EXHIBIT 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of September 3, 2004, 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, the "Borrowers") and
Cohanzick High Yield Partners, L.P., a Delaware limited partnership, as lender
(the "Lender").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be legally bound, the
parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
1.01 Defined Terms. The following terms, when used within this Agreement,
shall have the meanings set forth below.
"Ableco Loan and Security Agreement" means the Loan and Security
Agreement, dated December 18, 2003, by and among Ableco Finance LLC, as Agent,
the lenders from time to time party thereto and the Borrowers, as the same now
exists or may hereafter be amended, modified, supplemented or restated.
"Ableco Loan Agreements" means, collectively, the following: (a) the
Ableco Loan and Security Agreement, 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; and (b) the
mortgages, deeds of trust, agreements, documents and instruments at any time
executed and/or delivered by any Borrower in connection therewith or related
thereto, as any of the same may be amended, modified, supplemented, extended,
renewed, restated or replaced from time to time.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (i) vote ten percent (10%) or more of
all classes of Capital Stock having ordinary voting power for the election of
directors of such Person, or (ii) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Agreement" means this Loan Agreement, as amended, supplemented or
otherwise modified from time to time.
"Base Rate" means 12% per annum.
"Borrowing Date" means the Business Day on which the Lender makes a Term
Loan to the Borrowers hereunder.
"Business Day" means a 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.
"Capital Stock" means any and all shares, interests, participation or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"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.
"Cash Rate" means interest at a rate per annum equal to (i) the Base Rate
plus (ii) 1.8% per annum, plus (iii) effective September 1, 2005, the product of
(x) 0.6% per annum and (y) the Outstanding Ratio on September 1, 2005, and (iv)
effective September 1, 2006, the product of (x) 0.6% per annum and (y) the
Outstanding Ratio on September 1, 2006.
"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 to any other Borrower; (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; (c) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), except by 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 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.
"Closing Date" means the Business Day on which all of the conditions of
Section 4.01 hereof have been satisfied (or waived in writing by the Lender).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, together with the regulations thereunder.
"Consolidated Net Income" means, 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)
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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
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 the
Lender; 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.
"Default" means any of the events specified in Section 7.01 hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Default Rate" means, for any day, a rate per annum equal to (i) the Cash
Rate plus (ii) 5% per annum.
"Die Casting Assets" mean all of the machinery and equipment owned by
Borrowers and located at the facilities for Borrowers' die casting operations in
Lakewood, New York.
"Dollars", "USD" and "$" means dollars in the legal tender of the United
States of America.
"EBITDA" means, 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
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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' consolidated Statement of Income. At any time after
the Borrowers' die casting division has ceased operating, EBITDA for such
division shall be excluded from the calculation of EBITDA for the entire period.
"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.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which is treated with Borrowers as a single employer under Section
414(b), (c), (m) or (o) of the Code.
"Event of Default" means any of the events specified in Section 7.01
hereof, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"GAAP" means generally accepted accounting principles in the United States
of America 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 statements and pronouncements of the Financial
Accounting Standards Board, or in such other statements by such other entities
as may be in general use by significant segments of the accounting profession,
which are applicable to the circumstances as of the date of determination).
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or
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controlled (through stock or capital ownership or otherwise) by any of the
foregoing, whether domestic or foreign.
"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).
"Indebtedness" means, with respect to any Person, any liability, whether
or not contingent, (a) in respect of borrowed money 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 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.
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"Interest Expense" means, 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 receivable, but excluding interest paid in
property other than cash and any other interest expense not payable in cash.
"Interest Payment Date" has the meaning set forth in Section 3.01(b)
hereof.
"Loan Documents" means, collectively, this Agreement and the Notes.
"Material Adverse Effect" means a material adverse effect on (i) the
business, operations, property, condition (financial or otherwise) of the
Borrowers taken as a whole, (ii) the ability of the Borrowers taken as a whole
to perform their obligations under the Loan Documents, or (iii) the validity or
enforceability of the Loan Documents or the rights or remedies of the Lender
thereunder.
"Maturity Date" means June 30, 2007.
"Multiemployer Plan" means any plan as described in Section 3(37) or
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
other disposition of any asset, 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 incurred in
connection with such transaction, (b) the amount of taxes reasonably estimated
by such Person to be actually and reasonably attributable to such transaction,
and (c) the amount of any Indebtedness secured by a security interest, lien or
other encumbrance 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.
"Note" has the meaning set forth in Section 2.03 hereof.
"Obligations" means the unpaid principal amount of, and interest
(including, without limitation, interest accruing after the maturity of the Term
Loan and interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to any Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) on the Note, and all other obligations
and liabilities of the Borrowers to the Lender, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, arising under, out of, or in connection with, this Agreement and the
Note, whether on account of principal, interest, fees, indemnities, costs,
expenses (including, without
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limitation, all fees and disbursements of counsel to the Lender, that are
required to be paid by the Borrowers pursuant to the terms of this Agreement) or
otherwise.
"Outstanding Ratio" means, as of any date, a fraction, the numerator of
which is the principal amount of the Term Loan outstanding and the denominator
of which shall be the principal amount of the Term Loan outstanding on the Term
Loan Commitment Termination Date, provided however, if such fraction is greater
than one (1), then the Outstanding Ratio shall be deemed to be one (1).
"Participant" means any Person that acquires and holds a participation in
the interest of the Lender in any portion of the Term Loan in conformity with
the provisions of Section 9.13(c) of this Agreement governing participations.
"Pension Plan" means any pension plan, as defined under Section 3(2) of
ERISA, which is sponsored, maintained or contributed to by any Borrower, or its
ERISA Affiliates.
"Permitted Holders" means William B. Connor, Michael A. Lubin, Warren
Delano, Kenneth I. Greenstein, Joseph Pardo, Elizabeth H. Ruml, Dennis J.
Welhouse and each of their respective Affiliates.
"Person" means an individual, partnership, corporation, business trust,
limited liability company, limited liability partnership, joint stock company,
trust, unincorporated association, joint venture, Governmental Authority, or
other entity of whatever nature.
"PIK Margin" means (i) 3.6% per annum plus (ii) effective September 1,
2005, the product of (x) 1.2% per annum and (y) the Outstanding Ratio on
September 1, 2005, and (iii) effective September 1, 2006, the product of (x)
1.2% per annum and (y) the Outstanding Ratio on September 1, 2006.
"PIK Rate" means interest at a rate per annum equal to (i) the Base Rate
plus (ii) the PIK Margin.
"Provision for Taxes" means 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.
"Refinancing" has the meaning set forth in Section 6.02(a)(vi) hereof.
"Refinancing Indebtedness" has the meaning set forth in Section
6.02(a)(vi) hereof.
"Remaining Existing Subordinated Note Indebtedness" means the principal
amount not to exceed $158,000 (plus any interest accrued thereon) in respect of
Indebtedness (including principal, interest, fees and expenses) arising from or
evidenced by the 12 3/4% Senior Subordinated Notes due February 1, 2000 issued
by LPC (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced), which have not been
exchanged by the holders thereof for Senior Subordinated Notes.
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"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Senior Subordinated Note Indenture" means 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.
"Senior Subordinated Notes" means the 12% Senior Subordinated Notes due
August 1, 2009 issued by LPC pursuant to the Senior Subordinated Note Indenture.
"Series B Preferred Stock" means the $8 Cumulative Convertible Preferred
Stock, Series B of LPC.
"Solvent" means, 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).
"Subsidiary" means, 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.
"Term Loan" has the meaning assigned to such term in Section 2.01 hereof.
"Term Loan Commitment" means the commitment of the Lender to make the Term
Loan to the Borrowers in an amount not exceeding Seven Million Dollars
($7,000,000).
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"Term Loan Commitment Termination Date" " has the meaning assigned to such
term in Section 2.01 hereof.
"Termination Event" means the following events, except for those events
that could not, in the aggregate, have a Material Adverse Effect: (a) a
"Reportable Event" described in Section 4043 of ERISA; (b) the withdrawal of any
Borrower or its ERISA Affiliates from any Pension Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA;
(c) the partial or complete withdrawal of any Borrower or its ERISA Affiliate
from a Multiemployer Plan; (d) the imposition of a lien pursuant to Section 412
of the Code or Section 302 of ERISA, (e) any event or condition which results in
the reorganization or insolvency of a Multiemployer Plan under Sections 4241 or
4245 of ERISA; (f) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by the
Pension Benefit Guaranty Corporation of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA; (g) any other event that could result in any
liability being imposed on any Borrower or its ERISA Affiliates under Title VI
of ERISA; (h) the failure of any Borrower to administer any of its employee
benefit plans, as defined in Section 3(3) of ERISA, in accordance with the
plan's terms and applicable law; (i) any Borrower or any of its ERISA Affiliates
fail to make full payment when due of any amount which, under the provisions of
any Pension Plan or ERISA, any Borrower or any of its ERISA Affiliates are
required to make; or (j) the termination of a Pension Plan, the filing of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA.
"Voting Stock" means 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.
"Weighted Average Life to Maturity" means, 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 total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (iii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
"Working Capital Loan Agreements" means, collectively, the following: (a)
the Amended and Restated Loan and Security Agreement, dated December 18, 2003,
by and among Congress, as Agent, The CIT Group/Commercial Financing, Inc., as
Co-Agent, the lenders from time to time party thereto, 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; and (b) the agreements, documents and instruments at
any time executed and/or delivered by any Borrower in connection therewith or
related thereto.
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1.02 Accounting Terms. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP.
1.03 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, schedule and
exhibit references are to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
ARTICLE 2. THE TERM LOAN
2.01 Agreement to Make the Term Loan. Subject to the terms and conditions
of this Agreement, the Lender hereby agrees to make loans (each a "Term Loan"
and, collectively, the "Term Loan") to the Borrowers on any Business Day during
the period from the Closing Date through September 15, 2004 (the "Term Loan
Commitment Termination Date") in an aggregate principal amount not to exceed the
Term Loan Commitment. Any portion of the Term Loan Commitment that is not
borrowed on or before the Term Loan Commitment Termination Date shall not be
available thereafter.
2.02 Purpose; Disbursement of Proceeds. The proceeds of each Term Loan may
be used by the Borrowers only to purchase Senior Subordinated Notes and/or for
working capital and general corporate purposes, and shall be disbursed by the
Lender to LRG; provided, however, that $2,000,000 of the proceeds of the Term
Loan shall be used to repay the Revolving Loans (as such term is defined in the
Working Capital Loan Agreements) in accordance with the terms of the Working
Capital Loan Agreements. The Borrowers may not use proceeds of the Term Loan (i)
to purchase Senior Subordinated Notes from any shareholder, director or officer
of any Borrower or any other Affiliate of the Borrower or (ii) to knowingly
purchase Senior Subordinated Notes from Congress Financial Corporation, The CIT
Group/Commercial Financing, Inc. or Ableco Finance LLC or any shareholder,
director or officer or other Affiliate of Congress Financial Corporation, The
CIT Group/Commercial Financing, Inc. or Ableco Finance LLC.
2.03 Notes. The outstanding balance of each Term Loan shall be evidenced
by (i) the Lender's records, which shall be conclusive, absent manifest error,
and (ii) a promissory note of the Borrowers, dated the Borrowing Date, payable
to the Lender, in a principal amount equal to the Term Loan made on the
applicable Borrowing Date and substantially in the form of Exhibit A attached
hereto (as amended, supplemented or otherwise modified from time to time, each a
"Note" and, collectively, the Notes).
2.04 Repayment of Term Loan. The Borrowers hereby promise to pay to the
Lender the unpaid principal balance of the Term Loan in one installment on the
earlier of (i) the Maturity Date
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or (ii) such earlier date on which the Term Loan shall become due and payable in
accordance with the terms of this Agreement and the other Loan Documents.
2.05 Prepayments of Term Loan. (a) The Borrowers may prepay all or part of
the Term Loan on any Interest Payment Date, from time to time subject to the
following conditions and to Section 2.05(b) hereof:
(i) each partial prepayment shall be made in the minimum amount of
$100,000;
(ii) the Borrowers shall give the Lender notice of such prepayment
at least thirty (30) days prior to the date of such prepayment; and
(iii) any amount prepaid may not be reborrowed hereunder.
Any prepayment made pursuant to this Section 2.05 shall be applied in accordance
with Section 3.03 hereof.
(b) In the event that the Borrowers propose to prepay the Term Loan in
full with the proceeds of a senior financing (other than financing provided by
any Person who is then a senior lender to Borrower (a "New Financing"),
Borrowers shall notify the Lender of such proposed New Financing and the terms
thereof. The Lender shall have the opportunity for ten (10) days after receipt
of such notice from Borrowers to commit in writing to provide, and to provide,
such New Financing on at least as favorable terms and conditions as the terms
and conditions of the proposed New Financing, including the timing thereof. In
the event that the Lender does not commit to provide or fails to provide such
New Financing, Borrowers may obtain the proposed New Financing from another
financing source.
2.06 Joint and Several Liability. Each Borrower shall be jointly and
severally liable for all amounts due to the Lender under this Agreement and the
other Loan Documents, regardless of the amount of the proceeds of the Term Loan
received by such Borrower. All references herein or in any of the other Loan
Documents to any of the obligations of Borrowers to make any payment hereunder
or thereunder shall constitute joint and several obligations of Borrowers. The
Obligations arising as a result of the joint and several liability of a Borrower
hereunder with respect to the Term Loan 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 or the absence of any other action to enforce the same,
(c) the waiver, consent, extension, forbearance or granting of any indulgence by
the 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 the Lender, (d)
the election of the Lender in any proceeding instituted under the Bankruptcy
Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (e) the
disallowance of all or any portion of the claim(s) of the Lender for the
repayment of the Obligations of the other Borrower under Section 502 of the
Bankruptcy Code, or (f) any other circumstances that might constitute a legal or
equitable discharge or defense of the other Borrower. With respect to the
Obligations arising as a result of the joint and several liability of a
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Borrower hereunder, each Borrower waives, until the Obligations shall have been
paid in full, any right to enforce any right of subrogation or any remedy that
the Lender now has or may hereafter have against any Borrower and any benefit
of, and any right to participate in, any security or collateral given to the
Lender. At any time an Event of Default exists or has occurred and is
continuing, the Lender may proceed directly against any Borrower to collect and
recover the full amount, or any portion of the Obligations, without notice to
(except as provided in Section 7.01 hereof) or first proceeding against the
other Borrower or any other Person, or against any security or collateral for
the Obligations.
ARTICLE 3. INTEREST, FEES AND OTHER COMPENSATION
3.01 Interest. (a) Subject to Section 3.02 hereof, the Borrowers shall pay
interest on the outstanding principal amount of the Term Loan on each Interest
Payment Date at the Cash Rate or the PIK Rate, as elected by the Borrowers in
their sole discretion. In the event that the Borrowers elect to pay interest on
an Interest Payment Date at the Cash Rate, Borrowers shall pay such interest to
the Lender in cash as provided in Section 3.03 hereof. In the event that the
Borrowers elect to pay interest on an Interest Payment Date at the PIK Rate, the
Borrowers shall pay to the Lender (i) interest at the Base Rate in cash as
provided in Section 3.03 hereof and (ii) interest calculated at a rate equal to
the PIK Margin by adding such amount of interest to the principal amount of the
Term Loan on the applicable Interest Payment Date.
(a) The Borrowers shall pay interest on the outstanding principal balance
of the Term Loan on the last day of each calendar month commencing with the
first such payment on September 30, 2004 (each, an "Interest Payment Date").
(b) All interest on the Term Loan shall accrue based on the actual number
of days elapsed and a year of 360 days.
3.02 Interest at the Default Rate. If any amount due hereunder is not paid
when due (whether on the original maturity date, by acceleration or otherwise),
the Borrowers shall pay interest to the Lender on the outstanding principal
balance of the Term Loan at a per annum rate equal to the Default Rate for the
period from and after the date of occurrence of an Event of Default and for so
long as any Event of Default is continuing.
3.03 Payments. All amounts payable to the Lender in cash hereunder shall
be payable in Dollars and in currency drawn in immediately available funds no
later than 3:00 p.m. New York time on the day on which such amounts are payable
hereunder to a Lender account designated by the Lender. Payments made to the
Lender hereunder shall be applied first against any outstanding fees, expenses
and charges due the Lender under the Loan Documents, second against interest (if
any) accrued at the rate specified in Section 3.02 hereof, third against other
interest due in cash on the Term Loan, and fourth against the principal amount
of the Term Loan then due.
3.04 No Setoff or Counterclaim. All sums payable by the Borrowers
hereunder shall be paid in full without setoff or counterclaim by reason of any
claim any Borrowers may have against the Lender.
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3.05 Taxes. All payments made by the Borrowers under this Agreement and
the Note shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding taxes imposed on or measured by the net income of the
Lender as a result of a present or former connection between the Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any of the other Loan Documents). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Lender hereunder or under the Note, the amounts so payable to the Lender
shall be increased to the extent necessary to yield to the Lender (after payment
of all Non-Excluded Taxes) interest or any such other amounts payable hereunder
at the Cash Rate or the PIK Rate, as applicable. Whenever any Non-Excluded Taxes
are payable by the Borrowers, as promptly as possible thereafter the Borrowers
shall send to the Lender a certified copy of an original official receipt
received by the Borrowers showing payment thereof or other evidence of payment
reasonably acceptable to the Lender. If the Borrowers fail to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fail to remit
to the Lender the required receipts or other required documentary evidence, in
addition to any other remedy available to the Lender, the Borrowers shall
indemnify the Lender for any incremental taxes, interest or penalties that may
become payable by the Lender as a result of any such failure. The agreements in
this Section 3.05 shall survive the termination of this Agreement and the
payment of the Term Loan and all other amounts payable hereunder until the
expiration of the statute of limitations relating to the applicable tax.
ARTICLE 4. CONDITIONS PRECEDENT
4.01 Conditions Precedent to this Agreement. The obligation of the Lender
to enter into this Agreement is subject to the receipt by the Lender of the
following documents in form and substance reasonably satisfactory to the Lender
and its counsel:
(a) a signed copy of this Loan Agreement, duly executed and delivered by
the Borrowers;
(b) copies of the certificate of incorporation and by-laws of each
Borrower and resolutions of the Board of Directors of each Borrower authorizing
the transactions contemplated by this Agreement, certified to by the Secretary
or an Assistant Secretary of each Borrower;
(c) a certificate as to the incumbency of the officers of each Borrower
signing the Loan Documents;
(d) a good standing certificate from the jurisdiction of organization of
each Borrower;
(e) an opinion of counsel to the Borrowers substantially in the form of
Exhibit B attached hereto;
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(f) a written notice from the Borrowers requesting a Term Loan borrowing
in the amount of $2,000,000 and specifying a Borrowing Date of one (1) Business
Day after the Closing Date;
(g) a certificate of the Borrowers (executed on behalf of each Borrower by
its Chairman, President or one of its Vice Presidents) certifying that as of
date of this Agreement (i) no Default or Event of Default has occurred and is
continuing; and (ii) the representations and warranties made by the Borrowers in
this Agreement and in any other Loan Document are true in all respects (or, as
to such representations and warranties that are not subject to a materiality
qualification, in all material respects) as of the date of this Agreement,
except to the extent that such representations and warranties expressly relate
solely to a specified date, then as of such specified date; and
(h) copies of consents to the incurrence of Indebtedness pursuant to the
Term Loan from the required lenders who are parties to the Working Capital Loan
Agreements and Ableco Finance LLC as the lender under the Ableco Loan Agreements
in each case in form and substance reasonably acceptable to the Lender.
4.02 Conditions Precedent to Term Loan. The obligation of the Lender to
make a Term Loan hereunder is subject to the following conditions precedent:
(a) the Borrowers shall have delivered (or caused to be delivered) all of
the documents set forth in Section 4.01 hereof;
(b) the Lender shall have received a Note duly completed and executed by
the Borrowers;
(c) the Borrowers shall have notified the Lender by telephone not later
than 10:00 a.m. New York time at least one (1) Business Day prior to the
proposed Borrowing Date; provided that such telephonic borrowing request shall
be promptly confirmed in writing by fax to the Lender and shall specify the
proposed Borrowing Date and the amount of the Term Loan Commitment requested to
be borrowed; and
(d) immediately before and after giving effect to the making of a Term
Loan (i) no Default or Event of Default shall have occurred and be continuing
hereunder; and (ii) the representations and warranties made by the Borrowers in
this Agreement and in any other Loan Document shall be true in all respects (or,
as to such representations and warranties that are not subject to a materiality
qualification, in all material respects) on the Borrowing Date, except to the
extent that such representations and warranties expressly relate solely to a
specified date, then as of such specified date.
The written borrowing request submitted by the Borrowers pursuant to
Section 4.02(b) shall constitute a representation and warranty by the Borrowers,
as of the date of such written request, that the condition in Section 4.02(d)
has been satisfied.
Notwithstanding anything herein to the contrary, the obligation of the
Lender to make a Term Loan shall terminate on the Term Loan Commitment
Termination Date.
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Lender as follows:
5.01 Incorporation, Qualification and Ownership. Each Borrower is a
corporation duly organized, validly existing 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 jurisdictions where the nature of its business or
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.
5.02 Power and Authority; Corporate Action. Each Borrower has full
corporate power and authority to execute and deliver this Agreement and the
other Loan Documents to which any such Borrower is a party and to perform and
observe the terms and conditions stated herein and therein. Each Borrower has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party.
5.03 Loan Documents Binding. This Agreement and the other Loan Documents
to which any Borrower is or will be a party have been (or on the Closing Date
will be) duly executed and delivered on behalf of the Borrower, and this
Agreement and the other Loan Documents to which any Borrower is or will be a
party constitutes a legal, valid and binding obligation of such Borrower,
enforceable against such Borrower in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
5.04 Registration and Approvals. All approvals, licenses and
authorizations of, and all filings and registrations with, any Governmental
Authority necessary for the due execution, delivery, performance and/or
enforceability of this Agreement and the other Loan Documents to which each
Borrower is a party have been obtained and are in full force and effect.
5.05 No Conflict. The execution, delivery and performance of this
Agreement and the other Loan Documents to which each Borrower is a party (i)
will not violate any statute, order, regulation, or other provision of law or
any Governmental Authority directive having the force of law; (ii) will not
violate any provision of the certificate of incorporation or by-laws of any
Borrower; and (iii) will not result in the breach of any provision of, or in the
imposition of any lien or encumbrance under, or constitute a default or an event
which with notice or lapse of time, or both, would constitute a default under,
any material agreement to which any Borrower is a party or by which it or any of
its property is bound (including, without limitation, the Senior Subordinated
Note Indenture), except the agreement with respect to the Remaining Existing
Subordinated Indebtedness.
5.06 Absence of Defaults. Each Borrower is not in default under any
agreement, obligation or duty to which it is a party or by which it or any of
its property is bound which could have a Material Adverse Effect, and, as of the
date hereof, no Default or Event of Default has occurred and is continuing
hereunder.
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5.07 Litigation. There are no pending or threatened legal actions,
arbitrations or other proceedings against any Borrower, which are reasonably
expected to have a Material Adverse Effect.
5.08 Taxes. The Borrowers have filed all required tax returns, and all
taxes, assessments and other such governmental charges due from the Borrowers
have been fully paid except for taxes which are being contested in good faith.
Adequate provision has been made for the payment of all federal, state and other
income tax liabilities of the Borrowers, including those being contested as
aforesaid.
5.09 Regulation U. Neither the making of the Term Loan under this
Agreement nor the intended use thereof or of the proceeds thereof, will violate
or be inconsistent with the provisions of Regulation U of the Board of Governors
of the Federal Reserve System.
5.10 Financial Condition. The audited financial statements of the
Borrowers for the fiscal year ended December 31, 2003 and the unaudited
quarterly financial statements for the fiscal quarter ended June 30, 2004 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 present fairly
in all material respects the financial condition and the results of operations
of the Borrowers as at the dates and for the periods set forth therein. Except
as disclosed to the Lender or as disclosed in the financial statements for the
quarterly period ended June 30, 2004, from December 30, 2003 to the date hereof,
there has been no act, condition or event which has had or is reasonably likely
to have a Material Adverse Effect.
5.11 Environmental Matters. (a) No Borrower has generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off its premises (whether or not owned by it) in any
manner which at any time violates in any material respect any applicable
Environmental Law, and the operations of the Borrowers comply in all material
respects with all Environmental Laws except where the failure to so comply could
reasonably be expected to have a Material Adverse Effect.
(b) 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 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 could
reasonably be expected to have a Material Adverse Effect.
(c) No Borrower has any 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 in each case relating to its real property.
(d) The Borrowers have all permits required to be obtained or filed in
connection with the operations of Borrowers under any Environmental Law and all
of such permits are valid and in
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full force and effect, except where the failure to have obtained or filed such
permits could reasonably be expected to have a Material Adverse Effect.
5.12 Solvency. As of the Borrowing Date and after giving effect to the
transactions contemplated by this Agreement and the use of proceeds of the Term
Loan, each Borrower is Solvent.
5.13 Senior Debt. The Term Loan constitutes "Senior Debt" as such term as
defined in the Senior Subordinated Note Indenture as in effect on the date
hereof.
5.14 Reporting. Since December 31, 2003, LPC has filed all reports
required to be filed under the Securities Exchange Act of 1934, as amended, and
such reports did not, as of their respective dates, contain an untrue statement
of material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
ARTICLE 6. COVENANTS
6.01 Affirmative Covenants of the Borrowers. So long as any of the
Obligations shall remain unpaid, each Borrower covenants and agrees with the
Lender as follows:
(a) Corporate Existence. Each Borrower shall preserve and maintain its
corporate existence and good standing in the jurisdiction of its organization,
and (ii) qualify and remain qualified to do business and remain in good standing
in each jurisdiction in which such qualification is required except where the
failure to so qualify is not reasonably expected to have a Material Adverse
Effect.
(b) Financial Statements and Other Information. (i) Each Borrower shall,
and shall cause its Subsidiaries to, keep proper books and records in which true
and complete entries shall be made of all the business of such Borrower and its
Subsidiaries in accordance with GAAP. Borrowers shall promptly furnish to the
Lender all such financial and other information as the Lender shall reasonably
request relating to the assets, business and operations of Borrowers. Without
limiting the foregoing, Borrowers shall furnish or cause to be furnished to the
Lender, the following: (i) within thirty (30) days after the end of each fiscal
month (or within forty-five (45) 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, presenting fairly 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 the absence of
complete footnote disclosure 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, presenting fairly in all
material respects the financial position and the results of the operations of
Borrowers and their
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Subsidiaries as of the end of and for such fiscal year, together with the
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 the Lender,
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.
(ii) Borrowers shall promptly after the sending or filing thereof
furnish or cause to be furnished to the Lender 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.
(c) Maintenance of Properties. Each Borrower shall maintain, keep, and
preserve all of its properties (tangible and intangible) necessary to conduct
its business in reasonably good working order and condition, ordinary wear and
tear excepted; provided, however, that the foregoing shall not prohibit
Borrowers from selling the Die Casting Assets so long as the Net Cash Proceeds
thereof are applied in accordance with Section 6.01(i) hereof.
(d) Maintenance of Insurance. Each Borrower shall maintain insurance with
financially sound and reputable insurers against all losses or damages or risks
of the kinds customarily insured against by companies similarly situated,
including, but not limited to, business interruption insurance, unemployment
insurance, workmen's compensation insurance for the employees of the Borrowers,
public liability, property damage, fire and extended coverage and comprehensive
general liability insurance.
(e) Compliance with Laws. Each Borrower shall comply in all material
respects with all applicable laws, rules, regulations, policies and orders of
Governmental Authorities except where the failure to so comply is not reasonably
expected to have a Material Adverse Effect.
(f) Right of Inspection. Each Borrower shall permit the Lender or any
agent or representative thereof, at any reasonable time and as often as may
reasonably be desired, upon two (2) Business Days' prior notice to the
Borrowers, to examine and make copies of and abstracts from the records and
books of accounts of, and visit the properties of, the Borrowers, and to discuss
the finances and business of the Borrowers with its executive officers,
representatives and independent accountants.
(g) Notices. Borrowers shall:
(i) Give notice to the Lender within three (3) Business Days after
an executive officer of any Borrower becomes aware of (1) any proceeding
of the type described in Section 5.07 hereof, (2) the occurrence of any
Default or Event of Default hereunder, (3) the occurrence of any "Default"
or "Event of Default" under the Ableco Loan Agreements, as each such term
is defined in the Ableco Loan Agreements, (4) the occurrence of any
"Default" or "Event of Default" under the Working Capital Loan Agreements,
as each such term is defined in the Working Capital Loan Agreements and
(5) any material amendment to
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any of the Working Capital Loan Agreements, the Ableco Loan Agreements or
the Senior Subordinated Note Indenture; and
(ii) Furnish the Lender with such other available information as the
Lender may from time to time reasonably request.
(h) Amendment Fees. In the event that Borrowers pay or distribute any fees
or other compensation to Ableco Finance LLC (or to any other lender or agent
under the Ableco Loan Agreements) in connection with any amendment to, or waiver
of, any covenants set forth in the Ableco Loan Agreements, Borrowers agree to
pay to the Lender (promptly, but in no event more than three (3) Business Days,
after the date on which any such fees or other compensation is paid or
distributed to Ableco Finance LLC (or to any other lender or agent under the
Ableco Loan Agreements)) a fee or other compensation at the same rate as is
payable to Ableco Finance LLC (or to any other lender or agent under the Ableco
Loan Agreements) based on the outstanding principal balance of the Term Loan in
proportion to the outstanding principal balance of the loans under the Ableco
Loan Agreements. If the Borrowers complete a Refinancing in which Ableco Finance
LLC is replaced as the agent and a lender under the Ableco Loan Agreements, and
thereafter, pay or distribute a fee or other compensation to any lender or agent
under the Ableco Loan Agreements or the Working Capital Loan Agreements in
connection with any amendment to, or waiver of, any covenants set forth in the
Ableco Loan Agreements or the Working Capital Loan Agreements, then the
Borrowers shall pay or distribute to the Lender, as the Lender shall elect, (x)
such fee or other compensation at the same rate as is payable to such lender or
agent under the Ableco Loan Agreements based on the outstanding principal
balance of the Term Loan in proportion to the outstanding principal balance of
the loans under the Ableco Loan Agreements or (y) such fee or other compensation
at the same rate as is payable to the agent under the Working Capital Loan
Agreements based on the outstanding principal balance of the Term Loan in
proportion to the outstanding principal balance of the loans under the Working
Capital Loan Agreements.
(i) Proceeds of Asset Sales. Each Borrower shall apply the Net Cash
Proceeds of any sale, lease, transfer or other disposition of any of its assets
to the prepayment of the Term Loan. The Borrowers shall not use Net Cash
Proceeds to purchase or otherwise acquire Senior Subordinated Notes.
6.02 Negative Covenants of the Borrowers. So long as any of the
Obligations shall remain unpaid, each Borrower covenants and agrees with the
Lender as follows:
Indebtedness. (a) Except as permitted below in this Section 6.02(a),
Borrower shall not create, incur, assume or suffer to exist any Indebtedness for
borrowed money or the deferred purchase price of goods or services which is
senior to or pari passu with the Term Loan, except that the Borrowers may incur
the following Indebtedness:
(i) Indebtedness arising under the Working Capital Loan Agreements,
provided that the outstanding principal amount of the revolving credit
loans thereunder shall not exceed $23,500,000 and the outstanding
principal amount of the term loans thereunder shall not exceed the
principal amount of such term loans outstanding as of the date hereof,
less any principal payments of such term loan made after the date hereof;
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(ii) Indebtedness outstanding under the Ableco Loan Agreements as of
the date hereof, less any principal payments thereof made after the date
hereof;
(iii) Indebtedness outstanding under the Working Capital Loan
Agreements and/or the Ableco Loan Agreements that is additional to the
Indebtedness permitted under clause (i) and clause (ii) of this Section
6.02(a) in an aggregate amount not to exceed $1,500,000 (the "Additional
Secured Indebtedness");
(iv) Indebtedness, including Capitalized Leases, existing on the
date hereof;
(v) Indebtedness, including Capitalized Leases, arising after the
date hereof incurred to finance the acquisition of (or to reimburse the
Borrowers for the cost of) equipment or real property acquired on or after
the date hereof, including, without limitation, any such Indebtedness
secured by any equipment, real estate, and/or any proceeds thereof,
acquired after the date hereof, provided that the aggregate principal
amount of Indebtedness incurred pursuant to this clause (iv) shall not
exceed $2,000,000 in any 12-month period;
(vi) Any Indebtedness or obligations of Borrowers to any insurance
company or third party that enters into arrangements to allow Borrowers to
pay all or a portion of the applicable insurance premiums on insurance
policies in installments, which may be secured by the insurance policies
the subject of such arrangements and any loss proceeds paid or payable
thereunder;
(vii) Indebtedness of any Borrower arising after the date hereof
issued in exchange for, or the net proceeds of which are used to
refinance, replace or substitute for (each a "Refinancing"), Indebtedness
pursuant to the Ableco Loan Agreements and/or the Working Capital Loan
Agreements (the "Refinancing Indebtedness"); provided, that, as to any
such Refinancing Indebtedness, each of the following conditions is
satisfied:
(A) to the extent that (w) the principal amount of such
Refinancing Indebtedness, plus (x) the principal amount of the
Indebtedness outstanding under the Ableco Loan Agreements
(including any Additional Secured Indebtedness incurred
thereunder, but excluding such Refinancing Indebtedness), plus
(y) the outstanding principal amount of the term loans
outstanding and the maximum amount which may borrowed in
respect of the revolving credit facility under the Working
Capital Loan Agreements (without regard to the borrowing base
or any reserves; and including any Additional Secured
Indebtedness incurred thereunder, but excluding such
Refinancing Indebtedness), in each case immediately after
giving effect to such Refinancing (the "Total Indebtedness")
exceeds the amount equal to (x) the principal amount of
Indebtedness outstanding under the Ableco Loan Agreements,
plus (y) the outstanding principal amount of the term loans
and the maximum amount which may borrowed in respect of the
revolving credit facility under the Working Capital Loan
Agreements, in each case immediately prior to giving effect to
such Refinancing, plus (z) any Additional Secured Indebtedness
(but only to the extent not already
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incurred under the Ableco Loan Agreements and/or the Working
Capital Loan Agreements prior to giving effect to such
Refinancing) (the "Existing Indebtedness"), such excess amount
shall be applied toward repayment of the Term Loan in
accordance with Section 3.03 hereof.
(B) ) in no event shall the amount of the Refinancing
Indebtedness exceed the amount of Indebtedness refinanced
thereby, unless the sum of (i) the Total Indebtedness, plus
(ii) the then outstanding principal amount of the Term Loan,
plus (iii) the then outstanding aggregate principal amount of
all other Indebtedness of the Borrowers that is pari passu
with the Term Loan does not exceed three (3) times the
Borrowers' EBITDA for the immediately preceding four fiscal
quarters;
(C) in no event shall the amount of Refinancing Indebtedness
secured by the Borrowers' real property exceed the sum of (x)
the amount of Indebtedness that is secured by the Borrowers'
real property pursuant to the Ableco Loan Agreements
immediately prior to giving effect to such Refinancing plus
(y) any Additional Secured Indebtedness under the Ableco Loan
Agreements as of the date of and after giving effect to such
Refinancing;
(D) the Lender shall have received not less than ten (10)
Business Days' prior written notice of the intention to incur
such Indebtedness;
(E) promptly upon the Lender's request, the Lender shall have
received true, correct and complete copies of all agreements,
documents and instruments evidencing or otherwise related to
such Indebtedness;
(F) the Refinancing Indebtedness shall have a Weighted Average
Life to Maturity equal to or greater than the Weighted Average
Life to Maturity and a final maturity not earlier than the
final maturity, respectively, of the Indebtedness being
refinanced, replaced, or substituted for;
(G) such Indebtedness shall be at interest rates that are
substantially equivalent to or lower than those in respect of
the Indebtedness so refinanced, replaced or substituted for;
and
(H) as of the date of incurring such Refinancing Indebtedness
and after giving effect thereto, no Default or Event of
Default shall exist or have occurred and be continuing.
(viii) Guarantees of Indebtedness permitted by the foregoing clauses
(i) through (vi).
(b) Fundamental Changes. No Borrower shall consolidate, or merge with or
into, any Person other than a Borrower.
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(c) Purchase of Senior Subordinated Notes. The Borrowers shall not
purchase or otherwise acquire for cash Senior Subordinated Notes on or after the
Closing Date for aggregate consideration (exclusive of any accrued interest
paid) in excess of $10,000,000.
(d) Restricted Payments. LPC shall not declare or pay any cash dividend or
other cash distribution in respect of its Capital Stock, or purchase or redeem
its Capital Stock, other than cash dividends, other cash distributions, or
purchases or redemptions in respect of Series B Preferred Stock in accordance
with the terms of LPC's Restated Certificate of Incorporation as in effect on
the date hereof.
6.03 Additional Covenant. If the Indebtedness evidenced by the Working
Capital Loan Agreements or the Ableco Loan Agreements is refinanced and replaced
with Refinancing Indebtedness, then (x) Section 9.3(a) and (b), the first
sentence of Section 9.4, Section 9.6(a), Section 9.12, Section 9.13, Section
9.15, Section 9.17, Section 9.18, Section 9.19, Section 9.20, Section 9.21 and
Section 9.23 of the Ableco Loan and Security Agreement as in effect immediately
prior to such refinancing shall be incorporated into this Agreement by reference
and shall have the same force and effect as if such provisions were fully set
forth in this Agreement; and (y) the Borrowers agree to cause any Subsidiary of
the Borrowers acquired or formed after the date such refinancing to guarantee
the Obligations of the Borrowers to the Lender under this Agreement pursuant to
a guaranty in form and substance reasonably acceptable to the Borrowers and the
Lender.
ARTICLE 7. EVENTS OF DEFAULT
7.01 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
(a) Any Borrower shall fail to pay (i) any principal amount of the Term
Loan as and when due and payable (whether at stated maturity or upon mandatory
prepayment), or (ii) any interest on the Term Loan within five (5) Business Days
after such interest is due and payable;
(b) Any representation or warranty made by any Borrower herein or in any
other Loan Document or any certificate furnished hereunder proves to have been
false or misleading in any material respect when made or deemed made;
(c) Any Borrower shall default in the observance or performance of any
term, covenant or agreement contained in Section 6.01(i), Section 6.01(h) or
Section 6.02 hereof;
(d) Any Borrower shall default in the observance or performance of any
term, covenant or agreement (other than those specified in Section 7.01(c)
hereof) contained in any of the Loan Documents to which it is a party, and such
default shall continue unremedied for a period of ten (10) days after notice
thereof to the Borrowers by the Lender;
(e) Any of the Loan Documents shall for any reason cease to be in full
force and effect (other than in accordance with its terms), or be declared null
and void or unenforceable in whole or in part, or the validity or enforceability
of any of the Loan Documents shall be challenged or be denied by any party
thereto (other than the Lender);
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(f) The occurrence of any of the following events: (i) an accumulated
funding deficiency, whether or not waived, with respect to any Pension Plan that
is sponsored, maintained or contributed to by any Borrower, or its ERISA
Affiliates, (ii) the institution of proceedings to terminate, or the appointment
of a trustee with respect to, any Pension Plan by the PBGC; (iii) any other
event or condition which would constitute grounds under Section 4042(a) of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; or (iv) a Termination Event;
(g) Any judgment for the payment of money is rendered against any Borrower
in excess of $500,000 in any one case or in excess of $1,000,000 in the
aggregate (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 that has or is reasonably likely to
have a Material Adverse Effect;
(h) Any Borrower dissolves or suspends or discontinues doing business or
sells all or substantially all of its assets, except as permitted pursuant to
Section 6.01(c) or Section 6.02(b) hereof;
(i) Any Borrower 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;
(j) 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 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 shall file any answer admitting the allegations made in
such proceeding or not contesting such petition or application or indicating its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(k) 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 for all or any part of its property;
(l) Any default in the payment of principal due upon the maturity or
termination date of the Ableco Loan Agreements or the Working Capital Loan
Agreements (each a "Final Principal Payment"), which default is not otherwise
cured within five (5) days thereafter, whether or not such default is waived in
writing;
(m) Any default in the payment of principal under the Ableco Loan
Agreements or the Working Capital Loan Agreements (other than a Final Principal
Payment), which default continues beyond the applicable cure period, if any,
with respect thereto and is not waived in writing;
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(n) Any default in the payment of interest under the Ableco Loan
Agreements or the Working Capital Loan Agreements, which default continues
beyond the applicable cure period, if any, with respect thereto and such default
is not otherwise cured within five (5) days thereafter, whether or not such
default is waived in writing;
(o) (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 the Lender pursuant to the Loan Documents and the
Remaining Existing Subordinated Indebtedness), in any such case in an amount in
excess of $1,000,000 in the aggregate, 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 the Lender pursuant to the Loan
Documents and the Remaining Existing Subordinated Indebtedness), which default
continues beyond the applicable cure period, if any, and is not waived in
writing, and, in the case of clause (A) or (B), the holders of such Indebtedness
accelerate such Indebtedness or otherwise exercise their remedies in respect of
such default; and
(p) Any Change of Control.
THEN, and in any such event, the Lender may, by notice to the Borrower,
declare the aggregate outstanding principal amount of the Term Loan, all
interest thereon, and all other amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon the aggregate
outstanding principal amount of the Term Loan, all such interest, and all such
other amounts shall become and be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all of which are
hereby expressly waived by the Borrowers; provided that, if there shall be an
Event of Default under Sections 7.01(i), (j) or (k) hereof, the aggregate
outstanding principal amount of the Term Loan, all interest thereon, and all
other amounts payable under this Agreement and the other Loan Documents shall be
immediately due and payable, without notice, declaration, presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the
Borrowers.
7.02 Remedies on Event of Default. If any of the Obligations have been, or
are deemed to be, accelerated pursuant to Section 7.01, the Lender may enforce
any of the rights or remedies granted to the Lender under any of the Loan
Documents and any other rights or remedies accorded to the Lender at equity or
law, by virtue of statute or otherwise.
ARTICLE 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE LENDER
The Lender represents and warrants to the Borrowers as follows:
8.01 Purchase for Investment. (a) The Lender is making the Loan solely for
its own account and not with a view to any sale or distribution thereof in
violation of any applicable securities laws. The Lender understands that the
Term Loan and any Note have not been registered under the Securities Act or any
state or other securities law and cannot be sold unless subsequently registered
under the Securities Act of 1933, as amended (the "Securities Act") or pursuant
to
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applicable exemptions from registration under the Securities Act and in
compliance with applicable state laws. The Note shall bear a restrictive legend
denoting such transfer restriction.
(a) The Lender is an "accredited investor" as defined in Rule 501(a)
and/or a "qualified institutional buyer" as defined in Rule 144A, each as
promulgated under the Securities Act (or any successor provision), as it may be
amended from time to time.
(b) The source of funds to be used by the Lender to make the Term Loan
hereunder does not include assets of any employee benefit plan (other than a
plan exempt from the coverage of ERISA) or plan or any other entity the assets
of which consist of "plan assets" of employee benefit plans or plans as defined
in Department of Labor regulation Section 2510.3-101. As used in this Section
8.03, the term "employee benefit plan" shall have the meaning assigned to such
term in Section 3 of ERISA, and the term "plan" shall have the meaning assigned
thereto in Section 4975(e)(1) of the Code.
8.02 Access to Information. The Lender and its representatives have had
access to such financial and other information concerning the Borrowers, the
Term Loan and the transactions contemplated by this Agreement as the Lender has
deemed necessary in connection with its decision to make the Term Loan and has
had an opportunity to discuss with the management of the Borrowers the business
and financial affairs of the Borrowers, and has generally such knowledge and
experience in business and financial matters so as to enable it to understand
and evaluate the risks of the Term Loan and the transactions contemplated by
this Agreement.
8.03 Authorization and Power. The execution, delivery and performance of
this Agreement and the other Loan Documents to which the Lender is a party are
within its corporate, limited liability company or limited partnership, as the
case may be, power and authority and have been duly authorized by all necessary
action of the Lender, do not conflict with or result in a breach of or violate
any of the Lender's governing documents or any applicable laws, rules or
regulations of any Governmental Authority.
ARTICLE 9. MISCELLANEOUS
9.01 Entire Agreement. This Agreement and the other Loan Documents to
which the Borrowers are a party constitute the entire agreement of the parties
hereto with respect to the transactions contemplated hereby and shall supersede
any prior understandings with respect thereto, including, without limitation,
any offer letter or letter of intent.
9.02 Amendments. This Agreement may be amended only in writing signed by
the parties hereto.
9.03 Expenses; Indemnity. (a) The Borrowers agree to promptly pay or
reimburse the Lender for all reasonable out-of-pocket costs and expenses
incurred by it (including, without limitation, the reasonable fees and expenses
of the Lender's counsel) in connection with (i) the negotiation, preparation,
execution and delivery of this Agreement and the other Loan Documents (subject
to a cap of $30,000); (ii) any modification, supplement or waiver (or proposed
modification, supplement or waiver) of any of the terms of this Agreement or any
of the other Loan Documents;
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(iii) any Default and any enforcement or collection proceedings resulting
therefrom or in connection with the negotiation of any restructuring of the
Obligations; and (iv) the enforcement of this Section 9.03.
(b) Each Borrower shall, jointly and severally, indemnify and hold the
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 Loan Document, 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 counsel, except
that Borrowers shall not have any obligation under this Section 9.04 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 that they are 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 Loan Documents 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.
9.04 Waiver and Cumulative Rights. The failure or delay of the Lender to
require performance by any Borrower of any provision of this Agreement or any
other Loan Document to which any Borrower is a party shall not affect the right
of the Lender to require performance of such provision, unless such performance
has been waived in writing by the Lender. No waiver of any Default or Event of
Default shall constitute a waiver of any other Default or Event of Default. All
rights granted to the Lender hereunder or allowed to the Lender by law or in
equity shall be cumulative and may be exercised in part or in whole from time to
time.
9.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
9.06 SUBMISSION TO JURISDICTION. EACH BORROWER HEREBY IRREVOCABLY CONSENTS
TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT SITTING
IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS AND OTHERWISE ARISING OUT OF OR
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY, AND EACH BORROWER HEREBY
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IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH STATE OR FEDERAL COURT. THE BORROWER WAIVES ANY
OBJECTION TO ANY ACTION OR PROCEEDING IN ANY STATE OR FEDERAL COURT SITTING IN
NEW YORK COUNTY ON THE BASIS OF FORUM NON CONVENIENS. EACH BORROWER HEREBY
WAIVES PERSONAL SERVICE OF ANY PROCESS IN CONNECTION WITH ANY SUCH ACTION OR
PROCEEDING AND AGREES THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL DIRECTED TO THE BORROWER AT THE ADDRESS SET FORTH IN SECTION
9.10 HEREOF. EACH BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH BORROWER
FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE LENDER SHALL BE
BROUGHT ONLY IN ANY STATE OR FEDERAL COURT SITTING IN NEW YORK COUNTY. EACH
BORROWER FURTHER AGREES THAT, AT THE DISCRETION OF THE LENDER, IT MAY SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW AND MAY BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
9.07 WAIVER OF JURY TRIAL. BORROWERS AND LENDER 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 LOAN DOCUMENTS 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 LOAN DOCUMENTS 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 AND LENDER 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 OR THE 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.
9.08 GOVERNING LAW. THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
ANY CHOICE OF LAW RULES WHICH WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANY
OTHER JURISDICTION.
9.09 Usury Limitations. It is the intention of the Borrowers and the
Lender to conform strictly to applicable usury laws. Accordingly,
notwithstanding anything to the contrary in this Agreement or the Note, amounts
constituting interest under applicable law and contracted for, chargeable or
receivable hereunder or under the Note shall under no circumstances, together
with any other interest, late charges or other amounts which may be interpreted
to be interest contracted for, chargeable or receivable hereunder or thereunder,
exceed the maximum amount of interest permitted by law, and in the event any
amounts were to exceed the maximum amount of interest permitted by
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law, such excess amounts shall be deemed a mistake and shall either be reduced
immediately and automatically to the maximum amount permitted by law or, if
required to comply with applicable law, be canceled automatically and, if
already paid, at the option of the Lender, be refunded to the Borrower or
credited on the principal amount of the Term Loan then outstanding.
9.10 Notices. Any notice required or permitted to be given hereunder shall
be in writing and shall be effective when actually received if delivered by hand
or the next Business Day after delivered to a nationally recognized overnight
courier service for next Business Day delivery, or when transmitted with
electronic or telephonic confirmation of receipt if transmitted by facsimile or
e-mail, or five days after being sent by registered or certified, prepaid first
class mail, return receipt requested, and addressed to the parties as follows:
To the Borrowers: Lexington Precision Corporation
767 Third Avenue
New York, NY 10017-2023
Attention: President
Telephone: 212-319-4657
Fax: 212-319-4659
To the Lender: Cohanzick Management LLC
427 Bedford Road, Suite 260
Pleasantville, NY 10570
Attention: David K. Sherman
Telephone: 212-838-9300
Fax: 914-992-9817
Any party may change its address for purposes hereof by notices to the other
parties in accordance with this Section 9.10.
9.11 Severability. If any provisions contained in this Agreement or any
document executed in connection herewith shall be invalid, illegal or
unenforceable in any respect, under any applicable law, the validity, legality
and enforceability of the remaining provisions contained herein shall not, in
any way, be affected or impaired, and such illegal, invalid or unenforceable
provisions shall, at the request of the Lender, be replaced by other provisions
in accordance with the purpose and meaning of this Agreement.
9.12 Captions. The table of contents and captions, article and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
9.13 Assignment and Participations. (a) The Lender may assign all (but not
less than all) of its rights and obligations under or in respect of this
Agreement, the Term Loan, the Notes and the Loan Documents to an Affiliate of
the Lender which is organized under state law in the United States, which
assignee shall become a party to this Agreement as the Lender by execution of an
Assignment and Acceptance in a form acceptable to the Lender ("Assignment and
Acceptance").
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Except as provided in this Section 9.13, the Lender may not assign this
Agreement, the Term Loan, the Notes or any other Loan Documents.
(b) Upon such execution and delivery of and, from and after the effective
date specified in the Assignment and Acceptance, the assignee thereunder shall
become a party to this Agreement and to the other Loan Documents and, have the
rights and obligations of the Lender hereunder and thereunder and the assigning
Lender shall relinquish its rights and be released from its obligations under
this Agreement and the other Loan Documents.
(c) The Lender may sell participations to any Person that is a "qualified
institutional buyer" as defined in Rule 144A (as promulgated under the
Securities Act (or any successor provision) as it may be amended from time to
time) in or to all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of the Term Loan owing to it); provided, that (i) the Lender's
obligations under this Agreement and the other Loan Documents shall remain
unchanged, (ii) the Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and Borrowers shall continue to
deal solely and directly with the Lender in connection with the Lender's rights
and obligations under this Agreement and the other Loan Documents, and (iii) the
Participant shall not have any rights under this Agreement or any of the other
Loan Documents (the Participant's rights against the Lender in respect of such
participation to be those set forth in the agreement executed by the Lender in
favor of the Participant relating thereto) and all amounts payable by any
Borrower hereunder shall be determined as if the Lender had not sold such
participation.
(d) Borrowers agree to cooperate with the Lender in connection with any
assignments or participations permitted under this Section 9.13 and upon request
shall take such commercially reasonable actions in order to enable or effect any
such assignment or participation. The assigning Lender and any assignee of the
Lender shall comply with all applicable laws, rules and regulations in
connection with and such assignment or participation.
9.14 Confidentiality . The Lender hereby agrees to be bound by the terms
and conditions of that certain Confidentiality Agreement, dated as of August 9,
2004, among the Borrowers and Cohanzick Management LLC (the "Confidentiality
Agreement") to the same extent as Cohanzick Management LLC and as if the Lender
was a party thereto; provided, however, that the Lender may disclose Evaluation
Material (as defined in the Confidentiality Agreement) to a Participant (or
prospective Participant) or to any Affiliate of the Lender or to counsel for the
Lender (or any Affiliate of the Lender) or Participant (or prospective
Participant) so long as such Person shall have agreed in writing, or by
acceptance of the information be deemed to have agreed, to treat such
information as confidential in accordance with the terms of the Confidentiality
Agreement as if such Person was a party thereto to same extent as Cohanzick
Management LLC and the Lender.
9.15 Counterparts, Etc. This Agreement may be executed in any number of
counterparts, all of which, when taken together, shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart. Delivery of an executed counterpart of this Agreement of any
of the other Loan Documents by facsimile shall have the same force and effect as
delivery of an original executed counterpart of this Agreement or any of the
other Loan Documents.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized signatories as of the day and year
written above.
BORROWERS
LEXINGTON PRECISION CORPORATION
By: /s/ Warren Delano
---------------------------------------
Name: Warren Delano
Title: President
LEXINGTON RUBBER GROUP, INC.
By: /s/ Warren Delano
---------------------------------------
Name: Warren Delano
Title: President
LENDER
COHANZICK HIGH YIELD PARTNERS, L.P.
By: /s/ David K. Sherman
---------------------------------------
Name: David K. Sherman
Title: Authorized Agent
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EXHIBIT A
THIS NOTE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR ANY APPLICABLE EXEMPTION THEREFROM.
EACH HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE BORROWERS THAT IT WILL
NOT (ON ITS OWN BEHALF OR ON BEHALF OF ANYONE ELSE) OFFER, SELL, TRANSFER,
PLEDGE OR OTHERWISE DISPOSE OF THIS NOTE, EXCEPT: (1) TO THE BORROWERS; (2)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION; (3) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF
RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT; (4) IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT UNDER RULE 144 (IF AVAILABLE);
OR (5) IN ANOTHER TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT TO A TRANSFEREE WHO HAS FURNISHED SUCH CERTIFICATES AND OPINIONS
OF COUNSEL AS THE ISSUER MAY REQUEST, AND IN THE CASE OF CLAUSES (4) THROUGH (5)
ABOVE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES.
TERM NOTE
U.S. $7,000,000 September __, 2004
For value received, each of Lexington Precision Corporation and
Lexington Rubber Group, Inc., jointly and severally, (the "Borrowers"), promises
to pay to the order of Cohanzick High Yield Partners, L.P. (the "Lender") the
principal sum of United States Dollars Seven Million (U.S. $7,000,000), together
with interest on the unpaid balance thereof, as provided in the Loan Agreement
dated as of September __, 2004 between the Borrowers and the Lender, as the same
may be amended, modified or supplemented from time to time (the "Loan
Agreement"). Principal and interest shall be payable in lawful money of the
United States of America and in immediately available funds, as provided in the
Loan Agreement.
This Term Note is a "Note" referred to in the Loan Agreement, is
subject to all of the terms and conditions of the Loan Agreement and the Lender
is entitled to all of the benefits thereunder. If an Event of Default shall
occur and be continuing, the entire principal amount hereof together with
accrued interest may become immediately due and payable as provided in the Loan
Agreement.
The undersigned hereby waives presentment, demand for payment,
notice of dishonor, and any and all other notices or demands, except as
expressly provided in the Loan Agreement, in connection with the delivery,
acceptance, performance, default or enforcement of this Note.
Capitalized terms used herein that are not otherwise defined herein
shall have the meanings ascribed to such terms in the Loan Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CHOICE OF LAW RULES THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, the undersigned have caused this Note to be duly
executed as of the date first above written.
LEXINGTON PRECISION CORPORATION
By: __________________________________
Name:
Title:
LEXINGTON RUBBER GROUP, INC.
By: __________________________________
Name:
Title:
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EXHIBIT B
September __, 2004
Cohanzick High Yield Partners, L.P.
427 Bedford Road, Suite 260
Pleasantville, NY 10570
Attn. Mr. David K. Sherman
Ladies and Gentlemen:
We have acted as counsel to (i) Lexington Precision Corporation, a
Delaware corporation ("LPC"), and (ii) Lexington Rubber Group, Inc., a Delaware
corporation ("LRG" and together with LPC, each being referred to herein
individually as a "Borrower" and collectively as the "Borrowers"), in connection
with the execution and delivery of the Loan Agreement, dated as of September
___, 2004 (the "Loan Agreement"), among the Borrowers and C Cohanzick High Yield
Partners, L.P. (the "Lender"). Unless otherwise defined herein, capitalized
terms used herein have the meanings set forth in the Loan Agreement.
This opinion is furnished to you pursuant to Section 4.01(e) of the Loan
Agreement. In connection with this opinion, we have examined, among other
documents, a copy of the Loan Agreement in the form executed and delivered on
the date hereof, a Note in draft form as of the date hereof (the Loan Agreement
and the Note are sometimes referred to herein as the "Loan Documents") and a
copy of that certain Indenture, dated as of December 18, 2003, between LPC, as
issuer, and Wilmington Trust Company, as trustee, with respect to the 12% Senior
Subordinated Notes due August 1, 2009 issued by LPC (as in effect on the date
hereof, the "Indenture"). Subject to the assumptions and qualifications
contained herein, we also have examined originals or copies, certified or
otherwise identified to our satisfaction of such corporate records of the
Borrowers, agreements and such other instruments and certificates of officers
and representatives of the Borrowers, and made such investigations of law, as we
have deemed necessary or appropriate as a basis for the opinions expressed
below. We have relied as to factual matters upon representations and
certificates of the Borrowers and their respective officers. We have not
independently investigated or verified the facts represented in such
certificates and do not opine as to the accuracy of any such facts.
In rendering the following opinions, we have assumed, without
investigation, that the representations and warranties as to factual matters of
each of the Borrowers in the Loan Documents are true and correct. In addition,
we have assumed, without investigation, the authenticity of any document or
instrument submitted to us as original, the conformity to the originals of any
document or instrument submitted to us as a copy, the authenticity of the
originals of such latter documents, the legal capacity of natural persons and
the genuineness of all signatures (other than those of the Borrowers on the Loan
Documents) on such originals or copies. We have also assumed, but not
independently verified, that all documents executed by a party other than the
Borrowers were duly and validly authorized, executed and delivered by such party
and that all documents executed and delivered by a party other than the
Borrowers are legal, valid and binding obligations of such party enforceable
against such party in accordance with their respective terms.
Members of our firm involved in the preparation of this opinion are
licensed to practice law in the State of New York and, in rendering the
following opinions, do not purport to be experts on, or to express an opinion
herein concerning, any law other than the laws of the State of New York.
Based upon and subject to the foregoing and the other assumptions and
qualifications contained herein, we are of the opinion that:
1. The Term Loan made pursuant the Loan Agreement constitutes "Senior
Debt" as such term is defined in the Indenture.
2. Assuming that the aggregate principal amount of all Indebtedness
incurred pursuant to 4.05(b)(iv) of the Indenture, after giving effect to the
incurrence of the Term Loan, does not exceed $35,000,000, the incurrence by the
Borrowers of the Term Loan made pursuant to the Loan Agreement does not violate
the Indenture.
This opinion is provided to you pursuant to the Loan Agreement and may not
be furnished or relied upon by any other Person (other than Persons who have
purchased participations pursuant to the Loan Agreement from the Lender) or for
any purpose other than in connection with the transactions contemplated by the
Loan Documents without our prior written consent in each instance. The opinions
expressed herein are rendered as of the date hereof, and we disclaim any
undertaking to advise you of changes in law or fact which may affect the
continued correctness of any of our opinions as of a later date.
Very truly yours,
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LOAN AGREEMENT
by and among
LEXINGTON PRECISION CORPORATION
LEXINGTON RUBBER GROUP, INC.
as Borrowers
and
COHANZICK HIGH YIELD PARTNERS, L.P.
as Lender
Dated as of September 3, 2004
TABLE OF CONTENTS
Page
LOAN AGREEMENT....................................................................................................1
ARTICLE 1. DEFINITIONS........................................................................................1
1.01 Defined Terms....................................................................................1
1.02 Accounting Terms................................................................................10
1.03 Other Definitional Provisions...................................................................10
ARTICLE 2. THE TERM LOAN.....................................................................................10
2.01 Agreement to Make the Term Loan.................................................................10
2.02 Purpose; Disbursement of Proceeds...............................................................10
2.03 Note............................................................................................10
2.04 Repayment of Term Loan..........................................................................10
2.05 Prepayments of Term Loan........................................................................11
2.06 Joint and Several Liability.....................................................................11
ARTICLE 3. INTEREST, FEES AND OTHER COMPENSATION.............................................................12
3.01 Interest........................................................................................12
3.02 Interest at the Default Rate....................................................................12
3.03 Payments........................................................................................12
3.04 No Setoff or Counterclaim.......................................................................12
3.05 Taxes...........................................................................................13
ARTICLE 4. CONDITIONS PRECEDENT..............................................................................13
4.01 Conditions Precedent to this Agreement..........................................................13
4.02 Conditions Precedent to Term Loan...............................................................14
ARTICLE 5. REPRESENTATIONS AND WARRANTIES....................................................................15
5.01 Incorporation, Qualification and Ownership......................................................15
5.02 Power and Authority; Corporate Action...........................................................15
5.03 Loan Documents Binding..........................................................................15
5.04 Registration and Approvals......................................................................15
5.05 No Conflict.....................................................................................15
5.06 Absence of Defaults.............................................................................15
5.07 Litigation......................................................................................16
5.08 Taxes...........................................................................................16
5.09 Regulation U....................................................................................16
5.10 Financial Condition.............................................................................16
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Page
5.11 Environmental Matters...........................................................................16
5.12 Solvency........................................................................................17
5.13 Senior Debt.....................................................................................17
5.14 Reporting.......................................................................................17
ARTICLE 6. COVENANTS.........................................................................................17
6.01 Affirmative Covenants of the Borrowers..........................................................17
6.02 Negative Covenants of the Borrowers.............................................................19
6.03 Additional Covenant.............................................................................22
ARTICLE 7. EVENTS OF DEFAULT.................................................................................22
7.01 Events of Default...............................................................................22
7.02 Remedies on Event of Default....................................................................24
ARTICLE 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE LENDER..........................................24
8.01 Purchase for Investment.........................................................................24
8.02 Access to Information...........................................................................25
8.03 Authorization and Power.........................................................................25
ARTICLE 9. MISCELLANEOUS.....................................................................................25
9.01 Entire Agreement................................................................................25
9.02 Amendments......................................................................................25
9.03 Expenses; Indemnity.............................................................................25
9.04 Waiver and Cumulative Rights....................................................................26
9.05 Successors and Assigns..........................................................................26
9.06 SUBMISSION TO JURISDICTION......................................................................26
9.07 WAIVER OF JURY TRIAL............................................................................27
9.08 GOVERNING LAW...................................................................................27
9.09 Usury Limitations...............................................................................27
9.10 Notices.........................................................................................28
9.11 Severability....................................................................................28
9.12 Captions........................................................................................28
9.13 Assignment and Participations...................................................................28
9.14 Confidentiality.................................................................................29
9.15 Counterparts, Etc...............................................................................29
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