EXHIBIT 10.3
[Execution]
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
by and among
LEXINGTON PRECISION CORPORATION
LEXINGTON RUBBER GROUP, INC.
as Borrowers
and
CONGRESS FINANCIAL CORPORATION
as Agent
THE CIT GROUP/COMMERCIAL FINANCING, INC.
as Co-Agent
and
THE LENDERS FROM TIME TO TIME PARTY HERETO
as Lenders
Dated: December 18, 2003
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS................................................................................... 1
SECTION 2. CREDIT FACILITIES............................................................................. 29
2.1 Loans......................................................................................... 29
2.2 Letter of Credit Accommodations............................................................... 30
2.3 Term Loans. ................................................................................. 34
2.4 Commitments................................................................................... 36
2.5 Joint and Several Liability................................................................... 36
2.6 Mandatory Prepayments......................................................................... 37
SECTION 3. INTEREST AND FEES............................................................................. 39
3.1 Interest...................................................................................... 39
3.2 Fees.......................................................................................... 40
3.3 Changes in Laws and Increased Costs of Loans.................................................. 41
SECTION 4. CONDITIONS PRECEDENT.......................................................................... 43
4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations..................... 43
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations......................... 45
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST..................................................... 46
SECTION 6. COLLECTION AND ADMINISTRATION................................................................. 51
6.1 Borrowers' Loan Accounts...................................................................... 51
6.2 Statements.................................................................................... 52
6.3 Collection of Accounts........................................................................ 52
6.4 Payments...................................................................................... 53
6.5 Authorization to Make Loans................................................................... 54
6.6 Use of Proceeds............................................................................... 54
6.7 Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of Loans
and Statements................................................................................ 55
6.8 Pro Rata Treatment............................................................................ 55
6.9 Sharing of Payments, Etc...................................................................... 56
6.10 Settlement Procedures......................................................................... 57
6.11 Obligations Several; Independent Nature of Lenders' Rights.................................... 59
SECTION 7. COLLATERAL REPORTING AND COVENANTS............................................................ 59
7.1 Collateral Reporting.......................................................................... 59
7.2 Accounts Covenants............................................................................ 60
7.3 Inventory Covenants........................................................................... 61
(i)
7.4 Equipment Covenants........................................................................... 61
7.5 Power of Attorney............................................................................. 62
7.6 Right to Cure................................................................................. 63
7.7 Access to Premises............................................................................ 63
SECTION 8. REPRESENTATIONS AND WARRANTIES................................................................ 64
8.1 Corporate Existence, Power and Authority...................................................... 64
8.2 Name; State of Organization; Chief Executive Office; Collateral Locations..................... 64
8.3 Financial Statements; No Material Adverse Change.............................................. 65
8.4 Priority of Liens; Title to Properties........................................................ 65
8.5 Tax Returns................................................................................... 65
8.6 Litigation.................................................................................... 65
8.7 Compliance with Other Agreements and Applicable Laws.......................................... 66
8.8 Environmental Compliance...................................................................... 66
8.9 Employee Benefits............................................................................. 67
8.10 Bank Accounts................................................................................. 68
8.11 Intellectual Property......................................................................... 68
8.12 Subsidiaries; Affiliates; Capitalization; Solvency............................................ 68
8.13 Labor Disputes................................................................................ 69
8.14 Restrictions on Subsidiaries.................................................................. 69
8.15 Material Contracts............................................................................ 70
8.16 Payable Practices............................................................................. 70
8.17 Accuracy and Completeness of Information...................................................... 70
8.18 Survival of Warranties; Cumulative............................................................ 70
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS............................................................ 70
9.1 Maintenance of Existence...................................................................... 70
9.2 New Collateral Locations...................................................................... 71
9.3 Compliance with Laws, Regulations, Etc........................................................ 71
9.4 Payment of Taxes and Claims................................................................... 72
9.5 Insurance..................................................................................... 72
9.6 Financial Statements and Other Information.................................................... 73
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc....................................... 75
9.8 Encumbrances.................................................................................. 76
9.9 Indebtedness.................................................................................. 78
9.10 Loans, Investments, Etc....................................................................... 85
9.11 Dividends and Redemptions..................................................................... 86
9.12 Transactions with Affiliates.................................................................. 87
9.13 Compliance with ERISA. ...................................................................... 88
9.14 End of Fiscal Years; Fiscal Quarters.......................................................... 88
9.15 Change in Business............................................................................ 88
9.16 Limitation of Restrictions Affecting Subsidiaries............................................. 88
9.17 Net Worth..................................................................................... 89
(ii)
9.18 Minimum EBITDA................................................................................ 89
9.19 Fixed Charge Coverage Ratio................................................................... 90
9.20 Maximum Capital Expenditures.................................................................. 91
9.21 License Agreements............................................................................ 91
9.22 Costs and Expenses............................................................................ 92
9.23 Further Assurances............................................................................ 93
SECTION 10. EVENTS OF DEFAULT AND REMEDIES................................................................ 93
10.1 Events of Default............................................................................. 93
10.2 Remedies...................................................................................... 95
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW.................................. 99
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver......................... 99
11.2 Waiver of Notices............................................................................. 100
11.3 Amendments and Waivers........................................................................ 100
11.4 Waiver of Counterclaims....................................................................... 102
11.5 Indemnification............................................................................... 102
SECTION 12. THE AGENT..................................................................................... 103
12.1 Appointment, Powers and Immunities............................................................ 103
12.2 Reliance by Agent............................................................................. 103
12.3 Events of Default............................................................................. 104
12.4 Congress in its Individual Capacity........................................................... 104
12.5 Indemnification............................................................................... 105
12.6 Non-Reliance on Agent and Other Lenders....................................................... 105
12.7 Failure to Act................................................................................ 105
12.8 Additional Loans.............................................................................. 105
12.9 Concerning the Collateral and the Related Financing Agreements................................ 106
12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders ................ 106
12.11 Collateral Matters............................................................................ 107
12.12 Agency for Perfection......................................................................... 108
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS.............................................................. 109
13.1 Term.......................................................................................... 109
13.2 Interpretative Provisions..................................................................... 111
13.3 Notices....................................................................................... 113
13.4 Partial Invalidity............................................................................ 113
13.5 Confidentiality............................................................................... 113
13.6 Successors.................................................................................... 115
13.7 Assignments; Participations................................................................... 115
13.8 Entire Agreement.............................................................................. 117
(iii)
SECTION 14. ACKNOWLEDGMENT AND RESTATEMENT................................................................ 118
14.1 Existing Obligations.......................................................................... 118
14.2 Acknowledgment of Security Interests.......................................................... 118
14.3 Existing Agreement............................................................................ 118
14.4 Restatement................................................................................... 119
14.5 Release....................................................................................... 119
(iv)
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Compliance Certificate
Schedule 1.52 Existing LPC Term Notes
Schedule 1.53 Existing LRG Term Notes
Schedule 1.100 Permitted Holders
Schedule 1.116 Holders of Remaining Existing Subordinated Note
Indebtedness
Schedule 1.132 Term Loan Lender Agreements
(i)
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement dated December
18, 2003 is entered into by and among Lexington Precision Corporation, a
Delaware corporation ("LPC") and Lexington Rubber Group, Inc., a Delaware
corporation ("LRG", and together with LPC, each, individually, a "Borrower" and
collectively, "Borrowers"), the parties hereto from time to time as lenders,
whether by execution of this Agreement or an Assignment and Acceptance (each
individually, a "Lender" and collectively, "Lenders"), Congress Financial
Corporation , a Delaware corporation, in its capacity as agent for Lenders (in
such capacity, "Agent") and The CIT Group/Commercial Financing, Inc., a New York
corporation, in its capacity as co-agent for Lenders (in such capacity,
"Co-Agent").
W I T N E S S E T H:
WHEREAS, Congress Financial Corporation, in its individual capacity
("Congress"), and Borrowers are presently parties to certain financing
arrangements pursuant to an Accounts Financing Agreement [Security Agreement],
dated January 11, 1990, by and between Congress and LPC and an Accounts
Financing Agreement [Security Agreement], dated January 11, 1990, by and between
Congress and LRG (collectively, the Existing Accounts Agreements", together with
all supplements thereto and all other related financing and security agreements,
collectively, the "Existing Financing Agreements");
WHEREAS, Agent, Lenders and Borrowers wish to amend and restate the
Existing Financing Agreements pursuant to which Lenders may make loans and
provide other financial accommodations to Borrowers; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrowers on a pro
rata basis according to its Commitment (as defined below) on the terms and
conditions set forth herein and Agent is willing to act as agent for Lenders on
the terms and conditions set forth herein and in the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, as to each Borrower, all present and
future rights of such Borrower to payment of a monetary obligation, whether or
not earned by performance, which is
not evidenced by chattel paper or an instrument, (a) for property that has been
or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a secondary obligation incurred or
to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.
1.3 "Administrative Borrower" shall mean LPC in its capacity as
Administrative Borrower on behalf of itself and the other Borrowers pursuant to
Section 6.7 hereof and it successors and assigns in such capacity.
1.4 "Affiliate" shall mean, with respect to a specified Person,
any other Person which directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
such Person, and without limiting the generality of the foregoing, includes (a)
any Person which beneficially owns or holds ten (10%) percent or more of all
classes of Voting Stock of such Person, (b) any Person of which such Person
beneficially owns or holds ten (10%) percent or more of all classes of Voting
Stock and (c) any director or executive officer of such Person. For the purposes
of this definition, the term "control" (including with correlative meanings, the
terms "controlled by" and "under common control with"), as used with respect to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise.
1.5 "Agent" shall mean Congress Financial Corporation, in its
capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.
1.6 "Agent Payment Account" shall mean account no. 5000000030279
of Agent at Wachovia Bank, National Association, or such other account of Agent
as Agent may from time to time designate to Administrative Borrower as the Agent
Payment Account for purposes of this Agreement and the other Financing
Agreements.
1.7 "Appraisal Reserve" shall mean the Reserve in the amount equal
to $650,000; provided, that, such Appraisal Reserve shall be released within
five (5) Business Days following the receipt by Agent of an updated appraisal as
to the Equipment, in form, scope and methodology acceptable to Agent and by an
appraiser acceptable to Agent and upon which Agent
2
is expressly permitted to rely, in the event that the results of such appraisal
reflect that the then outstanding principal amount of the Term Loans do not
exceed eighty-five (85%) percent of the net orderly liquidation value of the
Equipment that is subject to a valid, perfected first priority lien of Agent.
1.8 "Assignment and Acceptance" shall mean an Assignment and
Acceptance substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.7
hereof.
1.9 "Bank One" shall mean Bank One, N.A., a national banking
association, and its successors and assigns.
1.10 "Bank One Financing" shall mean the loans by Bank One to
Borrowers pursuant to the Bank One Financing Agreements.
1.11 "Bank One Financing Agreements" shall mean the Credit Facility
and Security Agreement, dated as of January 31, 1997, by and among Borrowers and
Bank One, as amended, together with the promissory notes, guarantees and
mortgages delivered in connection thereunder and all other documents,
instruments and agreements executed in connection therewith or pursuant thereto,
as the same now exist or may hereafter be amended, modified, supplemented,
renewed, restated or replaced.
1.12 "Blocked Accounts" shall have the meaning set forth in Section
6.3 hereof.
1.13 "Borrowing Base" shall mean, at any time, as to each Borrower,
the amount equal to:
(a) the lesser of:
(i) the amount equal to: (A) eighty-eight (88%)
percent of the Net Amount of the Eligible Domestic Accounts of such Borrower,
plus (B) eighty (80%) percent of the Net Amount of the Eligible Foreign Accounts
of such Borrower, plus (C) the lesser of the Inventory Loan Limit for such
Borrower or the sum of: (1) sixty-five (65%) percent multiplied by the Value of
the Eligible Inventory of such Borrower consisting of finished goods, plus (2)
sixty-five (65%) percent multiplied by the Value of the Eligible Inventory of
such Borrower consisting of raw materials, plus (3) sixty-five (65%) percent
multiplied by the Value of the Eligible Inventory of such Borrower consisting of
work-in-process, or
(ii) the Revolving Loan Limit for such Borrower,
minus
(b) Reserves attributable to such Borrower.
3
For purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Letter of Credit Accommodations for the purpose
of purchasing Eligible Inventory as Revolving Loans to the extent Agent is in
effect basing the issuance of the Letter of Credit Accommodations on the Value
of the Eligible Inventory being purchased with such Letter of Credit
Accommodations. In determining the actual amounts of such Letter of Credit
Accommodations to be so treated for purposes of the sublimit, the outstanding
Revolving Loans and Reserves shall be attributed first to any components of the
lending formulas set forth above that are not subject to such sublimit, before
being attributed to the components of the lending formulas subject to such
sublimit. The amounts of Eligible Inventory of any Borrower shall, at Agent's
option, be determined based on the lesser of the amount of Inventory set forth
in the general ledger of such Borrower or the perpetual inventory record
maintained by such Borrower.
1.14 "Business Day" shall mean any day other than a Saturday,
Sunday, or other day on which commercial banks are authorized or required to
close under the laws of the State of New York, or the State of North Carolina,
and a day on which Agent is open for the transaction of business, except that if
a determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.
1.15 "Capital Expenditures" shall mean all expenditures for any
fixed or capital assets (including, but not limited to, tooling) or
improvements, or for replacements, substitutions or additions thereto, which
have a useful life of more than one (1) year, including, but not limited to, the
direct or indirect acquisition of such assets by way of offset items or
otherwise and shall include the principal amount of Capitalized Lease payments.
1.16 "Capitalized Leases" shall mean, as applied to any Person, any
lease of (or any agreement conveying the right to use) any property (whether
real, personal or mixed) by such Person as lessee which, in accordance with
GAAP, is required to be reflected as a liability on the balance sheet of such
Person.
1.17 "Capital Stock" shall mean, with respect to any Person, any
and all shares, interests, participations or other equivalents (however
designated) of such Person's capital stock or partnership, limited liability
company or other equity interests at any time outstanding, and any and all
rights, warrants or options exchangeable for or convertible into such capital
stock or other interests (but excluding any debt security that is exchangeable
for or convertible into such capital stock).
1.18 "Cash Equivalents" shall mean, at any time, (a) any evidence
of Indebtedness with a maturity date of ninety (90) days or less issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof; provided, that, the full faith and credit of
the United States of America is pledged in support thereof; (b) certificates of
deposit or bankers' acceptances with a maturity of ninety (90) days or less of
any financial institution that is a member of the Federal Reserve System having
combined capital, surplus and undivided profits of not less than $250,000,000;
(c) commercial paper (including variable rate demand notes) with a maturity of
ninety (90) days or less issued by a corporation (except an
4
Affiliate of any Borrower) organized under the laws of any State of the United
States of America or the District of Columbia and rated at least A-1 by Standard
& Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. or at
least P-1 by Moody's Investors Service, Inc.; (d) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with any financial institution having
combined capital, surplus and undivided profits of not less than $250,000,000;
(e) repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by the United
States of America or issued by any governmental agency thereof and backed by the
full faith and credit of the United States of America, in each case maturing
within ninety (90) days or less from the date of acquisition; provided, that,
the terms of such agreements comply with the guidelines set forth in the Federal
Financial Agreements of Depository Institutions with Securities Dealers and
Others, as adopted by the Comptroller of the Currency on October 31, 1985; and
(f) investments in money market funds and mutual funds which invest
substantially all of their assets in securities of the types described in
clauses (a) through (e) above.
1.19 "Change of Control" shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of any Borrower to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act), other than as permitted in Section 9.7 hereof;
(b) the liquidation or dissolution of any Borrower or the adoption of a plan by
the stockholders of any Borrower relating to the dissolution or liquidation of
such Borrower, other than as permitted in Section 9.7 hereof; (c) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), except for one or more Permitted Holders, of beneficial
ownership, directly or indirectly, of a majority of the voting power of the
total outstanding Voting Stock of any Borrower or the Board of Directors of any
Borrower; (d) during any period of two (2) consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of any Borrower
(together with any new directors who have been appointed by any Permitted
Holder, or whose nomination for election by the stockholders of such Borrower,
as the case may be, was approved by a vote of at least sixty-six and two-thirds
(66 2/3%) percent of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of any Borrower then still in office; (e) the
failure of the LPC to own directly or indirectly one hundred (100%) percent of
the voting power of the total outstanding Voting Stock of LRG; or (f) the
failure of Permitted Holders to own directly or indirectly forty (40%) percent
of the voting power of the total outstanding Voting Stock of LPC.
1.20 "CIT" shall mean The CIT Group/Equipment Financing, Inc., a
New York corporation, and its successors and assigns.
1.21 "CIT Financing" shall mean the loans by CIT to Borrowers
pursuant to the CIT Financing Agreements.
1.22 "CIT Financing Agreements" shall mean the Loan and Security
Agreement, dated as of March 19, 1997, Rider A to the Loan and Security
Agreement and the Supplement and Exhibit
5
A thereto, each dated and/or delivered as of March 19, 1997, each between LPC
and CIT, together with all notes, guarantees and other documents, instruments
and agreements executed pursuant thereto or in connection therewith and all
supplements executed and delivered pursuant thereto, as the same now exist or
may hereafter be amended, modified, supplemented, renewed, restated or replaced.
1.23 "Code" shall mean the Internal Revenue Code of 1986, as the
same now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.24 "Collateral" shall have the meaning set forth in Section 5.1
hereof.
1.25 "Collateral Access Agreement" shall mean an agreement in
writing, in form and substance reasonably satisfactory to Agent, from any lessor
of premises to any Borrower, or any other person to whom any Collateral is
consigned or who has custody, control or possession of any such Collateral or is
otherwise the owner or operator of any premises on which any of such Collateral
is located, pursuant to which such lessor, consignee or other person, inter
alia, acknowledges the first priority security interest of Agent in such
Collateral, agrees to waive any and all claims such lessor, consignee or other
person may, at any time, have against such Collateral, whether for processing,
storage or otherwise, and agrees to permit Agent access to, and the right to
remain on, the premises of such lessor, consignee or other person so as to
exercise Agent's rights and remedies and otherwise deal with such Collateral and
in the case of any consignee or other person who at any time has custody,
control or possession of any Collateral, acknowledges that it holds and will
hold possession of the Collateral for the benefit of Agent and Lenders and
agrees to follow all instructions of Agent with respect thereto.
1.26 "Commitment" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures pages
hereto designated as the Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.7 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as "Commitments".
1.27 "Congress" shall mean Congress Financial Corporation, a
Delaware corporation, in its individual capacity, and its successors and
assigns.
1.28 "Consolidated Net Income" shall mean, with respect to any
Person for any period, the aggregate of the net income (loss) of such Person and
its Subsidiaries, on a consolidated basis, for such period (excluding to the
extent included therein any extraordinary or non-recurring gains and
extraordinary non-cash charges to property, plant and equipment or goodwill)
after deducting all charges which should be deducted before arriving at the net
income (loss) for such period and after deducting the Provision for Taxes for
such period, all as determined in accordance with GAAP; provided, that, (a) the
net income of any Person that is not a wholly-owned Subsidiary or that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid or payable to such
6
Person or a wholly-owned Subsidiary of such Person; (b) except to the extent
included pursuant to the foregoing clause, the net income of any Person accrued
prior to the date it becomes a wholly-owned Subsidiary of such Person or is
merged into or consolidated with such Person or any of its wholly-owned
Subsidiaries or the date that Person's assets are acquired by such Person or by
any of its wholly-owned Subsidiaries shall be excluded; (c) the effect of any
change in accounting principles adopted by such Person or its Subsidiaries after
the date hereof shall be excluded; (d) net income shall exclude interest
accrued, but not paid on indebtedness owing to a Subsidiary or parent
corporation of such Person, which is subordinated in right of payment to the
payment in full of the Obligations, on terms and conditions acceptable to Agent;
and (e) the net income (if positive) of any wholly-owned Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
such wholly-owned Subsidiary to such Person or to any other wholly-owned
Subsidiary of such Person is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to such wholly-owned Subsidiary shall
be excluded. For the purposes of this definition, net income excludes any gain
and any non-cash loss (but not any cash loss) together with any related
Provision for Taxes for such gain and non-cash loss (but not any cash loss)
realized upon the sale or other disposition of any assets that are not sold in
the ordinary course of business (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or of any Capital Stock of such
Person or a Subsidiary of such Person and any net income or loss realized as a
result of changes in accounting principles or the application thereof to such
Person.
1.29 "Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of any Borrower pursuant to
Sections 2.1 and 2.2 hereof.
1.30 "Credit Facility Revolving Loan Limit" shall mean $23,500,000.
1.31 "Default" shall mean an act, condition or event which, with
notice or passage of time or both, would constitute an Event of Default.
1.32 "Defaulting Lender" shall have the meaning set forth in
Section 6.10 hereof.
1.33 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance reasonably satisfactory to Agent, by and among
Agent, the Borrower with a deposit account at any bank and the bank at which
such deposit account is at any time maintained, which agreement provides that
such bank will comply with instructions originated by Agent directing
disposition of the funds in the deposit account without further consent by such
Borrower and such other terms and conditions as Agent may reasonably require,
including as to any such agreement with respect to any Blocked Account,
providing that all items received or deposited in the Blocked Accounts are the
property of Agent, that the bank has no lien upon, or right to setoff against,
the Blocked Accounts, the items received for deposit therein, or the funds from
time to time on deposit therein and that the bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis to the Agent Payment
Account all funds received or deposited into the Blocked Accounts.
7
1.34 "EBITDA" shall mean, as to any Person, with respect to any
period, an amount equal to: (a) the Consolidated Net Income of such Person for
such period, plus (b) depreciation and amortization for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
all in accordance with GAAP, plus (c) Interest Expense for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
plus (d) the Provision for Taxes for such period (to the extent deducted in the
computation of Consolidated Net Income of such Person); provided, that, for
purposes of this calculation, EBITDA shall exclude (i) any write-down or
write-off of assets recorded in accordance with the requirements of Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets",
and Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", and any reduction in net income
resulting from the adoption of Statement of Financial Accounting Standards No.
150, "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity" and (ii) any other items of income or expense that are
required by GAAP to be classified as non-operating amounts in the Borrowers'
Statement of Income.
1.35 "Eligible Accounts" shall mean Accounts created by a Borrower
which are and continue to be acceptable to Agent based on the criteria set forth
below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto;
(b) such Accounts are not unpaid after the earlier of (i)
ninety (90) days after the date of the original invoice for them or (ii) sixty
(60) days after the original due date for them;
(c) such Accounts comply with the terms and conditions
contained in Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent, until such
payment is no longer conditional or contingent in Agent's determination, and
subject to the satisfaction of the other criteria set forth in this definition;
(e) the chief executive office of the account debtor with
respect to such Accounts is located in the United States of America or Canada
(provided, that, at any time promptly upon Agent's request, such Borrower shall
execute and deliver, or cause to be executed and delivered, such other
agreements, documents and instruments as may be required by Agent to perfect the
security interests of Agent in those Accounts of an account debtor with its
chief executive office or principal place of business in Canada in accordance
with the applicable laws of the Province of Canada in which such chief executive
office or principal place of business is located and take or cause to be taken
such other and further actions as Agent may request to enable Agent as secured
party with respect thereto to collect such Accounts under the applicable Federal
or
8
Provincial laws of Canada) or, at Agent's option, if the chief executive office
and principal place of business of the account debtor with respect to such
Accounts is located other than in the United States of America or Canada, then
if either: (i) the account debtor has delivered to such Borrower an irrevocable
letter of credit issued or confirmed by a bank satisfactory to Agent and payable
only in the United States of America and in U.S. dollars, sufficient to cover
such Account, in form and substance satisfactory to Agent and if required by
Agent, the original of such letter of credit has been delivered to Agent or
Agent's agent and the issuer thereof, and such Borrower has complied with the
terms of Section 5.2(f) hereof with respect to the assignment of the proceeds of
such letter of credit to Agent or naming Agent as transferee beneficiary
thereunder, as Agent may specify, or (ii) such Account is subject to credit
insurance payable to Agent issued by an insurer and on terms and in an amount
acceptable to Agent, or (iii) such Account is otherwise acceptable in all
respects to Agent (subject to such lending formula with respect thereto as Agent
may determine);
(f) such Accounts do not consist of progress billings (such
that the obligation of the account debtors with respect to such Accounts is
conditioned upon such Borrower's satisfactory completion of any further
performance under the agreement giving rise thereto), bill and hold invoices or
retainage invoices, except, as to bill and hold invoices, if Agent shall have
received an agreement in writing from the account debtor, in form and substance
reasonably satisfactory to Agent, confirming the unconditional obligation of the
account debtor to take the goods related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and is not owed any amounts that may
give rise to any right of setoff or recoupment against such Accounts (but the
portion of the Accounts of such account debtor in excess of the amount at any
time and from time to time owed by such Borrower to such account debtor or
claimed owed by such account debtor shall, subject to the satisfaction of the
other criteria of this definition, be deemed Eligible Accounts),
(h) there are no facts, events or occurrences which would
impair the validity, enforceability or collectability of such Accounts or reduce
the amount payable or delay payment (beyond ninety (90) days after the date of
the original invoice permitted under subsection (b) above) thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Agent and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement that are subject to an intercreditor agreement in
form and substance satisfactory to Agent between the holder of such security
interest or lien and Agent;
(j) neither the account debtor nor any officer or employee of
the account debtor with respect to such Accounts is an officer, employee, agent
or other Affiliate of any Borrower;
(k) the account debtors with respect to such Accounts are not
any foreign government, the United States of America, any State, political
subdivision, department, agency
9
or instrumentality thereof, unless, if the account debtor is the United States
of America, any State, political subdivision, department, agency or
instrumentality thereof, upon Agent's request, the Federal Assignment of Claims
Act of 1940, as amended or any similar State or local law, if applicable, has
been complied with in a manner satisfactory to Agent;
(l) there are no proceedings or actions which are threatened
or pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition (including, without limitation, any bankruptcy, dissolution,
liquidation, reorganization or similar proceeding);
(m) the aggregate amount of such Accounts owing by a single
account debtor do not constitute more than thirty (30%) percent of the aggregate
amount of all otherwise Eligible Accounts (but the portion of the Accounts not
in excess of the applicable percentages may be deemed Eligible Accounts);
(n) such Accounts are not owed by an account debtor who has
Accounts unpaid more than ninety (90) days after the original invoice date for
them which constitute more than fifty (50%) percent of the total Accounts of
such account debtor;
(o) the account debtor is not located in a state requiring the
filing of a Notice of Business Activities Report or similar report in order to
permit such Borrower to seek judicial enforcement in such State of payment of
such Account, unless such Borrower has qualified to do business in such state or
has filed a Notice of Business Activities Report or equivalent report for the
then current year or such failure to file and inability to seek judicial
enforcement is capable of being remedied without any material delay or material
cost;
(p) such Accounts are owed by account debtors whose total
indebtedness to such Borrower does not exceed the credit limit with respect to
such account debtors as determined by such Borrower from time to time, to the
extent such credit limit as to any account debtor is established consistent with
the current practices of such Borrower as of the date hereof and such credit
limit is acceptable to Agent (but the portion of the Accounts not in excess of
such credit limit shall, subject to the satisfaction of the other criteria of
this definition, be deemed Eligible Accounts); and
(q) such Accounts are owed by account debtors deemed
creditworthy at all times by Agent.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from a Borrower prior to the date hereof, in either case, if such event,
condition or other circumstance under either clause (i) or clause (ii) adversely
affects or could reasonably be expected to adversely affect the Accounts in the
good faith determination of Agent. Any Accounts which are not Eligible Accounts
shall nevertheless be part of the Collateral.
10
1.36 "Eligible Inventory" shall mean, as to each Borrower,
Inventory of such Borrower consisting of finished goods held for resale in the
ordinary course of the business of such Borrower, work-in-process and raw
materials for the production of such finished goods, in each case which are
acceptable to Agent based on the criteria set forth below. In general, Eligible
Inventory shall not include (a) scrap-metal; (b) components which are not part
of finished goods; (c) spare parts for equipment; (d) packaging and shipping
materials; (e) supplies used or consumed in such Borrower's business; (f)
Inventory at premises other than premises owned or leased and controlled by any
Borrower or, in the case of premises owned or operated by a third person, as to
which Congress has not received a Collateral Access Agreement; provided, that,
(i) as to locations which are leased by a Borrower, if Agent shall not have
received a Collateral Access Agreement from the owner or lessor with respect to
such location, duly authorized, executed and delivered by such owner or lessor
(or Agent shall determine to accept a Collateral Access Agreement that does not
include all required provisions or provisions in the form otherwise required by
Agent), Agent may, at its option, include the Inventory held at such location as
Eligible Inventory subject to the satisfaction of other terms and conditions set
forth in this definition and establish such Reserves in respect of amounts at
any time due or to become due to the owner and lessor thereof as Agent shall
determine, and (ii) as to locations owned and operated by a third person, if
Agent shall not have received a Collateral Access Agreement from the owner and
operator with respect to such location, duly authorized, executed and delivered
by such owner and operator (or Agent shall determine to accept a Collateral
Access Agreement that does not include all required provisions or provisions in
the form otherwise required by Agent), Agent may, at its option, establish such
Reserves in respect of amounts at any time due or to become due to the owner and
operator thereof as Agent shall determine, provided that, in addition, if
required by Agent, in order for such Inventory at locations owned and operated
by a third person to be Eligible Inventory, Agent shall have received: (A) UCC
financing statements between the owner and operator, as consignee or bailee and
such Borrower, as consignor or bailor, in form and substance satisfactory to
Agent, which are duly assigned to Agent and (B) a written notice to any lender
to the owner and operator of the first priority security interest in such
Inventory of Agent; (g) Inventory subject to a security interest or lien in
favor of any Person other than Agent except those permitted in this Agreement
that are subject to an intercreditor agreement in form and substance
satisfactory to Agent between the holder of such security interest or lien and
Agent; (h) bill and hold goods; (i) unserviceable, obsolete or slow moving
Inventory; (j) Inventory which is not subject to the first priority, valid and
perfected security interest of Agent; (k) returned, damaged and/or defective
Inventory; (l) Inventory purchased or sold on consignment and (m) Inventory
located outside the United States of America. The criteria for Eligible
Inventory set forth above may only be changed and any new criteria for Eligible
Inventory may only be established by Agent in good faith based on either: (i) an
event, condition or other circumstance arising after the date hereof, or (ii) an
event, condition or other circumstance existing on the date hereof to the extent
Agent has no written notice thereof from a Borrower prior to the date hereof, in
either case, if such event, condition or other circumstance under either clause
(i) or (ii) adversely affects or could reasonably be expected to adversely
affect the Inventory in the good faith determination of Agent. Any Inventory
which is not Eligible Inventory shall nevertheless be part of the Collateral.
11
1.37 "Eligible Transferee" shall mean (a) any Lender; (b) the
parent company of any Lender and/or any Affiliate of such Lender which is at
least fifty (50%) percent owned by such Lender or its parent company; (c) any
person (whether a corporation, partnership, trust or otherwise) that is approved
by Agent and (i) is engaged in the business of making, purchasing, holding or
otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or
(ii) with respect to any Lender that is a fund which invests in bank loans and
similar extensions of credit, any other fund that invests in bank loans and
similar extensions of credit and is managed by the same investment advisor as
such Lender or by an Affiliate of such investment advisor; and (d) any other
commercial bank, financial institution or "accredited investor" (as defined in
Regulation D under the Securities Act of 1933) approved by Agent, provided,
that, (i) neither any Borrower nor any Affiliate of any Borrower shall qualify
as an Eligible Transferee and (ii) no Person to whom any Indebtedness which is
in any way subordinated in right of payment to any other Indebtedness of any
Borrower shall qualify as an Eligible Transferee, except as Agent may otherwise
specifically agree.
1.38 "Environmental Laws" shall mean all foreign, Federal, State
and local laws (including common law), legislation, rules, codes, licenses,
permits (including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal Act and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.39 "Equipment" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter acquired equipment, wherever located,
including machinery, data processing and computer equipment (whether owned or
licensed and including embedded software), vehicles, tools, furniture, fixtures,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements therefor,
wherever located.
12
1.40 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, together with all rules, regulations and interpretations thereunder or
related thereto.
1.41 "ERISA Affiliate" shall mean any person required to be
aggregated with any Borrower, or any of its respective Subsidiaries under
Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.42 "ERISA Event" shall mean (a) any "reportable event", as
defined in Section 4043(c) of ERISA or the regulations issued thereunder, with
respect to a Plan for which the reporting requirements have not been waived in
writing; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which any Borrower or any of its respective
Subsidiaries is a "disqualified person" (within the meaning of Section 4975 of
the Code) or with respect to which any Borrower or any of its respective
Subsidiaries could otherwise be liable; (f) a complete or partial withdrawal by
any Borrower or any ERISA Affiliate from a Multiemployer Plan or a cessation of
operations which is treated as such a withdrawal or notification that a
Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to
terminate, the treatment of a Plan amendment as a termination under Section 4041
or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit
Guaranty Corporation to terminate a Plan; (h) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, (i) the
imposition of any liability under Title IV of ERISA, other than Pension Benefit
Guaranty Corporation premiums due but not delinquent under Section 4007 of
ERISA, upon any Borrower or any ERISA Affiliate in excess of $1,000,000 and (j)
any other event of condition with respect to a Plan, including any Plan subject
to Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate, that
could reasonably be expected to result in liability of any Borrower in excess of
$1,000,000.
1.43 "Eurodollar Rate" shall mean with respect to the Interest
Period for a Eurodollar Rate Loan, the interest rate per annum equal to the
arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market (or other Eurodollar Rate market selected by a Borrower or
Administrative Borrower on behalf of such Borrower and approved by Agent) on or
about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement
of such Interest Period in amounts substantially equal to the principal amount
of the Eurodollar Rate Loans requested by and available to such Borrower in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by a Borrower or Administrative Borrower.
1.44 "Eurodollar Rate Loans" shall mean, individually and
collectively, Eurodollar Rate Revolving Loans and Eurodollar Rate Term Loans.
13
1.45 "Eurodollar Rate Revolving Loans" shall mean any portion of
the Revolving Loans on which interest is payable based on the Adjusted
Eurodollar Rate in accordance with the terms hereof.
1.46 "Eurodollar Rate Term Loans" shall mean any portion of the
Term Loans on which interest is payable based on the Adjusted Eurodollar Rate in
accordance with the terms hereof.
1.47 "Event of Default" shall mean the occurrence or existence of
any event or condition described in Section 10.1 hereof.
1.48 "Excess Availability" shall mean, as to each Borrower, the
amount, as determined by Agent, calculated at any date, equal to: (a) the lesser
of: (i) the Borrowing Base of such Borrower and (ii) the Revolving Loan Limit of
such Borrower (in each case under (i) or (ii) after giving effect to any
Reserves other than Reserves in respect of Letter of Credit Accommodations),
minus (b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations of such Borrower (but not including, without duplication, for this
purpose Obligations of such Borrower arising pursuant to any guarantees in favor
of Agent and Lenders of the Obligations of the other Borrowers or the then
outstanding aggregate principal amount of the Term Loans or any outstanding
Letter of Credit Accommodations), plus (ii) the amount of all Reserves then
established in respect of Letter of Credit Accommodations, plus (iii) the
aggregate amount of all then outstanding and unpaid trade payables and other
obligations of such Borrower which are outstanding more than sixty (60) days
past due as of such time (other than trade payables or other obligations being
contested or disputed by such Borrower in good faith), plus (iv) without
duplication, the amount of checks issued by such Borrower to pay trade payables
and other obligations which are more than sixty (60) days past due as of such
time (other than trade payables or other obligations being contested or disputed
by such Borrower in good faith), but not yet sent.
1.49 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.50 "Exchange Agreement" shall mean the Exchange Agreement, dated
as of December 18, 2003, by and among LPC, Warren Delano and Michael A. Lubin,
as the same now exists or may hereafter be amended, modified, supplemented,
renewed, restated or replaced.
1.51 "Existing Financing Agreements" shall have the meaning set
forth in the Recitals hereto, including, without limitation, the Existing Term
Notes.
1.52 "Existing LPC Term Notes" shall mean the promissory notes made
by LPC payable to Congress listed on Schedule 1.52 hereto.
1.53 "Existing LRG Term Notes" shall mean the promissory notes made
by LRG payable to Congress listed on Schedule 1.53 hereto.
14
1.54 "Existing Junior Subordinated Notes" shall mean, collectively,
the 14% Junior Subordinated Notes due May 1, 2000 issued by LPC in the current
outstanding principal amount of $346,667 and the Junior Subordinated Convertible
Increasing Rate Notes due May 1, 2000 issued by LPC, the principal amount of
which has been converted into Capital Stock, as the same have been amended and
now exist.
1.55 "Existing Senior Subordinated Notes" shall mean, collectively,
the 12 3/4% Senior Subordinated Notes due February 1, 2000 issued by LPC in the
current outstanding principal amount of $27,412,125, as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.56 "Existing Term Notes" shall mean, collectively, the Existing
LPC Term Notes and the Existing LRG Term Notes.
1.57 "Extraordinary Receipts" shall mean any cash received by a
Borrower or any of its Subsidiaries not in the ordinary course of business from
the following, (a) proceeds of insurance in respect of the Collateral, (b)
condemnation awards (and payments in lieu thereof) in respect of the Collateral,
(c) indemnity payments, and (d) after the occurrence and during the continuance
of a Default or an Event of Default, (i) foreign, United States, state or local
tax refunds, (ii) pension plan reversions and (iii) judgments, proceeds of
settlements or other consideration of any kind in connection with any cause of
action in respect of the Collateral.
1.58 "Fee Letter" shall mean the letter agreement, dated of even
date herewith, by and between Borrowers and Agent, setting forth certain fees
payable by Borrowers to Agent for the benefit of itself and Lenders, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.59 "Financing Agreements" shall mean, collectively, this
Agreement and all notes, guarantees, security agreements, deposit account
control agreements, investment property control agreements, intercreditor
agreements and all other agreements, documents and instruments now or at any
time hereafter executed and delivered by any Borrower or Obligor in connection
this Agreement.
1.60 "Fixed Charge Coverage Ratio" shall mean, as to any applicable
period, with respect to Borrowers and their Subsidiaries, on a consolidated
basis, the ratio of (a) EBITDA for such period less Capital Expenditures for
such period that were not financed within such period to (b) Fixed Charges of
Borrowers and their Subsidiaries for such period.
1.61 "Fixed Charges" shall mean, as to any Person and its
Subsidiaries with respect to any period, the sum of, without duplication, (a)
all cash Interest Expense, provided that any annual fees paid to the Term Loan
Lenders or Term Loan Agent will be considered cash Interest Expense when such
amounts are recognized as an expense in the Borrowers' Statement of Income, plus
(b) all regularly scheduled (as determined at the beginning of the respective
period) principal payments of Indebtedness for borrowed money (including,
without limitation, all regularly scheduled payments of principal in respect of
the Term Loans) and Indebtedness with
15
respect to Capitalized Leases (and without duplicating amounts in item (a) of
this definition, the interest component with respect to Indebtedness under
Capitalized Leases), plus (c) all cash income taxes other than cash income taxes
related to income that is required by GAAP to be classified as non-operating
amounts in the Borrowers' Statement of Income, plus (d) all cash dividends paid
on preferred stock to the extent not included in item (a) of this definition,
but excluding any such cash dividends that were scheduled to be paid prior to
December 31, 2003.
1.62 "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the most recent audited financial statements
delivered to Agent prior to the date hereof.
1.63 "Governmental Authority" shall mean any nation or government,
any state, province, or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.64 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.65 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be in accordance with GAAP, recorded as
Capitalized Leases; (d) any contractual obligation, contingent or otherwise, of
such Person to pay or be liable for the payment of any indebtedness described in
this definition of another Person, including, without limitation, any such
indebtedness directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide
16
funds for the payment or discharge thereof, or to maintain solvency, assets,
level of income, or other financial condition; (e) all obligations with respect
to redeemable stock and redemption or repurchase obligations under any Capital
Stock or other equity securities issued by such Person; (f) all reimbursement
obligations and other liabilities of such Person with respect to surety bonds
(whether bid, performance or otherwise), letters of credit, banker's
acceptances, drafts or similar documents or instruments issued for such Person's
account; (g) all indebtedness of such Person in respect of indebtedness of
another Person for borrowed money or indebtedness of another Person otherwise
described in this definition which is secured by any consensual lien, security
interest, collateral assignment, conditional sale, mortgage, deed of trust, or
other encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; (h) all obligations, liabilities and indebtedness
of such Person (marked to market) arising under swap agreements, cap agreements
and collar agreements and other agreements or arrangements designed to protect
such Person against fluctuations in interest rates or currency or commodity
values; (i) all obligations owed by such Person under License Agreements with
respect to non-refundable, advance or minimum guaranteed royalty payments; and
(j) the principal and interest portions of all rental obligations of such Person
under any synthetic lease or similar off-balance sheet financing where such
transaction is considered to be borrowed money for tax purposes but is
classified as an operating lease in accordance with GAAP. For purposes of
calculating Net Worth, EBITDA and the Fixed Charge Coverage Ratio pursuant to
Sections 9.17, 9.18 and 9.19 hereof, the Nomura Debt shall not constitute
Indebtedness and the principal and interest in respect of the Nomura Debt shall
not be included in making any such calculations.
1.66 "Information Certificate" shall mean the Information
Certificate dated of even date herewith of Borrowers containing information with
respect to Borrowers and their respective businesses and assets executed by
Borrowers and delivered to Agent in connection with the preparation of this
Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.67 "Insurance Premium Collateral" shall mean, collectively, (a)
any insurance policies of Borrowers for which an Insurance Premium Finance Party
has entered into arrangements to allow Borrowers to pay all or a portion of the
applicable insurance premiums on such insurance policies in installments rather
than in one lump sum annual payment, and (b) any loss proceeds paid or payable
to a Borrower pursuant to the insurance policies for which such Insurance
Premium Finance Party has entered into arrangements to allow Borrowers to pay
all or a portion of the applicable insurance premiums on such insurance policies
in installments rather than in one lump sum annual payment (to the extent of the
amount owed to such Insurance Premium Finance Party), provided, that, (i) in no
event shall the Insurance Premium Collateral include any amounts deposited in or
received in the lockbox or blocked account established by Borrowers in
connection with the Financing Agreements or otherwise with respect to Borrowers'
financing arrangements with Agent and Lenders for the handling of collections of
Accounts or other assets and (ii) in no event shall the Insurance Premium
Collateral of any Insurance Premium Finance Party secure any obligation to any
other Insurance Premium Finance Party.
1.68 "Insurance Premium Finance Party" shall mean, in connection
with insurance
17
policies maintained by Borrowers, an insurance company or a third party that
enters into arrangements to allow Borrowers to pay all or a portion of the
applicable insurance premiums on such insurance policies in installments rather
than in one lump sum annual payment
1.69 "Intellectual Property" shall mean, as to each Borrower, such
Borrower's now owned and hereafter arising or acquired: patents, patent rights,
patent applications, copyrights, works which are the subject matter of
copyrights, copyright registrations, trademarks, trade names, trade styles,
trademark and service mark applications, and licenses and rights to use any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in- part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of authorship, domain names and domain name registrations;
software and contract rights relating to computer software programs, in whatever
form created or maintained.
1.70 "Intercreditor Agreement" shall mean the Intercreditor
Agreement, dated of even date herewith, by and among Agent (on behalf of the
Lenders) and Term Loan Agent, as acknowledged and agreed to by Borrowers, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.71 "Interest Expense" shall mean, for any period, as to any
Person, as determined in accordance with GAAP, the total interest expense of
such Person, whether paid or accrued during such period (including the interest
component of Capitalized Leases for such period), including, without limitation,
discounts in connection with the sale of any Accounts, but excluding interest
paid in property other than cash and any other interest expense not payable in
cash.
1.72 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as any
Borrower (or Administrative Borrower on behalf of such Borrower) may elect, the
exact duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, such Borrower (or
Administrative Borrower on behalf of such Borrower) may not elect an Interest
Period which will end after the last day of the then-current term of this
Agreement.
1.73 "Interest Rate" shall mean,
(a) Subject to clause (b) of this definition below:
(i) as to Prime Rate Revolving Loans, a rate
equal to one (1%) percent per annum in excess of the Prime Rate,
(ii) as to Prime Rate Term Loans, a rate equal to
one and one-half (1 1/2%) percent per annum in excess of the Prime Rate,
18
(iii) as to Eurodollar Rate Revolving Loans, a
rate equal to three and one-quarter (3 1/4%) percent per annum in excess of the
Adjusted Eurodollar Rate (in each case, based on the Eurodollar Rate applicable
for the Interest Period selected by a Borrower, or by Administrative Borrower on
behalf of such Borrower, as in effect three (3) Business Days after the date of
receipt by Agent of the request of or on behalf of such Borrower for such
Eurodollar Rate Loans in accordance with the terms hereof, whether such rate is
higher or lower than any rate previously quoted to any Borrower), and
(iv) as to Eurodollar Rate Term Loans, a rate
equal to three and three- quarters (3 3/4%) percent per annum in excess of the
Adjusted Eurodollar Rate (determined as provided above).
(b) Notwithstanding anything to the contrary contained in
clause (a) of this definition, the Interest Rate (i) shall mean the rate of
three (3%) percent per annum in excess of the Prime Rate as to Prime Rate Loans
and the rate of five and one-quarter (5 1/4%) percent per annum in excess of the
Adjusted Eurodollar Rate as to Eurodollar Rate Loans and (ii) shall mean the
rate of three and one-half (3 1/2%) percent per annum in excess of the Prime
Rate as to Prime Rate Term Loans and the rate of five and three-quarters (5
3/4%) percent per annum in excess of the Adjusted Eurodollar Rate as to
Eurodollar Rate Term Loans, at Agent's option, without notice, (A) either (1)
for the period on and after the date of termination or non-renewal hereof until
such time as all Obligations are indefeasibly paid and satisfied in full in
immediately available funds, or (2) for the period from and after the date of
the occurrence of any Event of Default, and for so long as such Event of Default
is continuing as determined by Agent and (B) on the Revolving Loans to any
Borrower at any time outstanding in excess of the Borrowing Base of such
Borrower or the Revolving Loan Limit of such Borrower (whether or not such
excess(es) arise or are made with or without Agent's or any Lender's knowledge
or consent and whether made before or after an Event of Default).
1.74 "Inventory" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter existing or acquired goods, wherever located,
which (a) are leased by such Borrower as lessor; (b) are held by such Borrower
for sale or lease or to be furnished under a contract of service; (c) are
furnished by such Borrower under a contract of service; or (d) consist of raw
materials, work in process, finished goods or materials used or consumed in its
business.
1.75 "Inventory Loan Limit" shall mean, as to each Borrower, at any
time, the amount equal to $8,000,000 minus the then outstanding principal amount
of Revolving Loans to the other Borrowers (and including Letter of Credit
Accommodations to the extent provided in the definition of the term Borrowing
Base) based on Eligible Inventory.
1.76 "Investment Property Control Agreement" shall mean an
agreement in writing, in form and substance reasonably satisfactory to Agent, by
and among Agent, any Borrower (as the case may be) and any securities
intermediary, commodity intermediary or other person who has custody, control or
possession of any investment property of such Borrower acknowledging that such
securities intermediary, commodity intermediary or other person has custody,
control or possession of such investment property on behalf of Agent, that it
will comply with entitlement
19
orders originated by Agent with respect to such investment property, or other
instructions of Agent, or (as the case may be) apply any value distributed on
account of any commodity contract as directed by Agent, in each case, without
the further consent of such Borrower and including such other terms and
conditions as Agent may require.
1.77 "Junior Subordinated Notes" shall mean, collectively, the 13%
Junior Subordinated Notes due November 1, 2009 issued by LPC, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.78 "Lenders" shall mean the financial institutions who are
signatories hereto as Lenders and other persons made a party to this Agreement
as a Lender in accordance with Section 13.7 hereof, and their respective
successors and assigns; each sometimes being referred to herein individually as
a "Lender".
1.79 "Letter of Credit Accommodations" shall mean, collectively,
the letters of credit, merchandise purchase or other guaranties which are from
time to time either (a) issued or opened by Agent or any Lender for the account
of any Borrower or Obligor or (b) with respect to which Agent or Lenders have
agreed to indemnify the issuer or guaranteed to the issuer the performance by
any Borrower or Obligor of its obligations to such issuer; sometimes being
referred to herein individually as "Letter of Credit Accommodation".
1.80 "License Agreements" shall have the meaning set forth in
Section 8.11 hereof.
1.81 "Loan Limit" shall mean, as to each Borrower, at any time, the
amount equal to the Maximum Credit minus the then outstanding principal amount
of Loans and the amount of Letter of Credit Accommodations provided to the other
Borrower.
1.82 "Loans" shall mean, collectively, the Revolving Loans and the
Term Loans.
1.83 "LPC Term Note" shall mean the Amended and Restated Term
Promissory Note, dated of even date herewith, made by LPC payable to Agent in
the original principal amount of $4,000,000, amending and restating the Existing
LPC Term Notes in order to evidence the existing Obligations previously
evidenced by or arising under such Existing LPC Term Notes and the additional
Obligations evidenced by or arising under the Term Loans, as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.84 "LRG Term Note" shall mean the Amended and Restated Term
Promissory Note, dated of even date herewith, made by LRG payable to Agent in
the original principal amount of $9,500,000, amending and restating the Existing
LRG Term Notes in order to evidence the existing Obligations previously
evidenced by or arising under such Existing LPC Term Notes and the additional
Obligations evidenced by or arising under the Term Loans, as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
20
1.85 "Material Adverse Effect" shall mean a material adverse effect
on (a) the financial condition, business, performance or operations of Borrowers
taken as a whole or the legality, validity or enforceability of this Agreement
or any of the other Financing Agreements; (b) the legality, validity,
enforceability, perfection or priority of the security interests and liens of
Agent upon the Collateral of Borrowers (taken as a whole); (c) the Collateral of
Borrowers (taken as a whole) or its value; (d) the ability of the Borrowers
(taken as a whole) to repay the Obligations or perform their obligations under
this Agreement or any of the other Financing Agreements as and when to be
performed in accordance therewith; or (e) the ability of Agent or any Lender to
enforce the Obligations or realize upon the Collateral or otherwise with respect
to the rights and remedies of Agent and Lenders under this Agreement or any of
the other Financing Agreements.
1.86 "Material Contract" shall mean (a) any contract or other
agreement (other than customer purchase orders with a term of one year or less
and the Financing Agreements or other agreements with respect to borrowed
money), written or oral, of any Borrower involving monetary liability of or to
any Person in an amount in excess of $1,000,000 in any fiscal year and (b) any
other contract or other agreement (other than customer purchase orders with a
term of one year or less and the Financing Agreements or other agreements with
respect to borrowed money), whether written or oral, to which any Borrower is a
party and as to which the breach, nonperformance, cancellation or failure to
renew by any party thereto would have a Material Adverse Effect.
1.87 "Maximum Credit" shall mean the amount of $37,000,000 minus,
at any time of determination, the then aggregate amount of principal re-paid by
Borrowers to Agent in respect of the Term Loans in accordance with the terms of
this Agreement and the Term Notes.
1.88 "Multiemployer Plan" shall mean a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by any
Borrower or any ERISA Affiliate.
1.89 "Net Amount of Eligible Domestic Accounts" shall mean, as to
any Borrower, the gross amount of the Eligible Accounts of such Borrower with
respect to account debtors with chief executive offices located in the United
States of America or Canada less (a) sales, excise or similar taxes included in
the amount thereof and (b) returns, discounts, claims, credits and allowances of
any nature at any time issued, owing, granted, outstanding, available or claimed
with respect thereto.
1.90 "Net Amount of Eligible Foreign Accounts" shall mean, as to
any Borrower, the gross amount of the Eligible Accounts of such Borrower with
respect to account debtors with chief executive offices located outside of the
United States of America and Canada which, in Agent's sole determination,
satisfy all of the conditions set forth in Section 1.39(e) hereof and all other
conditions of eligibility set forth in Section 1.39 hereof less (a) sales,
excise or similar taxes included in the amount thereof and (b) returns,
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed with respect thereto.
1.91 "Net Cash Proceeds" shall mean, with respect to any sale,
lease, transfer or other
21
disposition of any asset or the sale or issuance of any Indebtedness, the
aggregate amount of cash received from time to time (whether as initial
consideration or through payment or disposition of deferred consideration) by or
on behalf of such Person in connection with such transaction after deducting
therefrom only (without duplication) (a) reasonable and customary brokerage
commissions, underwriting fees and discounts, legal fees, accountant's fees,
investment banking fees, finder's fees, other similar fees and commissions and
reasonable out-of-pocket expenses, (b) the amount of taxes reasonably estimated
by such Person to be actually and reasonably attributable to such transaction,
(c) the amount of any Indebtedness secured by a security interest, lien or other
encumbrance (other than a security interest or other lien created under any
Financing Agreement) on such asset that, by the terms of such transaction, is
required to be repaid upon such disposition, in each case to the extent, but
only to the extent, that the amounts so deducted are actually paid to a Person
that, except in the case of reasonable out-of-pocket expenses, is not an
Affiliate of such Person or any Affiliate of any Borrower and, in each case, are
properly attributable to such transaction or to the asset that is the subject
thereof.
1.92 "Net Worth" shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its Subsidiaries (if any), the amount
equal to the difference between: (a) the aggregate net book value of all assets
of such Person and its Subsidiaries, calculating the book value of inventory for
this purpose on a first-in-first-out basis, after deducting from such book
values all appropriate reserves in accordance with GAAP (including all reserves
for doubtful receivables, obsolescence, depreciation and amortization) and (b)
the aggregate amount of the Indebtedness and other liabilities of such Person
and its Subsidiaries (including tax and other proper accruals); provided, that,
for purposes of this calculation, Net Worth shall exclude any write-down or
write-off of assets, net of the applicable income tax effect, recorded in
accordance with the requirements of Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets", and Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", and any reduction in net worth resulting from the adoption
of Statement of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
1.93 "Nomura" shall mean Nomura Special Situations Investment
Trust, a Delaware trust (as successor-in-interest to Tri-Links Investment Trust,
as successor-in-interest to Nomura Holdings America, Inc.), and its successors
and assigns.
1.94 "Nomura Agreements" shall mean, collectively, the following
(as the same now exist or may hereafter be amended, modified, supplemented,
renewed, restated or replaced): (a) Note Purchase Agreement, dated as of October
27, 1997, between LPC and Nomura, (b) promissory note, dated as of October 27,
1997, made by LPC payable to the order of Nomura in the original principal
amount of $7,500,000 and (c) all other agreements, documents and instruments
executed in connection therewith.
1.95 "Nomura Debt" shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by LPC to Nomura
pursuant to the Nomura Agreements and the Nomura Payoff Agreement, including
principal, interest, costs and expenses arising under the
22
Nomura Agreements.
1.96 "Nomura Payoff Agreement" shall mean the Payoff Agreement,
dated December 18, 2003, by and between Nomura and LPC, as the same now exists
or may hereafter be amended, modified, supplemented, renewed, restated or
replaced, reflecting, among other things, the terms and conditions of, and the
effective date of, the payoff of the Nomura Debt outstanding under the Nomura
Agreements.
1.97 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by any or all of Borrowers to Agent or any
Lender and/or any of their Affiliates, including principal, interest, charges,
fees, costs and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, arising under this Agreement or any of the
other Financing Agreements, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of this
Agreement or after the commencement of any case with respect to such Borrower
under the United States Bankruptcy Code or any similar statute (including the
payment of interest and other amounts which would accrue and become due but for
the commencement of such case, whether or not such amounts are allowed or
allowable in whole or in part in such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, or secured or unsecured.
1.98 "Obligor" shall mean any guarantor, endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, other than Borrowers.
1.99 "Participant" shall mean any financial institution that
acquires and holds a participation in the interest of any Lender in any of the
Loans and Letter of Credit Accommodations in conformity with the provisions of
Section 13.7 of this Agreement governing participations.
1.100 "Permitted Holders" shall mean the persons listed on Schedule
1.100 hereto and their respective successors and assigns.
1.101 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.102 "Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which any Borrower sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or any Multiemployer Plan to
which Borrower has made contributions at any time during the immediately
preceding six (6) plan years.
1.103 "Prime Rate" shall mean the rate from time to time publicly
announced by
23
Wachovia Bank, National Association, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
1.104 "Prime Rate Loans" shall mean, individually and collectively,
the Prime Rate Revolving Loans and the Prime Rate Term Loans.
1.105 "Prime Rate Revolving Loans" shall mean the portion of the
Revolving Loans on which interest is payable based on the Prime Rate in
accordance with the terms hereof.
1.106 "Prime Rate Term Loans" shall mean the portion of the Term
Loans on which interest is payable based on the Prime Rate in accordance with
the terms hereof.
1.107 "Pro Rata Share" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's Commitment
and the denominator of which is the aggregate amount of all of the Commitments
of Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letter of Credit Accommodations and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit Accommodations.
1.108 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial, county
or local, and whether foreign or domestic, that are paid or payable by any
Person in respect of any period in accordance with GAAP.
1.109 "Real Property" shall mean all now owned and hereafter
acquired real property of each Borrower, including leasehold interests, together
with all buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, wherever located.
1.110 "Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of each Borrower: (a) all Accounts; (b)
all interest, fees, late charges, penalties, collection fees and other amounts
due or to become due or otherwise payable in connection with any Account; (c)
all payment intangibles of such Borrower; (d) letters of credit, indemnities,
guarantees, security or other deposits and proceeds thereof payable to any
Borrower or otherwise in favor of or delivered to any Borrower in connection
with any Account; or (e) all other accounts, contract rights, chattel paper,
instruments, notes, general intangibles and other forms of obligations owing to
any Borrower, whether from the sale and lease of goods or other property, the
licensing of any property (including Intellectual Property or other general
intangibles), the rendition of services or from the making of loans or advances
by any Borrower or to or for the benefit of any third person (including loans or
advances to any Affiliates or Subsidiaries of any Borrower) or otherwise
associated with any Accounts, Inventory or general intangibles of any Borrower
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to any Borrower in
connection with the termination of any Plan and any other amounts payable to any
Borrower from any Plan, rights
24
and claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of
insurance and any proceeds thereof and proceeds of insurance covering the lives
of employees on which any Borrower is a beneficiary).
1.111 "Records" shall mean, as to each Borrower, all of its present
and future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of any
Borrower with respect to the foregoing maintained with or by any other person).
1.112 "Reference Bank" shall mean Wachovia Bank, National
Association, or such other bank as Agent may from time to time designate.
1.113 "Refinancing Indebtedness" shall have the meaning set forth in
Section 9.9(j) hereof.
1.114 "Renewal Date" shall have the meaning set forth in Section
13.1 hereof.
1.115 "Remaining Existing Senior Subordinated Notes" shall mean the
Existing Senior Subordinated Notes which are not exchanged by the holders
thereof for Senior Subordinated Notes, not to exceed the Remaining Existing
Subordinated Note Indebtedness.
1.116 "Remaining Existing Subordinated Note Indebtedness" shall mean
an amount not to exceed $500,000 in respect of Indebtedness (including
principal, interest, fees and expenses) arising from or evidenced by the
Remaining Existing Senior Subordinated Notes. Schedule 1.116 hereto sets forth
the holders of the Remaining Existing Subordinated Note Indebtedness and the
principal amount of the Existing Senior Subordinated Notes held by each such
holder.
1.117 "Register" shall have the meaning set forth in Section 13.7
hereof.
1.118 "Required Lenders" shall mean, at any time, those Lenders
whose Pro Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent or
more of the aggregate of the Commitments of all Lenders, or if the Commitments
shall have been terminated, Lenders to whom at least sixty-six and two-thirds
(66 2/3%) percent of the then outstanding Obligations are owing.
1.119 "Reserves" shall mean as of any date of determination, such
amounts as Agent may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letter of Credit Accommodations which
would otherwise be available to any Borrower under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or risks
which, as determined by Agent in good faith, adversely affect, or would have a
reasonable likelihood of adversely affecting, either (i) the Collateral or any
other property which is security
25
for the Obligations or its value or (ii) the assets, business or prospects of
any Borrower or Obligor or (iii) the security interests and other rights of
Agent or any Lender in the Collateral (including the enforceability, perfection
and priority thereof), (b) to reflect Agent's good faith belief that any
collateral report or financial information furnished to Agent by or on behalf of
any Borrower or Obligor is or may have been incomplete, inaccurate or misleading
in any material respect, (c) to reflect outstanding Letter of Credit
Accommodations as provided in Section 2.2 hereof or (d) in respect of any state
of facts which Agent determines in good faith constitutes a Default or an Event
of Default. Without limiting the generality of the foregoing, Reserves may be
established to reflect that dilution with respect to the Accounts (based on the
ratio of the aggregate amount of non-cash reductions in Accounts for any period
to the aggregate dollar amount of the sales of Borrower for such period) as
calculated by Agent for any period is or is reasonably anticipated to be greater
than three (3%) percent or to reflect that the net orderly liquidation value of
the Equipment as set forth in the most recent acceptable appraisals received by
Agent with respect thereto has declined so that the then outstanding principal
amount of the Term Loans is greater than eighty-five (85%) percent of such
appraised net orderly liquidation value. To the extent Agent may revise the
lending formulas used to determine the Borrowing Base or establish new criteria
or revise existing criteria for Eligible Accounts or Eligible Inventory so as to
address any circumstances, condition, event or contingency in a manner
satisfactory to Agent, Agent shall not establish a Reserve for the same purpose.
The term "Reserves" as used herein shall include, in addition and not in
limitation, the Special Reserve, the Appraisal Reserve and the Rubber Group
Reserve. The amount of any Reserve established by Agent (other than the Special
Reserve, the Appraisal Reserve and the Rubber Group Reserve) shall have a
reasonable relationship to the event, condition or other matter which is the
basis for such reserve as determined by Agent in good faith.
1.120 "Revolving Loan Limit" shall mean, as to each Borrower, at any
time, the amount equal to the $23,500,000 minus the then outstanding principal
amount of the Revolving Loans and Letter of Credit Accommodations provided to
the other Borrower.
1.121 "Revolving Loans" shall mean the loans now or hereafter made
by or on behalf of any Lender or by Agent for the account of any Lender on a
revolving basis pursuant to the Credit Facility (involving advances, repayments
and readvances) as set forth in Section 2.1 hereof.
1.122 "Rubber Group Reserve" shall mean the Reserve in the amount of
$1,000,000; provided, that, such Rubber Group Reserve shall be released within
five (5) Business Days from the last to be received by Agent of each of the
following: (a) a certificate from Borrowers, executed by the Chief Financial
Officer of each Borrower and either the Chairman of the Board or President of
each Borrower, stating that the EBITDA of Borrowers' "Rubber Group", as such
EBITDA of the Rubber Group is reflected in Borrowers' quarterly reports on Form
10-Q and annual reports on Form 10-K, for each of the prior two consecutive
fiscal quarters was not less $8,000,000 and (b) the financial statements of
Borrowers with respect to such prior two consecutive fiscal quarters as required
pursuant to Section 9.6(a) hereof; provided, further, that, in the event such
Reserve is released in accordance with the conditions as set forth above, Agent
shall re-establish such Reserve in the amount of $1,000,000 at any time that
Agent determines that the EBITDA of Borrowers' Rubber Group, as such EBITDA of
the Rubber Group is
26
reflected in Borrowers' quarterly reports on Form 10-Q and annual reports on
Form 10-K, for any prior two consecutive fiscal quarters was less than
$8,000,000 and such Reserve shall be released in the event that the conditions
as set forth above for its release have been satisfied.
1.123 "Senior Subordinated Notes" shall mean, collectively, the 12%
Senior Subordinated Notes due August 1, 2009 issued by LPC pursuant to the
Subordinated Note Indenture, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.124 "Senior Subordinated Note Indenture" shall mean the Indenture,
dated as of December 18, 2003, between LPC, as issuer, and Wilmington Trust
Company, as trustee, with respect to the Senior Subordinated Notes, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.125 "Series B Preferred Stock" shall mean the $8 Cumulative
Convertible Preferred Stock, Series B, of LPC.
1.126 "Solvent" shall mean, at any time with respect to any Person,
that at such time such Person (a) is generally able to pay its debts as they
mature and has (and has a reasonable basis to believe it will continue to have)
sufficient capital (and not unreasonably small capital) to carry on its business
consistent with its practices as of the date hereof, and (b) the assets and
properties of such Person (and its Subsidiaries, taken as a whole) at a fair
valuation (and including as assets for this purpose at a fair valuation all
rights of subrogation, contribution or indemnification arising pursuant to any
guarantees given by such Person and its Subsidiaries, taken as a whole) are
greater than the Indebtedness of such Person and its Subsidiaries, taken as a
whole, and including subordinated and contingent liabilities (without
duplication) computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including (without duplication) as to
contingent liabilities arising pursuant to any guarantee the face amount of such
liability as reduced to reflect the probability of it becoming a matured
liability).
1.127 "Special Agent Advances" shall have the meaning set forth in
Section 12.11 hereof.
1.128 "Special Reserve" shall mean the Reserve in the amount equal
to $1,350,000.
1.129 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which at least a majority of the outstanding Capital Stock or
other interests entitled to vote in the election of the board of directors of
such corporation (irrespective of whether, at the time, Capital Stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person is, at the time, directly or indirectly, owned by such Person and/or one
or more subsidiaries of such Person.
27
1.130 "Term Loan Agent" shall mean Ableco Finance LLC, a Delaware
limited liability company, in its capacity as agent acting for and on behalf of
the Term Loan Lenders pursuant to the Term Loan Agreement, and its successors
and assigns (including any replacement or successor agent or additional agent
acting for and on behalf of the Term Loan Lenders).
1.131 "Term Loan Agreement" shall mean the Loan and Security
Agreement, dated of even date herewith, by and among Term Loan Agent, Term Loan
Lenders and Borrowers, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, including any
agreements with respect to Refinancing Indebtedness.
1.132 "Term Loan Debt" shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by any Borrower to Term
Loan Agent or any Term Loan Lender, including principal, interest, charges,
fees, premiums, indemnities, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, arising under the Term Loan
Lender Agreements.
1.133 "Term Loan Lender Agreements" shall mean, collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Term Loan
Agreement; (b) the mortgages, deeds of trust, agreements, documents and
instruments set forth on Schedule 1.133 hereto; and (c) all other agreements,
documents and instruments at any time executed and/or delivered by any Borrower
with, to or in favor of Term Loan Agent or any Term Loan Lender in connection
therewith or related thereto; sometimes being referred to herein individually as
a "Term Loan Lender Agreement".
1.134 "Term Loan Lenders" shall mean, collectively, Ableco Finance
LLC in its individual capacity and the other lenders who are from time to time
parties to the Term Loan Agreement as lenders, and their respective successors
and assigns, and the lenders with respect to any Refinancing Indebtedness; each
sometimes being referred to herein individually as a "Term Loan Lender".
1.135 "Term Loans" shall mean, collectively, the term loans made by
or on behalf of Lenders to each Borrower evidenced by the Term Notes as provided
for in Section 2.3 hereof; sometimes being referred to herein individually as a
"Term Loan".
1.136 "Term Notes" shall mean, collectively, the LPC Term Note and
the LRG Term Note; sometimes being referred to herein individually as a "Term
Note".
1.137 "UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.138 "Value" shall mean, with respect to Inventory, the lower of
(a) cost computed on a
28
first-in first-out basis in accordance with GAAP or (b) market value, as
determined by Agent in good faith, provided, that, for purposes of the
calculation of the Borrowing Base, the Value of the Inventory shall not include:
(i) the portion of the value of Inventory equal to the profit earned by any
Affiliate on the sale thereof to any Borrower or (ii) write-ups or write-downs
in value with respect to currency exchange rates.
1.139 "Voting Stock" shall mean with respect to any Person, (a) one
(1) or more classes of Capital Stock of such Person having general voting powers
to elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
1.140 "Warrant Agent Agreement" shall mean the Warrant Agent
Agreement, dated as of December 18, 2003, by and between LPC and Wilmington
Trust Company, in its capacity as warrant agent, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.141 "Weighted Average to Maturity" shall mean when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the product obtained
by multiplying (i) the amount of each then outstanding installment, sinking
fund, serial maturity or other required payments of principal, including payment
at final maturity, in respect thereof, by (ii) the number of years (calculated
to the nearest one-twelfth) that will elapse between such date and the making of
such payment.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to and upon the terms and conditions
contained herein, each Lender severally (and not jointly) agrees to make its Pro
Rata Share of Revolving Loans to each Borrower from time to time in amounts
requested by such Borrower (or Administrative Borrower on behalf of such
Borrower) up to the amount outstanding at any time equal to the lesser of: (i)
the Borrowing Base of such Borrower at such time or (ii) the Revolving Loan
Limit of such Borrower at such time.
(b) Agent may, in its discretion, from time to time, upon
not less than five (5) days prior notice to Administrative Borrower, reduce the
lending formula(s) with respect to Eligible Inventory to the extent that Agent
determines in good faith that: (i) the number of days of the turnover of the
Inventory for any period has adversely changed or (ii) the liquidation value of
the Eligible Inventory, or any category thereof, has decreased, including any
decrease attributable to a change in the nature, quality or mix of the
Inventory. The amount of any decrease in the lending formulas shall have a
reasonable relationship to the event, condition or circumstance which is the
basis for such decrease, as determined by Agent in good faith. In
29
determining whether to reduce the lending formula(s), Agent may consider events,
conditions, contingencies or risks which are also considered in determining
Eligible Accounts, Eligible Inventory or in establishing Reserves.
(c) Except in Agent's discretion, with the consent of all
Lenders, or as otherwise provided herein, (i) the aggregate amount of the Loans
and the Letter of Credit Accommodations outstanding at any time shall not exceed
the Maximum Credit, (ii) the aggregate principal amount of the Revolving Loans
and Letter of Credit Accommodations outstanding at any time to a Borrower shall
not exceed the lesser of the Borrowing Base of such Borrower or the Revolving
Loan Limit of such Borrower, (iii) the aggregate principal amount of Loans and
Letter of Credit Accommodations outstanding at any time to a Borrower shall not
exceed the Loan Limit of such Borrower, (iv) the aggregate principal amount of
Revolving Loans outstanding at any time to Borrowers based on the Eligible
Inventory of Borrowers shall not exceed $8,000,000, (v) the aggregate principal
amount of Revolving Loans outstanding at any time to Borrowers based on the
percentage of Eligible Inventory consisting of work-in-process as set forth in
Section 1.12(a)(i)(C)(3) shall not exceed $2,000,000 and (vi) the aggregate
principal amount of Revolving Loans outstanding at any time to Borrowers based
on the Net Amount of Eligible Foreign Accounts as set forth in Section
1.12(a)(i)(B) shall not exceed $2,000,000.
(d) In the event that (i) the aggregate principal amount
of Revolving Loans and Letter of Credit Accommodations outstanding to a Borrower
exceed the Borrowing Base of such Borrower or the Revolving Loan Limit of such
Borrower, (ii) the aggregate principal amount of Revolving Loans and Letter of
Credit Accommodations based on the Eligible Inventory of a Borrower exceed the
Inventory Loan Limit of such Borrower, (iii) the aggregate principal amount of
Revolving Loans and Letter of Credit Accommodations based on the Eligible
Inventory of all Borrowers exceeds the sublimit set forth above, (iv) the
aggregate amount of the outstanding Letter of Credit Accommodations exceed the
sublimit for Letter of Credit Accommodations set forth in Section 2.2(e), or (v)
the aggregate amount of Loans and Letter of Credit Accommodations exceed the
Maximum Credit, such event shall not limit, waive or otherwise affect any rights
of Agent or Lenders in such circumstances or on any future occasions and
Borrowers shall, upon demand by Agent, which may be made at any time or from
time to time, immediately repay to Agent the entire amount of any such
excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to and upon the terms and conditions
contained herein, at the request of a Borrower (or Administrative Borrower on
behalf of such Borrower), Agent agrees, for the ratable risk of each Lender
according to its Pro Rata Share, to provide or arrange for Letter of Credit
Accommodations for the account of such Borrower containing terms and conditions
acceptable to Agent and the issuer thereof. Any payments made by or on behalf of
Agent or any Lender to any issuer thereof and/or to any related parties in
connection with the Letter of Credit Accommodations provided to or for the
benefit of a Borrower shall constitute additional Revolving Loans to such
Borrower pursuant to this Section 2 (or Special Agent Advances as the case may
be).
30
(b) In addition to any charges, fees or expenses charged
by any bank or issuer in connection with the Letter of Credit Accommodations,
Borrowers shall pay to Agent, for the benefit of Lenders, a letter of credit fee
at a rate equal to one and one-half (1 1/2 %) percent per annum, on the daily
outstanding balance of the Letter of Credit Accommodations for the immediately
preceding month (or part thereof), payable in arrears as of the first day of
each succeeding month, except that Agent may, and upon the written direction of
Required Lenders shall, require Borrowers to pay to Agent for the ratable
benefit of Lenders such letter of credit fee, at a rate equal to three and
one-half (3 1/2 %) percent per annum on such daily outstanding balance for: (i)
the period from and after the date of termination hereof until Agent and Lenders
have received full and final payment of all Obligations (notwithstanding entry
of a judgment against any Borrower) and (ii) the period from and after the date
of the occurrence of an Event of Default for so long as such Event of Default is
continuing as determined by Agent. Such letter of credit fee shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed and
the obligation of Borrowers to pay such fee shall survive the termination of
this Agreement.
(c) The Borrower requesting such Letter of Credit
Accommodation (or Administrative Borrower on behalf of such Borrower) shall give
Agent two (2) Business Days' prior written notice of such Borrower's request for
the issuance of a Letter of Credit Accommodation. Such notice shall be
irrevocable and shall specify the original face amount of the Letter of Credit
Accommodation requested, the effective date (which date shall be a Business Day
and in no event shall be a date less than ten (10) days prior to the end of the
then current term of this Agreement) of issuance of such requested Letter of
Credit Accommodation, whether such Letter of Credit Accommodations may be drawn
in a single or in partial draws, the date on which such requested Letter of
Credit Accommodation is to expire (which date shall be a Business Day), the
purpose for which such Letter of Credit Accommodation is to be issued, and the
beneficiary of the requested Letter of Credit Accommodation. The Borrower
requesting the Letter of Credit Accommodation (or Administrative Borrower on
behalf of such Borrower) shall attach to such notice the proposed terms of the
Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of
the applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Agent: (i) the Borrower requesting such
Letter of Credit Accommodation (or Administrative Borrower on behalf of such
Borrower) shall have delivered to the proposed issuer of such Letter of Credit
Accommodation at such times and in such manner as such proposed issuer may
require, an application, in form and substance satisfactory to such proposed
issuer and Agent, for the issuance of the Letter of Credit Accommodation and
such other documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit Accommodation shall be
satisfactory to Agent and such proposed issuer, (ii) as of the date of issuance,
no order of any court, arbitrator or other Governmental Authority shall purport
by its terms to enjoin or restrain money center banks generally from issuing
letters of credit of the type and in the amount of the proposed Letter of Credit
Accommodation, and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of law)
from any
31
Governmental Authority with jurisdiction over money center banks generally shall
prohibit, or request that the proposed issuer of such Letter of Credit
Accommodation refrain from, the issuance of letters of credit generally or the
issuance of such Letter of Credit Accommodations; and (iii) the Excess
Availability of the Borrower requesting such Letter of Credit Accommodation,
prior to giving effect to any Reserves with respect to such Letter of Credit
Accommodations, on the date of the proposed issuance of any Letter of Credit
Accommodations, shall be equal to or greater than: (A) if the proposed Letter of
Credit Accommodation is for the purpose of purchasing Eligible Inventory and the
documents of title with respect thereto are consigned to the issuer, the sum of
(1) the Value of such Eligible Inventory multiplied by the percentage equal to
one hundred (100%) percent minus the then applicable percentage with respect to
Eligible Inventory set forth in the definition of the term Borrowing Base, plus
(2) freight, taxes, duty and other amounts which Agent estimates must be paid in
connection with such Inventory upon arrival and for delivery to one of such
Borrower's locations for Eligible Inventory within the United States of America
and (B) if the proposed Letter of Credit Accommodation is for any other purpose
or the documents of title are not consigned to the issuer in connection with a
Letter of Credit Accommodation for the purpose of purchasing Inventory, an
amount equal to one hundred (100%) percent of the face amount thereof and all
other commitments and obligations made or incurred by Agent with respect
thereto. Effective on the issuance of each Letter of Credit Accommodation, a
Reserve shall be established in the applicable amount set forth in Section
2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).
(e) Except in Agent's discretion, with the consent of all
Lenders, the amount of all outstanding Letter of Credit Accommodations and all
other commitments and obligations made or incurred by Agent or any Lender in
connection therewith shall not at any time exceed $2,500,000.
(f) Borrowers shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or wilful misconduct of Agent or any Lender as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Each Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation. Each Borrower assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder. Each Borrower hereby releases and holds Agent and
Lenders harmless from and against any acts, waivers, errors, delays or
omissions, whether caused by any Borrower, by any issuer or correspondent or
otherwise with respect to or relating to any Letter of Credit Accommodation,
except for the gross negligence or wilful misconduct of Agent or any Lender as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction. The provisions of this Section 2.2(f) shall survive the payment of
Obligations and the termination of this Agreement.
32
(g) In connection with Inventory purchased pursuant to
Letter of Credit Accommodations, Borrowers shall, at Agent's request, instruct
all suppliers, carriers, forwarders, customs brokers, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver them to Agent and/or subject to
Agent's order, and if they shall come into such Borrower's possession, to
deliver them, upon Agent's request, to Agent in their original form; provided,
that, Agent shall not exercise its rights under this clause (g) to have such
persons deliver any cash, checks, documents or instruments (so long as such
documents or instruments are held by a customs broker) or Inventory to Agent
unless an Event of Default exists or has occurred and is continuing. Borrowers
shall also, at Agent's request, designate Agent as the consignee on all bills of
lading and other negotiable and non-negotiable documents.
(h) Each Borrower hereby irrevocably authorizes and
directs any issuer of a Letter of Credit Accommodation to name such Borrower as
the account party therein and to deliver to Agent all instruments, documents and
other writings and property received by issuer pursuant to the Letter of Credit
Accommodations and to accept and rely upon Agent's instructions and agreements
with respect to all matters arising in connection with the Letter of Credit
Accommodations or the applications therefor. Nothing contained herein shall be
deemed or construed to grant any Borrower any right or authority to pledge the
credit of Agent or any Lender in any manner. Agent and Lenders shall have no
liability of any kind with respect to any Letter of Credit Accommodation
provided by an issuer other than Agent or any Lender unless Agent has duly
executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrowers shall be bound by any reasonable interpretation made in good faith by
Agent, or any other issuer or correspondent under or in connection with any
Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of any Borrower.
(i) Notwithstanding anything in this Agreement to the
contrary, so long as no Event of Default exists or has occurred and is
continuing, a Borrower may (i) approve or resolve any questions of
non-compliance of documents, (ii) give any instructions as to acceptance or
rejection of any documents or goods, (iii) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (iv) with
Agent's consent, grant any extensions of the maturity of, time of payment for,
or time of presentation of, any drafts, acceptances, or documents, and agree to
any amendments, renewals, extensions, modifications, changes or cancellations of
any of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral.
(j) At any time an Event of Default exists or has
occurred and is continuing, Agent, upon notice to Administrative Borrower, shall
have the right and authority to, and Borrowers shall not, without the prior
written consent of Agent, (i) approve or resolve any questions of non-compliance
of documents, (ii) give any instructions as to acceptance or rejection of any
documents or goods, (iii) execute any and all applications for steamship or
airway guaranties, indemnities or delivery orders, (iv) grant any extensions of
the maturity of, time of
33
payments for, or time of presentation of, any drafts, acceptances, or documents,
and (v) agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letter of Credit Accommodations, or documents, drafts or acceptances thereunder
or any letters of credit included in the Collateral. Agent may take such actions
either in its own name or in any Borrower's name.
(k) Any rights, remedies, duties or obligations granted
or undertaken by any Borrower to any issuer or correspondent in any application
for any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower to Agent for the
ratable benefit of Lenders. Any duties or obligations undertaken by Agent to any
issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Agent in favor of any issuer or
correspondent to the extent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrowers to Agent for the ratable
benefit of Lenders and to apply in all respects to Borrowers.
(l) Immediately upon the issuance or amendment of any
Letter of Credit Accommodation, each Lender shall be deemed to have irrevocably
and unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation, to the extent of such Lender's Pro Rata
Share, of the liability with respect to such Letter of Credit Accommodation
(including, without limitation, all Obligations with respect thereto).
(m) Each Borrower is irrevocably and unconditionally
obligated, without presentment, demand or protest, to pay to Agent any amounts
paid by an issuer of a Letter of Credit Accommodation with respect to such
Letter of Credit Accommodation (whether through the borrowing of Loans in
accordance with Section 2.2(a) or otherwise). In the event that any Borrower
fails to pay Agent on the date of any payment under a Letter of Credit
Accommodation in an amount equal to the amount of such payment, Agent (to the
extent it has actual notice thereof) shall promptly notify each Lender of the
unreimbursed amount of such payment and each Lender agrees, upon one (1)
Business Day's notice, to fund to Agent the purchase of its participation in
such Letter of Credit Accommodation in an amount equal to its Pro Rata Share of
the unpaid amount. The obligation of each Lender to deliver to Agent an amount
equal to its respective participation pursuant to the foregoing sentence is
absolute and unconditional and such remittance shall be made notwithstanding the
occurrence or continuance of any Event of Default, the failure to satisfy any
other condition set forth in Section 4 or any other event or circumstance. If
such amount is not made available by a Lender when due, Agent shall be entitled
to recover such amount on demand from such Lender with interest thereon, for
each day from the date such amount was due until the date such amount is paid to
Agent at the interest rate then payable by any Borrower in respect of Loans that
are Prime Rate Loans as set forth in Section 3.1(a) hereof.
2.3 Term Loans.
(a) Agent, Lenders and LPC are hereby amending and restating
the terms of the outstanding term loans to LPC evidenced by the Existing LPC
Term Notes. LPC hereby
34
acknowledges, confirms and agrees that as of December 18, 2003, the aggregate
principal amount outstanding in respect of the Existing LPC Term Notes is
$3,300,800. On the date hereof, subject to and upon the terms and conditions
contained herein, each Lender severally (and not jointly) agrees to make an
additional advance to LPC in an amount equal to its Pro Rata Share of the excess
of the original principal amount of the LPC Term Loan over the outstanding
aggregate principal amount of the Existing LPC Term Notes, which additional
advances shall be in the aggregate amount of $699,200. Such advance shall,
together with the amount outstanding in respect of the Existing LPC Term Notes
immediately prior thereto, constitute the Term Loan to LPC (the "LPC Term
Loan"), which shall be in the total principal amount of $4,000,000. The
indebtedness of LPC to Agent and Lenders arising pursuant to the LPC Term Loan,
including the additional advance provided for herein, is hereby amended and
restated as set forth in the LPC Term Note. The terms of the LPC Term Loan,
including the additional advance described above, shall be set forth in the LPC
Term Note and evidenced thereby and shall together constitute part of the Term
Loans. LPC hereby promises to pay to the order of Agent on the date hereof, the
interest due under the terms of the Existing LPC Term Notes for the period from
December 1, 2003 through the date hereof.
(b) The LPC Term Loan is (i) evidenced by the LPC Term Note in
such original principal amount duly executed and delivered by LPC to Agent
concurrently herewith and shall constitute part of the Term Loans; (ii) to be
repaid, together with interest and other amounts, in accordance with this
Agreement and the LPC Term Note and (iii) secured by all of the Collateral. The
principal amount of the LPC Term Loan shall be repaid in forty-five (45)
consecutive monthly installments (or earlier as provided herein) payable on the
first day of each month commencing February, 2004, of which the first forty-four
(44) installments shall each be in the amount of $88,000 and the last
installment shall be in the amount of the entire unpaid balance of the LPC Term
Loan.
(c) Agent, Lenders and LRG are hereby amending and restating
the terms of the outstanding term loans to LRG evidenced by the Existing LRG
Term Notes. LRG hereby acknowledges, confirms and agrees that as of December 18,
2003, the aggregate principal amount outstanding in respect of the Existing LRG
Term Notes is $3,749,178. On the date hereof, subject to and upon the terms and
conditions contained herein, each Lender severally (and not jointly) agrees to
make an additional advance to LRG in an amount equal to its Pro Rata Share of
the excess of the aggregate original principal amount of the LRG Term Loan over
the outstanding principal amount of the Existing LRG Term Notes, which
additional advances shall be in the aggregate amount of $5,750,822. Such advance
shall, together with the amount outstanding in respect of the Existing LRG Term
Notes immediately prior thereto, constitute the Term Loan to LRG (the "LRG Term
Loan"), which shall be in the total principal amount of $9,500,000. The
indebtedness of LRG to Agent and Lenders arising pursuant to the LRG Term Loan
and including the additional advance provided for herein is hereby amended and
restated as set forth in the LRG Term Note. The terms of the LRG Term Loan,
including the additional advance described above, shall be set forth in the LRG
Term Note and evidenced thereby and shall together constitute part of the Term
Loans. LRG hereby promises to pay to the order of Agent on the date hereof, the
interest due under the terms of the Existing LRG Term Notes for the period from
December 1, 2003 through the date hereof.
35
(d) The LRG Term Loan is (i) evidenced by the LRG Term Note in
such original principal amount duly executed and delivered by LRG to Agent
concurrently herewith and shall constitute part of the Term Loans; (ii) to be
repaid, together with interest and other amounts, in accordance with this
Agreement and the LRG Term Note and (iii) secured by all of the Collateral. The
principal amount of the LRG Term Loan shall be repaid in forty-five (45)
consecutive monthly installments (or earlier as provided herein) payable on the
first day of each month commencing February, 2004, of which the first forty-four
(44) installments shall each be in the amount of $212,000 and the last
installment shall be in the amount of the entire unpaid balance of the LRG Term
Loan.
2.4 Commitments. The aggregate amount of each Lender's Pro Rata
Share of the Loans and Letter of Credit Accommodations shall not exceed the
amount of such Lender's Commitment, as the same may from time to time be amended
in accordance with the provisions hereof.
2.5 Joint and Several Liability. Each Borrower shall be jointly
and severally liable for all amounts due to Agent and Lenders under this
Agreement and the other Financing Agreements, regardless of which Borrower
actually receives the Loans or Letter of Credit Accommodations hereunder or the
amount of such Loans received or the manner in which Agent or any Lender
accounts for such Loans, Letter of Credit Accommodations or other extensions of
credit on its books and records. All references herein or in any of the other
Financing Agreements to any of the obligations of Borrowers to make any payment
hereunder or thereunder shall constitute joint and several obligations of
Borrowers. The Obligations with respect to Loans made to a Borrower, and the
Obligations arising as a result of the joint and several liability of a Borrower
hereunder, with respect to Loans made to the other Borrower, shall be separate
and distinct obligations, but all such other Obligations shall be primary
obligations of all Borrowers. The Obligations arising as a result of the joint
and several liability of a Borrower hereunder with respect to Loans, Letter of
Credit Accommodations or other extensions of credit made to the other Borrower
shall, to the fullest extent permitted by law, be unconditional irrespective of
(a) the validity or enforceability, avoidance or subordination of the
Obligations of the other Borrower or of any promissory note or other document
evidencing all or any part of the Obligations of the other Borrower, (b) the
absence of any attempt to collect the Obligations from the other Borrower, any
Obligor or any other security therefor, or the absence of any other action to
enforce the same, (c) the waiver, consent, extension, forbearance or granting of
any indulgence by Agent or any Lender with respect to any provisions of any
instrument evidencing the Obligations of the other Borrower, or any part
thereof, or any other agreement now or hereafter executed by the other Borrower
and delivered to Agent or any Lender, (d) the failure by Agent or any Lender to
take any steps to perfect and maintain its security interest in, or to preserve
its rights and maintain its security or collateral for the Obligations of the
other Borrower, (e) the election of Agent and Lenders in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, (f) the disallowance of all or any portion of the
claim(s) of Agent or any Lender for the repayment of the Obligations of the
other Borrower under Section 502 of the Bankruptcy Code, or (g) any other
circumstances which might constitute a legal or equitable discharge or defense
of an Obligor or of the other Borrower. With respect to the Obligations arising
as a result of the joint and several liability of a Borrower
36
hereunder with respect to Loans, Letter of Credit Accommodations or other
extensions of credit made to the other Borrower hereunder, each Borrower waives,
until the Obligations shall have been paid in full and this Agreement shall have
been terminated, any right to enforce any right of subrogation or any remedy
which Agent or any Lender now has or may hereafter have against any Borrower or
Obligor and any benefit of, and any right to participate in, any security or
collateral given to Agent or any Lender. At any time an Event of Default exists
or has occurred and is continuing, Agent may proceed directly and at once,
without notice, against any Borrower to collect and recover the full amount, or
any portion of the Obligations, without first proceeding against the other
Borrower or any other Person, or against any security or collateral for the
Obligations. Each Borrower consents and agrees that Agent and Lenders shall be
under no obligation to marshall any assets in favor of Borrower(s) or against or
in payment of any or all of the Obligations.
2.6 Mandatory Prepayments. Notwithstanding the provisions of
Section 6.4 hereof, so long as no Event of Default exists or has occurred and is
continuing:
(a) Subject to Section 2.6(c) hereof, upon the receipt by any
Borrower or any of its Subsidiaries of any Extraordinary Receipts, Borrowers
shall pay to Agent an amount equal to one hundred percent (100%) of such
Extraordinary Receipts, net of any reasonable expenses incurred in collecting
such Extraordinary Receipts, which payments shall be applied to the Obligations
as follows:
(i) if such Extraordinary Receipts are the proceeds
of Inventory or Accounts, then such proceeds shall be applied as follows: first,
to pay the outstanding principal amount of the Revolving Loans, and second, to
pay the outstanding principal amount of the Term Loans; and
(ii) if such Extraordinary Receipts are the proceeds
of any Collateral other than Inventory or Accounts, then such proceeds shall be
applied as follows: first, to pay the outstanding principal amount of Term
Loans, and then, unless otherwise agreed to by Agent, to pay the outstanding
principal amount of Revolving Loans (to the extent the amounts are applied to
reduce the outstanding principal amount of the Revolving Loans, Borrowers direct
Agent to, and Agent shall, establish and maintain a permanent Reserve and
permanently reduce the Revolving Loan Limit, in each case, in an amount equal to
the amount of such net proceeds that are so applied to the outstanding principal
amount of Revolving Loans).
(b) Upon (i) the sale or disposition of any Collateral by any
Borrower or any of its Subsidiaries as permitted in Sections 9.7(b)(ii) and (vi)
hereof, (ii) the issuance or sale by any Borrower or any of its Subsidiaries of
Capital Stock of such Borrower or Subsidiary as permitted in Sections
9.7(b)(iii), (iv) and (v) hereof, (iii) the issuance or incurrence by any
Borrower or any of its Subsidiaries of any Indebtedness of the type described in
Section 9.9(h) hereof or (iv) upon the sale or disposition of any Collateral by
any Borrower or any of its Subsidiaries not otherwise permitted in this
Agreement but consented to by Required Lenders, in each case, Borrowers shall
pay to Agent an amount equal to one hundred percent (100%) of the Net Cash
Proceeds received by such Person in connection therewith, which payments shall
be applied to the Obligations as
37
follows:
(i) if such sale or disposition is of Inventory or
Accounts, then such Net Cash Proceeds shall be applied as follows: first, to pay
the outstanding principal amount of the Revolving Loans, and second, to pay the
outstanding principal amount of the Term Loans; and
(ii) if such sale or disposition is of any Collateral
other than Inventory or Accounts, or from the issuance of such Capital Stock,
then such Net Cash Proceeds shall be applied first, to pay the outstanding
principal amount of Term Loans and then, unless otherwise agreed to by Agent, to
pay the outstanding principal amount of Revolving Loans (to the extent the
amounts are applied to reduce the outstanding principal amount of the Revolving
Loans, Borrowers direct Agent to, and Agent shall, establish and maintain a
permanent Reserve and permanently reduce the Revolving Loan Limit, in each case,
in an amount equal to the amount of such Net Cash Proceeds that are so applied
to the outstanding principal amount of Revolving Loans).
(c) Notwithstanding Section 2.6(a) above, if any of the
Equipment is lost, damaged or physically destroyed, upon the written request of
Administrative Borrower, Agent shall release to Administrative Borrower any
Extraordinary Receipts consisting of insurance proceeds from insurance policies
covering such loss, damage or destruction which are received by Agent pursuant
to Section 9.5 hereof or otherwise to the extent a Borrower elects to apply such
Extraordinary Receipts to the repair, refurbishing or replacement of Equipment
which has been so lost, damages or destroyed, provided, that, all of the
following conditions are satisfied: (i) no Default or Event of Default shall
exist or have occurred and be continuing, (ii) the amount of the insurance
proceeds (together with any deductible to be satisfied by a Borrower) are
sufficient, in Lender's good faith determination, to effect such repair,
refurbishment or replacement in a satisfactory manner, (iii) such proceeds shall
be used first to repair, refurbish or replace the Collateral so lost, damaged or
destroyed (free and clear of any security interests, liens, claims or
encumbrances), (iv) the insurance carrier shall have waived any right of
subrogation against Borrowers under its policy, (v) the casualty resulted in the
receipt of Extraordinary Receipts from insurance proceeds of $250,000 or less,
(vi) such repair, refurbishment or replacement shall be commenced as soon as
reasonably practicable and shall be diligently pursued to satisfactory
completion, and (vii) the repair, refurbishment or replacement to which the
proceeds are applied shall cause the Equipment so lost, damaged or destroyed to
be of at least equal value and substantially the same character as prior to such
loss, damage or destruction. Pending any release of such Extraordinary Receipts
to Administrative Borrower pursuant to this Section 2.6(c), such Extraordinary
Receipts received by Agent shall be applied against Revolving Loans and no
Reserve shall be established in connection therewith. Nothing contained in this
Section 2.6(c) shall be construed to limit the use of any subsequent Revolving
Loans for the costs of repair or replacement of the Collateral lost or damaged
resulting in the payment of such insurance proceeds. Any Extraordinary Receipts
applied to repair, refurbish or replace Equipment pursuant to and in accordance
with this Section 2.6(c) shall not be deemed Capital Expenditures for purposes
of this Agreement.
(d) Notwithstanding Section 2.6(b) above, the Net Cash
Proceeds of any sale or
38
disposition of Collateral permitted by Sections 9.7(b)(ii) and (vi) hereof may
be reinvested by a Borrower to purchase property or assets used or useful in
such Borrower's business at any time within one hundred twenty (120) days after
receipt of such Net Cash Proceeds, provided, that, (i) any such Net Cash
Proceeds not so used within such one hundred twenty (120) day period shall be
immediately remitted to Agent for application to the Obligations as provided in
Section 2.6(b) above, (ii) Agent, for itself and the benefit of Lenders, shall
have a valid and perfected first- priority lien on and security interest in such
replacement or new property or assets and (iii) at the time of the receipt of
any such Net Cash Proceeds, no Default or Event of Default shall exist or have
occurred and be continuing. Any Net Cash Proceeds reinvested by a Borrower
pursuant to and in accordance with this Section 2.6(d) shall not be deemed to be
Capital Expenditures for purposes of this Agreement.
(e) Nothing contained in this Section 2.6 shall be deemed to
be a consent by Agent and Lenders to the sale or disposition of any Collateral
except as expressly permitted in this Agreement.
(f) All prepayments of any Term Loans under this Section 2.6
shall be applied against the remaining installments (if any) of principal due on
the Term Loans in the inverse order of maturity. Notwithstanding anything to the
contrary in this Section 2.6, all prepayments of principal under this Section
2.6 shall be made together with accrued and unpaid interest thereon to the date
of such prepayment.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Agent, for the benefit of
Lenders, interest on the outstanding principal amount of the Loans at the
Interest Rate. All interest accruing hereunder on and after the date that any
Event of Default exists or has occurred and is continuing or on and after the
date of termination hereof shall be payable on demand.
(b) Each Borrower (or Administrative Borrower on behalf
of such Borrower) may from time to time request Eurodollar Rate Loans or may
request that Prime Rate Loans be converted to Eurodollar Rate Loans or that any
existing Eurodollar Rate Loans continue for an additional Interest Period. Such
request from a Borrower (or Administrative Borrower on behalf of such Borrower)
shall specify the amount of the Eurodollar Rate Loans, the amount of the Prime
Rate Loans to be converted to Eurodollar Rate Loans or the amount of the
Eurodollar Rate Loans to be continued (subject to the limits set forth below)
and the Interest Period to be applicable to such Eurodollar Rate Loans. Subject
to the terms and conditions contained herein, three (3) Business Days after
receipt by Agent of such a request from a Borrower (or Administrative Borrower
on behalf of such Borrower), such Eurodollar Rate Loans shall be made, such
Prime Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar
Rate Loans shall continue, as the case may be, provided, that, (i) no Default or
Event of Default shall exist or have occurred and be continuing, (ii) no party
hereto shall have sent any notice of
39
termination of this Agreement, such Borrower (or Administrative Borrower on
behalf of such Borrower) shall have complied with such customary procedures as
are established by Agent and specified by Agent to Administrative Borrower from
time to time for requests by Borrowers for Eurodollar Rate Loans, (iii) no more
than four (4) Interest Periods may be in effect at any one time, (iv) the
aggregate amount of the Eurodollar Rate Loans must be in an amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, (v) the
maximum amount of the Eurodollar Rate Loans in the aggregate at any time
requested by Borrowers shall not exceed the amount equal to (A) eighty (80%)
percent of the lowest aggregate principal amount of the Term Loans which it is
anticipated will be outstanding as of the last day of the applicable Interest
Period plus (B) eighty (80%) percent of the lowest principal amount of the
Revolving Loans which it is anticipated will be outstanding during the
applicable Interest Period, in each case as determined by Agent in good faith
(but with no obligation of Agent or Lenders to make such Loans), and (vi) Agent
and each Lender shall have determined that the Interest Period or Adjusted
Eurodollar Rate is available to Agent and such Lender and can be readily
determined as of the date of the request for such Eurodollar Rate Loan by such
Borrower. Any request by or on behalf of a Borrower for Eurodollar Rate Loans or
to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any existing
Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the
contrary contained herein, Agent and Lenders shall not be required to purchase
United States Dollar deposits in the London interbank market or other applicable
Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions
hereof shall be deemed to apply as if Agent and Lenders had purchased such
deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert
to Prime Rate Loans upon the last day of the applicable Interest Period, unless
Agent has received and approved a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by
Agent to Parent, be subsequently converted to Prime Rate Loans in the event that
this Agreement shall terminate or not be renewed. Borrowers shall pay to Agent,
for the benefit of Lenders, upon demand by Agent (or Agent may, at its option,
charge any loan account of any Borrower) any amounts required to compensate any
Lender or Participant for any loss (including loss of anticipated profits), cost
or expense incurred by such person, as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Agent, for
the account of Lenders, monthly in arrears on the first Business Day of each
calendar month and shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed. The interest rate on non-contingent
Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an
amount equal to each increase or decrease in the Prime Rate effective on the
first day of the month after any change in such Prime Rate is announced and
shall be based on the Prime Rate in effect on the last day of the month in which
any such change occurs. In no event shall charges constituting interest payable
by Borrowers to Agent and Lenders exceed the maximum amount or the rate
permitted under any applicable law or regulation, and if any such part or
provision of this Agreement is in contravention of any such law or regulation,
such part or provision shall be deemed amended to conform thereto.
40
3.2 Fees.
(a) Borrowers shall pay to Agent, for the account of Lenders,
monthly an unused line fee at a rate equal to one-half of one (1/2%) percent per
annum calculated upon the amount by which the Credit Facility Revolving Loan
Limit exceeds the average daily principal balance of the outstanding Revolving
Loans and Letter of Credit Accommodations during the immediately preceding month
(or part thereof) while this Agreement is in effect and for so long thereafter
as any of the Obligations are outstanding, which fee shall be payable on the
first Business Day of each month in arrears.
(b) Borrowers agree to pay to Agent the other fees and amounts
set forth in the Fee Letter in the amounts and at the times specified therein.
3.3 Changes in Laws and Increased Costs of Loans.
(a) If after the date hereof, either (i) any change in,
or in the interpretation of, any law or regulation is introduced, including,
without limitation, with respect to reserve requirements, applicable to Lender
or any banking or financial institution from whom any Lender borrows funds or
obtains credit (a "Funding Bank"), (ii) a Funding Bank or any Lender complies
with any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank or any Lender determines that the adoption of
any applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or a Funding Bank or any Lender complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or would
have the direct or indirect effect of reducing the rate of return on any
Lender's capital as a consequence of its obligations hereunder to a level below
the rate that such Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank's or Lender's policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, and the result of any of the foregoing events described in clauses
(i), (ii) or (iii) is or results in an increase in the cost to any Lender of
funding or maintaining the Loans, the Letter of Credit Accommodations or its
Commitment, then Borrowers shall from time to time upon demand by Agent pay to
Agent additional amounts sufficient to indemnify Lenders against such increased
cost on an after-tax basis (after taking into account applicable deductions and
credits in respect of the amount indemnified). A certificate showing the
calculations for the amount of such increased cost shall be submitted to
Administrative Borrower by Agent and shall be conclusive, absent manifest error.
(b) If prior to the first day of any Interest Period, (i)
Agent shall have determined in good faith (which determination shall be
conclusive and binding upon Borrowers) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, (ii) Agent has
received notice from the Required Lenders that the Eurodollar Rate determined or
to be determined for
41
such Interest Period will not adequately and fairly reflect the cost to Lenders
of making or maintaining Eurodollar Rate Loans during such Interest Period, or
(iii) Dollar deposits in the principal amounts of the Eurodollar Rate Loans to
which such Interest Period is to be applicable are not generally available in
the London interbank market, Agent shall give telecopy or telephonic notice
thereof to Administrative Borrower as soon as practicable thereafter, and will
also give prompt written notice to Administrative Borrower when such conditions
no longer exist. If such notice is given (A) any Eurodollar Rate Loans requested
to be made on the first day of such Interest Period shall be made as Prime Rate
Loans, (B) any Loans that were to have been converted on the first day of such
Interest Period to, or continued as, Eurodollar Rate Loans shall be converted to
or continued as Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan
shall be converted, on the last day of the then-current Interest Period thereof,
to Prime Rate Loans. Until such notice has been withdrawn by Agent, no further
Eurodollar Rate Loans shall be made or continued as such, nor shall any Borrower
(or Administrative Borrower on behalf of any Borrower) have the right to convert
Prime Rate Loans to Eurodollar Rate Loans.
(c) Notwithstanding any other provision herein, if the
adoption of or any change in any law, treaty, rule or regulation or final,
non-appealable determination of an arbitrator or a court or other Governmental
Authority or in the interpretation or application thereof occurring after the
date hereof shall make it unlawful for Agent or any Lender to make or maintain
Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such
Lender shall promptly give written notice of such circumstances to
Administrative Borrower (which notice shall be withdrawn whenever such
circumstances no longer exist), (ii) the commitment of such Lender hereunder to
make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert
Prime Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and, until
such time as it shall no longer be unlawful for such Lender to make or maintain
Eurodollar Rate Loans, such Lender shall then have a commitment only to make a
Prime Rate Loan when a Eurodollar Rate Loan is requested and (iii) such Lender's
Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted
automatically to Prime Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Rate Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, Borrowers shall pay to such Lender such amounts, if any,
as may be required pursuant to Section 3.3(d) below.
(d) Borrowers shall indemnify Agent and each Lender and
to hold Agent and each Lender harmless from any loss or expense (excluding lost
profits) which Agent or such Lender may sustain or incur as a consequence of (i)
default by Borrower in making a borrowing of, conversion into or extension of
Eurodollar Rate Loans after such Borrower (or Administrative Borrower on behalf
of such Borrower) has given a notice requesting the same in accordance with the
provisions of this Loan Agreement, (ii) default by any Borrower in making any
prepayment of a Eurodollar Rate Loan after such Borrower has given a notice
thereof in accordance with the provisions of this Agreement, and (iii) the
making of a prepayment of Eurodollar Rate Loans on a day which is not the last
day of an Interest Period with respect thereto. With respect to Eurodollar Rate
Loans, such indemnification may include an amount equal to the excess, if any,
of (A) the amount of interest which would have accrued on the amount so prepaid,
or not so borrowed, converted or extended, for the period from the date of such
prepayment or of such
42
failure to borrow, convert or extend to the last day of the applicable Interest
Period (or, in the case of a failure to borrow, convert or extend, the Interest
Period that would have commenced on the date of such failure) in each case at
the applicable rate of interest for such Eurodollar Rate Loans provided for
herein over (B) the amount of interest (as determined by such Agent or such
Lender) which would have accrued to Agent or such Lender on such amount by
placing such amount on deposit for a comparable period with leading banks in the
interbank Eurodollar market. This covenant shall survive the termination or
non-renewal of this Loan Agreement and the payment of the Obligations.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all releases, terminations and such other
documents as Agent may request to evidence and effectuate the termination by
Bank One of the Bank One Financing and the termination and release by it of any
interest in and to any assets and properties of each Borrower, duly authorized,
executed and delivered by it or each of them, including, but not limited to, (i)
UCC termination statements for all UCC financing statements previously filed by
it or any of them or their predecessors, as secured party and any Borrower, as
debtor; and (ii) satisfactions and discharges of any mortgages, deeds of trust
or deeds to secure debt by any Borrower in favor of it or any of them, in form
acceptable for recording with the appropriate Governmental Authority;
(b) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all releases, terminations and such other
documents as Agent may request to evidence and effectuate the termination by CIT
of the CIT Financing and the termination and release by it of any interest in
and to any assets and properties of each Borrower, duly authorized, executed and
delivered by it or each of them, including, but not limited to, (i) UCC
termination statements for all UCC financing statements previously filed by it
or any of them or their predecessors, as secured party and any Borrower, as
debtor; and (ii) satisfactions and discharges of any mortgages, deeds of trust
or deeds to secure debt by any Borrower in favor of it or any of them, in form
acceptable for recording with the appropriate Governmental Authority;
(c) Agent shall have received evidence, in form and
substance satisfactory to Agent, that Borrowers have exchanged the Existing
Senior Subordinated Notes (other than the Remaining Existing Subordinated Note
Indebtedness) for the Senior Subordinated Notes.
(d) Agent shall have received evidence, in form and
substance satisfactory to Agent, that Borrowers have exchanged the Existing
Junior Subordinated Notes for the Junior Subordinated Notes.
(e) Agent shall have received a true, correct and
complete copy of the Nomura Payoff Agreement, duly authorized, executed and
delivered by the parties thereto.
43
(f) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall be in
form and substance reasonably satisfactory to Agent, and Agent shall have
received all information and copies of all documents, including records of
requisite corporate action and proceedings which Agent may have reasonably
requested in connection therewith, such documents where requested by Agent or
its counsel to be certified by appropriate corporate officers or Governmental
Authority (and including a copy of the certificate of incorporation of each
Borrower certified by the Secretary of State (or equivalent Governmental
Authority) which shall set forth the same complete corporate name of such
Borrower as is set forth herein and such document as shall set forth the
organizational identification number of each Borrower, if one is issued in its
jurisdiction of incorporation);
(g) no material adverse change shall have occurred in the
assets, business or prospects of Borrowers since the date of Agent's latest
field examination (not including for this purpose the field review referred to
in clause (e) below) and no change or event shall have occurred which would
impair the ability of any Borrower or Obligor to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a party
or the ability of Agent or any Lender to enforce the Obligations or realize upon
the Collateral;
(h) Agent shall have completed a field review of the
Records and such other information with respect to the Collateral as Agent may
require to determine the amount of Loans available to Borrowers (including,
without limitation, current perpetual inventory records and/or roll-forwards of
Accounts and Inventory through the date of closing and test counts of the
Inventory in a manner satisfactory to Agent, together with such supporting
documentation as may be necessary or appropriate, and other documents and
information that will enable Agent to accurately identify and verify the
Collateral), the results of which in each case shall be satisfactory to Agent,
not more than three (3) Business Days prior to the date hereof;
(i) Borrowers shall have, at their expense, delivered or
caused to be delivered to Agent a written orderly liquidation value appraisal as
to the Equipment (updated from the most recent appraisal received by Agent as to
the Equipment prior to the date of this Agreement) in form, scope and
methodology acceptable to Agent and by an appraiser acceptable to Agent,
addressed to Agent and upon which Agent is expressly permitted to rely;
(j) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all consents, waivers, acknowledgments and
other agreements from third persons which Agent may deem necessary or desirable
in order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of each Borrower and by
processors and warehouses at which Collateral is located;
(k) Agent shall have received the Intercreditor
Agreement, in form and substance reasonably satisfactory to Agent, duly
authorized, executed and delivered by Term Loan Agent, Borrowers;
44
(l) the Excess Availability as determined by Agent, as of
the date hereof, shall be not less than $5,500,000 after giving effect to the
initial Loans made or to be made and Letter of Credit Accommodations issued or
to be issued in connection with the initial transactions hereunder but without
giving effect to the Special Reserve, the Appraisal Reserve and the Rubber Group
Reserve;
(m) Agent shall have received, in form and substance
reasonably satisfactory to Agent, Deposit Account Control Agreements by and
among Agent, each Borrower, as the case may be and each bank at which such
Borrower has a deposit account (other than the Excluded Deposit Accounts, as
defined in Section 5.2(d) hereof), in each case, duly authorized, executed and
delivered by such bank and Borrower, as the case may be (or Agent shall be the
bank's customer with respect to such deposit account as Agent may specify);
(n) Agent shall have received evidence, in form and
substance satisfactory to Agent, that Agent has a valid perfected first priority
security interest in all of the Collateral, subject only to purchase money
security interests in Equipment to the extent permitted in Section 9.8(e) hereof
and as set forth on Schedule 8.4 to the Information Certificate, and any
security interests on Insurance Premium Collateral to the extent permitted in
Section 9.8(k) hereof which may have priority;
(o) Agent shall have received and reviewed lien and
judgement search results for the jurisdiction of incorporation of each Borrower,
the jurisdiction of the chief executive office of each Borrower and all
jurisdictions in which assets of Borrowers are located, which search results
shall be in form and substance satisfactory to Agent;
(p) Agent shall have received originals of the shares of
the stock certificates representing all of the issued and outstanding shares of
the Capital Stock of LRG, together with stock powers duly executed in blank with
respect thereto;
(q) Agent shall have received evidence of insurance and
loss payee endorsements required hereunder and under the other Financing
Agreements, in form and substance reasonably satisfactory to Agent, and
certificates of insurance policies and/or endorsements naming Agent as loss
payee;
(r) Agent shall have received, in form and substance
reasonably satisfactory to Agent, such opinion letters of counsel to Borrowers
with respect to the Financing Agreements and such other matters as Agent may
reasonably request; and
(s) the other Financing Agreements and all instruments
and documents hereunder and thereunder shall have been duly executed and
delivered to Agent, in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
Agent and Lenders making the Loans and/or providing Letter of Credit
Accommodations to Borrowers, including the initial Loans and
45
Letter of Credit Accommodations and any future Loans and Letter of Credit
Accommodations:
(a) all representations and warranties contained herein
and in the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the making of each such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto, except
to the extent that such representations and warranties expressly relate solely
to an earlier date (in which case such representations and warranties shall have
been true and accurate in all material respects on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or providing
the Letter of Credit Accommodations, or (B) the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or has a reasonable likelihood of having a Material Adverse Effect; and
(c) no Default or Event of Default shall exist or shall
have occurred and be continuing on and as of the date of the making of such Loan
or providing each such Letter of Credit Accommodation and after giving effect
thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest.
(a) To secure payment and performance of all Obligations,
each Borrower hereby grants to Agent, for itself and the benefit of Lenders, a
continuing security interest in, a lien upon, and a right of set off against,
and hereby assigns to Agent, for itself and the benefit of Lenders, as security,
all personal property, and interests in personal property, of each Borrower,
whether now owned or hereafter acquired or existing, and wherever located
(together with all other collateral security for the Obligations at any time
granted to or held or acquired by Agent or any Lender, collectively, the
"Collateral"), including:
(i) all Accounts;
(ii) all general intangibles, including, without
limitation, all Intellectual Property;
(iii) all goods, including, without limitation,
Inventory and Equipment;
(iv) all chattel paper, including, without
limitation, all tangible and electronic chattel paper;
(v) all instruments, including, without
limitation, all promissory notes;
46
(vi) all documents;
(vii) all deposit accounts;
(viii) all letters of credit, banker's acceptances
and similar instruments, including all letter-of-credit rights;
(ix) all supporting obligations and all present
and future liens, security interests, rights, remedies, title and interest in,
to and in respect of Receivables and other Collateral, including (A) rights and
remedies under or relating to guaranties, contracts of suretyship, letters of
credit and credit and other insurance related to the Collateral, (B) rights of
stoppage in transit, replevin, repossession, reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, (C) goods described in
invoices, documents, contracts or instruments with respect to, or otherwise
representing or evidencing, Receivables or other Collateral, including returned,
repossessed and reclaimed goods, and (D) deposits by and property of account
debtors or other persons securing the obligations of account debtors;
(x) all (A) investment property (including
securities, whether certificated or uncertificated, securities accounts,
security entitlements, commodity contracts or commodity accounts) and (B)
monies, credit balances, deposits and other property of any Borrower now or
hereafter held or received by or in transit to Agent, any Lender or its
Affiliates or at any other depository or other institution from or for the
account of any Borrower, whether for safekeeping, pledge, custody, transmission,
collection or otherwise;
(xi) all commercial tort claims, including,
without limitation, those identified in the Information Certificate;
(xii) to the extent not otherwise described above,
all Receivables;
(xiii) all Records; and
(xiv) all products and proceeds of the foregoing,
in any form, including insurance proceeds and all claims against third parties
for loss or damage to, or destruction of or other involuntary conversion of any
kind or nature of, any or all of the other Collateral.
(b) Excluded Collateral. Notwithstanding anything to the
contrary set forth in Section 5.1(a) above, the types or items of Collateral
described in such Section shall not include any Equipment (or proceeds thereof)
which is or becomes subject to a mortgage or other lien or security interest
(including capitalized or finance leases) permitted under Sections 9.8(e) or (m)
hereof if the valid grant of a security interest or lien therein to Agent in
such Equipment is prohibited by the terms of the agreement between such Borrower
and the holder of such mortgage or other lien or security interest or under
applicable law and such prohibition has not been or is not waived, or the
consent of the holder of the mortgage or other lien or security interest has not
been or is not otherwise obtained (it being understood that Borrower shall have
no obligation to Agent whatsoever to obtain such consent), or under applicable
law such
47
prohibition cannot be waived.
5.2 Perfection of Security Interests.
(a) Each Borrower irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Agent or its designee
as the secured party and such Borrower as debtor, as Agent may require, and
including any other information with respect to such Borrower or otherwise
required by part 5 of Article 9 of the Uniform Commercial Code of such
jurisdiction as Agent may determine, together with any amendments and
continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Each Borrower
hereby ratifies and approves all financing statements naming Agent or its
designee as secured party and such Borrower, as the case may be, as debtor with
respect to the Collateral (and any amendments with respect to such financing
statements) filed by or on behalf of Agent prior to the date hereof in respect
of the security interest granted pursuant to this Agreement and ratifies and
confirms the authorization of Agent to file such financing statements (and
amendments thereto, if any). Each Borrower hereby authorizes Agent to adopt on
behalf of such Borrower any symbol required for authenticating any electronic
filing. In the event that the description of the collateral in any financing
statement naming Agent or its designee as the secured party and any Borrower as
debtor includes assets and properties of such Borrower that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by such Borrower to the extent of the
Collateral included in such description and it shall not render the financing
statement ineffective as to any of the Collateral or otherwise affect the
financing statement as it applies to any of the Collateral. In no event shall
any Borrower at any time file, or permit, authorize or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Agent or
its designee as secured party and such Borrower as debtor.
(b) Each Borrower does not have any chattel paper
(whether tangible or electronic) or instruments as of the date of this
Agreement, except as set forth in the Information Certificate. In the event that
any Borrower shall be entitled to or shall receive any chattel paper or
instrument after the date hereof, Borrowers shall promptly notify Agent thereof
in writing. Promptly upon the receipt thereof by or on behalf of any Borrower
(including by any agent or representative), such Borrower shall deliver, or
cause to be delivered to Agent, all tangible chattel paper and instruments that
such Borrower has or may at any time acquire, accompanied by such instruments of
transfer or assignment duly executed in blank as Agent may from time to time
specify, in each case except as Agent may otherwise agree. At Agent's option,
each Borrower shall, or Agent may at any time on behalf of any Borrower, cause
the original of any such instrument or chattel paper to be conspicuously marked
in a form and manner acceptable to Agent with the following legend referring to
chattel paper or instruments as applicable: "This [chattel paper][instrument] is
subject to the security interest of Congress Financial Corporation, as Agent,
pursuant to the Amended and Restated Loan and Security Agreement, dated December
18, 2003, as the same now exists or may be amended, modified, supplemented,
extended, restated, renewed or replaced, and any sale, transfer, assignment or
encumbrance of this [chattel
48
paper][instrument] violates the rights of such secured party."
(c) In the event that any Borrower shall at any time hold
or acquire an interest in any electronic chattel paper or any "transferable
record" (as such term is defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction), such
Borrower shall promptly notify Agent thereof in writing. Promptly upon Agent's
request, such Borrower shall take, or cause to be taken, such actions as Agent
may request to give Agent control of such electronic chattel paper under Section
9-105 of the UCC and control of such transferable record under Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect
in such jurisdiction.
(d) None of the Borrowers has any deposit accounts as of
the date hereof, except as set forth in the Information Certificate. Borrowers
shall not, directly or indirectly, after the date hereof open, establish or
maintain any deposit account unless each of the following conditions is
satisfied: (i) Agent shall have received not less than five (5) Business Days
prior written notice of the intention of any Borrower to open or establish such
account which notice shall specify in reasonable detail and specificity
acceptable to Agent the name of the account, the owner of the account, the name
and address of the bank at which such account is to be opened or established,
the individual at such bank with whom such Borrower is dealing and the purpose
of the account, (ii) the bank where such account is opened or maintained shall
be acceptable to Agent, and (iii) on or before the opening of such deposit
account, such Borrower shall as Agent may specify either (A) deliver to Agent a
Deposit Account Control Agreement with respect to such deposit account duly
authorized, executed and delivered by such Borrower and the bank at which such
deposit account is opened and maintained or (B) arrange for Agent to become the
customer of the bank with respect to the deposit account on terms and conditions
acceptable to Agent. The terms of this subsection (d) shall not apply to deposit
accounts specifically and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of any Borrower's
salaried employees (the "Excluded Deposit Accounts").
(e) No Borrower owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.
(i) In the event that any Borrower shall be
entitled to or shall, at any time after the date hereof, hold or acquire any
certificated securities, such Borrower shall promptly endorse, assign and
deliver the same to Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as Agent may from time to time specify. If any
securities, now or hereafter acquired by any Borrower are uncertificated and are
issued to such Borrower or its nominee directly by the issuer thereof, such
Borrower shall immediately notify Agent thereof and shall, as Agent may specify,
either (A) direct the issuer to agree to comply with instructions from Agent as
to such securities, without further consent of any Borrower or
49
such nominee, or (B) arrange for Agent to become the registered owner of the
securities.
(ii) Borrowers shall not, directly or indirectly,
after the date hereof open, establish or maintain any investment account,
securities account, commodity account or any other similar account (other than a
deposit account) with any securities intermediary or commodity intermediary
unless each of the following conditions is satisfied: (A) Agent shall have
received not less than five (5) Business Days prior written notice of the
intention of such Borrower to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the securities
intermediary or commodity intermediary at which such account is to be opened or
established, the individual at such intermediary with whom such Borrower is
dealing and the purpose of the account, (B) the securities intermediary or
commodity intermediary (as the case may be) where such account is opened or
maintained shall be acceptable to Agent, and (C) on or before the opening of
such investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, such Borrower shall as Agent
may specify either (1) execute and deliver, and cause to be executed and
delivered to Agent, an Investment Property Control Agreement with respect
thereto duly authorized, executed and delivered by such Borrower and such
securities intermediary or commodity intermediary or (2) arrange for Agent to
become the entitlement holder with respect to such investment property on terms
and conditions acceptable to Agent; provided, that, LPC may maintain its
investment account number 390-01616 maintained with Jefferies & Company, Inc.
without delivery of an Investment Property Control Agreement so long as at any
time the balance therein exceeds $1,000, LPC shall promptly remit such excess to
Agent.
(f) Borrowers are not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker's acceptance
or similar instrument as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower shall be entitled to or
shall receive any right to payment under any letter of credit, banker's
acceptance or any similar instrument, whether as beneficiary thereof or
otherwise, after the date hereof, such Borrower shall promptly notify Agent
thereof in writing. Such Borrower shall immediately, as Agent may specify,
either (i) deliver, or use its reasonable best efforts to cause to be delivered
to Agent, with respect to any such letter of credit, banker's acceptance or
similar instrument, the written agreement of the issuer and any other nominated
Person obligated to make any payment in respect thereof (including any
confirming or negotiating bank), in form and substance satisfactory to Agent,
consenting to the assignment of the proceeds of the letter of credit to Agent by
such Borrower and agreeing to make all payments thereon directly to Agent or as
Agent may otherwise direct or (ii) cause Agent to become, at Borrowers' expense,
the transferee beneficiary of the letter of credit, banker's acceptance or
similar instrument (as the case may be).
(g) Borrowers do not have any pending commercial tort
claims as of the date hereof, except as set forth in the Information
Certificate. In the event that any Borrower shall, at any time after the date
hereof have any pending commercial tort claims, such Borrower shall promptly
notify Agent thereof in writing, which notice shall (i) set forth in reasonable
detail the basis for and nature of such commercial tort claim and (ii) include
the express grant by such Borrower to Agent of a security interest in such
commercial tort claim (and the proceeds thereof).
50
In the event that such notice does not include such grant of a security
interest, the sending thereof by such Borrower to Agent shall be deemed to
constitute such grant to Agent. Upon the sending of such notice, any commercial
tort claim described therein shall constitute part of the Collateral and shall
be deemed included therein. Without limiting the authorization of Agent provided
in Section 5.2(a) hereof or otherwise arising by the execution by such Borrower
of this Agreement or any of the other Financing Agreements, Agent is hereby
irrevocably authorized from time to time and at any time to file such financing
statements naming Agent or its designee as secured party and such Borrower as
debtor, or any amendments to any financing statements, covering any such
commercial tort claim as Collateral. In addition, each Borrower shall promptly
upon Agent's request, execute and deliver, or cause to be executed and
delivered, to Agent such other agreements, documents and instruments as Agent
may reasonably require in connection with such commercial tort claim.
(h) Borrowers do not have any goods, documents of title
or other Collateral in the custody, control or possession of a third party as of
the date of this Agreement, except as set forth in the Information Certificate
and except for goods located in the United States in transit to a location of a
Borrower permitted herein in the ordinary course of business of such Borrower
and in the possession of the carrier transporting such goods. In the event that
any goods, documents of title or other Collateral are at any time after the date
hereof in the custody, control or possession of any other person not referred to
in the Information Certificate (other than such carriers), Borrowers shall
promptly notify Agent thereof in writing. Promptly upon Agent's request,
Borrowers shall use its reasonable best efforts to deliver to Agent a Collateral
Access Agreement duly authorized, executed and delivered by such person and the
Borrower that is the owner of such Collateral.
(i) Borrowers shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority (subject to the prior security interests on Equipment to the
extent permitted pursuant to Section 9.8(e) hereof, the prior purchase money
security interests on Equipment to the extent set forth on Schedule 8.4 of the
Information Certificate and the security interests on Insurance Premium
Collateral to the extent permitted in Section 9.8(k) hereof in the event it is
determined that any such security interests have priority), and the ability of
Agent to enforce, the security interest of Agent in any and all of the
Collateral, including, without limitation, (i) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto under
the UCC or other applicable law, to the extent, if any, that any Borrower's
signature thereon is required therefor, (ii) causing Agent's name to be noted as
secured party on any certificate of title for a titled good if such notation is
a condition to attachment, perfection or priority of, or ability of Agent to
enforce, the security interest of Agent in such Collateral, (iii) complying with
any provision of any statute, regulation or treaty of the United States as to
any Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, and (iv) taking all commercially reasonable actions
to obtain the consents and approvals of any Governmental Authority or third
party, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and taking all commercially reasonable
actions required by any earlier versions of the UCC or by other law, as
applicable in any relevant jurisdiction.
51
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Agent shall maintain one or more
loan account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of any Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including interest, fees, charges, costs
and expenses. All entries in the loan account(s) shall be made in accordance
with Agent's customary practices as in effect from time to time.
6.2 Statements. Agent shall render to Administrative Borrower each
month a statement setting forth the balance in the Borrowers' loan account(s)
maintained by Agent for Borrowers pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement
shall be subject to subsequent adjustment by Agent but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrowers and
conclusively binding upon Borrowers and as an account stated, except to the
extent that Agent receives a written notice from Administrative Borrower of any
specific exceptions of Administrative Borrower thereto within thirty (30) days
after the date such statement has been received by Administrative Borrower.
Until such time as Agent shall have rendered to Administrative Borrower a
written statement as provided above, the balance in any Borrower's loan
account(s) shall be presumptive evidence of the amounts due and owing to Agent
and Lenders by Borrowers.
6.3 Collection of Accounts.
(a) Borrowers shall establish and maintain, at their
expense, blocked accounts or lockboxes and related blocked accounts (in either
case, "Blocked Accounts"), with such banks as are acceptable to Agent, into
which Borrowers shall promptly deposit and direct their respective account
debtors to directly remit all payments on Receivables and all payments
constituting proceeds of Inventory or other Collateral in the identical form in
which such payments are made, whether by cash, by check or other manner.
Borrowers shall deliver, or cause to be delivered to Agent, a Deposit Account
Control Agreement duly authorized, executed and delivered by each bank where a
Blocked Account is maintained as provided in Section 5.2 hereof or at any time
and from time to time Agent may become the bank's customer with respect to any
of the Blocked Accounts and promptly upon Agent's request, Borrowers shall
execute and deliver such agreements and documents as Agent may require in
connection therewith. Each Borrower agrees that all payments made to such
Blocked Accounts or other funds received and collected by Agent or any Lender,
whether in respect of the Receivables, as proceeds of Inventory or other
Collateral or otherwise, shall be treated as payments to Agent and Lenders in
respect of the Obligations and therefore shall constitute the property of Agent
(other than the Excluded Deposit Accounts) and Lenders to the extent of the then
outstanding Obligations.
(b) For purposes of calculating the amount of Loans
available to each Borrower, such payments will be applied (conditional upon
final collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds in the Agent Payment
52
Account, provided such payments and notice thereof are received in accordance
with Agent's usual and customary practices as in effect from time to time and
within sufficient time to credit such Borrower's loan account on such day, and
if not, then on the next Business Day. For the purposes of calculating interest
on the Obligations, such payments or other funds received will be applied
(conditional upon final collection) to the Obligations in accordance with
Section 6.4(a) hereof one (1) Business Day following the date of receipt of
immediately available funds by Agent in the Agent Payment Account provided such
payments or other funds and notice thereof are received in accordance with
Agent's usual and customary practices as in effect from time to time and within
sufficient time to credit such Borrower's loan account on such day, and if not,
then on the next Business Day.
(c) Each Borrower and their respective Subsidiaries or
other Affiliates (other than individual shareholders) shall, acting as trustee
for Agent, receive, as the property of Agent, any monies, checks, notes, drafts
or any other payment relating to and/or proceeds of Accounts or other Collateral
which come into their possession or under their control and, immediately upon
receipt thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to Agent.
In no event shall the same be commingled with any Borrower's own funds.
Borrowers agree to reimburse Agent on demand for any amounts owed or paid to any
bank or other financial institution at which a Blocked Account or any other
deposit account or investment account is established or any other bank,
financial institution or other person involved in the transfer of funds to or
from the Blocked Accounts arising out of Agent's payments to or indemnification
of such bank, financial institution or other person in connection with such
Blocked Account or any amount received therein or transferred therefrom. The
obligations of Borrowers to reimburse Agent for such amounts pursuant to this
Section 6.3 shall survive the termination of this Agreement.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment
Account as provided in Section 6.3 or to such other place as Agent may designate
in writing to Borrowers from time to time. Other than as expressly set forth in
Section 2.6 hereof (and only with respect to proceeds of Real Property, subject
to the terms of Section 2.4 of the Intercreditor Agreement), Agent shall apply
payments received or collected from any Borrower or for the account of any
Borrower (including the monetary proceeds of collections or of realization upon
any Collateral), other than proceeds from the sale or other disposition of Real
Property (which proceeds shall be applied as set forth in the Intercreditor
Agreement) , as follows: first, to pay any fees, indemnities or expense
reimbursements then due to Agent and Lenders from any Borrower; second, to pay
interest due in respect of any Loans (and including any Special Agent Advances);
third, to pay or prepay principal in respect of Special Agent Advances; fourth,
to pay principal due in respect of the Loans in the following order: at all
times prior to the existence of an Event of Default, first to the Revolving
Loans and then to the Term Loans and at all times after an Event of Default
exists or has occurred and in continuing, in such order and manner as Agent
determines; fifth, to pay or prepay any other Obligations whether or not then
due, in such order and manner as Agent determines. Notwithstanding anything to
the contrary contained in this Agreement, (i) unless so directed by
Administrative Borrower, or unless a Default or an Event of Default shall exist
or
53
have occurred and be continuing, Agent shall not apply any payments which it
receives to any Eurodollar Rate Loans, except (A) on the expiration date of the
Interest Period applicable to any such Eurodollar Rate Loans or (B) in the event
that there are no outstanding Prime Rate Loans and (ii) to the extent any
Borrower uses any proceeds of the Loans or Letter of Credit Accommodations to
acquire rights in or the use of any Collateral or to repay any Indebtedness used
to acquire rights in or the use of any Collateral, payments in respect of the
Obligations shall be deemed applied first to the Obligations arising from Loans
and Letter of Credit Accommodations that were not used for such purposes and
second to the Obligations arising from Loans and Letter of Credit Accommodations
the proceeds of which were used to acquire rights in or the use of any
Collateral in the chronological order in which such Borrower acquired such
rights in or the use of such Collateral.
(b) At Agent's option, all principal, interest, fees,
costs, expenses and other charges provided for in this Agreement or the other
Financing Agreements may be charged directly to the loan account(s) of any
Borrower maintained by Agent. Borrowers shall make all payments to Agent and
Lenders on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Agent or any
Lender is required to surrender or return such payment or proceeds to any Person
for any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Agent or such Lender. Borrowers shall be liable to pay to Agent, and do hereby
indemnify and hold Agent and Lenders harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4(b) shall remain effective
notwithstanding any contrary action which may be taken by Agent or any Lender in
reliance upon such payment or proceeds. This Section 6.4 (b) shall survive the
payment of the Obligations and the termination of this Agreement.
6.5 Authorization to Make Loans. Agent and Lenders are authorized
to make the Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be (and
believed by Agent to be) an officer of Administrative Borrower or any Borrower
or other authorized person or, at the discretion of Agent, if such Loans are
necessary to satisfy any Obligations. All requests for Loans or Letter of Credit
Accommodations hereunder shall specify the date on which the requested advance
is to be made or the requested Letter of Credit Accommodations established
(which day shall be a Business Day) and the amount of the requested Loan.
Requests received after 11:00 a.m. New York City time on any day shall be deemed
to have been made as of the opening of business on the immediately following
Business Day. All Loans and Letter of Credit Accommodations under this Agreement
shall be conclusively presumed to have been made to, and at the request of and
for the benefit of, any Borrower when deposited to the credit of any Borrower or
otherwise disbursed or established in accordance with the instructions of any
Borrower or in accordance with the terms and conditions of this Agreement.
6.6 Use of Proceeds. Borrowers shall use the initial proceeds of
the Loans provided
54
by Agent to Borrowers hereunder only for: (a) payments to each of the persons
listed in the disbursement direction letter furnished by Borrowers to Agent on
or about the date hereof and (b) costs, expenses and fees in connection with the
preparation, negotiation, execution and delivery of this Agreement and the other
Financing Agreements. All other Loans made or Letter of Credit Accommodations
provided to or for the benefit of any Borrower pursuant to the provisions hereof
shall be used by such Borrower only for general operating, working capital and
other proper corporate purposes of such Borrower not otherwise prohibited by the
terms hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended.
6.7 Appointment of Administrative Borrower as Agent for Requesting
Loans and Receipts of Loans and Statements.
(a) Each Borrower hereby irrevocably appoints and
constitutes Administrative Borrower as its agent to request and receive Loans
and Letter of Credit Accommodations pursuant to this Agreement and the other
Financing Agreements from Agent or any Lender in the name or on behalf of such
Borrower. Agent and Lenders may disburse the Loans to such bank account of
Administrative Borrower or a Borrower or otherwise make such Loans to a Borrower
and provide such Letter of Credit Accommodations to a Borrower as Administrative
Borrower may designate or direct, without notice to any other Borrower or
Obligor. Notwithstanding anything to the contrary contained herein, Agent may at
any time and from time to time require that Loans to or for the account of any
Borrower be disbursed directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the
appointment by Borrowers to act as the agent of Borrowers pursuant to this
Section 6.7. Administrative Borrower shall ensure that the disbursement of any
Loans to each Borrower requested by or paid to or for the account of such
Borrower, or the issuance of any Letter of Credit Accommodations for a Borrower
hereunder, shall be paid to or for the account of such Borrower.
(c) Each Borrower hereby irrevocably appoints and
constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.
(d) Any notice, election, representation, warranty,
agreement or undertaking by or on behalf of any other Borrower by Administrative
Borrower shall be deemed for all purposes to have been made by such Borrower, as
the case may be, and shall be binding upon and enforceable against such Borrower
to the same extent as if made directly by such Borrower.
(e) No purported termination of the appointment of
Administrative Borrower as agent as aforesaid shall be effective, except after
ten (10) days' prior written notice to Agent.
55
6.8 Pro Rata Treatment. Except to the extent otherwise provided in
this Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares and (b) each payment on
account of any Obligations to or for the account of one or more of Lenders in
respect of any Obligations due on a particular day shall be allocated among the
Lenders entitled to such payments based on their respective Pro Rata Shares and
shall be distributed accordingly.
6.9 Sharing of Payments, Etc.
(a) Each Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim Agent
or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower at any
of its offices, in dollars or in any other currency, against any principal of or
interest on any Loans owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such balances
are then due to such Borrower), in which case it shall promptly notify
Administrative Borrower and Agent thereof; provided, that, such Lender's failure
to give such notice shall not affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from any
Borrower payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by any Borrower to such
Lender than the percentage thereof received by any other Lender, it shall
promptly pay to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the Loans or
such other amounts, respectively, owing to such other Lenders (or such interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all Lenders
shall share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) in
accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
(c) Each Borrower agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to
exercise any right of setoff, banker's lien, counterclaim or similar right or
shall affect the right of any Lender to
56
exercise, and retain the benefits of exercising, any such right with respect to
any other Indebtedness or obligation of any Borrower. If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section applies, such Lender shall, to the
extent practicable, assign such rights to Agent for the benefit of Lenders and,
in any event, exercise its rights in respect of such secured claim in a manner
consistent with the rights of Lenders entitled under this Section to share in
the benefits of any recovery on such secured claim.
6.10 Settlement Procedures.
(a) In order to administer the Credit Facility in an
efficient manner and to minimize the transfer of funds between Agent and
Lenders, Agent may, at its option, subject to the terms of this Section, make
available, on behalf of Lenders, the full amount of the Loans requested or
charged to any Borrower's loan account(s) or otherwise to be advanced by Lenders
pursuant to the terms hereof, without requirement of prior notice to Lenders of
the proposed Loans.
(b) With respect to all Loans made by Agent on behalf of
Lenders as provided in this Section, the amount of each Lender's Pro Rata Share
of the outstanding Loans shall be computed weekly, and shall be adjusted upward
or downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
New York City time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a "Settlement Period"). If the summary
statement is sent by Agent and received by a Lender prior to 12:00 p.m. New York
City time, then such Lender shall make the settlement transfer described in this
Section by no later than 3:00 p.m. New York City time on the same Business Day
and if received by a Lender after 12:00 p.m. New York City time, then such
Lender shall make the settlement transfer by not later than 3:00 p.m. New York
City time on the next Business Day following the date of receipt. If, as of the
end of any Settlement Period, the amount of a Lender's Pro Rata Share of the
outstanding Loans is more than such Lender's Pro Rata Share of the outstanding
Loans as of the end of the previous Settlement Period, then such Lender shall
forthwith (but in no event later than the time set forth in the preceding
sentence) transfer to Agent by wire transfer in immediately available funds the
amount of the increase. Alternatively, if the amount of a Lender's Pro Rata
Share of the outstanding Loans in any Settlement Period is less than the amount
of such Lender's Pro Rata Share of the outstanding Loans for the previous
Settlement Period, Agent shall forthwith transfer to such Lender by wire
transfer in immediately available funds the amount of the decrease. The
obligation of each of the Lenders to transfer such funds and effect such
settlement shall be irrevocable and unconditional and without recourse to or
warranty by Agent. Agent and each Lender agrees to mark its books and records at
the end of each Settlement Period to show at all times the dollar amount of its
Pro Rata Share of the outstanding Loans and Letter of Credit Accommodations.
Each Lender shall only be entitled to receive interest on its Pro Rata Share of
57
the Loans to the extent such Loans have been funded by such Lender. Because the
Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to
the time when Lenders will actually advance and/or be repaid such Loans,
interest with respect to Loans shall be allocated by Agent in accordance with
the amount of Loans actually advanced by and repaid to each Lender and the Agent
and shall accrue from and including the date such Loans are so advanced to but
excluding the date such Loans are either repaid by Borrowers or actually settled
with the applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts
available and the settlement described above shall not yet have occurred, upon
repayment of any Loans by a Borrower, Agent may apply such amounts repaid
directly to any amounts made available by Agent pursuant to this Section. In
lieu of weekly or more frequent settlements, Agent may, at its option, at any
time require each Lender to provide Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Agent's disbursement of
such Loan to Borrower. In such event, all Loans under this Agreement shall be
made by the Lenders simultaneously and proportionately to their Pro Rata Shares.
No Lender shall be responsible for any default by any other Lender in the other
Lender's obligation to make a Loan requested hereunder nor shall the Commitment
of any Lender be increased or decreased as a result of the default by any other
Lender in the other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to a
Borrower (or Administrative Borrower for the benefit of such Borrower) pursuant
to this Section on any day, Agent may assume that each Lender will make
available to Agent such Lender's Pro Rata Share of the Loan requested or
otherwise made on such day and Agent may, in its discretion, but shall not be
obligated to, cause a corresponding amount to be made available to or for the
benefit of such Borrower on such day. If Agent makes such corresponding amount
available to a Borrower and such corresponding amount is not in fact made
available to Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent's option based on
the arithmetic mean determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of the three leading brokers of Federal funds transactions in New
York City selected by Agent) and if such amounts are not paid within three (3)
days of Agent's demand, at the highest Interest Rate provided for in Section 3.1
hereof applicable to Prime Rate Loans. During the period in which such Lender
has not paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent for its own account. Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Administrative Borrower of such failure and Borrowers shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Administrative Borrower's receipt of such notice. A Lender who fails to pay
Agent its Pro Rata Share of any Loans made available by the Agent on such
Lender's behalf, or any Lender who fails to pay any other amount owing by it to
Agent, is a "Defaulting Lender". Agent shall not be obligated to transfer to a
Defaulting
58
Lender any payments received by Agent for the Defaulting Lender's benefit, nor
shall a Defaulting Lender be entitled to the sharing of any payments hereunder
(including any principal, interest or fees). Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent. Agent may hold and, in its
discretion, relend to a Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. For purposes of voting
or consenting to matters with respect to this Agreement and the other Financing
Agreements and determining Pro Rata Shares, such Defaulting Lender shall be
deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be
zero (0). This Section shall remain effective with respect to a Defaulting
Lender until such default is cured. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by any Borrower or Obligor of their duties and
obligations hereunder.
(e) Nothing in this Section or elsewhere in this
Agreement or the other Financing Agreements shall be deemed to require Agent to
advance funds on behalf of any Lender, to relieve any Lender from its obligation
to fulfill its Commitment hereunder or to prejudice any rights that any Borrower
may have against any Lender as a result of any default by any Lender hereunder
in fulfilling its Commitment.
6.11 Obligations Several; Independent Nature of Lenders' Rights.
The obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Borrowers shall provide Agent with the following documents
in a form reasonably satisfactory to Agent:
(i) on a regular basis as required by Agent,
schedules of sales made, credits issued and cash received;
(ii) as soon as possible after the end of each month
(but in any event within ten (10) Business Days after the end thereof), on a
monthly basis or more frequently as Agent may request, (A) inventory reports,
(B) inventory reports by location and category (and including the amounts of
Inventory and the value thereof at any leased locations and at premises of
warehouses, processors or other third parties), (C) agings of accounts
receivable (together with
59
a reconciliation to the previous month's aging and general ledger) and (D)
agings of accounts payable (and including information indicating the amounts
owing to owners and lessors of leased premises, warehouses, processors and other
third parties from time to time in possession of any Collateral);
(iii) upon Agent's request, (A) copies of customer
statements, purchase orders, sales invoices, credit memos, remittance advices
and reports, and copies of deposit slips and bank statements, (B) copies of
shipping and delivery documents, and (C) copies of purchase orders, invoices and
delivery documents for Inventory and Equipment acquired by any Borrower;
(iv) such other reports as to the Collateral as Agent
shall request from time to time.
(b) If any Borrower's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, such Borrower hereby irrevocably authorizes such
service, contractor, shipper or agent to deliver such records, reports, and
related documents to Agent and to follow Agent's instructions with respect to
further services at any time that an Event of Default exists or has occurred and
is continuing.
7.2 Accounts Covenants.
(a) Borrowers shall notify Agent promptly of: (i) any
material delay in any Borrower's performance of any of its material obligations
to any account debtor or the assertion of any material claims, offsets, defenses
or counterclaims by any account debtor, or any material disputes with account
debtors, or any settlement, adjustment or compromise thereof, (ii) all material
adverse information known to any Borrower relating to the financial condition of
any account debtor and (iii) any event or circumstance which, to the best of any
Borrower's knowledge, would cause Agent to consider any then existing Accounts
as no longer constituting Eligible Accounts. No credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any account
debtor without Agent's consent, except in the ordinary course of a Borrower's
business in accordance with practices and policies previously disclosed in
writing to Agent and except as set forth in the schedules delivered to Agent
pursuant to Section 7.1(a) above. Notwithstanding anything in this Agreement to
the contrary, so long as no Event of Default exists or has occurred and is
continuing, Borrowers shall settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor. Notwithstanding anything in
this Agreement to the contrary, at any time that an Event of Default exists or
has occurred and is continuing, Agent shall, at its option, upon notice to
Borrowers, have the exclusive right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) With respect to each Account: (i) the amounts shown
on any invoice delivered to Agent or schedule thereof delivered to Agent shall
be true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Agent pursuant to the terms of this Agreement, (iii)
except as provided in Section 7.2(a) above, no credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any account
60
debtor except as reported to Agent in accordance with this Agreement and except
for credits, discounts, allowances or extensions made or given in the ordinary
course of each Borrower's business in accordance with practices and policies
previously disclosed to Agent, (iv) there shall be no setoffs, deductions,
contras, defenses, counterclaims or disputes existing or asserted with respect
thereto except as reported to Agent in accordance with the terms of this
Agreement, (v) none of the transactions giving rise thereto will violate any
applicable foreign, Federal, State or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
(c) Agent shall have the right at any time or times, in
Agent's name or in the name of a nominee of Agent, to verify the validity,
amount or any other matter relating to any Receivables or other Collateral, by
mail, telephone, facsimile transmission or otherwise.
7.3 Inventory Covenants. With respect to the Inventory: (a) each
Borrower shall at all times maintain inventory records reasonably satisfactory
to Agent, keeping correct and accurate records itemizing and describing the
kind, type, quality and quantity of Inventory, such Borrower's cost therefor and
daily withdrawals therefrom and additions thereto; (b) Borrowers shall conduct a
physical count of the Inventory at least once each year but at any time or times
as Agent may request at any time an Event of Default exists or has occurred and
is continuing, and promptly following such physical inventory shall supply Agent
with a report in such form and with such specificity as may be satisfactory to
Agent concerning such physical count; (c) Borrowers shall not remove any
Inventory from the locations set forth or permitted herein, without the prior
written consent of Agent, except for sales of Inventory in the ordinary course
of its business and except to move Inventory directly from one location set
forth or permitted herein to another such location and except for Inventory
shipped from the manufacturer thereof to such Borrower which is in transit to
the locations set forth or permitted herein; (d) upon Agent's request, Borrowers
shall, at their expense, no more than once in any twelve (12) month period, but
at any time or times as Agent may request at any time an Event of Default exists
or has occurred and is continuing, deliver or cause to be delivered to Agent
written appraisals (or updates of appraisals) as to the Inventory in form, scope
and methodology acceptable to Agent and by an appraiser acceptable to Agent,
addressed to Agent and Lenders and upon which Agent and Lenders are expressly
permitted to rely; (e) Borrowers shall produce, use, store and maintain the
Inventory with all reasonable care and caution and in accordance with applicable
standards of their insurance and in material conformity with applicable laws
(including the requirements of the Federal Fair Labor Standards Act of 1938, as
amended and all rules, regulations and orders related thereto); (f) none of the
Inventory or other Collateral constitutes farm products or the proceeds thereof;
(g) each Borrower assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the Inventory; (h)
Borrowers shall not sell Inventory to any customer on approval, or any other
basis which entitles the customer to return or may obligate any Borrower to
repurchase such Inventory, other than the right of customers to return any
product that does not meet the specifications provided to Borrowers by the
customer in accordance with the Borrowers' current practices as in effect on the
date hereof; (i) Borrowers shall keep the Inventory in good and marketable
condition; and (j) Borrowers and shall not, without prior written notice to
Agent or the specific identification of such Inventory in
61
a report with respect thereto provided by Administrative Borrower to Agent
pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on
consignment or approval.
7.4 Equipment Covenants. With respect to the Equipment: (a) upon
Agent's request, Borrowers shall, at their expense, no more than once in any
twelve (12) month period, but at any time or times as Agent may request at any
time an Event of Default exists or has occurred and is continuing, deliver or
cause to be delivered to Agent written appraisals (or updates of appraisals) as
to the Equipment in form, scope and methodology acceptable to Agent and by an
appraiser acceptable to Agent, addressed to Agent and upon which Agent is
expressly permitted to rely; (b) Borrowers shall keep the Equipment in good
order, repair, running and marketable condition (ordinary wear and tear
excepted); (c) Borrowers shall use the Equipment with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
material conformity with all applicable laws; (d) the Equipment is and shall be
used in the business of Borrowers and not for personal, family, household or
farming use; (e) Borrowers shall not remove any Equipment from the locations set
forth or permitted herein, except to the extent necessary to have any Equipment
repaired or maintained in the ordinary course of its business or to move
Equipment directly from one location set forth or permitted herein to another
such location and except for the movement of motor vehicles used by or for the
benefit of such Borrower in the ordinary course of business; (f) the Equipment
is now and shall remain personal property and Borrowers shall not permit any of
the Equipment to be or become a part of or affixed to real property; and (g)
each Borrower assumes all responsibility and liability arising from its use of
the Equipment.
7.5 Power of Attorney. Each Borrower hereby irrevocably designates
and appoints Agent (and all persons designated by Agent) as such Borrower's true
and lawful attorney-in-fact, and authorizes Agent, in such Borrower's or Agent's
name, to: (a) at any time an Event of Default exists or has occurred and is
continuing (i) demand payment on Receivables or other Collateral, (ii) enforce
payment of Receivables by legal proceedings or otherwise, (iii) exercise all of
such Borrower's rights and remedies to collect any Receivable or other
Collateral, (iv) sell or assign any Receivable upon such terms, for such amount
and at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew an Account, (vi) discharge and release any
Receivable, (vii) prepare, file and sign such Borrower's name on any proof of
claim in bankruptcy or other similar document against an account debtor or other
obligor in respect of any Receivables or other Collateral, (viii) notify the
post office authorities to change the address for delivery of remittances from
account debtors or other obligors in respect of Receivables or other proceeds of
Collateral to an address designated by Agent, and open and dispose of all mail
addressed to such Borrower and handle and store all mail relating to the
Collateral; and (ix) do all acts and things which are necessary, in Agent's
determination, to fulfill such Borrower's obligations under this Agreement and
the other Financing Agreements and (b) at any time to (i) take control in any
manner of any item of payment in respect of Receivables or constituting
Collateral or otherwise received in or for deposit in the Blocked Accounts or
otherwise received by Agent or any Lender, (ii) have access to any lockbox or
postal box into which remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral are sent or received,
(iii) endorse such Borrower's name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Agent and any
Lender and
62
deposit the same in Agent's account for application to the Obligations, (iv)
endorse such Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Receivable or any
goods pertaining thereto or any other Collateral, including any warehouse or
other receipts, or bills of lading and other negotiable or non-negotiable
documents, (v) clear Inventory the purchase of which was financed with Letter of
Credit Accommodations through U.S. Customs or foreign export control authorities
in such Borrower's name, Agent's name or the name of Agent's designee, and to
sign and deliver to customs officials powers of attorney in such Borrower's name
for such purpose, and to complete in such Borrower's or Agent's name, any order,
sale or transaction, obtain the necessary documents in connection therewith and
collect the proceeds thereof, and (vi) sign such Borrower's name on any request
for verification of Receivables and notices thereof to account debtors or any
secondary obligors or other obligors in respect thereof (and thereafter Agent
shall give Administrative Borrower prompt written notice thereof). Each Borrower
hereby releases Agent and Lenders and their respective officers, employees and
designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except
as a result of Agent's or any Lender's own gross negligence or wilful misconduct
as determined pursuant to a final non-appealable order of a court of competent
jurisdiction.
7.6 Right to Cure. Agent may, at its option, upon notice to
Administrative Borrower, (a) cure any default by any Borrower under any material
agreement with a third party that affects the Collateral, its value or the
ability of Agent to collect, sell or otherwise dispose of the Collateral or the
rights and remedies of Agent or any Lender therein or the ability of any
Borrower to perform its obligations hereunder or under any of the other
Financing Agreements, at any time on or after a Default or Event of Default
exists or has occurred and is continuing, (b) pay or bond on appeal any judgment
entered against any Borrower, at any time on or after a Default or Event of
Default exists or has occurred and is continuing, (c) discharge taxes, liens,
security interests or other encumbrances at any time levied on or existing with
respect to the Collateral and pay any amount, incur any expense or perform any
act which, in Agent's judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Agent and Lenders
with respect thereto, provided, that, Agent shall not exercise its right
pursuant to this Section 7.6(c) to discharge such taxes, liens, security
interest or other encumbrances that are permitted under Section 9.8 hereof,
unless either (i) a Default or Event of Default shall exist or have occurred and
be continuing, or (ii) with respect to liens, security interests or other
encumbrances, the beneficiary or holder of such lien, security interest or other
encumbrance has the right to take action against or with respect to the
Collateral which right is not subject to an effective stay pursuant to
applicable law. Agent may add any amounts so expended to the Obligations and
charge any Borrower's account therefor, such amounts to be repayable by
Borrowers on demand. Agent and Lenders shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of any Borrower. Any payment made or other
action taken by Agent or any Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
7.7 Access to Premises. From time to time as requested by Agent,
at the cost and
63
expense of Borrowers, (a) Agent or its designee shall have complete access to
all of each Borrower's premises during normal business hours and after
reasonable notice to Administrative Borrower, or at any time and without notice
to Administrative Borrower if an Event of Default exists or has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of each Borrower's books and records, including the Records,
and (b) each Borrower shall promptly furnish to Agent such copies of such books
and records or extracts therefrom as Agent may reasonably request, and Agent or
any Lender or Agent's designee may use during normal business hours such of any
Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing (provided, that, Borrowers shall make such
personnel, equipment, supplies and premises available to Agent or its designee
in such manner so that Agent or its designee shall not materially interfere with
the operations of Borrowers) and if an Event of Default exists or has occurred
and is continuing for the collection of Receivables and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants to Agent and Lenders the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations to Borrowers:
8.1 Corporate Existence, Power and Authority. Each Borrower is a
corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a Material Adverse Effect. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder (a) are all within each
Borrower's corporate powers, (b) have been duly authorized by all necessary
corporate action, (c) are not in contravention of law or the terms of any
Borrower's certificate of incorporation, by-laws, or other organizational
documentation, or any material indenture, agreement or undertaking to which any
Borrower is a party or by which any Borrower or its property are bound and (d)
will not result in the creation or imposition of, or require or give rise to any
obligation to grant any lien, security interest, charge or other encumbrance
upon any property of any Borrower except in favor of Agent pursuant to this
Agreement and the other Financing Agreements and as contemplated by this
Agreement. This Agreement and the other Financing Agreements to which any
Borrower is a party constitute legal, valid and binding obligations of such
Borrower enforceable in accordance with their respective terms.
8.2 Name; State of Organization; Chief Executive Office;
Collateral Locations.
(a) The exact legal name of each Borrower is as set forth
on the signature page of this Agreement and in the Information Certificate. No
Borrower has, during the five years prior to the date of this Agreement, been
known by or used any other corporate or fictitious name
64
or been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person, or acquired any of its material property or
assets out of the ordinary course of business, except as set forth in the
Information Certificate.
(b) Each Borrower is an organization of the type and
organized in the jurisdiction set forth in the Information Certificate. The
Information Certificate accurately sets forth the organizational identification
number of each Borrower or accurately states that such Borrower has none and
accurately sets forth the federal employer identification number of each
Borrower.
(c) The chief executive office and mailing address of
each Borrower and each Borrower's Records concerning Accounts are located only
at the addresses identified as such in Schedule 8.2 to the Information
Certificate and its only other places of business and the only other locations
of Collateral, if any, are the addresses set forth in Schedule 8.2 to the
Information Certificate, subject to the rights of any Borrower to establish new
locations in accordance with Section 9.2 below. The Information Certificate
correctly identifies any of such locations which are not owned by a Borrower and
sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change. All
financial statements relating to any Borrower which have been or may hereafter
be delivered by any Borrower to Agent and Lenders have been prepared in
accordance with GAAP (except as to any interim financial statements, to the
extent such statements are subject to normal year-end adjustments and do not
include certain footnote disclosures) and fairly present in all material
respects the financial condition and the results of operation of such Borrower
as at the dates and for the periods set forth therein. Except as disclosed in
any interim financial statements furnished by Borrowers to Agent prior to the
date of this Agreement, there has been no act, condition or event which has had
or is reasonably likely to have a Material Adverse Effect since the date of the
most recent audited financial statements of any Borrower furnished by any
Borrower to Agent prior to the date of this Agreement.
8.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Agent under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens indicated on
Schedule 8.4 to the Information Certificate and the other liens permitted under
Section 9.8 hereof. Each Borrower has good and insurable fee simple title to or
valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof.
8.5 Tax Returns. Each Borrower has filed, or caused to be filed,
in a timely manner all tax returns, reports and declarations which are required
to be filed by it. All information in such tax returns, reports and declarations
is complete and accurate in all material respects. Each Borrower has paid or
caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, except taxes the validity of which are being
contested in good faith
65
by appropriate proceedings diligently pursued and available to such Borrower and
with respect to which reserves have been set aside on its books in accordance
with GAAP. Adequate provision has been made for the payment of all accrued and
unpaid Federal, State, county, local, foreign and other taxes whether or not yet
due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on Schedule 8.6 to the
Information Certificate, (a) there is no investigation by any Governmental
Authority pending, or to the best of any Borrower's knowledge threatened,
against or affecting any Borrower, its respective assets or business and (b)
there is no action, suit, proceeding or claim by any Person pending, or to the
best of any Borrower's knowledge threatened, against any Borrower or its assets
or goodwill, or against or affecting any transactions contemplated by this
Agreement, in each case, which if adversely determined against such Borrower has
or could reasonably be expected to have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) None of the Borrowers are in default in any respect
under, or in violation in any respect of the terms of, any material agreement,
contract, instrument, lease or other commitment to which it is a party or by
which it or any of its assets are bound (other than defaults or events of
default under the Remaining Existing Senior Subordinated Notes) where such
default or violation has or could reasonably be expected to have a Material
Adverse Effect. Borrowers are in compliance with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
relating to their respective businesses, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health Act
of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA,
the Code, as amended, and the rules and regulations thereunder where the failure
to so comply has or could reasonably be expected to have a Material Adverse
Effect, and all Environmental Laws where the failure to so comply has or could
reasonably be expected to have a Material Adverse Effect.
(b) Each of the Borrowers have obtained all material
permits, licenses, approvals, consents, certificates, orders or authorizations
of any Governmental Authority required for the lawful conduct of its business
(the "Permits") where the failure to obtain such Permits has or could reasonably
be expected to have a Material Adverse Effect. All of the Permits are valid and
subsisting and in full force and effect where the failure of any of the Permits
to be valid and subsisting has or could reasonably be expected to have a
Material Adverse Effect. There are no actions, claims or proceedings pending or
to the best of any Borrower's knowledge, threatened that seek the revocation,
cancellation, suspension or modification of any of the Permits where the
revocation, cancellation, suspension or modification of any of the Permits has
or could reasonably be expected to have a Material Adverse Effect.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the
Information Certificate, Borrowers and any of their Subsidiaries have not
generated, used, stored, treated, transported, manufactured, handled, produced
or disposed of any Hazardous Materials, on or off its premises
66
(whether or not owned by it) in any manner which at any time violates in any
material respect any applicable Environmental Law or Permit, and the operations
of Borrowers and any Subsidiary of any Borrower complies in all material
respects with all Environmental Laws and all Permits where the failure to so
comply has or could reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 8.8 to the
Information Certificate, to the Borrowers' knowledge, there has been no
investigation by any Governmental Authority or any proceeding, complaint, order,
directive, claim, citation or notice by any Governmental Authority or any other
person nor is any pending or to the best of any Borrower's knowledge threatened,
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by any Borrower or any of their respective Subsidiaries or the
release, spill or discharge, threatened or actual, of any Hazardous Material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which has or could reasonably be expected to have a
Material Adverse Effect.
(c) Except as set forth on Schedule 8.8 to the
Information Certificate, Borrowers and their Subsidiaries have no knowledge of
any material liability (contingent or otherwise) in connection with a release,
spill or discharge, threatened or actual, of any Hazardous Materials or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials.
(d) Borrowers and their Subsidiaries have all Permits
required to be obtained or filed in connection with the operations of Borrowers
under any Environmental Law and all of such licenses, certificates, approvals or
similar authorizations and other Permits are valid and in full force and effect
where the failure to have obtained or filed such has or could reasonably be
expected to have a Material Adverse Effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other Federal or State
law. Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service and
to the best of any Borrower's knowledge, nothing has occurred which would cause
the loss of such qualification. Each Borrower and its ERISA Affiliates have made
all required contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending, or to the best of any
Borrower's knowledge, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan that if adversely determined
would have or could reasonably be expected to have a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules in any material respect with respect to any Plan.
67
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) the current value of each Plan's assets (determined in
accordance with the assumptions used for funding such Plan pursuant to Section
412 of the Code) are not less than such Plan's liabilities under Section
4001(a)(16) of ERISA; (iii) each Borrower, and their ERISA Affiliates, have not
incurred and do not reasonably expect to incur, any liability under Title IV of
ERISA with respect to any Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) each Borrower, and their ERISA Affiliates, have not
incurred and do not reasonably expect to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) each Borrower, and their ERISA Affiliates, have not
engaged in a transaction that would be subject to Section 4069 or 4212(c) of
ERISA.
8.10 Bank Accounts. All of the deposit accounts, investment
accounts or other accounts in the name of or used by any Borrower maintained at
any bank or other financial institution are set forth on Schedule 8.10 to the
Information Certificate, subject to the right of each Borrower to establish new
accounts in accordance with Section 5.2 hereof.
8.11 Intellectual Property. Each Borrower owns or licenses or
otherwise has the right to use all material Intellectual Property necessary for
the operation of its business as presently conducted or proposed to be
conducted. As of the date hereof, Borrowers do not have any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any State thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 8.11 to the Information
Certificate and has not granted any licenses with respect thereto other than as
set forth in Schedule 8.11 to the Information Certificate. No event has occurred
which permits or would permit after notice or passage of time or both, the
revocation, suspension or termination of such rights. To the best of any
Borrower's knowledge, no slogan or other advertising device, product, process,
method, substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by any
Borrower infringes any patent, trademark, servicemark, tradename, copyright,
license or other Intellectual Property owned by any other Person presently and
no claim or litigation is pending or, to the knowledge of any Borrower,
threatened against or affecting any Borrower contesting its right to sell or use
any such Intellectual Property. Schedule 8.11 to the Information Certificate
sets forth all of the material agreements or other arrangements of each Borrower
pursuant to which such Borrower has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property that
are material to the operation of its business as conducted on the date hereof
owned by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of such Borrower (other than
such agreements which are generally commercially available for a fee) as in
effect on the date hereof (collectively, together with such agreements or other
arrangements as may be entered into by any Borrower after the date hereof,
collectively, the "License Agreements" and individually, a "License Agreement").
No trademark, servicemark, copyright or other Intellectual Property used by any
Borrower on or after the date hereof which is owned by another person, or owned
by such Borrower subject to any security interest, lien, collateral assignment,
pledge or other encumbrance in favor of any person other than Agent, is affixed
to any Eligible Inventory, except (a) to the extent permitted
68
under the term of the license agreements listed on Schedule 8.11 to the
Information Certificate and (b) to the extent the sale of Inventory to which
such Intellectual Property is affixed is permitted to be sold by such Borrower
under applicable law (including the United States Copyright Act of 1976).
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) None of the Borrowers has any direct or indirect
Subsidiaries or Affiliates or is engaged in any joint venture or partnership
except as set forth in Schedule 8.12 to the Information Certificate.
(b) Each Borrower is the record and beneficial owner of
all of the issued and outstanding shares of Capital Stock of each of the
Subsidiaries listed on Schedule 8.12 to the Information Certificate as being
owned by such Borrower and there are no proxies, irrevocable or otherwise, with
respect to such shares and no equity securities of any of the Subsidiaries are
or may become required to be issued by reason of any options, warrants, rights
to subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is or may become bound to issue additional shares of it Capital Stock or
securities convertible into or exchangeable for such shares.
(c) The issued and outstanding shares of Capital Stock of
LRG are directly and beneficially owned and held by the persons indicated in the
Information Certificate, and all of such shares have been duly authorized and
are fully paid and non-assessable, free and clear of all claims, liens, pledges
and encumbrances of any kind, except as disclosed in writing to Agent prior to
the date hereof.
(d) Borrowers, taken as a whole, are Solvent and will
continue to be Solvent after the creation of the Obligations, the security
interests of Agent and the other transactions contemplated hereunder.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information
Certificate is a list (including dates of termination) of all collective
bargaining or similar agreements between or applicable to each Borrower and any
union, labor organization or other bargaining agent in respect of the employees
of any Borrower on the date hereof.
(b) There is (i) no significant unfair labor practice
complaint pending against any Borrower or, to the best of any Borrower's
knowledge, threatened against it, before the National Labor Relations Board, and
no significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
any Borrower or, to best of any Borrower's knowledge, threatened against it, and
(ii) no significant strike, labor dispute, slowdown or stoppage is pending
against any Borrower or, to the best of any Borrower's knowledge, threatened
against any Borrower which has or could reasonably be expected to have a
Material Adverse Effect.
69
8.14 Restrictions on Subsidiaries. Except for restrictions
contained in this Agreement or any other agreement with respect to Indebtedness
of any Borrower permitted hereunder as in effect on the date hereof, there are
no contractual or consensual restrictions on any Borrower or any of its
Subsidiaries which prohibit or otherwise restrict (a) the transfer of cash or
other assets (i) between any Borrower and any of its Subsidiaries or (ii)
between any Subsidiaries of any Borrower or (b) the ability of any Borrower or
any of its Subsidiaries to incur the Obligations or grant security interests to
Agent or any Lender in the Collateral.
8.15 Material Contracts. Schedule 8.15 to the Information
Certificate sets forth all Material Contracts to which any Borrower is a party
or is bound as of the date hereof. Borrowers have delivered true, correct and
complete copies of such Material Contracts to Agent on or before the date
hereof. Borrowers are not in breach or in default in any material respect of or
under any Material Contract and have not received any notice of the intention of
any other party thereto to terminate any Material Contract.
8.16 Payable Practices. Each Borrower have not made any material
change in the historical accounts payable practices from those in effect
immediately prior to the date hereof.
8.17 Accuracy and Completeness of Information. All information
furnished by or on behalf of any Borrower in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificate is true and correct in all material respects on the date
as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading as of
the date as of which such information is dated or certified. No event or
circumstance has occurred since the date of the most recent audited financial
statements delivered by Borrowers to Agent which has had or could reasonably be
expected to have a Material Adverse Affect, which has not been fully and
accurately disclosed to Agent in writing prior to the date hereof.
8.18 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Agent and Lenders on the date of each additional
borrowing or other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agent and Lenders regardless of any
investigation made or information possessed by Agent or any Lender (except to
the extent any such representation or warranty was expressly made as of a
specified date, in which case it shall only be deemed made as of such date). The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which any Borrower shall now
or hereafter give, or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
70
(a) Each Borrower shall at all times preserve, renew and
keep in full force and effect its corporate existence and rights and franchises
with respect thereto and maintain in full force and effect all licenses,
trademarks, tradenames, approvals, authorizations, leases, contracts and Permits
necessary to carry on the business as presently conducted.
(b) No Borrower shall change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days prior written notice from any Borrower of such proposed change
in its corporate name, which notice shall accurately set forth the new name; and
(ii) Agent shall have received a copy of the amendment to the Certificate of
Incorporation of such Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation or organization of such
Borrower promptly after it becomes available.
(c) No Borrower shall change its chief executive office
or its mailing address or organizational identification number (or if it does
not have one, shall not acquire one) unless Agent shall have received not less
than thirty (30) days' prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. No Borrower shall change
its type of organization, jurisdiction of organization or other legal structure
except as otherwise permitted pursuant to Section 9.7(a) of this Agreement.
9.2 New Collateral Locations. Each Borrower may open any new
location within the continental United States provided such Borrower (a) gives
Agent thirty (30) days prior written notice of the intended opening of any such
new location and (b) executes and delivers, or causes to be executed and
delivered, to Agent such agreements, documents, and instruments as Agent may
deem reasonably necessary or desirable to protect its interests in the
Collateral at such location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower shall, and shall cause any Subsidiary
to, at all times, comply in all material respects with all laws, rules,
regulations, licenses, approvals, orders and other Permits applicable to it and
duly observe all requirements of any foreign, Federal, State or local
Governmental Authority, including ERISA, the Code, the Occupational Safety and
Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and all statutes, rules, regulations, orders, permits and stipulations
relating to environmental pollution and employee health and safety, including
all of the Environmental Laws, where the failure to so comply has or could
reasonably be expected to have a Material Adverse Effect.
(b) Borrowers shall give written notice to Agent promptly
upon any Borrower's receipt of any notice of, or any Borrower's otherwise
obtaining knowledge of, (i) the occurrence of any event involving the release,
spill or discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental
71
Law by any Borrower or (B) the release, spill or discharge, threatened or
actual, of any Hazardous Material other than in the ordinary course of business
and other than as permitted under any applicable Environmental Law which, in the
case of any of the foregoing, is reasonably likely to result in a material
liability. Copies of all environmental surveys, audits, assessments, feasibility
studies and results of remedial investigations made after the date hereof shall
be promptly furnished, or caused to be furnished, by such Borrower or Agent.
Each Borrower shall take prompt action to respond to any material non-compliance
with any of the Environmental Laws and shall report to Agent on such response.
(c) Without limiting the generality of the foregoing,
whenever Agent reasonably determines that there is non-compliance, or any
condition which requires any action by or on behalf of any Borrower in order to
avoid any non-compliance, with any Environmental Law, Borrowers shall, at
Agent's request and Borrowers' expense: (i) cause an independent environmental
engineer reasonably acceptable to Agent to conduct such tests of the site where
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
(d) Each Borrower shall indemnify and hold harmless Agent
and Lenders and their respective directors, officers, employees, agents,
invitees, representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material related to any Borrower or any of its real or personal
property, including the costs of any required or necessary repair, cleanup or
other remedial work with respect to any property of any Borrower and the
preparation and implementation of any closure, remedial or other required plans.
All representations, warranties, covenants and indemnifications in this Section
9.3 shall survive the payment of the Obligations and the termination of this
Agreement.
9.4 Payment of Taxes and Claims. Each Borrower shall, and shall
cause any Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to such Borrower or
Subsidiary, as the case may be, and with respect to which adequate reserves have
been set aside on its books. Each Borrower shall be liable for any tax or
penalties imposed on Agent or any Lender as a result of the financing
arrangements provided for herein and each Borrower agrees to indemnify and hold
Agent harmless with respect to the foregoing, and to repay to Agent, for the
benefit of Lenders, on demand the amount thereof, and until paid by such
Borrower such amount shall be added and deemed part of the Loans, provided,
that, nothing contained herein shall be construed to require any Borrower to pay
any income or franchise taxes attributable to the income of Lenders from any
amounts charged or paid hereunder to Lenders.
72
The foregoing indemnity shall survive the payment of the Obligations and the
termination of this Agreement.
9.5 Insurance. Each Borrower shall, and shall cause any Subsidiary
to, at all times, maintain with financially sound and reputable insurers
insurance with respect to the Collateral against loss or damage and all other
insurance of the kinds and in the amounts customarily insured against or carried
by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer. Borrowers shall
furnish certificates, policies or endorsements to Agent as Agent shall
reasonably require as proof of such insurance, and, if any Borrower fails to do
so within five (5) days after written request by Agent, Agent is authorized, but
not required, to obtain such insurance at the expense of Borrowers. All policies
shall provide for at least thirty (30) days prior written notice to Agent of any
cancellation or reduction of coverage and that Agent may act as attorney for
each Borrower in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrowers shall cause Agent to be named as a loss payee and an
additional insured as its interests may appear (but without any liability for
any premiums) under such insurance policies and Borrowers shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance reasonably satisfactory to Agent. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Agent as its interests may appear and further specify that Agent and Lenders
shall be paid regardless of any act or omission by any Borrower, except, that,
the proceeds of such insurance with respect to Equipment that is subject to
liens permitted under Section 9.8(e) or 9.8(m) shall not be payable to Agent and
Lenders. Without limiting any other rights of Agent or Lenders, any insurance
proceeds received by Agent at any time may be applied to the cost of repairs,
refurbishment or replacement of Collateral and/or to payment of the Obligations,
so long as no Event of Default exists or has occurred and is continuing, in
accordance with the terms of Section 2.6 hereof and, at any time an Event of
Default exists or has occurred and is continuing, in accordance with Section 6.4
hereof. Upon application of such proceeds to the Revolving Loans, nothing
contained in this Section 9.5 shall be construed to limit the use of any
subsequent Revolving Loans for the costs of repair or replacement of the
Collateral lost or damaged resulting in the payment of such insurance proceeds.
9.6 Financial Statements and Other Information.
(a) Each Borrower shall, and shall cause any Subsidiary
to, keep proper books and records in which true and complete entries shall be
made of all dealings or transactions of or in relation to the Collateral and the
business of such Borrower and its Subsidiaries in accordance with GAAP.
Borrowers shall promptly furnish to Agent and Lenders all such financial and
other information as Agent shall reasonably request relating to the Collateral
and the assets, business and operations of Borrowers, and Borrower shall notify
the auditors and accountants of Borrowers that Agent is authorized to obtain
such information directly from them, provided, that, Agent shall give Borrowers
notice concurrently with Agent's request for any such information. Without
limiting the foregoing, Borrowers shall furnish or cause to be furnished to
Agent, the following: (i) within thirty (30) days after the end of each fiscal
month (or within forty-five (45)
73
days after the end of a fiscal month that is also the end of a fiscal quarter,
as applicable), monthly unaudited consolidated financial statements, and
unaudited consolidating financial statements (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders' equity), all in reasonable detail, fairly presenting the
financial position and the results of the operations of Borrowers and their
Subsidiaries as of the end of and through such fiscal month, certified to be
correct by the chief financial officer of each Borrower, subject to normal
year-end adjustments and no footnotes and accompanied by a compliance
certificate substantially in the form of Exhibit C hereto, along with a schedule
in a form satisfactory to Agent of the calculations used in determining, as of
the end of such month, whether Borrowers are in compliance with the covenants
set forth in Sections 9.17, 9.18, 9.19 and 9.20 of this Agreement for such month
and (ii) within one hundred twenty (120) days after the end of each fiscal year,
audited consolidated financial statements and unaudited consolidating financial
statements of Borrowers and their Subsidiaries (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting in all material respects the financial position and
the results of the operations of Borrowers and their Subsidiaries as of the end
of and for such fiscal year, together with the unqualified opinion of
independent certified public accountants with respect to the audited
consolidated financial statements, which accountants shall be an independent
accounting firm selected by Borrowers and reasonably acceptable to Agent, that
such audited consolidated financial statements have been prepared in accordance
with GAAP, and present fairly the results of operations and financial condition
of Borrowers and their respective Subsidiaries as of the end of and for the
fiscal year then ended.
(b) Borrowers shall promptly notify Agent in writing of
the details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $250,000 or which if
adversely determined would have or could reasonably be expected to have a
Material Adverse Effect, (ii) any Material Contract being terminated or amended
in any material respect or any new Material Contract entered into (in which
event Borrowers shall provide Agent with a copy of such Material Contract),
(iii) any order, judgment or decree in excess of $500,000 shall have been
entered against any Borrower any of its properties or assets, (iv) any
notification of a material violation of laws or regulations received by any
Borrower, (v) any ERISA Event, and (vi) the occurrence of any Default or Event
of Default.
(c) Borrowers shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports which
any Borrower sends to its stockholders generally and copies of all reports and
registration statements which any Borrower files with the Securities and
Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(d) Borrowers shall furnish or cause to be furnished to
Agent such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrowers, as Agent may, from time to time,
reasonably request. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrowers to any court or other Governmental Authority or to any Lender or
Participant or
74
prospective Lender or Participant or any Affiliate of any Lender or Participant
subject to and in accordance with the confidentiality provisions contained in
Section 13.5 of this Agreement. Each Borrower hereby irrevocably authorizes and
directs all accountants or auditors to deliver to Agent, at Borrowers' expense,
copies of the financial statements of any Borrower and any reports or management
letters prepared by such accountants or auditors on behalf of any Borrower and
to disclose to Agent and Lenders such information as they may have regarding the
business of any Borrower. Any documents, schedules, invoices or other papers
delivered to Agent or any Lender may be destroyed by Agent or such Lender one
(1) year after the same are delivered to Agent or such Lender, except as
otherwise designated by Administrative Borrower to Agent or such Lender in
writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each
Borrower shall not, and shall not permit any Subsidiary to, directly or
indirectly,
(a) merge into or with or consolidate with any other
Person or permit any other Person to merge into or with or consolidate with it
except that any wholly-owned Subsidiary of a Borrower may merge with and into or
consolidate with any other wholly-owned Subsidiary of a Borrower and any
Borrower may merge with and into or consolidate with any other Borrower,
provided, that, each of the following conditions is satisfied as determined by
Agent in good faith: (i) Agent shall have received not less than ten (10)
Business Days' prior written notice of the intention of such Subsidiaries to so
merge or consolidate, which notice shall set forth in reasonable detail
satisfactory to Agent, the persons that are merging or consolidating, which
person will be the surviving entity, the locations of the assets of the persons
that are merging or consolidating, and the material agreements and documents
relating to such merger or consolidation, (ii) Agent shall have received such
other information with respect to such merger or consolidation as Agent may
reasonably request, (iii) as of the effective date of the merger or
consolidation and after giving effect thereto, no Default or Event of Default
shall exist or have occurred, (iv) Agent shall have received, true, correct and
complete copies of all agreements, documents and instruments relating to such
merger or consolidation, including, but not limited to, the certificate or
certificates of merger to be filed with each appropriate Secretary of State
(with a copy as filed promptly after such filing), (v) the surviving corporation
shall expressly confirm, ratify and assume the Obligations and the Financing
Agreements to which it is a party in writing, in form and substance satisfactory
to Agent, and Borrowers shall execute and deliver such other agreements,
documents and instruments as Agent may reasonably request in connection
therewith;
(b) sell, issue, assign, lease, license, transfer,
abandon or otherwise dispose of any Capital Stock or any of its other assets
(other than Real Property) to any other Person, except for
(i) sales of Inventory in the ordinary course of
business,
(ii) the sale or other disposition of Equipment
(including worn-out or obsolete Equipment or Equipment no longer used or useful
in the business of any Borrower) so long as such sales or other dispositions do
not involve Equipment having an aggregate fair
75
market value in excess of $250,000 for all such Equipment disposed of in any
fiscal year of Borrowers or as Agent may otherwise agree, and
(iii) the issuance and sale by any Borrower of
Capital Stock of such Borrower after the date hereof; provided, that, (A) the
terms of such Capital Stock, and the terms and conditions of the purchase and
sale thereof, shall not include any terms that include any limitation on the
right of any Borrower to request or receive Loans or Letter of Credit
Accommodations or the right of any Borrower to amend or modify any of the terms
and conditions of this Agreement or any of the other Financing Agreements or
otherwise in any way relate to or affect the arrangements of Borrowers with
Agent and Lenders, (B) except as Agent may otherwise agree in writing, all of
the Net Cash Proceeds of the sale and issuance of such Capital Stock (other than
proceeds of Capital Stock to be used for the exchange of Remaining Existing
Senior Subordinated Notes in accordance with Section 9.10(i) hereof) shall be
paid to Agent for application to the Obligations in accordance with Section 6.4
of this Agreement, (C) after giving effect to such issuance and sale, no Change
of Control shall occur and (D) as of the date of such issuance and sale and
after giving effect thereto, no Default or Event of Default shall exist or have
occurred,
(iv) the issuance of Capital Stock of any Borrower
consisting of common stock pursuant to an employee stock option or grant or
similar equity plan or 401(k) plans of such Borrower for the benefit of its
employees, directors and consultants, provided, that, in no event shall such
Borrower be required to issue, or shall such Borrower issue, Capital Stock
pursuant to such stock plans or 401(k) plans which would result in a Change of
Control or other Event of Default,
(v) the issuance and sale by LPC of Capital Stock
(including, without limitation, in connection with the exercise of warrants to
purchase such Capital Stock) pursuant to and in accordance with the Warrant
Agent Agreement and the Exchange Agreement as in effect on the date hereof;
provided, that, (A) except as Agent may otherwise agree in writing, all of the
Net Cash Proceeds of the sale and issuance of such Capital Stock shall be paid
to Agent for application to the Obligations in accordance with Section 6.4 of
this Agreement and (B) after giving effect to any such issuance and sale, no
Change of Control shall occur.
(vi) the sale or other disposition of Collateral not
otherwise permitted above so long as such sales or other dispositions do not
involve Collateral having an aggregate fair market value in excess of $200,000
for all such Collateral disposed of in any fiscal year of Borrowers, provided,
that, (A) Agent shall have received not less than five (5) Business Days' prior
written notice of such sale or disposition and (B) as of the date of any such
sale or disposition, and after giving effect thereto, no Default or Event of
Default shall exist or shall have occurred and be continuing,
(vii) the intercompany loans and dividend payments to
the extent permitted by Sections 9.10(g), 9.11 and 9.12,
(c) wind up, liquidate or dissolve; or
76
(d) agree to do any of the foregoing except if
conditioned on approval by Agent.
9.8 Encumbrances. Each Borrower shall not, and shall not permit
any Subsidiary to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets or properties, including the Collateral, or file
or permit the filing of, or permit to remain in effect, any financing statement
or other similar notice of any security interest or lien with respect to any
such assets or properties, except:
(a) the security interests and liens of Agent for itself
and the benefit of Lenders;
(b) liens securing the payment of taxes, assessments or
other governmental charges or levies either not yet overdue or the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower or Subsidiary, as the case may be and
with respect to which reserves have been set aside on its books as required by
GAAP;
(c) non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course of such Borrower's
or Subsidiary's business to the extent: (i) such liens secure Indebtedness which
is not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower or
such Subsidiary, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which reserves have been set aside on
its books as required by GAAP;
(d) zoning restrictions, easements, licenses, covenants
and other restrictions affecting the use of Real Property which do not interfere
in any material respect with the use of such Real Property or ordinary conduct
of the business of such Borrower or such Subsidiary as presently conducted
thereon or materially impair the value of the Real Property (or, in the case of
leasehold interests, the value of Borrowers' interest in the Real Property) that
is subject thereto;
(e) purchase money or other types of security interests
in Equipment and the proceeds thereof (including Capitalized Leases) acquired
after the date hereof and purchase money or other types of mortgages on Real
Property to secure Indebtedness permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by any Borrower after
the date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of such Borrower as of the date hereof;
(g) pledges and deposits of cash by any Borrower after
the date hereof to
77
secure the performance of tenders, bids, leases, trade contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations in each case in the ordinary course of business consistent with the
current practices of such Borrower as of the date hereof;
(h) liens arising from (i) operating leases and the
precautionary UCC financing statement filings in respect thereof and (ii)
equipment or other materials which are not owned by any Borrower located on the
premises of such Borrower (but not in connection with, or as part of, the
financing thereof) from time to time in the ordinary course of business and
consistent with current practices of such Borrower and the precautionary UCC
financing statement filings in respect thereof;
(i) the security interests in and liens upon the
Collateral and mortgages and liens upon the Real Property in favor of Term Loan
Agent to secure the Term Loan Debt, provided, that, the security interests in
and liens upon the Collateral in favor of Term Loan Agent are and shall at all
times be subject and subordinate to the security interests and liens therein of
Agent pursuant to the terms of the Intercreditor Agreement;
(j) judgments and other similar liens arising in
connection with court proceedings that do not constitute an Event of Default,
provided, that, (i) such liens are being contested in good faith and by
appropriate proceedings diligently pursued, (ii) adequate reserves or other
appropriate provision, if any, as are required by GAAP have been made therefor,
(iii) a stay of enforcement of any such liens is in effect and (iv) Agent may
establish a Reserve with respect thereto;
(k) the security interests and liens of an Insurance
Premium Finance Party on the Insurance Premium Collateral to secure the
Indebtedness described in and to the extent permitted in Section 9.9 (l) hereof;
(l) liens on Real Property pursuant to or as permitted by
the Term Loan Lender Agreements; and
(m) the security interests and liens set forth on
Schedule 8.4 to the Information Certificate.
9.9 Indebtedness. Each Borrower shall not, and shall not permit
any Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse,
or otherwise become responsible for (directly or indirectly), the Indebtedness,
performance, obligations or dividends of any other Person, except:
(a) the Obligations;
(b) purchase money or other types of Indebtedness
(including Capitalized Leases) arising after the date hereof to the extent
secured by purchase money or other types of security interests in Equipment and
the proceeds thereof (including Capitalized Leases) and purchase money or other
type of mortgages or liens on Real Property not to exceed $2,500,000 in
78
the aggregate incurred during any fiscal year so long as such security
interests, mortgages or liens do not apply to any property of such Borrower or
Subsidiary other than the Equipment or Real Property (and the proceeds thereof)
acquired after the date of this Agreement, and the Indebtedness secured thereby
does not exceed the cost of the Equipment or Real Property so acquired, as the
case may be; provided, that, with respect to Indebtedness permitted to be
incurred pursuant to this Section 9.9(b) other than purchase money Indebtedness:
(i) Agent shall have received five (5) Business Days'
prior written notice of the intention of Borrowers to incur such Indebtedness,
(ii) Agent shall have received true, correct and
complete copies of the agreements, documents and instruments evidencing or
otherwise related to such Indebtedness, duly authorized, executed and delivered
by the parties thereto,
(iii) Agent shall have received true, correct and
complete copies of any amendments to the documentation evidencing such
Indebtedness which amend, modify, alter or change in any material respect the
terms of such Indebtedness,
(iv) Borrowers shall not, directly or indirectly,
redeem, retire, defease, purchase or otherwise acquire such Indebtedness or set
aside or otherwise deposit or invest any sums for such purpose, except with
respect to the exercise of a purchase option on Equipment subject to such
Indebtedness,
(iv) Borrowers shall furnish to Agent all notices of
default or demands for payment in connection with such Indebtedness either
received by any Borrower or on its behalf, promptly after the receipt thereof,
and
(v) as of the date of incurring such Indebtedness and
after giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing;
(c) guarantees by any Borrower of the Obligations of the
other Borrower in favor of Agent for the benefit of Lenders;
(d) the Indebtedness of any Borrower to any other
Borrower arising after the date hereof pursuant to loans by any Borrower
permitted under Section 9.10(g) hereof;
(e) Indebtedness of Borrowers to the Term Loan Lenders
evidenced by or arising under the Term Loan Agreement and the other Term Loan
Lender Agreements (as in effect on the date hereof or as amended in accordance
with clause (v) below), provided, that:
(i) the principal amount of such Indebtedness shall
not exceed $11,500,000, less the aggregate amount of all repayments, repurchases
or redemptions thereof, whether optional or mandatory, plus interest thereon at
the rate provided in the Term Loan Lender Agreements as in effect on the date
hereof,
79
(ii) as of the date hereof, no event of default, or
event which with notice or passage of time or both would constitute an event of
default exists, or has occurred under the Term Loan Lender Agreements,
(iii) Agent shall have received true, correct and
complete copies of all of the Term Loan Lender Agreements, as duly authorized,
executed and delivered by the parties thereto,
(iv) Borrowers shall not, directly or indirectly,
make, or be required to make, any payments in respect of such Indebtedness,
except, that, Borrowers may make regularly scheduled payments and mandatory
prepayments (as set forth in Section 2.4 of the Term Loan Agreement) of
principal and interest and fees and other amounts in respect of the Term Loan
Debt in accordance with the terms of the Term Loan Lender Agreements as in
effect on the date hereof;
(v) Borrowers shall not, directly or indirectly, (A)
amend, modify, alter or change in any material respect any of the material terms
of such Indebtedness or any of the Term Loan Lender Agreements as in effect on
the date hereof, except, that, Borrowers may, after prior written notice to
Agent, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness other than pursuant to
payments thereof, or to reduce the interest rate or any fees in connection
therewith, or to release any liens on or security interests in any assets or
properties of Borrowers, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, except as permitted in clause (iv) above, and
(vi) Borrowers shall furnish to Agent all notices of
default or demands for payment in connection with such Indebtedness either
received by such Borrower or on its behalf promptly after the receipt thereof,
and all such notices or demands sent by any Borrower or on its behalf
concurrently with the sending thereof, as the case may be;
(f) Indebtedness of LPC evidenced by the Senior Subordinated
Notes as in effect on the date hereof or as permitted to be amended pursuant to
the terms hereof, provided, that:
(i) the aggregate principal amount of such
Indebtedness shall not exceed $42,476,099, less the aggregate amount of all
repayments or redemptions, whether optional or mandatory, in respect thereof,
plus interest thereon at the rate provided for in the Senior Subordinated Notes
as in effect on the date hereof,
(ii) the Obligations are and shall at all time
constitute "Senior Debt" as such term is defined in the Senior Subordinated Note
Indenture as in effect on the date hereof and Agent and Lenders are and shall be
entitled to all of the rights and benefits thereof under the Senior Subordinated
Note Indenture as in effect on the date hereof and there shall be no other
"Senior Debt" except for Indebtedness permitted by Section 9.9 hereof or as
Agent may otherwise agree,
80
(iii) Borrowers shall not, directly or indirectly,
make any payments in respect of such Indebtedness, except that they may make
regularly scheduled payments of interest and fees, if any, in respect of such
Indebtedness when due in accordance with the terms of the Senior Subordinated
Notes and the Senior Subordinated Note Indenture as in effect on the date
hereof,
(iv) Borrowers shall not, directly or indirectly,
amend, modify, alter or change in any material respect any terms of such
Indebtedness or any of the Senior Subordinated Notes or the Senior Subordinated
Note Indenture, except that Borrowers may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof or defer the timing of any payments in respect thereof, or to forgive or
cancel any portion of such Indebtedness other than pursuant to payments thereof,
or to reduce the interest rate or any fees in connection therewith, and
(v) Borrowers shall not, directly or indirectly,
redeem, retire, defease, purchase or otherwise acquire all or any part of such
Indebtedness other than at maturity (as set forth in the Senior Subordinated
Note Indenture as in effect on the date hereof or as extended after the date
hereof), or set aside or otherwise deposit or invest any sums for such purpose,
except, that, Borrowers may redeem or purchase all or any part of such
Indebtedness after one (1) year from the date of this Agreement, provided, that,
as of the date of any such redemption or purchase or any payment in respect
thereof and after giving effect thereto: (i) Borrowers shall give to Agent
written notice thereof on the day Borrowers so redeem or purchase all or any
part of such Indebtedness, which notice shall specify the maximum amount that
Borrowers will pay in respect thereof and the range of the principal amount of
the Senior Subordinated Notes which Borrowers anticipate will be so redeemed or
purchased, (ii) as of the date of any such redemption or purchase or payments in
respect thereof and after giving effect thereto, the aggregate amount of the
Excess Availability of Borrowers shall be not less than $4,000,000 and (iii) as
of the date of any such redemption or purchase or payment in respect thereof and
after giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing;
(g) Indebtedness of LPC evidenced by the Junior Subordinated
Notes as in effect on the date hereof or as permitted to be amended pursuant to
the terms hereof, provided, that:
(i) the aggregate principal amount of such
Indebtedness shall not exceed $346,667 the aggregate amount of all repayments or
redemptions, whether optional or mandatory, in respect thereof, plus interest
thereon at the rate provided for in the Junior Subordinated Notes as in effect
on the date hereof,
(ii) the Obligations are and shall at all time
constitute "Senior Debt" as such term is defined in the Junior Subordinated
Notes as in effect on the date hereof and Agent and Lenders are and shall be
entitled to all of the rights and benefits thereof under the Junior Subordinated
Notes as in effect on the date hereof and there shall be no other "Senior Debt"
except for Indebtedness permitted by Section 9.9 hereof or as Agent may
otherwise agree,
(iii) Borrowers shall not, directly or indirectly,
make any payments in respect of such Indebtedness, except that they may make
regularly scheduled payments of interest and fees,
81
if any, in respect of such Indebtedness when due in accordance with the terms of
the Junior Subordinated Notes as in effect on the date hereof,
(iv) Borrowers shall not, directly or indirectly,
amend, modify, alter or change in any material respect any terms of such
Indebtedness or any of the Junior Subordinated Notes, except that Borrowers may,
after prior written notice to Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof or defer the timing of any payments
in respect thereof, or to forgive or cancel any portion of such Indebtedness
other than pursuant to payments thereof, or to reduce the interest rate or any
fees in connection therewith, and
(v) Borrowers shall not, directly or indirectly,
redeem, retire, defease, purchase or otherwise acquire all or any part of such
Indebtedness other than at maturity (as set forth in the Junior Subordinated
Notes as in effect on the date hereof or as extended after the date hereof), or
set aside or otherwise deposit or invest any sums for such purpose, except,
that, Borrowers may redeem or purchase all or any part of such Indebtedness
after one (1) year from the date of this Agreement, provided, that, as of the
date of any such redemption or purchase or any payment in respect thereof and
after giving effect thereto: (i) Borrowers shall give to Agent written notice
thereof on the day Borrowers so redeem or purchase all or any part of such
Indebtedness, which notice shall specify the maximum amount that Borrowers will
pay in respect thereof and the range of the principal amount of the Junior
Subordinated Notes which Borrowers anticipate will be so redeemed or purchased,
(ii) as of the date of any such redemption or purchase or payments in respect
thereof and after giving effect thereto, the aggregate amount of the Excess
Availability of Borrowers shall be not less than $4,000,000 and (iii) as of the
date of any such redemption or purchase or payment in respect thereof and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing;
(h) unsecured Indebtedness of any Borrower arising after the
date hereof to any third person (but not to any other Borrower), provided, that,
each of the following conditions is satisfied as determined by Agent: (i) Agent
shall have received not less than ten (10) days prior written notice of the
intention of such Borrower to incur such Indebtedness, which notice shall set
forth in reasonable detail satisfactory to Agent the amount of such
Indebtedness, the person or persons to whom such Indebtedness will be owed, the
interest rate, the schedule of repayments and maturity date with respect thereto
and such other information as Agent may request with respect thereto, (ii) Agent
shall have received true, correct and complete copies of all agreements,
documents and instruments evidencing or otherwise related to such Indebtedness,
(iii) except as Agent may otherwise agree in writing, all of the cash proceeds
of the loans or other accommodations giving rise to such Indebtedness (other
than proceeds of such loans to be used for the purchase or exchange of Remaining
Existing Senior Subordinated Notes in accordance with Section 9.10(i) hereof)
shall be paid to Agent for application to the Obligations in accordance with
Section 2.6 or Section 6.4 hereof, as applicable, (iv) as of the date of
incurring such Indebtedness and after giving effect thereto, no Default or Event
of Default shall exist or have occurred and be continuing, and (v) Borrowers
shall furnish to Agent all default notices or demands for payment in connection
with such Indebtedness either received by any Borrower or on its behalf promptly
after the receipt thereof, or sent by any Borrower or on its behalf concurrently
with the sending thereof, as the case may be;
82
(i) the Indebtedness set forth on Schedule 9.9 to the
Information Certificate; provided, that, (i) Borrowers may only make regularly
scheduled payments of principal and interest in respect of such Indebtedness in
accordance with the terms of the agreement or instrument evidencing or giving
rise to such Indebtedness as in effect on the date hereof, (ii) Borrowers shall
not, directly or indirectly, (A) amend, modify, alter or change in any material
respect the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof except, that, Borrowers may,
after prior written notice to Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (iii) Borrowers shall
furnish to Agent all notices or demands in connection with such Indebtedness
either received by any Borrower or on its behalf, promptly after the receipt
thereof, or sent by any Borrower or on its behalf, concurrently with the sending
thereof, as the case may be;
(j) Indebtedness of Borrowers arising after the date hereof
issued in exchange for, or the proceeds of which are used to extend, refinance,
replace or substitute for, Indebtedness permitted under Section 9.9(e) hereof
(the "Refinancing Indebtedness"); provided, that, as to any such Refinancing
Indebtedness, each of the following conditions is satisfied: (i) Agent shall
have received not less than ten (10) Business Days' prior written notice of the
intention to incur such Indebtedness, which notice shall set forth in detail
reasonably satisfactory to Agent, the amount of such Indebtedness, the schedule
of repayments and maturity date with respect thereto and such other information
with respect thereto as Agent may reasonably request, (ii) promptly upon Agent's
request, Agent shall have received true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to such
Indebtedness, as duly executed and delivered by the parties thereto, (iii) the
Refinancing Indebtedness shall have a Weighted Average Life to Maturity and a
final maturity equal to or greater than the Weighted Average Life to Maturity
and the final maturity, respectively, of the Indebtedness being extended,
refinanced, replaced, or substituted for, (iv) the Refinancing Indebtedness
shall rank in right of payment no more senior relative to the Obligations as the
Indebtedness being extended, refinanced, replaced, or substituted for, (v) the
Refinancing Indebtedness shall not include terms and conditions with respect to
Borrowers which are more burdensome or restrictive in any material respect than
those included in the Indebtedness so extended, refinanced, replaced or
substituted for, (vi) such Indebtedness incurred by Borrowers shall be at rates
and with fees or other charges no higher or greater than the Indebtedness so
extended, refinanced, replaced or substituted for, (vii) as of the date of
incurring such Indebtedness and after giving effect thereto, no Event of Default
shall exist or have occurred and be continuing, (viii) the principal amount of
such Refinancing Indebtedness shall not exceed the principal amount of the
Indebtedness so extended, refinanced, replaced or substituted for (plus the
amount of reasonable refinancing fees and expenses incurred in connection
therewith), (ix) the Refinancing Indebtedness shall be secured by substantially
the same assets that secure the Indebtedness so extended, refinanced, replaced
or substituted for, provided, that, such security interests with respect to the
Refinancing Indebtedness shall have a priority no more senior than, and be at
least as subordinated (on terms and conditions acceptable to Agent) as the
security interest with respect to the Indebtedness so
83
extended, refinanced, replaced or substituted for, (x) Borrowers may only make
regularly scheduled payments and mandatory prepayments of principal, interest
and fees, if any, in respect of such Indebtedness as permitted in Section 9.9
(e) hereof, (xi) Borrowers shall not, directly or indirectly, (A) amend, modify,
alter or change in any material respect the terms of the agreements with respect
to such Refinancing Indebtedness, except that Borrowers may, after prior written
notice to Agent, amend, modify, alter or change the terms thereof so as to
extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Refinancing Indebtedness
other than pursuant to payments thereof, or to reduce the interest rate or any
fees in connection therewith, or to release any liens on or security interests
in any assets or properties of Borrowers, or (B) redeem, retire, defease,
purchase or otherwise acquire such Refinancing Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose (other than with
Refinancing Indebtedness to the extent permitted herein and to the extent
permitted with respect to the Indebtedness so extended, refinanced, replaced or
substituted for), and (xi) Borrowers shall furnish to Agent all notices of
default or demands for payment in connection with such Indebtedness either by
such Borrower or on its behalf promptly after the receipt thereof, and all such
notices or demands sent by any Borrower or on its behalf concurrently with the
sending thereof, as the case may be;
(k) the Remaining Existing Subordinated Note Indebtedness,
which may be purchased for cash or exchanged for Senior Subordinated Notes or
other unsecured Indebtedness and/or Capital Stock as permitted in Section
9.10(i) hereof;
(l) Indebtedness of Borrowers to an Insurance Premium Finance
Party in connection with insurance policies maintained by Borrowers arising as a
result of such Insurance Premium Finance Party entering into arrangements to
allow Borrowers to pay all or a portion of the applicable insurance premiums on
such insurance policies in installments rather than in one lump sum annual
payment; provided, that,
(i) the Insurance Premium Finance Party to which such
Indebtedness is owed shall only have the right to cancel or terminate the
insurance policy subject to its security interest, and shall only cancel or
terminate any such policy after ten (10) days prior written notice to Agent and
may only take such action with respect to such policy in the event that (A) a
Borrower has failed to make a regularly scheduled installment payment in respect
of the Indebtedness owed to such Insurance Premium Finance Party when due and
described in this Section 9.9(l) and (B) any applicable cure period with respect
thereto has expired,
(ii) Upon Agent's request, Borrowers shall promptly
deliver to Agent true, correct and complete copies of all agreements related to
such Indebtedness, as duly authorized, executed and delivered by the parties
thereto,
(iii) such Indebtedness shall be unsecured except to
the extent permitted under Section 9.8(k) hereof,
(iv) Borrowers shall furnish to Agent all default
notices or demands for payment in connection with such Indebtedness either
received by Borrowers or on their behalf
84
after the receipt thereof, or sent by Borrowers or on their behalf, concurrently
with the sending thereof, as the case may be; and
(m) the unsecured Nomura Debt to the extent outstanding as
provided in or pursuant to the Nomura Payoff Agreement as in effect on the date
hereof.
9.10 Loans, Investments, Etc. Each Borrower shall not, and shall
not permit any Subsidiary to, directly or indirectly, make any loans or advance
money or property to any person, or invest in (by capital contribution, dividend
or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all
or a substantial part of the assets or property of any person, or form or
acquire any Subsidiaries, or agree to do any of the foregoing (unless
conditioned upon Agent's consent), except:
(a) the endorsement of instruments for collection or deposit
in the ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that,
(i) no Loans are then outstanding and (ii) the terms and conditions of Section
5.2 hereof shall have been satisfied with respect to the deposit account,
investment account or other account in which such cash or Cash Equivalents are
held;
(c) the existing equity investments of each Borrower as of the
date hereof in its Subsidiaries, provided, that, no Borrower shall have any
further obligations or liabilities to make any capital contributions or other
additional investments or other payments to or in or for the benefit of any of
such Subsidiaries, except, that, a Borrower may make capital contributions to
another Borrower in the form of dividend payments as permitted pursuant to
Sections 9.11 and 9.12 hereof;
(d) loans and advances by any Borrower to employees of such
Borrower after the date hereof not to exceed the principal amount of $250,000 in
the aggregate at any time outstanding;
(e) stock or obligations issued to any Borrower by any Person
(or the representative of such Person) in respect of Indebtedness of such Person
owing to such Borrower in connection with the insolvency, bankruptcy,
receivership or reorganization of such Person or a composition or readjustment
of the debts of such Person; provided, that, the original of any such stock or
instrument evidencing such obligations shall be promptly delivered to Agent,
upon Agent's request, together with such stock power, assignment or endorsement
by such Borrower as Agent may request;
(f) obligations of account debtors to any Borrower arising
from Accounts which are past due evidenced by a promissory note made by such
account debtor payable to such Borrower; provided, that, promptly upon the
receipt of the original of any such promissory note by such Borrower, such
promissory note shall be endorsed to the order of Agent by such Borrower and
promptly delivered to Agent as so endorsed;
85
(g) loans by a Borrower to another Borrower after the date
hereof, provided, that, (i) upon Agent's request, Borrowers shall provide to
Agent a report in form and substance satisfactory to Agent of the outstanding
amount of such loans as of the last day of the immediately preceding month and
indicating any loans made and payments received during the immediately preceding
month, (ii) if any such loan shall be evidenced by a promissory note or other
instrument, the single original of such note or other instrument shall be
promptly delivered to Agent upon its request to hold as part of the Collateral,
with such endorsement and/or assignment by the payee of such note or other
instrument as Agent may require, (iii) as of the date of any such loan and after
giving effect thereto, the Borrower making such loan shall be Solvent and (iv)
as of the date of any such loan and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing;
(h) the loans and advances set forth on Schedule 9.10 to the
Information Certificate; provided, that, as to such loans and advances,
Borrowers shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto and Borrowers shall furnish to Agent all default notices or
demands for payment in connection with such loans and advances received by any
Borrower or on its behalf, promptly after the receipt thereof, or sent by any
Borrower or on its behalf, concurrently with the sending thereof, as the case
may be;
(i) the purchase of the Remaining Existing Subordinated Note
Indebtedness or the exchange of such Indebtedness for Indebtedness on terms
substantially similar to the Senior Subordinated Notes for cash or for other
unsecured Indebtedness and/or Capital Stock in accordance with Sections 9.9(h)
and 9.7(b)(iii)(B) hereof, respectively; provided, that, as of the date of any
such purchase, no Default or Event of Default shall exist or have occurred and
be continuing;
(j) the exchange of the Existing Junior Subordinated Notes for
the Junior Subordinated Notes and the exchange of defaulted interest for Capital
Stock of LPC pursuant to the Exchange Agreement and, to the extent permitted in
Section 9.7(b)(v), the issuance of warrants pursuant to the Warrant Exchange
Agreement in connection with the exchange of Existing Senior Subordinated Notes
and Existing Junior Subordinated Notes; and
(k) the payment of dividends by Borrowers to the extent
permitted by Sections 9.11 and 9.12 hereof.
9.11 Dividends and Redemptions. Each Borrower shall not, directly
or indirectly, declare or pay any dividends on account of any shares of class of
any Capital Stock of such Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, except that:
86
(a) any Borrower may declare and pay such dividends or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock for consideration in the form of shares of common stock (so long
as after giving effect thereto no Change of Control or other Default or Event of
Default shall exist or occur);
(b) Borrowers may pay dividends to the extent permitted in
Section 9.12 below;
(c) any Subsidiary of a Borrower (other than LRG except as
permitted in clause (d) below) may pay dividends to a Borrower;
(d) LRG may pay dividends to LPC; provided, that, (i) after
giving effect to any such dividend payment, the Excess Availability of LRG shall
be not less than $2,000,000 and (iii) as of the date of such dividend payment
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred and be continuing;
(e) Borrowers may repurchase Capital Stock consisting of
common stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan, provided, that, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such repurchase and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the material terms of any
indenture, agreement or undertaking to which such Borrower is a party or by
which such Borrower or its property are bound, and (iv) the aggregate amount of
all payments for such repurchases in any calendar year shall not exceed
$200,000; and
(f) LPC may declare and pay cash dividends in respect of, and
redeem, cancel or retire, the Series B Preferred Stock in accordance with the
terms of the Restated Certificate of Incorporation of LPC as in effect on the
date hereof so long as (i) (A) the aggregate amount of all payments in respect
of dividends due prior to December 31, 2003 shall not exceed $106,000, (B) the
aggregate amount of all payments in respect of dividends (not including those
permitted in clause (A) above) in any fiscal year shall not exceed $30,000, and
(C) the aggregate amount of all such payments in respect of redemptions,
cancellations or retirements (exclusive of dividends) shall not exceed $660,000
(which amount includes past due payments of up to $270,000) and (ii) on the date
of any such payment, redemption, cancellation or retirement and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing.
9.12 Transactions with Affiliates. Each Borrower shall not,
directly or indirectly:
(a) purchase, acquire or lease any property from, or sell,
transfer or lease any property to, any officer, director or other Affiliate of
such Borrower, except in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's business (as the case may be) and upon fair and
reasonable terms no less favorable to such Borrower than such Borrower would
obtain in a comparable arm's length transaction with an unaffiliated person; or
87
(b) make any payments (whether by dividend, loan or otherwise)
of management, consulting or other fees for management or similar services, or
of any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of such Borrower, except (i) reasonable compensation to, and
reimbursement of reasonable expenses incurred by, officers, employees and
directors for services rendered to such Borrower in the ordinary course of
business, (ii) payments by any Borrower to any other Borrower for actual and
necessary reasonable out-of-pocket legal and accounting, insurance, marketing,
payroll and similar types of services paid for by any Borrower on behalf of such
other Borrower, in the ordinary course of their respective businesses or as the
same may be directly attributable to such Borrower and for the payment of taxes
by or on behalf of such Borrower, (iii) the grant of stock options, restricted
stock awards, stock appreciation rights or similar rights to employees, officers
or directors pursuant to a plan approved by the Board of Directors of the
applicable Borrower (so long as after giving effect thereto no Change of Control
or other Default or Event of Default shall exist or occur), (iv) loans or
advances to employees permitted by Section 9.10(d) of this Agreement, (v) the
payment of reasonable fees to the directors of any Borrower who are not
employees of such Borrower, (vi) the transactions contemplated by the Exchange
Agreement and the Warrant Agent Agreement as permitted in Section 9.7(b)(v) and
(vii) regularly scheduled payments in respect of the Senior Subordinated Notes
and the Junior Subordinated Notes to officers, directors or employees of LPC in
their capacity as holders thereof to the extent permitted in Sections
9.9(f)(iii) and (g)(iii), respectively.
9.13 Compliance with ERISA. Each Borrower shall, and shall cause
each of its ERISA Affiliates, to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
Federal and State law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) not terminate any of such
Plans so as to incur any material liability to the Pension Benefit Guaranty
Corporation; (d) not allow or suffer to exist any prohibited transaction
involving any of such Plans or any trust created thereunder which would subject
such Borrower or such ERISA Affiliate to a material tax or penalty or other
liability on prohibited transactions imposed under Section 4975 of the Code or
ERISA; (e) make all required contributions to any Plan which it is obligated to
pay under Section 302 of ERISA, Section 412 of the Code or the terms of such
Plan; (f) not allow or suffer to exist any accumulated funding deficiency,
whether or not waived, with respect to any such Plan; or (g) allow or suffer to
exist any occurrence of a reportable event or any other event or condition which
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such Plan that is a single employer plan, which termination
could result in any material liability to the Pension Benefit Guaranty
Corporation.
9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower shall, for
financial reporting purposes, cause its, and each of its Subsidiaries' (a)
fiscal years to end on December 31 of each year and (b) fiscal quarters to end
on March 31, June 30, September 30, and December 31 of each year.
9.15 Change in Business. Each Borrower shall not engage in any
business other than the business of such Borrower on the date hereof and any
business reasonably related, ancillary or complimentary to the business in which
such Borrower is engaged on the date hereof.
88
9.16 Limitation of Restrictions Affecting Subsidiaries. Each
Borrower shall not, directly, or indirectly, create or otherwise cause or suffer
to exist any encumbrance or restriction which prohibits or limits the ability of
any Subsidiary of such Borrower to (a) pay dividends or make other distributions
or pay any Indebtedness owed to such Borrower or any Subsidiary of such
Borrower; (b) make loans or advances to such Borrower or any Subsidiary of such
Borrower, (c) transfer any of its properties or assets to such Borrower or any
Subsidiary of such Borrower; or (d) create, incur, assume or suffer to exist any
lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, other than encumbrances and restrictions arising under (i)
applicable law, (ii) this Agreement, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of such
Borrower or any Subsidiary of such Borrower, (iv) customary restrictions on
dispositions of real property interests found in reciprocal easement agreements
of such Borrower or any Subsidiary of such Borrower, (v) any agreement relating
to permitted Indebtedness incurred by a Subsidiary of such Borrower prior to the
date on which such Subsidiary was acquired by such Borrower and outstanding on
such acquisition date, and (vi) the extension or continuation of contractual
obligations in existence on the date hereof; provided, that, any such
encumbrances or restrictions contained in such extension or continuation are no
less favorable to Agent and Lenders than those encumbrances and restrictions in
effect on the date hereof under or pursuant to the contractual obligations so
extended or continued.
9.17 Net Worth. Borrowers (on a consolidated basis) shall, as of
the end of each month, have Net Worth of not less than the amount set forth
below with respect to such month:
Month Minimum Net Worth
----- -----------------
January 2004 and each month $ (14,500,000)
thereafter through and including
December 2004
January 2005 and each month (12,000,000)
thereafter through and including
December 2005
January 2006 and each (10,000,000)
month thereafter
Numbers in parentheses indicates a negative amount.
9.18 Minimum EBITDA.
(a) The EBITDA of Borrowers (on a consolidated basis) as of
the end of each month during fiscal year 2004 (commencing with March 2004), on a
cumulative year-to-date basis, shall be not less than the amount set forth below
with respect to such month:
89
Month Minimum EBITDA
----- --------------
March 2004 $ 3,000,000
April 2004 4,000,000
May 2004 5,000,000
June 2004 6,000,000
July 2004 7,000,000
August 2004 8,500,000
September 2004 10,000,000
October 2004 11,500,000
November 2004 13,000,000
December 2004 14,000,000
(b) The EBITDA of Borrowers (on a consolidated basis) for the
immediately preceding twelve (12) consecutive months (treated as a single
accounting period) as of the end of each month set forth below shall be not less
than the amount set forth below with respect to such month:
Month Minimum EBITDA
----- --------------
January 2005 and each month $ 15,000,000
thereafter through and including
March 2005
April 2005 and each 16,000,000
month thereafter
9.19 Fixed Charge Coverage Ratio.
(a) The Fixed Charge Coverage Ratio for Borrowers (on a
consolidated basis) as of the last day of each fiscal quarter during fiscal year
2004 (commencing with the fiscal quarter ending March 31, 2004), on a cumulative
year to date basis, shall be not less than 1.10:1.
(b) The Fixed Charge Coverage Ratio of Borrowers (on a
consolidated basis) for the immediately preceding twelve (12) consecutive months
(treated as a single accounting period) as of the last day of each fiscal
quarter set forth below shall be not less than the ratio set forth below with
respect to such fiscal quarter:
90
Fiscal Quarter Ending Ratio
- --------------------- -----
March 31, 2005 1.15:1
June 30, 2005 1.15:1
September 30, 2005 1.15:1
December 31, 2005 1.15:1
March 31, 2006 and the last day 1.20:1
of each fiscal quarter thereafter
9.20 Maximum Capital Expenditures. Borrowers shall not, in the
aggregate, make Capital Expenditures (other than those financed by Indebtedness
permitted under Section 9.9(b) hereof) in excess of $5,000,000 in any fiscal
year.
9.21 License Agreements.
(a) Each Borrower shall (i) promptly and faithfully observe
and perform all of the material terms, covenants, conditions and provisions of
the material License Agreements to which it is a party to be observed and
performed by it, at the times set forth therein, if any, (ii) not do, permit,
suffer or refrain from doing anything that could reasonably be expected to
result in a default under or breach of any of the terms of any material License
Agreement, (iii) not cancel, surrender, modify, amend, waive or release any
material License Agreement in any material respect or any term, provision or
right of the licensee thereunder in any material respect, or consent to or
permit to occur any of the foregoing if any of the foregoing would have a
Material Adverse Effect; except, that, subject to Section 9.21(b) below, such
Borrower may cancel, surrender or release any material License Agreement in the
ordinary course of the business of such Borrower; provided, that, such Borrower
(as the case may be) shall give Agent not less than thirty (30) days prior
written notice of its intention to so cancel, surrender and release any such
material License Agreement, (iv) give Agent prompt written notice of any
material License Agreement entered into by such Borrower after the date hereof,
together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may request, (v) give Agent prompt
written notice of any material breach of any obligation, or any default, by any
party under any material License Agreement, and deliver to Agent (promptly upon
the receipt thereof by such Borrower in the case of a notice to such Borrower
and concurrently with the sending thereof in the case of a notice from such
Borrower) a copy of each notice of default and every other notice and other
communication received or delivered by such Borrower in connection with any
material License Agreement which relates to the right of such Borrower to
continue to use the property subject to such License Agreement, and (vi) furnish
to Agent, promptly upon the request of Agent, such information and evidence as
Agent may reasonably require from time to time concerning the observance,
performance and compliance by such Borrower or the other party or parties
thereto with the material terms, covenants or provisions of any material License
Agreement.
91
(b) Each Borrower will either exercise any option to renew or
extend the term of each material License Agreement to which it is a party in
such manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option and give
prompt written notice thereof to Agent or give Agent prior written notice that
such Borrower does not intend to renew or extend the term of any such material
License Agreement or that the term thereof shall otherwise be expiring, not less
than sixty (60) days prior to the date of any such non-renewal or expiration. In
the event of the failure of such Borrower to extend or renew any material
License Agreement to which it is a party, Agent shall have, and is hereby
granted, the irrevocable right and authority, at its option, at any time that an
Event of Default shall exist or have occurred and be continuing, to renew or
extend the term of such material License Agreement, whether in its own name and
behalf, or in the name and behalf of a designee or nominee of Agent or in the
name and behalf of such Borrower. At any time that an Event of Default shall
exist or have occurred and be continuing, Agent may, but shall not be required
to, perform any or all of such obligations of such Borrower under any of the
License Agreements, including, but not limited to, the payment of any or all
sums due from such Borrower thereunder. Any sums so paid by Agent shall
constitute part of the Obligations.
9.22 Costs and Expenses. Borrowers shall pay to Agent on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, syndication,
administration, collection, liquidation, enforcement and defense of the
Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, environmental audits,
title insurance premiums, surveys, assessments, engineering reports and
inspections, appraisal fees and search fees, costs and expenses of remitting
loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the Blocked Accounts, together with Agent's customary charges
and fees with respect thereto; (c) charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations; (d) costs and
expenses of preserving and protecting the Collateral; (e) costs and expenses
paid or incurred in connection with obtaining payment of the Obligations,
enforcing the security interests and liens of Agent, selling or otherwise
realizing upon the Collateral, and otherwise enforcing the provisions of this
Agreement and the other Financing Agreements or defending any claims made or
threatened against Agent or any Lender arising out of the transactions
contemplated hereby and thereby (including preparations for and consultations
concerning any such matters); (f) reasonable all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Agent during the
course of periodic field examinations of the Collateral and such Borrower's
operations, plus a per diem charge at the rate of $750 per person per day for
Agent's examiners in the field and office (which per diem charges shall not
exceed the aggregate amount of $40,000 in any fiscal year, provided, that, any
per diem charge incurred at any time that a Default or Event of Default shall
exist or have occurred and be continuing shall not be included for purposes of
such $40,000 limitation); and (g) the reasonable fees and disbursements of
counsel (including legal
92
assistants) to Agent in connection with any of the foregoing.
9.23 Further Assurances. At the request of Agent at any time and
from time to time, Borrowers shall, at their expense, duly execute and deliver,
or cause to be duly executed and delivered, such further agreements, documents
and instruments, and do or cause to be done such further acts as may be
necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Agent may at any time and from time to time request a certificate
from an officer of any Borrower representing that all conditions precedent to
the making of Loans and providing Letter of Credit Accommodations contained
herein are satisfied. In the event of such request by Agent, Agent and Lenders
may, at Agent's option, cease to make any further Loans or provide any further
Letter of Credit Accommodations until Agent has received such certificate and,
in addition, Agent has determined that such conditions are satisfied.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Borrower fails to pay any of the Obligations when
due or (ii) any Borrower or Obligor fails to perform any of the covenants
contained in Sections 9.3, 9.4, 9.13, 9.14, 9.15, and 9.16 of this Agreement and
such failure shall continue for ten (10) days; provided, that, such ten (10) day
period shall not apply in the case of: (A) any failure to observe any such
covenant which is not capable of being cured at all or within such ten (10) day
period or which has been the subject of a prior failure within a six (6) month
period or (B) an intentional breach by any Borrower or Obligor of any such
covenant or (iii) any Borrower or Obligor fails to perform any of the terms,
covenants, conditions or provisions contained in this Agreement or any of the
other Financing Agreements other than those described in Sections 10.1(a)(i) and
10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by
any Borrower to Agent in this Agreement, the other Financing Agreements or any
other written agreement, schedule or confirmatory assignment shall when made or
deemed made be false or misleading in any material respect;
(c) any Obligor revokes or terminates or purports to revoke or
terminate or fails to perform any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender executed and delivered pursuant to this Agreement;
(d) any judgment for the payment of money is rendered against
any Borrower or Obligor in excess of $1,000,000 in any one case or in excess of
$2,000,000 in the aggregate
93
(excluding in such calculation amounts covered by insurance where the insurer
has acknowledged coverage in writing for such judgment) and shall remain
undischarged or unvacated for a period in excess of forty-five (45) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower or Obligor that has or is reasonably
likely to have a Material Adverse Effect or against any of the Collateral having
a value in excess of $250,000 (and, after giving effect to any Reserve
established by Agent in respect of any such judgment, injunction, attachment,
garnishment or execution against any Collateral having a value in excess of
$250,000, the Excess Availability of Borrowers shall be less than $2,000,000 in
the aggregate);
(e) any Borrower or Obligor dissolves or suspends or
discontinues doing business, except as permitted pursuant to Section 9.7 hereof;
(f) any Borrower or Obligor makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or calls a
meeting of its creditors or principal creditors in connection with a moratorium
or adjustment of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower or Obligor or all or any part of its
properties and such case or proceeding is not dismissed within forty-five (45)
days after the date of its filing or any Borrower or Obligor shall file any
answer admitting the allegations made in such proceeding or not contesting such
petition or application or indicates its consent to, acquiescence in or approval
of, any such action or proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or Obligor or for all or any part of its
property;
(i) (A) any default in the payment of principal, interest or
other monetary obligations in respect of any Indebtedness of any Borrower (other
than Indebtedness owing to Agent or Lenders pursuant to the Financing Agreements
and the Remaining Existing Subordinated Indebtedness), in any such case in an
amount in excess of $500,000, which default continues beyond the applicable cure
period, if any, with respect thereto and is not waived in writing or (B) any
default (other than a default in payment of principal, interest or other
monetary obligations) in respect of any Indebtedness of any Borrower (other than
Indebtedness owing to Agent or Lenders pursuant to the Financing Agreements and
the Remaining Existing Subordinated Indebtedness), which default continues
beyond the applicable cure period, if any, and is not waived in writing and the
holders of such Indebtedness accelerate such Indebtedness or otherwise exercise
their remedies in respect of such default, or (C) any default by any Borrower
94
under any Material Contract (other than agreements or contracts entered into in
respect of borrowed money), which default continues for more than the applicable
cure period with respect thereto (and is not waived in writing) if the other
party to such Material Contract exercises its remedies with respect to such
default and such exercise results in termination of such Material Contract or a
liability on the part of any Borrower in excess of $500,000;
(j) any material provision hereof or of any of the other
Financing Agreements shall for any reason cease to be valid, binding and
enforceable with respect to any party hereto or thereto (other than Agent) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral subject thereto (except as otherwise permitted herein or therein);
(k) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of any Borrower in an aggregate
amount in excess of $1,000,000;
(l) any Change of Control;
(m) the indictment by any Governmental Authority of any
Borrower or Obligor of which any Borrower, Obligor or Agent receives notice as
to which there is a reasonable possibility of an adverse determination, in the
good faith determination of Agent, under any criminal statute, or commencement
or threatened commencement of criminal or civil proceedings against such
Borrower or Obligor, pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of (i) any of the Collateral
having a value in excess of $250,000 (and, after giving effect to any Reserve
established by Agent in respect of any such possible forfeiture, the Excess
Availability of Borrowers shall be less than $2,000,000 in the aggregate) or
(ii) any other property of any Borrower which is necessary or material to the
conduct of its business;
(n) there shall be an act, condition or event that has a
Material Adverse Effect after the date hereof;
(o) there shall be no Excess Availability after giving effect
to any Rubber Group Reserve established in accordance with Section 1.122 hereof;
or
(p) an event of default shall exist or have occurred and be
continuing under any of the Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and
is continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other
95
Financing Agreements, the UCC and other applicable law, all of which rights and
remedies may be exercised without notice to or consent by any Borrower or
Obligor, except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to Agent and
Lenders hereunder, under any of the other Financing Agreements, the UCC or other
applicable law, are cumulative, not exclusive and enforceable, in Agent's
discretion, alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply to a court
of equity for an injunction to restrain a breach or threatened breach by any
Borrower or Obligor of this Agreement or any of the other Financing Agreements.
Subject to Section 12 hereof, Agent may, and at the direction of the Required
Lenders shall, at any time or times, proceed directly against any Borrower or
Obligor to collect the Obligations without prior recourse to the Collateral.
(b) Without limiting the generality of the foregoing, at any
time an Event of Default exists or has occurred and is continuing, Agent may, at
its option and shall upon the direction of the Required Lenders, (i) upon notice
to Administrative Borrower, accelerate the payment of all Obligations and demand
immediate payment thereof to Agent for itself and the benefit of Lenders
(provided, that, upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), and (ii) terminate the Commitments and this
Agreement (provided, that, upon the occurrence of any Event of Default described
in Sections 10.1(g) and 10.1(h), the Commitments and any other obligation of the
Agent or a Lender hereunder shall automatically terminate).
(c) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Agent may, in its discretion,
and upon the direction of the Required Lenders, shall (i) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (ii) require any Borrower or Obligor, at Borrowers'
expense, to assemble and make available to Agent any part or all of the
Collateral at any place and time designated by Agent, (iii) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (iv)
remove any or all of the Collateral from any premises on or in which the same
may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (v) sell, lease, transfer, assign,
deliver or otherwise dispose of any and all Collateral (including entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Agent or elsewhere) at such prices or terms as
Agent may deem reasonable, for cash, upon credit or for future delivery, with
the Agent having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or
equity of redemption of any Borrower or Obligor, which right or equity of
redemption is hereby expressly waived and released by Borrowers and Obligors
and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased
by Agent upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Agent. If notice of disposition of Collateral is required by law, ten (10) days
prior notice by Agent to Administrative Borrower designating the time and place
of any public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrowers and Obligors waive
96
any other notice. In the event Agent institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy,
each Borrower and Obligor waives the posting of any bond which might otherwise
be required. At any time an Event of Default exists or has occurred and is
continuing, upon Agent's request, Borrowers will either, as Agent shall specify,
furnish cash collateral to the issuer to be used to secure and fund Agent's
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Agent for the Letter of Credit
Accommodations. Such cash collateral shall be in the amount equal to one hundred
five (105%) percent of the amount of the Letter of Credit Accommodations plus
the amount of any fees and expenses payable in connection therewith through the
end of the latest expiration date of such Letter of Credit Accommodations.
(d) At any time or times that an Event of Default exists or
has occurred and is continuing, Agent may, in its discretion, enforce the rights
of any Borrower or Obligor against any account debtor, secondary obligor or
other obligor in respect of any of the Accounts or other Receivables. Without
limiting the generality of the foregoing, Agent may, in its discretion, at such
time or times (i) notify any or all account debtors, secondary obligors or other
obligors in respect thereof that the Receivables have been assigned to Agent and
that Agent has a security interest therein and Agent may direct any or all
accounts debtors, secondary obligors and other obligors to make payment of
Receivables directly to Agent, (ii) extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and upon
any terms or conditions, any and all Receivables or other obligations included
in the Collateral and thereby discharge or release the account debtor or any
secondary obligors or other obligors in respect thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Receivables or
such other obligations, but without any duty to do so, and Agent and Lenders
shall not be liable for any failure to collect or enforce the payment thereof
nor for the negligence of its agents or attorneys with respect thereto and (iv)
take whatever other action Agent may deem necessary or desirable for the
protection of its interests and the interests of Lenders. At any time that an
Event of Default exists or has occurred and is continuing, at Agent's request,
all invoices and statements sent to any account debtor shall state that the
Accounts and such other obligations have been assigned to Agent and are payable
directly and only to Agent and Borrowers and Obligors shall deliver to Agent
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require. In the
event any account debtor returns Inventory when an Event of Default exists or
has occurred and is continuing, Borrowers shall, upon Agent's request, hold the
returned Inventory in trust for Agent, segregate all returned Inventory from all
of its other property, dispose of the returned Inventory solely according to
Agent's instructions, and not issue any credits, discounts or allowances with
respect thereto without Agent's prior written consent.
(e) To the extent that applicable law imposes duties on Agent
or any Lender to exercise remedies in a commercially reasonable manner (which
duties cannot be waived under such law), each Borrower acknowledges and agrees
that it is not commercially unreasonable for Agent or any Lender (i) to fail to
incur expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third
97
party consents for access to Collateral to be disposed of, or to obtain or, if
not required by other law, to fail to obtain consents of any Governmental
Authority or other third party for the collection or disposition of Collateral
to be collected or disposed of, (iii) to fail to exercise collection remedies
against account debtors, secondary obligors or other persons obligated on
Collateral or to remove liens or encumbrances on or any adverse claims against
Collateral, (iv) to exercise collection remedies against account debtors and
other persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature, (vi) to contact other persons,
whether or not in the same business as any Borrower, for expressions of interest
in acquiring all or any portion of the Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the collateral is of a specialized nature, (viii) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets, (ix) to dispose of assets in
wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Agent or Lenders
against risks of loss, collection or disposition of Collateral or to provide to
Agent or Lenders a guaranteed return from the collection or disposition of
Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the
services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of the
Collateral. Each Borrower acknowledges that the purpose of this Section is to
provide non-exhaustive indications of what actions or omissions by Agent or any
Lender would not be commercially unreasonable in the exercise by Agent or any
Lender of remedies against the Collateral and that other actions or omissions by
Agent or any Lender shall not be deemed commercially unreasonable solely on
account of not being indicated in this Section. Without limitation of the
foregoing, nothing contained in this Section shall be construed to grant any
rights to any Borrower or to impose any duties on Agent or Lenders that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section.
(f) For the purpose of enabling Agent to exercise the rights
and remedies hereunder, each Borrower and Obligor hereby grants to Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable at any
time an Event of Default shall exist or have occurred and only for so long as
the same is continuing) without payment of royalty or other compensation to any
Borrower or Obligor, to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles, designs,
logos and other source of business identifiers and other Intellectual Property
and general intangibles now owned or hereafter acquired by any Borrower or
Obligor, wherever the same maybe located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.
(g) Agent may apply the cash proceeds of Collateral actually
received by Agent from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Agent may elect, whether or not then due. Borrowers shall remain liable to
Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
98
enforcement, including attorneys' fees and expenses.
(h) Without limiting the foregoing, upon the occurrence of a
Default or an Event of Default and for so long as the same is continuing, (i)
Agent and Lenders may, at Agent's option, and upon the occurrence of an Event of
Default, and for so long as the same is continuing, at the direction of the
Required Lenders, Agent and Lenders shall, without notice, (A) cease making
Loans or arranging for Letter of Credit Accommodations or reduce the lending
formulas or amounts of Loans and Letter of Credit Accommodations available to
Borrowers and/or (B) terminate any provision of this Agreement providing for any
future Loans or Letter of Credit Accommodations to be made by Agent and Lenders
to Borrowers and (ii) Agent may, at its option, establish such Reserves as Agent
determines, without limitation or restriction, notwithstanding anything to the
contrary contained herein.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (except as otherwise provided
therein) and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of New York but excluding any principles of conflicts
of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of New York.
(b) Borrowers, Agent and Lenders irrevocably consent and
submit to the non-exclusive jurisdiction of the Supreme Court of the State of
New York for New York County and the United States District Court for the
Southern District of New York, whichever Agent may elect, and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Agent and Lenders shall
have the right to bring any action or proceeding against any Borrower or its
property in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against any Borrower or its property).
(c) Each Borrower hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Agent's option,
by service upon any Borrower (or Administrative Borrower on behalf of such
Borrower) in any other manner provided under the rules of any such courts.
Within thirty (30)
99
days after such service, such Borrower shall appear in answer to such process,
failing which such Borrower shall be deemed in default and judgment may be
entered by Agent against such Borrower for the amount of the claim and other
relief requested.
(d) BORROWERS, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, AGENT
AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY
BORROWER, AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to any
Borrower (whether in tort, contract, equity or otherwise) for losses suffered by
such Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by a
final and non-appealable judgment or court order binding on Agent and such
Lender, that such losses were the result of acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Agent and Lenders
shall be entitled to the benefit of the rebuttable presumption that it acted in
good faith and with the exercise of ordinary care in the performance by it of
the terms of this Agreement. Each Borrower: (i) certifies that neither Agent,
any Lender nor any representative, agent or attorney acting for or on behalf of
Agent or any Lender has represented, expressly or otherwise, that Agent and
Lenders would not, in the event of litigation, seek to enforce any of the
waivers provided for in this Agreement or any of the other Financing Agreements
and (ii) acknowledges that in entering into this Agreement and the other
Financing Agreements, Agent and Lenders are relying upon, among other things,
the waivers and certifications set forth in this Section 11.1 and elsewhere
herein and therein.
11.2 Waiver of Notices. Each Borrower hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and chattel paper, included in or evidencing
any of the Obligations or the Collateral, and any and all other demands and
notices of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for herein.
No notice to or demand on any Borrower which Agent or any Lender may elect to
give shall entitle such Borrower to any other or further notice or demand in the
same, similar or other circumstances.
11.3 Amendments and Waivers.
100
(a) Neither this Agreement nor any other Financing Agreement
nor any terms hereof or thereof may be amended, waived, discharged or terminated
unless such amendment, waiver, discharge or termination is in writing signed by
Agent and the Required Lenders or at Agent's option, by Agent with the
authorization of the Required Lenders, and as to amendments to any of the
Financing Agreements (other than with respect to any provision of Section 12
hereof), by any Borrower; except, that, no such amendment, waiver, discharge or
termination shall:
(i) reduce the interest rate or any fees or extend
the time of payment of principal, interest or any fees or reduce the principal
amount of any Loan or Letter of Credit Accommodations, in each case without the
consent of each Lender directly affected thereby,
(ii) increase the Commitment of any Lender over the
amount thereof then in effect or provided hereunder, in each case without the
consent of the Lender directly affected thereby,
(iii) release any Collateral (except as expressly
required hereunder or under any of the other Financing Agreements or applicable
law and except as permitted under Section 12.11(b) hereof), without the consent
of Agent and all of Lenders,
(iv) reduce any percentage specified in the
definition of Required Lenders, without the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by any
Borrower of any of their rights and obligations under this Agreement, without
the consent of Agent and all of Lenders,
(vi) amend, modify or waive any terms of this Section
11.3 hereof, without the consent of Agent and all of Lenders, or
(vii) increase the advance rates constituting part of
the Borrowing Base, without the consent of Agent and all of Lenders.
(b) Agent and Lenders shall not, by any act, delay, omission
or otherwise be deemed to have expressly or impliedly waived any of its rights,
powers and/or remedies unless such waiver shall be in writing and signed as
provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in
Section 11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
101
obtained, if any, then Congress shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Congress of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Congress or such Eligible Transferee as Congress may specify, the Commitment of
such Non-Consenting Lender and all rights and interests of such Non-Consenting
Lender pursuant thereto. Congress shall provide the Non-Consenting Lender with
prior written notice of its intent to exercise its right under this Section,
which notice shall specify on date on which such purchase and sale shall occur.
Such purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Congress, or such Eligible Transferee
specified by Congress, shall pay to the Non-Consenting Lender (except as
Congress and such Non- Consenting Lender may otherwise agree) the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as fo the close of business on the business day immediately
preceding the effective date of such purchase and sale, plus (ii) amounts
accrued and unpaid in respect of interest and fees payable to the Non-Consenting
Lender to the effective date of the purchase (but in no event shall the
Non-Consenting Lender be deemed entitled to any early termination fee), minus
(iii) the amount of the closing fee received by the Non-Consenting Lender
pursuant to the terms hereof or of any of the other Financing Agreements
multiplied by the fraction, the numerator of which is the number of months
remaining in the then current term of the Credit Facility and the denominator of
which is the number of months in the then current term thereof. Such purchase
and sale shall be effective on the date of the payment of such amount to the
Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
terminate on such date.
(d) The consent of Agent shall be required for any amendment,
waiver or consent affecting the rights or duties of Agent hereunder or under any
of the other Financing Agreements, in addition to the consent of the Lenders
otherwise required by this Section and the exercise by Agent of any of its
rights hereunder with respect to Reserves or Eligible Accounts or Eligible
Inventory shall not be deemed an amendment to the advance rates provided for in
this Section 11.3.
11.4 Waiver of Counterclaims. Each Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Each Borrower shall, jointly and severally,
indemnify and hold Agent and each Lender, and its officers, directors, agents,
employees, advisors and counsel and their respective Affiliates (each such
person being an "Indemnitee"), harmless from and against any and all losses,
claims, damages, liabilities, costs or expenses (including reasonable attorneys'
fees and expenses) imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court costs,
and the fees and expenses of
102
counsel, except that Borrowers shall not have any obligation under this Section
11.5 to indemnify an Indemnitee with respect to a matter covered hereby
resulting from the gross negligence or wilful misconduct of such Indemnitee as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction (but without limiting the obligations of Borrowers as to any other
Indemnitee). To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates any
law or public policy, Borrowers shall pay the maximum portion which it is
permitted to pay under applicable law to Agent and Lenders in satisfaction of
indemnified matters under this Section. To the extent permitted by applicable
law, no Borrower shall assert, and each Borrower hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any of
the other Financing Agreements or any undertaking or transaction contemplated
hereby. All amounts due under this Section shall be payable upon demand. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Financing Agreements, and shall not by reason of
this Agreement or any other Financing Agreement be a trustee or fiduciary for
any Lender; (b) shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in any
of the other Financing Agreements, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Financing Agreement or any other document referred to or provided for herein or
therein or for any failure by any Borrower or any Obligor or any other Person to
perform any of its obligations hereunder or thereunder; and (c) shall not be
responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent
jurisdiction. Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or
103
other communication (including any thereof by telephone, telecopy, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by Agent. As to any matters not expressly provided for by this
Agreement or any other Financing Agreement, Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or thereunder in
accordance with instructions given by the Required Lenders or all of Lenders as
is required in such circumstance, and such instructions of such Agents and any
action taken or failure to act pursuant thereto shall be binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of
the occurrence of a Default or an Event of Default or other failure of a
condition precedent to the Loans and Letter of Credit Accommodations hereunder,
unless and until Agent has received written notice from a Lender, or a Borrower
specifying such Event of Default or any unfulfilled condition precedent, and
stating that such notice is a "Notice of Default or Failure of Condition". In
the event that Agent receives such a Notice of Default or Failure of Condition,
Agent shall give prompt notice thereof to the Lenders. Agent shall (subject to
Section 12.7) take such action with respect to any such Event of Default or
failure of condition precedent as shall be directed by the Required Lenders;
provided, that, unless and until Agent shall have received such directions,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to or by reason of such Event of Default or
failure of condition precedent, as it shall deem advisable in the best interest
of Lenders. Without limiting the foregoing, and notwithstanding the existence or
occurrence and continuance of an Event of Default or any other failure to
satisfy any of the conditions precedent set forth in Section 4 of this Agreement
to the contrary, Agent may, but shall have no obligation to, continue to make
Loans and issue or cause to be issued Letter of Credit Accommodations for the
ratable account and risk of Lenders from time to time if Agent believes making
such Loans or issuing or causing to be issued such Letter of Credit
Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender
may assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against any Borrower or
Obligor or any of the Collateral or other property of any Borrower or Obligor.
12.4 Congress in its Individual Capacity. With respect to its
Commitment and the Loans made and Letter of Credit Accommodations issued or
caused to be issued by it (and any successor acting as Agent), so long as
Congress shall be a Lender hereunder, it shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Congress in its individual capacity as Lender
hereunder. Congress (and any successor acting as Agent) and its Affiliates may
(without having to account therefor to any Lender) lend money to, make
investments in and generally engage in any kind of business with Borrowers (and
any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and
104
Congress and its Affiliates may accept fees and other consideration from any
Borrower and any of its Subsidiaries and Affiliates for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrowers hereunder and without limiting any
obligations of Borrowers hereunder) ratably, in accordance with their Pro Rata
Shares, for any and all claims of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Lender)
arising out of or by reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Financing Agreement or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on Agent or other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of Borrowers and Obligors and has made its own decision to
enter into this Agreement and that it will, independently and without reliance
upon Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Financing Agreements. Agent shall not be required to keep itself informed
as to the performance or observance by any Borrower or Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of any Borrower or Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from any
Borrower or Obligor which is required to be provided to Lenders or deemed to be
requested by Lenders hereunder and with a copy of any Notice of Default or
Failure of Condition received by Agent from any Borrower or any Lender;
provided, that, Agent shall not be liable to any Lender for any failure to do
so, except to the extent that such failure is attributable to Agent's own gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Except for notices, reports and
other documents expressly required to be furnished to Lenders by Agent
hereunder, Agent shall not have any duty or responsibility to provide any Lender
with any other credit or other information concerning the affairs, financial
condition or business of any Borrower or Obligor that may come into the
possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such
105
action.
12.8 Additional Loans. Agent shall not make any Revolving Loans or
provide any Letter of Credit Accommodations to any Borrower on behalf of Lenders
intentionally and with actual knowledge that such Revolving Loans or Letter of
Credit Accommodations would cause the aggregate amount of the total outstanding
Revolving Loans and Letter of Credit Accommodations to such Borrower to exceed
the Borrowing Base of such Borrower, without the prior consent of all Lenders,
except, that, Agent may make such additional Revolving Loans or provide such
additional Letter of Credit Accommodations on behalf of Lenders, intentionally
and with actual knowledge that such Revolving Loans or Letter of Credit
Accommodations will cause the total outstanding Revolving Loans and Letter of
Credit Accommodations to such Borrower to exceed the Borrowing Base of such
Borrower, as Agent may deem necessary or advisable in its discretion, provided,
that: (a) the total principal amount of the additional Revolving Loans or
additional Letter of Credit Accommodations to any Borrower which Agent may make
or provide after obtaining such actual knowledge that the aggregate principal
amount of the Revolving Loans equal or exceed the Borrowing Bases of Borrowers,
plus the amount of Special Agent Advances made pursuant to Section 12.11(a)(ii)
hereof then outstanding, shall not exceed the aggregate amount equal to ten
(10%) of the Maximum Credit and shall not cause the total principal amount of
the Loans and Letter of Credit Accommodations to exceed the Maximum Credit and
(b) no such additional Revolving Loan or Letter of Credit Accommodation shall be
outstanding more than ninety (90) days after the date such additional Revolving
Loan or Letter of Credit Accommodation is made or issued (as the case may be),
except as the Required Lenders may otherwise agree. Each Lender shall be
obligated to pay Agent the amount of its Pro Rata Share of any such additional
Revolving Loans or Letter of Credit Accommodations.
12.9 Concerning the Collateral and the Related Financing
Agreements. Each Lender authorizes and directs Agent to enter into this
Agreement and the other Financing Agreements. Each Lender agrees that any action
taken by Agent or Required Lenders in accordance with the terms of this
Agreement or the other Financing Agreements and the exercise by Agent or
Required Lenders of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders.
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report and report with respect to the Borrowing Base prepared or
received by Agent (each field audit or examination report and report with
respect to the Borrowing Base being referred to herein as a "Report" and
collectively, "Reports"), appraisal and financial statements;
(b) expressly agrees and acknowledges that Agent (i) does
not make any representation or warranty as to the accuracy of any Report,
appraisal or financial statement or (ii) shall not be liable for any information
contained in any Report, appraisal or financial statement;
106
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that Agent or any other party
performing any audit or examination will inspect only specific information
regarding Borrowers and will rely significantly upon Borrowers' books and
records, as well as on representations of Borrowers' personnel; and
(d) agrees to keep all Reports confidential and strictly
for its internal use in accordance with the terms of Section 13.5 hereof, and
not to distribute or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any
time on or after an Event of Default and for so long as the same is continuing
or upon any other failure of a condition precedent to the Loans and Letter of
Credit Accommodations hereunder, make such disbursements and advances ("Special
Agent Advances") which Agent, in its sole discretion, (i) deems necessary or
desirable either to preserve or protect the Collateral or any portion thereof or
(ii) to enhance the likelihood or maximize the amount of repayment by Borrowers
of the Loans and other Obligations, provided, that, the aggregate principal
amount of the Special Agent Advances pursuant to this clause (ii), plus the then
outstanding principal amount of the additional Loans and Letter of Credit
Accommodations which Agent may make or provide as set forth in Section 12.8
hereof, shall not exceed the aggregate amount of [ten (10%)] percent of the
Maximum Credit or (iii) to pay any other amount chargeable to any Borrower
pursuant to the terms of this Agreement or any of the other Financing Agreements
consisting of (A) costs, fees and expenses and (B) payments to any issuer of
Letter of Credit Accommodations. Special Agent Advances shall be repayable on
demand and together with all interest thereon shall constitute Obligations
secured by the Collateral. Special Agent Advances shall not constitute Loans but
shall otherwise constitute Obligations hereunder. Interest on Special Agent
Advances shall be payable at the Interest Rate then applicable to Prime Rate
Loans and shall be payable on demand. Without limitation of its obligations
pursuant to Section 6.10, each Lender agrees that it shall make available to
Agent, upon Agent's demand, in immediately available funds, the amount equal to
such Lender's Pro Rata Share of each such Special Agent Advance. If such funds
are not made available to Agent by such Lender, such Lender shall be deemed a
Defaulting Lender and Agent shall be entitled to recover such funds, on demand
from such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to Agent at the Federal Funds
Rate for each day during such period (as published by the Federal Reserve Bank
of New York or at Agent's option based on the arithmetic mean determined by
Agent of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of the three leading
brokers of Federal funds transactions in New York City selected by Agent) and if
such amounts are not paid within three (3) days of Agent's demand, at the
highest Interest Rate provided for in Section 3.1 hereof applicable to Prime
Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its
option and in its discretion to release any security interest in, mortgage or
lien upon, any of the Collateral (i) upon termination of the Commitments and
payment and satisfaction of all of the Obligations and
107
delivery of cash collateral to the extent required under Section 13.1 below, or
(ii) constituting property being sold or disposed of if Administrative Borrower
or any Borrower certifies to Agent that the sale or disposition is made in
compliance with Section 9.7 hereof (and Agent may rely conclusively on any such
certificate, without further inquiry), or (iii) constituting property in which
any Borrower did not own an interest at the time the security interest, mortgage
or lien was granted or at any time thereafter, or (iv) having a value in the
aggregate in any twelve (12) month period of less than $400,000, and to the
extent Agent may release its security interest in and lien upon any such
Collateral pursuant to the sale or other disposition thereof, such sale or other
disposition shall be deemed consented to by Lenders, or (v) if required or
permitted under the terms of any of the other Financing Agreements, including
any intercreditor agreement, or (vi) approved, authorized or ratified in writing
by all of Lenders. Except as provided above, Agent will not release any security
interest in, mortgage or lien upon, any of the Collateral without the prior
written authorization of all of Lenders. Upon request by Agent at any time,
Lenders will promptly confirm in writing Agent's authority to release particular
types or items of Collateral pursuant to this Section.
(c) Without any manner limiting Agent's authority to act
without any specific or further authorization or consent by the Required
Lenders, each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section. Agent
shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the security interest,
mortgage or liens granted to Agent upon any Collateral to the extent set forth
above; provided, that, (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to liability or
create any obligations or entail any consequence other than the release of such
security interest, mortgage or liens without recourse or warranty and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any security interest, mortgage or lien upon (or obligations of any Borrower in
respect of) the Collateral retained by such Borrower.
(d) Agent shall have no obligation whatsoever to any
Lender or any other Person to investigate, confirm or assure that the Collateral
exists or is owned by any Borrower or is cared for, protected or insured or has
been encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto, Agent
may act in any manner it may deem appropriate, in its discretion, given Agent's
own interest in the Collateral as a Lender and that Agent shall have no duty or
liability whatsoever to any other Lender.
12.12 Agency for Perfection. Each Lender hereby appoints Agent and
each other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the
108
Collateral of Agent in assets which, in accordance with Article 9 of the UCC can
be perfected only by possession (or where the security interest of a secured
party with possession has priority over the security interest of another secured
party) and Agent and each Lender hereby acknowledges that it holds possession of
any such Collateral for the benefit of Agent as secured party. Should any Lender
obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
12.13 Successor Agent. Agent may resign as Agent upon thirty (30)
days' notice to Lenders and Administrative Borrower. If Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
agent for Lenders. If no successor agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with
Lenders and Administrative Borrower, a successor agent from among Lenders. Upon
the acceptance by the Lender so selected of its appointment as successor agent
hereunder, such successor agent shall succeed to all of the rights, powers and
duties of the retiring Agent and the term "Agent" as used herein and in the
other Financing Agreements shall mean such successor agent and the retiring
Agent's appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Section
12 shall inure to its benefit as to any actions taken or omitted by it while it
was Agent under this Agreement. If no successor agent has accepted appointment
as Agent by the date which is thirty (30) days after the date of a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nonetheless thereupon become effective and Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
12.14 Co-Agent. The Lender identified on the facing page or
signature pages of this Agreement as a "co-agent" shall have no right, power,
obligation, liability, responsibility or duty under this Agreement or any of the
other Financing Agreements other than those applicable to all Lenders as such.
Without limiting the foregoing, the Lender so identified shall not have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on the Lender so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements
shall become effective as of the date set forth on the first page hereof and
shall continue in full force and effect for a term ending on June 30, 2006 (the
"Renewal Date"), and from year to year thereafter, unless sooner terminated
pursuant to the terms hereof. Agent may, at its option (or shall at the
direction of any Lender in writing received by Agent at least ninety (90) days
prior to the Renewal Date or the anniversary of any Renewal Date, as the case
may be), terminate this Agreement and the other Financing Agreements, or
Administrative Borrower or any Borrower may terminate this
109
Agreement and the other Financing Agreements, in each case, effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; provided, that,
this Agreement and all other Financing Agreements must be terminated
simultaneously. In addition, Borrowers may terminate this Agreement at any time
upon ten (10) days prior written notice to Agent (which notice shall be
irrevocable) and Agent may, at its option, and shall at the direction of
Required Lenders, terminate this Agreement at any time an Event of Default
exists or has occurred and is continuing. Upon the Renewal Date or any other
effective date of termination of the Financing Agreements, Borrowers shall pay
to Agent all outstanding and unpaid Obligations and shall furnish cash
collateral to Agent (or at Agent's option, a letter of credit issued for the
account of Borrowers and at Borrowers' expense, in form and substance
satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as
beneficiary) in such amounts as Agent determines are reasonably necessary to
secure Agent and Lenders from loss, cost, damage or expense, including
reasonable attorneys' fees and expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Agent or any Lender has not yet received final and indefeasible payment
and any continuing obligations of Agent or any Lender pursuant to any Deposit
Account Control Agreement. The amount of such cash collateral (or letter of
credit, as Agent may determine) as to any Letter of Credit Accommodations shall
be in the amount equal to one hundred five percent (105%) of the amount of the
Letter of Credit Accommodations plus the amount of any reasonable fees and
expenses payable in connection therewith through the end of the latest
expiration date of such Letter of Credit Accommodations. Such payments in
respect of the Obligations and cash collateral shall be remitted by wire
transfer in Federal funds to the Agent Payment Account or such other bank
account of Agent, as Agent may, in its discretion, designate in writing to
Administrative Borrower for such purpose. Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrowers to the
Agent Payment Account or other bank account designated by Agent are received in
such bank account later than 12:00 noon, New York City time.
(b) No termination of this Agreement or the other
Financing Agreements shall relieve or discharge any Borrower of its respective
duties, obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and Agent's continuing security interest in the Collateral and the rights
and remedies of Agent and Lenders hereunder, under the other Financing
Agreements and applicable law, shall remain in effect until all such Obligations
have been fully and finally discharged and paid. Accordingly, each Borrower
waives any rights it may have under the UCC to demand the filing of termination
statements with respect to the Collateral and Agent shall not be required to
send such termination statements to Borrowers, or to file them with any filing
office, unless and until this Agreement shall have been terminated in accordance
with its terms and all Obligations paid and satisfied in full in immediately
available funds.
(c) If for any reason this Agreement is terminated prior
to the Renewal Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Agent's and each Lender's lost profits as a result
thereof, Borrowers agree to pay to Agent for itself and the ratable benefit of
Lenders,
110
upon the effective date of such termination, an early termination fee in the
amount equal to
Amount Period
------ ------
(i) 2% of the aggregate amount From the date hereof to and including the
of the Credit Facility Revolving second anniversary of the date hereof; and
Loan Limit plus the then
outstanding principal amount of
the Term Loans
(ii) 1% of the aggregate amount From and after the second anniversary of the
of the Credit Facility Revolving date hereof to but not including the date
Loan Limit plus the then which is 60 days prior to the Renewal Date.
outstanding principal amount of
the Term Loans
Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrowers agree that it is reasonable under the circumstances currently
existing. In addition, Agent and Lenders shall be entitled to such early
termination fee upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h) hereof, even if Agent and Lenders do not exercise
the right to terminate this Agreement, but elect, at their option, to provide
financing to any Borrower or permit the use of cash collateral under the United
States Bankruptcy Code. The early termination fee provided for in this Section
13.1 shall be deemed included in the Obligations.
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1,
Article 8 or Article 9 of the UCC shall have the meanings given therein unless
otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to any Borrower, Agent and Lenders
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement
shall mean "including, without limitation" and the word "will" when used in this
Agreement shall be construed to have the same meaning and effect as the word
"shall".
(f) An Event of Default shall exist or continue or be
continuing until such
111
Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Agent, if such Event of Default is capable of being cured
as determined by Agent.
(g) All references to the term "good faith" used herein
when applicable to Agent or any Lender shall mean, notwithstanding anything to
the contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrowers shall have the burden of proving any lack of
good faith on the part of Agent or any Lender alleged by any Borrower at any
time.
(h) Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall be
computed unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the financial statements of Borrowers most recently
received by Agent prior to the date hereof. Notwithstanding anything to the
contrary contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term "unqualified
opinion" as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is not only unqualified but also does not
include any explanatory note or language, including any explanation,
supplemental comment or other comment concerning the ability of the applicable
person to continue as a going concern or otherwise.
(i) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including", the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including".
(j) Unless otherwise expressly provided herein, (i)
references herein to any agreement, document or instrument shall be deemed to
include all subsequent amendments, modifications, supplements, extensions,
renewals, restatements or replacements with respect thereto, but only to the
extent the same are not prohibited by the terms hereof or of any other Financing
Agreement, and (ii) references to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(l) This Agreement and other Financing Agreements may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are
the result of negotiations among and have been reviewed by counsel to Agent and
the other parties, and are the products of all parties. Accordingly, this
Agreement and the other Financing Agreements
112
shall not be construed against Agent or Lenders merely because of Agent's or any
Lender's involvement in their preparation.
13.3 Notices. All notices, requests and demands hereunder shall be
in writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section):
If to any Borrower: Lexington Precision Corporation
767 Third Avenue
New York, New York 10017-2023
Attention: President
Telephone No.: 212-319-4657
Telecopy No.: 212-319-4659
with a copy to: Nixon Peabody LLP
437 Madison Avenue
New York, New York 10022
Attention: Lauren Wiesenberg, Esq.
Telephone No.: 212-940-3136
Telecopy No.: 866-947-2363
If to Agent: Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Attention: Portfolio Manager
Telephone No.: 212-840-2000
Telecopy No.: 212-545-4583
13.4 Partial Invalidity. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 Confidentiality.
(a) Agent and each Lender shall use all reasonable
efforts to keep confidential, in accordance with its customary procedures for
handling confidential information and safe and sound lending practices, any
non-public information supplied to it by any Borrower pursuant to this
Agreement, provided, that, nothing contained herein shall limit the disclosure
of any such
113
information: (i) to the extent required by statute, rule, regulation, subpoena
or court order provided Administrative Borrower, if practicable, is given prior
notice of any such disclosure and in all other instances Administrative Borrower
is given notice of any such disclosure promptly after Agent's or such Lender's
disclosure of such information, (ii) to bank examiners and other regulators,
auditors and/or accountants, in connection with any litigation to which Agent or
such Lender is a party, (iii) to any Lender or Participant (or prospective
Lender or Participant) or to any Affiliate of any Lender so long as such Lender
or Participant (or prospective Lender or Participant) or Affiliate shall have
instructed in writing, and by acceptance of the information be deemed to have
agreed, to treat such information as confidential in accordance with this
Section 13.5, or (iv) to counsel for Agent or any Lender or Participant (or
prospective Lender or Participant).
(b) In the event that Agent or any Lender receives a
request or demand to disclose any confidential information pursuant to any
subpoena or court order, Agent or such Lender, as the case may be, agrees (i) to
the extent permitted by applicable law or if permitted by applicable law, to the
extent Agent or such Lender determines in good faith that it will not create any
risk of liability to Agent or such Lender, Agent or such Lender will promptly
notify Administrative Borrower of such request so that Administrative Borrower
may seek a protective order or other appropriate relief or remedy and (ii) if
disclosure of such information is required, disclose such information and,
subject to reimbursement by Borrowers of Agent's or such Lender's expenses,
cooperate with Administrative Borrower in the reasonable efforts to obtain an
order or other reliable assurance that confidential treatment will be accorded
to such portion of the disclosed information which Administrative Borrower so
designates, to the extent permitted by applicable law or if permitted by
applicable law, to the extent Agent or such Lender determines in good faith that
it will not create any risk of liability to Agent or such Lender.
(c) In no event shall this Section 13.5 or any other
provision of this Agreement, any of the other Financing Agreements or applicable
law be deemed: (i) to apply to or restrict disclosure of information that has
been or is made public by any Borrower, or any third party or otherwise becomes
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent or any Lender (or any Affiliate of any Lender)
on a non-confidential basis from a person other than a Borrower, (iii) to
require Agent or any Lender to return any materials furnished by a Borrower to
Agent or a Lender or prevent Agent or a Lender from responding to routine
informational requests in accordance with the Code of Ethics for the Exchange of
Credit Information promulgated by The Robert Morris Associates or other
applicable industry standards relating to the exchange of credit information.
The obligations of Agent and Lenders under this Section 13.5 shall supersede and
replace the obligations of Agent and Lenders under any confidentiality letter
signed prior to the date hereof.
(d) Notwithstanding anything to the contrary set forth
herein or in any of the other Financing Agreements or any other written or oral
understanding or agreement, (i) any obligations of confidentiality contained
herein, in any of the other Financing Agreements or any such other understanding
or agreement do not apply and have not applied from the commencement of
discussions between the parties to the tax treatment and tax structure of the
114
transactions contemplated herein (and any related transactions or arrangements),
and (ii) each party (and each of its employees, representatives, or other
agents) may disclose to any and all persons the tax treatment and tax
structuring of the transactions contemplated herein and all materials of any
kind (including opinions or other tax analyses) that are provided to such party
relating to such tax treatment and tax structure, all within the meaning of
Treasury Regulation Section 1.6011-4; provided, that, each party recognizes that
the privilege that it may, in its discretion, maintain with respect to the
confidentiality of a communication relating to the transactions contemplated
herein, including a confidential communication with its attorney or a
confidential communication with a federally authorized tax practitioner under
Section 7525 of the Internal Revenue Code, is not intended to be affected by the
foregoing. Borrowers do not intend to treat the Loans and related transactions
as being a "reportable transaction" (within the meaning of Treasury Regulation
Section 1.6011-4). In the event Borrowers determine to take any action
inconsistent with such intention, it will promptly notify Agent thereof. Each
Borrower acknowledges that one or more of Lenders may treat its Loans as part of
a transaction that is subject to Treasury Regulation Section 1.6011-4 or Section
301.6112-1, and the Agent and such Lender or Lenders, as applicable, may file
such IRS forms or maintain such lists and other records as they may determine is
required by such Treasury Regulations.
13.6 Successors. This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Agent, Lenders, Borrowers, and their
respective successors and assigns, except that no Borrower may assign its rights
under this Agreement and the other Financing Agreements without the prior
written consent of Agent and Lenders. Any such purported assignment without such
express prior written consent shall be void. No Lender may assign its rights and
obligations under this Agreement without the prior written consent of Agent,
except as provided in Section 13.7 below. The terms and provisions of this
Agreement and the other Financing Agreements are for the purpose of defining the
relative rights and obligations of Borrowers, Agent and Lenders with respect to
the transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of the
other Financing Agreements.
13.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of
Agent, assign all or, if less than all, a portion equal to at least $5,000,000
in the aggregate for the assigning Lender, of such rights and obligations under
this Agreement to one or more Eligible Transferees (but not including for this
purpose any assignments in the form of a participation), each of which assignees
shall become a party to this Agreement as a Lender by execution of an Assignment
and Acceptance; provided, that, (i) such transfer or assignment will not be
effective until recorded by Agent on the Register (as defined below) and (ii)
Agent shall have received for its sole account payment of a processing fee from
the assigning Lender or the assignee in the amount of $5,000.
(b) Agent shall maintain a register of the names and
addresses of Lenders, their Commitments and the principal amount of their Loans
(the "Register"). Agent shall also maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and shall
115
modify the Register to give effect to each Assignment and Acceptance. The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and any Borrowers, Obligors, Agent and Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
Administrative Borrower and any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, the assignee thereunder shall be a party hereto and to the other
Financing Agreements and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations (including, without limitation, the obligation to
participate in Letter of Credit Accommodations) of a Lender hereunder and
thereunder and the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement.
(d) By execution and delivery of an Assignment and
Acceptance, the assignor and assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower, Obligor or any of their
Subsidiaries or the performance or observance by any Borrower or Obligor of any
of the Obligations; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Financing Agreements, together with such other
documents and information it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance, (iv) such
assignee will, independently and without reliance upon the assigning Lender,
Agent and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Financing Agreements, (v) such
assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Financing
Agreements as are delegated to Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto, and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Financing
Agreements are required to be performed by it as a Lender. Agent and Lenders may
furnish any information concerning any Borrower or Obligor in the possession of
Agent or any Lender from time to time to assignees and Participants.
(e) Each Lender may sell participations to one or more
banks or other entities in or to all or a portion of its rights and obligations
under this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans
116
owing to it and its participation in the Letter of Credit Accommodations,
without the consent of Agent or the other Lenders); provided, that, (i) such
Lender's obligations under this Agreement (including, without limitation, its
Commitment hereunder) and the other Financing Agreements shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, and Borrowers, the other Lenders and Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other
Financing Agreements, and (iii) the Participant shall not have any rights under
this Agreement or any of the other Financing Agreements (the Participant's
rights against such Lender in respect of such participation to be those set
forth in the agreement executed by such Lender in favor of the Participant
relating thereto) and all amounts payable by any Borrower or Obligor hereunder
shall be determined as if such Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit
any Lender from pledging its Loans hereunder to a Federal Reserve Bank in
support of borrowings made by such Lenders from such Federal Reserve Bank;
provided, that, no such pledge shall release such Lender from any of its
obligations hereunder or substitute any such pledgee for such Lender as a party
hereto.
(g) Borrowers agree to cooperate with Agent or any Lender
permitted to sell assignments or participations under this Section 13.7 and upon
request shall take such commercially reasonable actions in order to enable or
effect any such assignment or participation, including (but not limited to) the
execution and delivery of any and all agreements, notes and other documents and
instruments as shall be reasonably requested by Agent or any Lender and the
delivery of informational materials, appraisals or other documents for, and the
participation of relevant management in meetings and conference calls with,
potential Lenders or Participants.
13.8 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represents the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
13.9 Counterparts, Etc. This Agreement or any of the other
Financing Agreements may be executed in any number of counterparts, each of
which shall be an original, but all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of this Agreement or
any of the other Financing Agreements by telefacsimile shall have the same force
and effect as the delivery of an original executed counterpart of this Agreement
or any of such other Financing Agreements. Any party delivering an executed
counterpart of any such agreement by telefacsimile shall also deliver an
original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of such agreement.
117
SECTION 14. ACKNOWLEDGMENT AND RESTATEMENT
14.1 Existing Obligations. Each Borrower hereby acknowledges,
confirms and agrees that Borrowers are indebted to Lender under the Existing
Financing Agreements, as of the close of business on December 17, 2003, in
respect of loans, advances and other financial accommodations, which amounts,
together with all interest accrued and accruing thereon (to the extent
applicable), and all fees, costs, expenses and other charges relating thereto,
all of which are unconditionally owing by Borrowers to Lender, without offset,
defense or counterclaim of any kind, nature or description whatsoever, as
follows: (a) in respect of loans, advances, letters of credit and other
financial accommodations to LPC, the aggregate principal amount of $6,598,592
consisting of (i) revolving loans in the aggregate outstanding principal amount
of $1,779,792, plus accrued fees and interest thereon, (ii) the term loans
evidenced by the Existing LPC Term Notes in the aggregate outstanding principal
amount of $3,300,800, plus accrued fees and interest thereon and (iii) letters
of credit in the outstanding principal amount of $1,518,000, and (b) in respect
of loans, advances, letters of credit and other financial accommodations to LRG,
the aggregate principal amount of $18,761,052 consisting of (i) revolving loans
in the aggregate outstanding principal amount of $15,011,874, plus accrued fees
and interest thereon, (ii) the term loans evidenced by the Existing LRG Term
Notes in the aggregate outstanding principal amount of $3,749,178, plus accrued
fees and interest thereon and (iii) letters of credit in the outstanding
principal amount of $0.
14.2 Acknowledgment of Security Interests.
(a) Each Borrower hereby acknowledges, confirms and agrees
that Congress has and Agent on behalf of Congress and Lenders shall continue to
have a security interest in and lien upon the Collateral heretofore granted to
Congress pursuant to the Existing Financing Agreements to secure the
Obligations, as well as any Collateral granted under this Agreement or under any
of the other Financing Agreements.
(b) The liens and security interests of Agent in the
Collateral shall be deemed to be continuously granted and perfected from the
earliest date of the granting and perfection of such liens and security
interests to Congress, whether under the Existing Financing Agreements, this
Agreement or any of the other Financing Agreements, all to the fullest extent
permitted by applicable law.
14.3 Existing Agreements. Each Borrower each hereby acknowledges,
confirms and agrees that at all times prior to the effectiveness of this
Agreement: (a) the Existing Financing Agreements have been duly executed and
delivered by such Borrower and are in full force and effect and (b) the
agreements and obligations of such Borrower contained in the Existing Financing
Agreements constitute the legal, valid and binding obligations of such Borrower
enforceable against it in accordance with their respective terms and such
Borrower has no valid defense to the enforcement of such obligations and (c)
Agent and Lenders are entitled to all of
118
the rights and remedies provided for in the Existing Agreements.
14.4 Restatement.
(a) Except as otherwise stated in Section 14.2 hereof and this
Section 14.4, as of the date hereof, the Existing Financing Agreements are
hereby amended and restated in their entirety, and as so amended and restated,
are replaced and superseded by this Agreement and the other Financing
Agreements, and the Borrowers shall continue to be jointly and severally liable
for the Obligations (which obligations pursuant to the Existing Financing
Agreements shall be deemed incorporated into, a part of, and amended, restated
and allocated as provided in Section 14.4(b) hereof). The amendment and
restatement contained herein shall not, in any manner, be construed to
constitute (i) payment of the Indebtedness and other obligations and liabilities
of Borrowers evidenced by or arising under the Existing Financing Agreements
(all of which Indebtedness and other obligations and liabilities shall be deemed
incorporated into, a part of, and amended, restated and allocated as provided in
Section 14.4(b) hereof) or (ii) a release, termination or impairment of the
liens and security interests securing such Indebtedness and other obligations
and liabilities, all of which liens and security interests shall be deemed to
secure the Obligations and shall be assigned to Agent for the benefit of
Lenders.
(b) The principal amount of the revolving loans, the amount of
the letters of credit (including all "Credits" as defined in the Existing
Financing Agreements) and the principal amount of term loans outstanding as of
the date hereof under the Existing Financing Agreements as set forth in Section
14.1 above shall be deemed Loans, Letter of Credit Accommodations and Term Loans
made under Sections 2.1, 2.2 and 2.3 of this Agreement, respectively, in such
amounts as set forth in Section 14.1 above for revolving loans, letters of
credit and term loans and shall be allocated Pro-Rata to Lenders in accordance
with their Commitment.
14.5 Release. Each Borrower for itself and its successors and
assigns does hereby remise, release, discharge and hold Congress (in its
capacity as lender under the Existing Financing Agreements), Agent and Lenders,
its officers, directors, agents and employees and their respective predecessors,
successors and assigns harmless from all claims, demands, debts, sums of money,
accounts, damages, judgments, financial obligations, actions, causes of action,
suits at law or in equity, of any kind or nature whatsoever, whether or not now
existing or known, which such Borrower or their respective successors or assigns
has had or may now or hereafter claim to have against Congress (in its capacity
as lender under the Existing Financing Agreements), Agent, Lenders or any of
their officers, directors, agents and employees and their respective
predecessors, successors and assigns in any way arising from or connected with
the Existing Financing Agreements or the arrangements set forth therein or
transactions thereunder up to and including the date hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
119
IN WITNESS WHEREOF, Agent, Lenders, Borrowers have caused these
presents to be duly executed as of the day and year first above written.
AGENT
CONGRESS FINANCIAL CORPORATION,
as Agent
By: /s/ Herb Korn
______________________________________
Title: Vice President
____________________________________
CO-AGENT
THE CIT GROUP/COMMERCIAL
FINANCING, INC., as Co-Agent
By: /s/ Louis McKinley
______________________________________
Title: Vice President
____________________________________
LENDERS
CONGRESS FINANCIAL CORPORATION
By: /s/ Herb Korn
______________________________________
Title: Vice President
___________________________________
Commitment: $18,500,000
THE CIT GROUP/COMMERCIAL FINANCING, INC.
By: /s/ Louis McKinley
______________________________________
Title: Vice President
___________________________________
Commitment: $18,500,000
BORROWERS
LEXINGTON PRECISION CORPORATION
By: /s/ Michael A. Lubin
______________________________________
Title: Chairman of the Board
___________________________________
LEXINGTON RUBBER GROUP, INC.
By: /s/ Michael A. Lubin
______________________________________
Title: Chairman of the Board
___________________________________
120
EXHIBIT A
to
LOAN AND SECURITY AGREEMENT
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of _____________, 2003 is made between
________________________ (the "Assignor") and ____________________ (the
"Assignee").
W I T N E S S E T H:
WHEREAS, Congress Financial Corporation, in its capacity as agent
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
of the parties thereto as lenders (in such capacity, "Agent"), and the parties
to the Loan Agreement as lenders (individually, each a "Lender" and
collectively, "Lenders") have entered or are about to enter into financing
arrangements pursuant to which Agent and Lenders may make loans and advances and
provide other financial accommodations to Lexington Precision Corporation and
Lexington Rubber Group, Inc. (collectively, "Borrowers") as set forth in the
Amended and Restated Loan and Security Agreement, dated _________, 2003, by and
among Borrowers, Agent, The CIT Group/Commercial Financing, Inc., in its
capacity as co-agent, and Lenders (as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, the
"Loan Agreement"), and the other agreements, documents and instruments referred
to therein or at any time executed and/or delivered in connection therewith or
related thereto (all of the foregoing, together with the Loan Agreement, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, being collectively referred to herein as the
"Financing Agreements");
WHEREAS, as provided under the Loan Agreement, Assignor committed to
making Loans (the "Committed Loans") to Borrowers in an aggregate amount not to
exceed $___________ (the "Commitment");
WHEREAS, Assignor wishes to assign to Assignee [part of the] [all]
rights and obligations of Assignor under the Loan Agreement in respect of its
Commitment in an amount equal to $______________ (the "Assigned Commitment
Amount") on the terms and subject to the conditions set forth herein and
Assignee wishes to accept assignment of such rights and to assume such
obligations from Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
A-1
(a) Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and
Assignee hereby purchases, assumes and undertakes from Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) an interest in (i) the Commitment and each of the
Committed Loans of Assignor and (ii) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor (in its capacity as a Lender) under
and in connection with the Loan Agreement and the other Financing Agreements, so
that after giving effect thereto, the Commitment of Assignee shall be as set
forth below and the Pro Rata Share of Assignee shall be _______ (__%) percent.
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), Assignee shall be a party to the Loan Agreement and succeed
to all of the rights and be obligated to perform all of the obligations of a
Lender under the Loan Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Commitment Amount. Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Commitment of Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Commitment Amount
and Assignor shall relinquish its rights and be released from its obligations
under the Loan Agreement to the extent such obligations have been assumed by
Assignee; provided, that, Assignor shall not relinquish its rights under
Sections 2.1, 6.4, 6.8 and 6.9 of the Loan Agreement to the extent such rights
relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date Assignee's Commitment will be
$_____________.
(d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date Assignor's Commitment will be
$______________ (as such amount may be further reduced by any other assignments
by Assignor on or after the date hereof).
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing Assignee's Pro Rata Share of the principal amount of all Committed
Loans.
(b) Assignee shall pay to Agent the processing fee in the
amount specified in Section 13.7(a) of the Loan Agreement.
3. Reallocation of Payments. Any interest, fees and other
payments accrued to the Effective Date with respect to the Commitment, Committed
Loans and outstanding Letter of Credit Accommodations shall be for the account
of Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Commitment Amount shall be
A-2
for the account of Assignee. Each of Assignor and Assignee agrees that it will
hold in trust for the other party any interest, fees and other amounts which it
may receive to which the other party is entitled pursuant to the preceding
sentence and pay to the other party any such amounts which it may receive
promptly upon receipt.
4. Independent Credit Decision. Assignee acknowledges that it has
received a copy of the Loan Agreement and the Schedules and Exhibits thereto,
together with copies of the most recent financial statements of Borrowers, and
such other documents and information as it has deemed appropriate to make its
own credit and legal analysis and decision to enter into this Assignment and
Acceptance and agrees that it will, independently and without reliance upon
Assignor, Agent or any Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Loan Agreement.
5. Effective Date; Notices.
(a) As between Assignor and Assignee, the effective date for
this Assignment and Acceptance shall be _______________, 200_ (the "Effective
Date"); provided, that, the following conditions precedent have been satisfied
on or before the Effective Date:
(i) this Assignment and Acceptance shall be executed
and delivered by Assignor and Assignee;
(ii) the consent of Agent as required for an
effective assignment of the Assigned Commitment Amount by Assignor to Assignee
shall have been duly obtained and shall be in full force and effect as of the
Effective Date;
(iii) written notice of such assignment, together
with payment instructions, addresses and related information with respect to
Assignee, shall have been given to Administrative Borrower and Agent;
(iv) Assignee shall pay to Assignor all amounts due
to Assignor under this Assignment and Acceptance; and
(v) the processing fee referred to in Section 2(b)
hereof shall have been paid to Agent.
(b) Promptly following the execution of this Assignment and
Acceptance, Assignor shall deliver to Administrative Borrower and Agent for
acknowledgment by Agent, a Notice of Assignment in the form attached hereto as
Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]
(a) Assignee hereby appoints and authorizes Assignor in its
capacity as Agent to take such action as agent on its behalf to exercise such
powers under the Loan Agreement as are
A-3
delegated to Agent by Lenders pursuant to the terms of the Loan Agreement.
(b) Assignee shall assume no duties or obligations held by
Assignor in its capacity as Agent under the Loan Agreement.]
7. Withholding Tax. Assignee (a) represents and warrants to
Assignor, Agent and Borrowers that under applicable law and treaties no tax will
be required to be withheld by Assignee, Agent or Borrowers with respect to any
payments to be made to Assignee hereunder or under any of the Financing
Agreements, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to Agent and
Borrowers prior to the time that Agent or Borrowers are required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form W-8BEN or W-8ECI, as applicable
(wherein Assignee claims entitlement to the benefits of a tax treaty that
provides for a complete exemption from U.S. federal income withholding tax on
all payments hereunder) and agrees to provide new such Forms upon the expiration
of any previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by Assignee, and (c) agrees to comply with all applicable U.S. laws
and regulations with regard to such withholding tax exemption.
8. Representations and Warranties.
(a) Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any security interest, lien, encumbrance or
other adverse claim, (ii) it is duly organized and existing and it has the full
power and authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment
and Acceptance and to fulfill its obligations hereunder, (iii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance, and apart from any agreements or undertakings
or filings required by the Loan Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance, and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any of the other Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto. Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of Borrowers or any of their respective
Affiliates, or the performance or observance by Borrowers or any other Person,
of any of its respective obligations under the Loan Agreement or any other
A-4
instrument or document furnished in connection therewith.
(c) Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder, (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Loan Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; and (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignee, enforceable against Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights to general equitable principles.
9. Further Assurances. Assignor and Assignee each hereby agree to
execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Assignment and Acceptance, including the delivery of any
notices or other documents or instruments to Borrowers or Agent, which may be
required in connection with the assignment and assumption contemplated hereby.
10. Miscellaneous
(a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other for further breach thereof.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) Assignor and Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Assignor and
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in New York County, New York over any suit, action or
proceeding arising
A-5
out of or relating to this Assignment and Acceptance and irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York State or Federal court. Each party to this Assignment and
Acceptance hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.
(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING
AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
and Acceptance to be executed and delivered by their duly authorized officers as
of the date first above written.
[ASSIGNOR]
By:
__________________________________
Title:
_______________________________
[ASSIGNEE]
By:
__________________________________
Title:
_______________________________
A-6
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
___, 20__
Attn.:
______________________________
Re:
____________________________________
Ladies and Gentlemen:
Congress Financial Corporation, in its capacity as agent pursuant to
the Loan Agreement (as hereinafter defined) acting for and on behalf of the
parties thereto as lenders (in such capacity, "Agent"), and the parties to the
Loan Agreement as lenders (individually, each a "Lender" and collectively,
"Lenders") have entered or are about to enter into financing arrangements
pursuant to which Agent and Lenders may make loans and advances and provide
other financial accommodations to Lexington Precision Corporation and Lexington
Rubber Group, Inc. (collectively, "Borrowers") as set forth in the Loan and
Security Agreement, dated _____________, 2003, by and among Borrowers, Agent and
Lenders (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement"),
and the other agreements, documents and instruments referred to therein or at
any time executed and/or delivered in connection therewith or related thereto
(all of the foregoing, together with the Loan Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, being collectively referred to herein as the "Financing
Agreements"). Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement.
1. We hereby give you notice of, and request your
consent to, the assignment by __________________________ (the "Assignor") to
___________________________ (the "Assignee") such that after giving effect to
the assignment Assignee shall have an interest equal to ________ (__%) percent
of the total Commitments pursuant to the Assignment and Acceptance Agreement
attached hereto (the "Assignment and Acceptance"). We understand that the
Assignor's Commitment shall be reduced by $_____________, as the same may be
further reduced by other assignments on or after the date hereof.
2. Assignee agrees that, upon receiving the consent of
Agent to such assignment, Assignee will be bound by the terms of the Loan
Agreement as fully and to the same extent as if the Assignee were the Lender
originally holding such interest under the Loan Agreement.
A-7
3. The following administrative details apply to
Assignee:
(A) Notice address:
Assignee name:
____________________________________
Address:
____________________________________
Attention:
____________________________________
Telephone:
____________________________________
Telecopier:
____________________________________
(B) Payment instructions:
Account No.:
____________________________________
At:
____________________________________
____________________________________
Reference:
____________________________________
Attention:
____________________________________
4. You are entitled to rely upon the representations,
warranties and covenants of each of Assignor and Assignee contained in the
Assignment and Acceptance.
A-8
IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
_________________________________________
Title:
______________________________________
[NAME OF ASSIGNEE]
By:
_________________________________________
Title:
______________________________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
CONGRESS FINANCIAL CORPORATION,
as Agent
By:
_________________________________________
Title:
______________________________________
A-9
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
Compliance Certificate
To: Congress Financial Corporation,
as Agent
1133 Avenue of the Americas
New York, New York 10036
Ladies and Gentlemen:
Pursuant to Section 9.6 of the Loan Agreement (as defined below),
Lexington Precision Corporation, a Delaware corporation and Lexington Rubber
Group, Inc., a Delaware corporation (collectively, "Borrower"), hereby certify
as follows:
1. Capitalized terms used herein without definition shall have the
meanings given to such terms in the Loan and Security Agreement, dated ______,
2003, by and among Congress Financial Corporation, in its capacity as agent for
the parties thereto as lenders (in such capacity, "Agent"), The CIT
Group/Commercial Financing, Inc., in its capacity as co-agent, and the parties
thereto as lenders (collectively, "Lenders") and Borrowers (as such Loan and
Security Agreement is amended, modified or supplemented, from time to time, the
"Loan Agreement").
2. The Borrowers have reviewed the terms of the Loan Agreement, and the
transactions and the financial condition of Borrowers, during the fiscal month
ending ____________.
3. The review described in Section 2 above did not disclose the
existence at the end of such fiscal month, and Borrowers have no knowledge of
the existence and continuance on the date hereof, of any condition or event
which constitutes a Default or an Event of Default, except as set forth on
Schedule I attached hereto. Schedule I attached hereto sets forth the
exceptions, if any, to this Section 3 listing, in detail, the nature of such
Default of Event of Default and the action which any Borrower has taken, is
taking, or proposes to take with respect to such Default or Event of Default.
4. Borrowers further certify that, based on the review described in
Section 2 above, no Borrower has at any time during or at the end of such fiscal
month, except as specifically described on Schedule II attached hereto, as
previously described or disclosed to you in writing, or as permitted by the Loan
Agreement, done any of the following:
(a) Changed its respective corporate name, or transacted
business under any trade name, style, or fictitious name,
other than those previously described to you and
C - 1
set forth in the Financing Agreements.
(b) Changed the location of its chief executive office,
changed its jurisdiction of incorporation, changed its
type of organization or changed the location of or
disposed of any of its properties or assets, or
established any new asset locations.
(c) Materially changed the terms upon which it sells goods
(including sales on consignment) or provides services, nor
has any vendor or trade supplier to any Borrower during or
at the end of such period materially adversely changed the
terms upon which it supplies goods to any Borrower.
5. Attached hereto as Schedule III are the calculations used in
determining, as of the end of such fiscal month whether Borrowers are in
compliance with the covenants set forth in Sections 9.17, 9.18, 9.19 and 9.20 of
the Loan Agreement for such fiscal month.
The foregoing certifications are made and delivered by the undersigned
this day of ___________, 20__.
Very truly yours,
LEXINGTON PRECISION CORPORATION
By:___________________________
Title:________________________
LEXINGTON RUBBER GROUP, INC.
By:___________________________
Title:________________________
C - 2