EXHIBIT 10.7
LOAN AND SECURITY AGREEMENT
by and among
LEXINGTON PRECISION CORPORATION
LEXINGTON RUBBER GROUP, INC.
as Borrowers
and
ABLECO FINANCE LLC
as Agent
and
THE LENDERS FROM TIME TO TIME PARTY HERETO
as Lenders
Dated: December 18, 2003
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.................................................................................... 1
SECTION 2. Loan facility.................................................................................. 19
2.1 The Loan....................................................................................... 19
2.2 Commitments.................................................................................... 20
2.3 Joint and Several Liability.................................................................... 20
2.4 Mandatory Prepayments.......................................................................... 21
SECTION 3. INTEREST AND FEES.............................................................................. 24
3.1 Interest....................................................................................... 24
3.2 Fees........................................................................................... 24
3.3 Changes in Laws and Increased Costs of Loan.................................................... 24
SECTION 4. CONDITIONS PRECEDENT........................................................................... 25
4.1 Conditions Precedent to the Loan............................................................... 25
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST...................................................... 28
5.1 Grant of Security Interest..................................................................... 28
5.2 Perfection of Security Interests............................................................... 30
SECTION 6. COLLECTION AND ADMINISTRATION.................................................................. 34
6.1 Borrowers' Loan Accounts....................................................................... 34
6.2 Statements..................................................................................... 34
6.3 Collection of Accounts......................................................................... 34
6.4 Payments....................................................................................... 34
6.5 Authorization to Make the Loan................................................................. 35
6.6 Use of Proceeds................................................................................ 35
6.7 Appointment of Administrative Borrower as Agent for Requesting the Loan and Receipt of Loan
and Statements ................................................................................ 35
6.8 Pro Rata Treatment............................................................................. 36
6.9 Sharing of Payments, Etc....................................................................... 36
6.10 Obligations Several; Independent Nature of Lenders' Rights..................................... 37
SECTION 7. COLLATERAL REPORTING AND COVENANTS............................................................. 37
7.1 Collateral Reporting........................................................................... 37
7.2 Accounts Covenants............................................................................. 38
7.3 Inventory Covenants............................................................................ 39
7.4 Equipment and Real Property Covenants.......................................................... 40
7.5 Power of Attorney.............................................................................. 40
7.6 Right to Cure.................................................................................. 41
7.7 Access to Premises............................................................................. 41
SECTION 8. REPRESENTATIONS AND WARRANTIES................................................................. 42
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8.1 Corporate Existence, Power and Authority....................................................... 42
8.2 Name; State of Organization; Chief Executive Office; Collateral Locations...................... 42
8.3 Financial Statements; No Material Adverse Change............................................... 43
8.4 Priority of Liens; Title to Properties......................................................... 43
8.5 Tax Returns.................................................................................... 43
8.6 Litigation..................................................................................... 43
8.7 Compliance with Other Agreements and Applicable Laws........................................... 44
8.8 Environmental Compliance....................................................................... 44
8.9 Employee Benefits.............................................................................. 45
8.10 Bank Accounts.................................................................................. 46
8.11 Intellectual Property.......................................................................... 46
8.12 Subsidiaries; Affiliates; Capitalization; Solvency............................................. 46
8.13 Labor Disputes................................................................................. 47
8.14 Restrictions on Subsidiaries................................................................... 47
8.15 Material Contracts............................................................................. 47
8.16 Payable Practices.............................................................................. 47
8.17 Accuracy and Completeness of Information....................................................... 47
8.18 Survival of Warranties; Cumulative............................................................. 48
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS............................................................. 48
9.1 Maintenance of Existence....................................................................... 48
9.2 New Collateral Locations....................................................................... 48
9.3 Compliance with Laws, Regulations, Etc......................................................... 49
9.4 Payment of Taxes and Claims.................................................................... 50
9.5 Insurance...................................................................................... 50
9.6 Financial Statements and Other Information..................................................... 51
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc........................................ 52
9.8 Encumbrances................................................................................... 54
9.9 Indebtedness................................................................................... 56
9.10 Loans, Investments, Etc........................................................................ 63
9.11 Dividends and Redemptions...................................................................... 64
9.12 Transactions with Affiliates................................................................... 65
9.13 Compliance with ERISA.......................................................................... 66
9.14 End of Fiscal Years; Fiscal Quarters........................................................... 66
9.15 Change in Business............................................................................. 67
9.16 Limitation of Restrictions Affecting Subsidiaries.............................................. 67
9.17 Leverage Ratio................................................................................. 67
9.18 Minimum EBITDA................................................................................. 68
9.19 Fixed Charge Coverage Ratio.................................................................... 69
9.20 Maximum Capital Expenditures................................................................... 69
9.21 License Agreements............................................................................. 69
9.22 After Acquired Real Property................................................................... 70
9.23 Additional Guaranties and Collateral Security.................................................. 71
9.24 Costs and Expenses............................................................................. 71
9.25 Further Assurances............................................................................. 72
SECTION 10. EVENTS OF DEFAULT AND REMEDIES................................................................. 72
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10.1 Events of Default.............................................................................. 72
10.2 Remedies....................................................................................... 75
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW................................... 78
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.......................... 78
11.2 Waiver of Notices.............................................................................. 79
11.3 Amendments and Waivers......................................................................... 79
11.4 Waiver of Counterclaims........................................................................ 81
11.5 Indemnification................................................................................ 81
SECTION 12. THE AGENT...................................................................................... 81
12.1 Appointment, Powers and Immunities............................................................. 81
12.2 Reliance by Agent.............................................................................. 82
12.3 Events of Default.............................................................................. 82
12.4 Ableco in its Individual Capacity.............................................................. 83
12.5 Indemnification................................................................................ 83
12.6 Non-Reliance on Agent and Other Lenders........................................................ 83
12.7 Failure to Act................................................................................. 84
12.8 [Intentionally Omitted.]....................................................................... 84
12.9 Concerning the Collateral and the Related Financing Agreements................................. 84
12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders.................. 84
12.11 Collateral Matters............................................................................. 84
12.12 Agency for Perfection.......................................................................... 86
12.13 Successor Agent................................................................................ 86
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS............................................................... 87
13.1 Term .......................................................................................... 87
13.2 Interpretative Provisions...................................................................... 88
13.3 Notices........................................................................................ 89
13.4 Partial Invalidity............................................................................. 90
13.5 Confidentiality................................................................................ 90
13.6 Successors..................................................................................... 91
13.7 Assignments; Participations.................................................................... 92
13.8 Entire Agreement............................................................................... 94
13.9 Counterparts, Etc.............................................................................. 94
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INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Compliance Certificate
Schedule 1.82 Permitted Holders
Schedule 1.96 Holders of Remaining Existing Subordinated Note Indebtedness
Schedule 1.117 Working Capital Lender Agreements
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated December 18, 2003 is
entered into by and among Lexington Precision Corporation, a Delaware
corporation ("LPC") and Lexington Rubber Group, Inc., a Delaware corporation
("LRG", and together with LPC, each, individually, a "Borrower" and
collectively, "Borrowers"), the parties hereto from time to time as lenders,
whether by execution of this Agreement or an Assignment and Acceptance (each
individually, a "Lender" and collectively, "Lenders") and Ableco Finance LLC, a
Delaware limited liability company, in its capacity as agent for Lenders (in
such capacity, "Agent").
W I T N E S S E T H:
Borrowers have asked Lenders to extend credit to Borrowers
consisting of a term loan in the aggregate principal amount of $11,500,000. The
proceeds of the term loan shall be used to refinance existing indebtedness of
Borrowers, for general working capital purposes of Borrowers and to pay fees and
expenses related to this Agreement. Lenders are severally, and not jointly,
willing to extend such credit to Borrowers subject to the terms and conditions
set forth herein and Agent is willing to act as agent for Lenders on the terms
and conditions set forth herein and in the other Financing Agreements.
In consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have
the respective meanings given to them below:
1.1 "Ableco" shall mean Ableco Finance LLC, a Delaware limited
liability company, in its individual capacity and its successors and assigns.
1.2 "Accounts" shall mean, as to each Borrower, all present and
future rights of such Borrower to payment of a monetary obligation, whether or
not earned by performance, which is not evidenced by chattel paper or an
instrument, (a) for property that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of, (b) for services rendered or to be rendered,
(c) for a secondary obligation incurred or to be incurred, or (d) arising out of
the use of a credit or charge card or information contained on or for use with
the card.
1.3 "Administrative Borrower" shall mean LPC in its capacity as
Administrative Borrower on behalf of itself and the other Borrowers pursuant to
Section 6.7 hereof and it successors and assigns in such capacity.
1.4 "Affiliate" shall mean, with respect to a specified Person,
any other Person which directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
such Person, and without limiting the generality of the foregoing, includes (a)
any Person which beneficially owns or holds ten (10%) percent or more of all
classes of
Voting Stock of such Person, (b) any Person of which such Person beneficially
owns or holds ten (10%) percent or more of all classes of Voting Stock and (c)
any director or executive officer of such Person. For the purposes of this
definition, the term "control" (including with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise.
1.5 "Agent" shall mean Ableco Finance LLC, in its capacity as
agent on behalf of Lenders pursuant to the terms hereof and any replacement or
successor agent hereunder.
1.6 "Agent Payment Account" shall mean an account at a bank
designated by Agent from time to time as the account into which Borrowers shall
make all payments to Agent for the benefit of Agent and Lenders under this
Agreement and the other Financing Agreements.
1.7 "Appraisal Reserve" shall mean the term "Appraisal Reserve" as
defined in the Working Capital Loan Agreement as in effect on the date hereof.
1.8 "Approved Fund" shall mean with respect to any Lender that is
a fund or similar investment vehicle that makes or invests in commercial loans,
any other fund or similar investment vehicle that invests in commercial loans
which is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor.
1.9 "Assignment and Acceptance" shall mean an Assignment and
Acceptance substantially in the form of Exhibit A attached hereto or such other
form as shall be acceptable to Agent (with blanks appropriately completed)
delivered to Agent in connection with an assignment of a Lender's interest
hereunder in accordance with the provisions of Section 13.7 hereof.
1.10 "Bank One" shall mean Bank One, N.A., a national banking
association, and its successors and assigns.
1.11 "Bank One Financing" shall mean the loans by Bank One to
Borrowers pursuant to the Bank One Financing Agreements.
1.12 "Bank One Financing Agreements" shall mean the Credit Facility
and Security Agreement, dated as of January 31, 1997, by and among Borrowers and
Bank One, as amended, together with the promissory notes, guarantees and
mortgages delivered in connection thereunder and all other documents,
instruments and agreements executed in connection therewith or pursuant thereto,
as the same now exist or may hereafter be amended, modified, supplemented,
renewed, restated or replaced.
1.13 "Blocked Accounts" shall have the meaning set forth in Section
6.3 of the Working Capital Loan Agreement as in effect on the date hereof.
1.14 "Borrowing Base" shall mean the term "Borrowing Base" as
defined, together with the terms used therein, in the Working Capital Loan
Agreement as in effect on the date hereof.
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1.15 "Business Day" shall mean any day other than a Saturday,
Sunday, or other day on which commercial banks are authorized or required to
close under the laws of the State of New York, or the State of North Carolina,
and a day on which Agent is open for the transaction of business.
1.16 "Capital Expenditures" shall mean all expenditures for any
fixed or capital assets (including, but not limited to, tooling) or
improvements, or for replacements, substitutions or additions thereto, which
have a useful life of more than one (1) year, including, but not limited to, the
direct or indirect acquisition of such assets by way of offset items or
otherwise and shall include the principal amount of Capitalized Lease payments.
1.17 "Capitalized Leases" shall mean, as applied to any Person, any
lease of (or any agreement conveying the right to use) any property (whether
real, personal or mixed) by such Person as lessee which, in accordance with
GAAP, is required to be reflected as a liability on the balance sheet of such
Person.
1.18 "Capital Stock" shall mean, with respect to any Person, any
and all shares, interests, participations or other equivalents (however
designated) of such Person's capital stock or partnership, limited liability
company or other equity interests at any time outstanding, and any and all
rights, warrants or options exchangeable for or convertible into such capital
stock or other interests (but excluding any debt security that is exchangeable
for or convertible into such capital stock).
1.19 "Cash Equivalents" shall mean, at any time, (a) any evidence
of Indebtedness with a maturity date of ninety (90) days or less issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof; provided, that, the full faith and credit of
the United States of America is pledged in support thereof; (b) certificates of
deposit or bankers' acceptances with a maturity of ninety (90) days or less of
any financial institution that is a member of the Federal Reserve System having
combined capital, surplus and undivided profits of not less than $250,000,000;
(c) commercial paper (including variable rate demand notes) with a maturity of
ninety (90) days or less issued by a corporation (except an Affiliate of any
Borrower) organized under the laws of any State of the United States of America
or the District of Columbia and rated at least A-1 by Standard & Poor's Ratings
Service, a division of The XxXxxx-Xxxx Companies, Inc. or at least P-1 by
Xxxxx'x Investors Service, Inc.; (d) repurchase obligations with a term of not
more than thirty (30) days for underlying securities of the types described in
clause (a) above entered into with any financial institution having combined
capital, surplus and undivided profits of not less than $250,000,000; (e)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or issued by any governmental agency thereof and backed by the full
faith and credit of the United States of America, in each case maturing within
ninety (90) days or less from the date of acquisition; provided, that, the terms
of such agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985; and (f)
investments in money market funds and mutual funds which invest substantially
all of their assets in securities of the types described in clauses (a) through
(e) above.
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1.20 "Change of Control" shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of any Borrower to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act), other than as permitted in Section 9.7 hereof;
(b) the liquidation or dissolution of any Borrower or the adoption of a plan by
the stockholders of any Borrower relating to the dissolution or liquidation of
such Borrower, other than as permitted in Section 9.7 hereof; (c) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), except for one or more Permitted Holders, of beneficial
ownership, directly or indirectly, of a majority of the voting power of the
total outstanding Voting Stock of any Borrower or the Board of Directors of any
Borrower; (d) during any period of two (2) consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of any Borrower
(together with any new directors who have been appointed by any Permitted
Holder, or whose nomination for election by the stockholders of such Borrower,
as the case may be, was approved by a vote of at least sixty-six and two-thirds
(66 2/3%) percent of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of any Borrower then still in office; (e) the
failure of the LPC to own directly or indirectly one hundred (100%) percent of
the voting power of the total outstanding Voting Stock of LRG; or (f) the
failure of Permitted Holders to own directly or indirectly forty (40%) percent
of the voting power of the total outstanding Voting Stock of LPC.
1.21 "CIT" shall mean The CIT Group/Equipment Financing, Inc., a
New York corporation, and its successors and assigns.
1.22 "CIT Financing" shall mean the loans by CIT to Borrowers
pursuant to the CIT Financing Agreements.
1.23 "CIT Financing Agreements" shall mean the Loan and Security
Agreement, dated as of March 19, 1997, Rider A to the Loan and Security
Agreement and the Supplement and Exhibit A thereto, each dated and/or delivered
as of March 19, 1997, each between LPC and CIT, together with all notes,
guarantees and other documents, instruments and agreements executed pursuant
thereto or in connection therewith and all supplements executed and delivered
pursuant thereto, as the same now exist or may hereafter be amended, modified,
supplemented, renewed, restated or replaced.
1.24 "Code" shall mean the Internal Revenue Code of 1986, as the
same now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.25 "Collateral" shall have the meaning set forth in Section 5.1
hereof.
1.26 "Collateral Access Agreement" shall mean an agreement in
writing, in form and substance reasonably satisfactory to Agent, from any lessor
of premises to any Borrower, or any other person to whom any Collateral is
consigned or who has custody, control or possession of any such Collateral or is
otherwise the owner or operator of any premises on which any of such Collateral
is located, pursuant to which such lessor, consignee or other person, inter
alia, acknowledges the security interest of Agent in such Collateral, agrees to
waive any and all
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claims such lessor, consignee or other person may, at any time, have against
such Collateral, whether for processing, storage or otherwise, and agrees to
permit Agent access to, and the right to remain on, the premises of such lessor,
consignee or other person so as to exercise Agent's rights and remedies and
otherwise deal with such Collateral and in the case of any consignee or other
person who at any time has custody, control or possession of any Collateral,
acknowledges that it holds and will hold possession of the Collateral for the
benefit of Agent and Lenders and agrees to follow all instructions of Agent with
respect thereto.
1.27 "Commitment" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures pages
hereto designated as the Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.7 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as "Commitments".
1.28 "Congress" shall mean Congress Financial Corporation, a
Delaware corporation, and its successors and assigns.
1.29 "Consolidated Net Income" shall mean, with respect to any
Person for any period, the aggregate of the net income (loss) of such Person and
its Subsidiaries, on a consolidated basis, for such period (excluding to the
extent included therein any extraordinary or non-recurring gains and
extraordinary non-cash charges to property, plant and equipment or goodwill)
after deducting all charges which should be deducted before arriving at the net
income (loss) for such period and after deducting the Provision for Taxes for
such period, all as determined in accordance with GAAP; provided, that, (a) the
net income of any Person that is not a wholly-owned Subsidiary or that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid or payable to such
Person or a wholly-owned Subsidiary of such Person; (b) except to the extent
included pursuant to the foregoing clause, the net income of any Person accrued
prior to the date it becomes a wholly-owned Subsidiary of such Person or is
merged into or consolidated with such Person or any of its wholly-owned
Subsidiaries or the date that Person's assets are acquired by such Person or by
any of its wholly-owned Subsidiaries shall be excluded; (c) the effect of any
change in accounting principles adopted by such Person or its Subsidiaries after
the date hereof shall be excluded; (d) net income shall exclude interest
accrued, but not paid on indebtedness owing to a Subsidiary or parent
corporation of such Person, which is subordinated in right of payment to the
payment in full of the Obligations, on terms and conditions acceptable to Agent;
and (e) the net income (if positive) of any wholly-owned Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
such wholly-owned Subsidiary to such Person or to any other wholly-owned
Subsidiary of such Person is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to such wholly-owned Subsidiary shall
be excluded. For the purposes of this definition, net income excludes any gain
and any non-cash loss (but not any cash loss) together with any related
Provision for Taxes for such gain and non-cash loss (but not any cash loss)
realized upon the sale or other disposition of any assets that are not sold in
the ordinary course of business (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or of any Capital Stock of such
Person or a Subsidiary of such Person
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and any net income or loss realized as a result of changes in accounting
principles or the application thereof to such Person.
1.30 "Credit Facility" shall mean the Loan provided to or for the
benefit of Borrowers pursuant to Section 2.1 hereof.
1.31 "Default" shall mean an act, condition or event which, with
notice or passage of time or both, would constitute an Event of Default.
1.32 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance reasonably satisfactory to Agent, by and among
the Working Capital Agent, the Borrower with a deposit account at any bank and
the bank at which such deposit account is at any time maintained, which
agreement provides that such bank will comply with instructions originated by
the Working Capital Agent directing disposition of the funds in the deposit
account without further consent by such Borrower and such other terms and
conditions as the Working Capital Agent may reasonably require, including as to
any such agreement with respect to any Blocked Account, providing that all items
received or deposited in the Blocked Accounts are the property of the Working
Capital Agent, that the bank has no lien upon, or right to setoff against, the
Blocked Accounts, the items received for deposit therein, or the funds from time
to time on deposit therein and that the bank will wire, or otherwise transfer,
in immediately available funds, on a daily basis to the Working Capital Agent
all funds received or deposited into the Blocked Accounts.
1.33 "EBITDA" shall mean, as to any Person, with respect to any
period, an amount equal to: (a) the Consolidated Net Income of such Person for
such period, plus (b) depreciation and amortization for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
all in accordance with GAAP, plus (c) Interest Expense for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
plus (d) the Provision for Taxes for such period (to the extent deducted in the
computation of Consolidated Net Income of such Person); provided, that, for
purposes of this calculation, EBITDA shall exclude (i) any write-down or
write-off of assets recorded in accordance with the requirements of Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets",
and Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", and any reduction in net income
resulting from the adoption of Statement of Financial Accounting Standards No.
150, "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity" and (ii) any other items of income or expense that are
required by GAAP to be classified as non-operating amounts in the Borrowers'
Statement of Income.
1.34 "Eligible Transferee" shall mean (a) any Lender; (b) the
parent company of any Lender and/or any Affiliate of such Lender which is at
least fifty (50%) percent owned by such Lender or its parent company; (c) any
person (whether a corporation, partnership, trust or otherwise) that is approved
by Agent and (i) is engaged in the business of making, purchasing, holding or
otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or
(ii) with respect to any Lender that is a fund which invests in bank loans and
similar extensions of credit, any other fund that invests in bank loans and
similar extensions of credit and is managed by the same
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investment advisor as such Lender or by an Affiliate of such investment advisor;
and (d) any other commercial bank, financial institution or "accredited
investor" (as defined in Regulation D under the Securities Act of 1933) approved
by Agent, provided, that, (i) neither any Borrower nor any Affiliate of any
Borrower shall qualify as an Eligible Transferee and (ii) no Person to whom any
Indebtedness which is in any way subordinated in right of payment to any other
Indebtedness of any Borrower shall qualify as an Eligible Transferee, except as
Agent may otherwise specifically agree.
1.35 "Environmental Laws" shall mean all foreign, Federal, State
and local laws (including common law), legislation, rules, codes, licenses,
permits (including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal Act and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.36 "Equipment" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter acquired equipment, wherever located,
including machinery, data processing and computer equipment (whether owned or
licensed and including embedded software), vehicles, tools, furniture, fixtures,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements therefor,
wherever located.
1.37 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, together with all rules, regulations and interpretations thereunder or
related thereto.
1.38 "ERISA Affiliate" shall mean any person required to be
aggregated with any Borrower, or any of its respective Subsidiaries under
Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.39 "ERISA Event" shall mean (a) any "reportable event", as
defined in Section 4043(c) of ERISA or the regulations issued thereunder, with
respect to a Plan for which the reporting requirements have not been waived in
writing; (b) the adoption of any amendment to a
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Plan that would require the provision of security pursuant to Section 401(a)(29)
of the Code or Section 307 of ERISA; (c) the existence with respect to any Plan
of an "accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section
412 of the Code or Section 303(d) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (e) the occurrence of a
"prohibited transaction" with respect to which any Borrower or any of its
respective Subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which any Borrower or any of its
respective Subsidiaries could otherwise be liable; (f) a complete or partial
withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or a
cessation of operations which is treated as such a withdrawal or notification
that a Multiemployer Plan is in reorganization; (g) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
Pension Benefit Guaranty Corporation to terminate a Plan; (h) an event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, (i) the imposition of any liability under Title IV of
ERISA, other than Pension Benefit Guaranty Corporation premiums due but not
delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate
in excess of $1,000,000 and (j) any other event of condition with respect to a
Plan, including any Plan subject to Title IV of ERISA maintained, or contributed
to, by any ERISA Affiliate, that could reasonably be expected to result in
liability of any Borrower in excess of $1,000,000.
1.40 "Excess Availability" shall mean the term "Excess
Availability" as defined in the Working Capital Loan Agreement as in effect on
the date hereof.
1.41 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.42 "Exchange Agreement" shall mean the Exchange Agreement, dated
as of December 18, 2003, by and among LPC, Xxxxxx Xxxxxx and Xxxxxxx X. Xxxxx,
as the same now exists or may hereafter be amended, modified, supplemented,
renewed, restated or replaced.
1.43 "Existing Junior Subordinated Notes" shall mean, collectively,
the 14% Junior Subordinated Notes due May 1, 2000 issued by LPC in the current
outstanding principal amount of $346,667 and the Junior Subordinated Convertible
Increasing Rate Notes due May 1, 2000 issued by LPC, the principal amount of
which has been converted into Capital Stock, as the same have been amended to
date and now exist.
1.44 "Existing Senior Subordinated Notes" shall mean, collectively,
the 12 3/4% Senior Subordinated Notes due February 1, 2000 issued by LPC in the
current outstanding principal amount of $27,412,125, as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.45 "Extraordinary Receipts" means any cash received by a Borrower
or any of its Subsidiaries not in the ordinary course of business from the
following, (i) proceeds of insurance, (ii) condemnation awards (and payments in
lieu thereof), (iii) indemnity payments, and (iv) after the occurrence and
during the continuance of a Default or an Event of Default, (A) foreign,
8
United States, state or local tax refunds, (B) pension plan reversions and (C)
judgments, proceeds of settlements or other consideration of any kind in
connection with any cause of action.
1.46 "Event of Default" shall mean the occurrence or existence of
any event or condition described in Section 10.1 hereof.
1.47 "Fee Letter" shall mean the letter agreement, dated of even
date herewith, by and among Borrowers and Agent, setting forth certain fees
payable by Borrowers to Agent for the benefit of itself and Lenders, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.48 "Financing Agreements" shall mean, collectively, this
Agreement and all notes, guarantees, security agreements, deposit account
control agreements, investment property control agreements, intercreditor
agreements and all other agreements, documents and instruments now or at any
time hereafter executed and delivered by any Borrower or Obligor in connection
this Agreement.
1.49 "Fixed Charge Coverage Ratio" shall mean, as to any applicable
period, with respect to Borrowers and their Subsidiaries, on a consolidated
basis, the ratio of (a) EBITDA for such period less Capital Expenditures for
such period that were not financed within such period to (b) Fixed Charges of
Borrowers and their Subsidiaries for such period. Notwithstanding anything in
this Agreement to the contrary, the Fixed Charge Coverage Ratio for the three
month period ending December 31, 2003 shall be calculated on a pro forma basis
as if the transactions contemplated by this Agreement, the Working Capital
Lender Agreements, the Senior Subordinated Note Indenture, the Warrant Agent
Agreement, the Exchange Agreement and the Nomura Payoff Agreement were
consummated and fully effective as of the first day of such period.
1.50 "Fixed Charges" shall mean, as to any Person and its
Subsidiaries with respect to any period, the sum of, without duplication, (a)
all cash Interest Expense, provided that any annual fees paid to the Working
Capital Lenders or Working Capital Agent will be considered cash Interest
Expense when such amounts are recognized as an expense in the Borrowers'
Statement of Income, plus (b) all regularly scheduled (as determined at the
beginning of the respective period) principal payments of Indebtedness for
borrowed money (including, without limitation, all regularly scheduled payments
of principal in respect of the Loan) and Indebtedness with respect to
Capitalized Leases (and without duplicating amounts in item (a) of this
definition, the interest component with respect to Indebtedness under
Capitalized Leases), plus (c) all cash income taxes other than cash income taxes
related to income that is required by GAAP to be classified as non-operating
amounts in the Borrowers' Statement of Income, plus (d) all cash dividends paid
on preferred stock to the extent not included in item (a) of this definition,
but excluding any such cash dividends that were scheduled to be paid prior to
December 31, 2003.
1.51 "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
9
for purposes of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the most recent audited financial statements
delivered to Agent prior to the date hereof.
1.52 "Governmental Authority" shall mean any nation or government,
any state, province, or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.53 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.54 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be in accordance with GAAP, recorded as
Capitalized Leases; (d) any contractual obligation, contingent or otherwise, of
such Person to pay or be liable for the payment of any indebtedness described in
this definition of another Person, including, without limitation, any such
indebtedness directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide 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
10
or currency or commodity values; (i) all obligations owed by such Person under
License Agreements with respect to non-refundable, advance or minimum guaranteed
royalty payments; and (j) the principal and interest portions of all rental
obligations of such Person under any synthetic lease or similar off-balance
sheet financing where such transaction is considered to be borrowed money for
tax purposes but is classified as an operating lease in accordance with GAAP.
For purposes of calculating EBITDA and the Fixed Charge Coverage Ratio pursuant
to Sections 9.18 and 9.19 hereof, the Nomura Debt shall not constitute
Indebtedness and the principal and interest in respect of the Nomura Debt shall
not be included in the making of any such calculations.
1.55 "Information Certificate" shall mean the Information
Certificate dated of even date herewith of Borrowers containing information with
respect to Borrowers and their respective businesses and assets executed by
Borrowers and delivered to Agent in connection with the preparation of this
Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.56 "Insurance Premium Collateral" shall mean, collectively, (a)
any insurance policies of Borrowers for which an Insurance Premium Finance Party
has entered into arrangements to allow Borrowers to pay all or a portion of the
applicable insurance premiums on such insurance policies in installments rather
than in one lump sum annual payment, and (b) any loss proceeds paid or payable
to a Borrower pursuant to the insurance policies for which such Insurance
Premium Finance Party has entered into arrangements to allow Borrowers to pay
all or a portion of the applicable insurance premiums on such insurance policies
in installments rather than in one lump sum annual payment (to the extent of the
amount owed to such Insurance Premium Finance Party), provided, that, (i) in no
event shall the Insurance Premium Collateral include any amounts deposited in or
received in the lockbox or blocked account established by Borrowers in
connection with the Financing Agreements or the Working Capital Lender
Agreements or otherwise with respect to Borrowers' financing arrangements with
Agent and Lenders or with Working Capital Agent and Working Capital Lenders for
the handling of collections of Accounts or other assets and (ii) in no event
shall the Insurance Premium Collateral of any Insurance Premium Finance Party
secure any obligation to any other Insurance Premium Finance Party.
1.57 "Insurance Premium Finance Party" shall mean, in connection
with insurance policies maintained by Borrowers, an insurance company or a third
party that enters into arrangements to allow Borrowers to pay all or a portion
of the applicable insurance premiums on such insurance policies in installments
rather than in one lump sum annual payment.
1.58 "Intellectual Property" shall mean, as to each Borrower, such
Borrower's now owned and hereafter arising or acquired: patents, patent rights,
patent applications, copyrights, works which are the subject matter of
copyrights, copyright registrations, trademarks, trade names, trade styles,
trademark and service xxxx applications, and licenses and rights to use any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to xxx for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in
11
whatever form maintained; trade secret rights, copyright rights, rights in works
of authorship, domain names and domain name registrations; software and contract
rights relating to computer software programs, in whatever form created or
maintained.
1.59 "Intercreditor Agreement" shall mean the Intercreditor
Agreement, dated of even date herewith, by and among Agent (on behalf of the
Lenders) and Working Capital Agent (on behalf of the lenders from time to time
party to the Working Capital Loan Agreement), as acknowledged and agreed to by
Borrowers, as the same now exists or may hereafter by amended, modified,
supplemented, extended, renewed, restated or replaced.
1.60 "Interest Expense" shall mean, for any period, as to any
Person, as determined in accordance with GAAP, the total interest expense of
such Person, whether paid or accrued during such period (including the interest
component of Capitalized Leases for such period), including, without limitation,
discounts in connection with the sale of any Accounts, but excluding interest
paid in property other than cash and any other interest expense not payable in
cash.
1.61 "Interest Rate" shall mean,
(a) Subject to clause (b) of this definition below, a
rate equal to the greater of (i) four percent (4%) per annum in excess of the
Prime Rate and (ii) eight and one quarter percent (8.25%) per annum.
(b) Notwithstanding anything to the contrary contained in
clause (a) of this definition, the Interest Rate shall mean a rate of interest
per annum equal to the rate of interest otherwise in effect from time to time
pursuant to the terms of this Agreement plus 2.5%, or, if a rate of interest is
not otherwise in effect, the greater of (i) the Prime Rate plus 6.5% and (ii)
10.75%, either (1) for the period on and after the date of termination or
non-renewal hereof until such time as all Obligations are indefeasibly paid and
satisfied in full in immediately available funds, or (2) for the period from and
after the date of the occurrence of any Event of Default, and for so long as
such Event of Default is continuing as determined by Agent.
1.62 "Inventory" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter existing or acquired goods, wherever located,
which (a) are leased by such Borrower as lessor; (b) are held by such Borrower
for sale or lease or to be furnished under a contract of service; (c) are
furnished by such Borrower under a contract of service; or (d) consist of raw
materials, work in process, finished goods or materials used or consumed in its
business.
1.63 "Investment Property Control Agreement" shall mean an
agreement in writing, in form and substance reasonably satisfactory to Agent, by
and among Working Capital Agent, any Borrower (as the case may be) and any
securities intermediary, commodity intermediary or other person who has custody,
control or possession of any investment property of such Borrower acknowledging
that such securities intermediary, commodity intermediary or other person has
custody, control or possession of such investment property on behalf of Working
Capital Agent, that it will comply with entitlement orders originated by Working
Capital Agent with respect to such investment property, or other instructions of
Working Capital Agent, or (as the case may be) apply any value distributed on
account of any commodity contract as directed by Working
12
Capital Agent, in each case, without the further consent of such Borrower and
including such other terms and conditions as Working Capital Agent may require.
1.64 "Junior Subordinated Notes" shall mean, collectively, the 13%
Junior Subordinated Notes due November 1, 2009 issued by LPC, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.65 "Lenders" shall mean the lenders who are signatories hereto as
Lenders and other persons made a party to this Agreement as a Lender in
accordance with Section 13.7 hereof, and their respective successors and
assigns; each sometimes being referred to herein individually as a "Lender".
1.66 "License Agreements" shall have the meaning set forth in
Section 8.11 hereof.
1.67 "Loan" shall mean the loans made by the Lenders to the
Borrowers on the date hereof pursuant to Section 2.1 hereof.
1.68 "Material Adverse Effect" shall mean a material adverse effect
on (a) the financial condition, business, performance or operations of Borrowers
taken as a whole or the legality, validity or enforceability of this Agreement
or any of the other Financing Agreements; (b) the legality, validity,
enforceability, perfection or priority of the security interests and liens of
Agent upon the Collateral of Borrowers (taken as a whole); (c) the Collateral of
Borrowers (taken as a whole) or its value; (d) the ability of the Borrowers
(taken as a whole) to repay the Obligations or perform their obligations under
this Agreement or any of the other Financing Agreements as and when to be
performed in accordance therewith; or (e) the ability of Agent or any Lender to
enforce the Obligations or realize upon the Collateral or otherwise with respect
to the rights and remedies of Agent and Lenders under this Agreement or any of
the other Financing Agreements.
1.69 "Material Contract" shall mean (a) any contract or other
agreement (other than customer purchase orders with a term of one year or less
and the Financing Agreements or other agreements with respect to borrowed
money), written or oral, of any Borrower involving monetary liability of or to
any Person in an amount in excess of $1,000,000 in any fiscal year and (b) any
other contract or other agreement (other than customer purchase orders with a
term of one year or less and the Financing Agreements or other agreements with
respect to borrowed money), whether written or oral, to which any Borrower is a
party and as to which the breach, nonperformance, cancellation or failure to
renew by any party thereto would have a Material Adverse Effect.
1.70 "Maximum Credit" shall mean the amount of $11,500,000 minus,
at any time of determination, the then aggregate amount of principal re-paid by
Borrowers to Agent in respect of the Loan in accordance with the terms of this
Agreement.
1.71 "Mortgages" shall mean, individually and collectively, each of
the mortgages, deeds of trust or other similar agreements executed by any
Borrower in favor of Agent, pursuant to which such Borrower granted to Agent a
lien and security interest in Borrower's Real Property and related assets.
13
1.72 "Multiemployer Plan" shall mean a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by any
Borrower or any ERISA Affiliate.
1.73 "Net Cash Proceeds" shall mean, with respect to any sale,
lease, transfer or other disposition of any asset or the sale or issuance of any
Indebtedness, the aggregate amount of cash received from time to time (whether
as initial consideration or through payment or disposition of deferred
consideration) by or on behalf of such Person in connection with such
transaction after deducting therefrom only (without duplication) (a) reasonable
and customary brokerage commissions, underwriting fees and discounts, legal
fees, accountant's fees, investment banking fees, finder's fees, other similar
fees and commissions and reasonable out-of-pocket expenses, (b) the amount of
taxes reasonably estimated by such Person to be actually and reasonably
attributable to such transaction, and (c) the amount of any Indebtedness secured
by a security interest, lien or other encumbrance (other than a security
interest, lien or other encumbrance created under any Financing Agreement) on
such asset that, by the terms of such transaction, is required to be repaid upon
such disposition, in each case to the extent, but only to the extent, that the
amounts so deducted are actually paid to a Person that, except in the case of
reasonable out-of-pocket expenses, is not an Affiliate of such Person or any
Affiliate of any Borrower and, in each case, are properly attributable to such
transaction or to the asset that is the subject thereof.
1.74 "Nomura" shall mean Nomura Special Situations Investment
Trust, a Delaware trust (as successor-in-interest to Tri-Links Investment Trust,
as successor-in-interest to Nomura Holdings America, Inc.), and its successors
and assigns.
1.75 "Nomura Agreements" shall mean, collectively, the following
(as the same now exist or may hereafter be amended, modified, supplemented,
renewed, restated or replaced): (a) Note Purchase Agreement, dated as of October
27, 1997, between LPC and Nomura, (b) promissory note, dated as of October 27,
1997, made by LPC payable to the order of Nomura in the original principal
amount of $7,500,000 and (c) all other agreements, documents and instruments
executed in connection therewith.
1.76 "Nomura Debt" shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by LPC to Nomura
pursuant to the Nomura Agreements and the Nomura Payoff Agreement, including
principal, interest, costs and expenses arising under the Nomura Agreements.
1.77 "Nomura Payoff Agreement" shall mean the Payoff Agreement,
dated December 18, 2003, by and between Nomura and LPC, as the same now exists
or may hereafter be amended, modified, supplemented, renewed, restated or
replaced, reflecting, among other things, the terms and conditions of, and the
effective date of, the payoff of the Nomura Debt outstanding under the Nomura
Agreements.
1.78 "Obligations" shall mean the Loan and all other obligations,
liabilities and indebtedness of every kind, nature and description owing by any
or all of Borrowers to Agent or any Lender and/or any of their Affiliates,
including principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
arising under this Agreement or any of the other Financing Agreements, whether
now existing or
14
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to such Borrower under the United States Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which would accrue
and become due but for the commencement of such case, whether or not such
amounts are allowed or allowable in whole or in part in such case), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, or secured or unsecured.
1.79 "Obligor" shall mean any guarantor, endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, other than Borrowers.
1.80 "Participant" shall mean any lender that acquires and holds a
participation in the interest of any Lender in any portion of the Loan in
conformity with the provisions of Section 13.7 of this Agreement governing
participations.
1.81 "Participant Register" shall have the meaning set forth in
Section 13.7 hereof.
1.82 "Permitted Holders" shall mean the persons listed on Schedule
1.82 hereto and their respective successors and assigns.
1.83 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.84 "Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which any Borrower sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or any Multiemployer Plan to
which Borrower has made contributions at any time during the immediately
preceding six (6) plan years.
1.85 "Prime Rate" shall mean the rate from time to time publicly
announced by JPMorgan Chase Bank, or its successors, as its prime rate, whether
or not such announced rate is the best rate available at such bank.
1.86 "Pro Rata Share" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's Commitment
and the denominator of which is the aggregate amount of all of the Commitments
of Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's portion of the Loan
and the denominator shall be the aggregate amount of the unpaid Loan.
1.87 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial, county
or local, and whether foreign or domestic, that are paid or payable by any
Person in respect of any period in accordance with GAAP.
15
1.88 "Real Property" shall mean, with respect to any Person, all
now owned and hereafter acquired real property of such Person, including
leasehold interests, together with all buildings, structures, and other
improvements located thereon and all licenses, easements and appurtenances
relating thereto, wherever located, including the real property and related
assets more particularly described in the Mortgages.
1.89 "Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of each Borrower: (a) all Accounts; (b)
all interest, fees, late charges, penalties, collection fees and other amounts
due or to become due or otherwise payable in connection with any Account; (c)
all payment intangibles of such Borrower; (d) letters of credit, indemnities,
guarantees, security or other deposits and proceeds thereof payable to any
Borrower or otherwise in favor of or delivered to any Borrower in connection
with any Account; or (e) all other accounts, contract rights, chattel paper,
instruments, notes, general intangibles and other forms of obligations owing to
any Borrower, whether from the sale and lease of goods or other property, the
licensing of any property (including Intellectual Property or other general
intangibles), the rendition of services or from the making of loans or advances
by any Borrower or to or for the benefit of any third person (including loans or
advances to any Affiliates or Subsidiaries of any Borrower) or otherwise
associated with any Accounts, Inventory or general intangibles of any Borrower
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to any Borrower in
connection with the termination of any Plan and any other amounts payable to any
Borrower from any Plan, rights and claims against carriers and shippers, rights
to indemnification, business interruption insurance and proceeds thereof,
casualty or any similar types of insurance and any proceeds thereof and proceeds
of insurance covering the lives of employees on which any Borrower is a
beneficiary).
1.90 "Records" shall mean, as to each Borrower, all of its present
and future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of any
Borrower with respect to the foregoing maintained with or by any other person).
1.91 "Reference Bank" shall mean JPMorgan Chase Bank, or such other
bank as Agent may from time to time designate.
1.92 "Refinancing Indebtedness" shall have the meaning set forth in
Section 9.9(k) hereof.
1.93 "Register" shall have the meaning set forth in Section 13.7
hereof.
1.94 "Registered Loan" shall have the meaning set forth in Section
2.1(e) hereof.
1.95 "Registered Note" shall have the meaning set forth in Section
2.1(e) hereof.
1.96 "Remaining Existing Subordinated Note Indebtedness" shall mean
an amount not to exceed $500,000 in respect of Indebtedness (including
principal, interest, fees and expenses)
16
arising from or evidenced by the Remaining Existing Senior Subordinated Notes.
Schedule 1.96 hereto sets forth the holders of the Remaining Existing
Subordinated Note Indebtedness and the principal amount of the Existing Senior
Subordinated Notes held by each such holder.
1.97 "Remaining Existing Senior Subordinated Notes" shall mean the
Existing Senior Subordinated Notes which are not exchanged by the holders
thereof for Senior Subordinated Notes, not to exceed the Remaining Existing
Subordinated Note Indebtedness.
1.98 "Renewal Date" shall have the meaning set forth in Section
13.1 hereof.
1.99 "Required Lenders" shall mean, at any time, those Lenders
whose Pro Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent or
more of the aggregate of the Commitments of all Lenders, or if the Commitments
shall have been terminated, Lenders to whom at least sixty-six and two-thirds
(66 2/3%) percent of the then outstanding Obligations are owing.
1.100 "Reserves" shall mean the term "Reserves" as defined in the
Working Capital Loan Agreement as in effect as on the date hereof.
1.101 "Rubber Group Reserve" shall mean the term "Rubber Group
Reserve" as defined in the Working Capital Loan Agreement as in effect on the
date hereof.
1.102 "Series B Preferred Stock" shall mean the $8 Cumulative
Convertible Preferred Stock, Series B, of LPC.
1.103 "Senior Subordinated Notes" shall mean, collectively, the 12%
Senior Subordinated Notes due August 1, 2009 issued by LPC pursuant to the
Senior Subordinated Note Indenture, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.104 "Senior Subordinated Note Indenture" shall mean the Indenture,
dated as of December 18, 2003, between LPC, as issuer, and Wilmington Trust
Company, as trustee, with respect to the Senior Subordinated Notes, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.105 "Solvent" shall mean, at any time with respect to any Person,
that at such time such Person (a) is generally able to pay its debts as they
mature and has (and has a reasonable basis to believe it will continue to have)
sufficient capital (and not unreasonably small capital) to carry on its business
consistent with its practices as of the date hereof, and (b) the assets and
properties of such Person (and its Subsidiaries, taken as a whole) at a fair
valuation (and including as assets for this purpose at a fair valuation all
rights of subrogation, contribution or indemnification arising pursuant to any
guarantees given by such Person and its Subsidiaries, taken as a whole) are
greater than the Indebtedness of such Person and its Subsidiaries, taken as a
whole, and including subordinated and contingent liabilities (without
duplication) computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including (without duplication) as to
contingent liabilities arising pursuant to any guarantee the face amount of such
liability as reduced to reflect the probability of it becoming a matured
liability).
17
1.106 "Special Agent Advances" shall have the meaning set forth in
Section 12.11 hereof.
1.107 "Special Reserve" shall mean the term "Special Reserve" as
defined in the Working Capital Loan Agreement as in effect on the date hereof.
1.108 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which at least a majority of the outstanding Capital Stock or
other interests entitled to vote in the election of the board of directors of
such corporation (irrespective of whether, at the time, Capital Stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person is, at the time, directly or indirectly, owned by such Person and/or one
or more subsidiaries of such Person.
1.109 "UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.110 "Voting Stock" shall mean with respect to any Person, (a) one
(1) or more classes of Capital Stock of such Person having general voting powers
to elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
1.111 "Warrant Agent Agreement" shall mean the Warrant Agent
Agreement, dated as of December 18, 2003, by and between LPC and Wilmington
Trust Company, in its capacity as warrant agent, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.112 "WC Revolving Loans" shall mean the term "Revolving Loans" as
defined in the Working Capital Loan Agreement as in effect on the date hereof.
1.113 "WC Term Loans" shall mean the term "Term Loans" as defined in
the Working Capital Loan Agreement as in effect on the date hereof.
1.114 "Weighted Average Life to Maturity" shall mean, when applied
to any Indebtedness at any date, the number of years obtained by dividing (a)
the then outstanding principal amount of such Indebtedness into (b) the 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.
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1.115 "Working Capital Agent" shall mean Congress, in its capacity
as agent acting for and on behalf of the Working Capital Lenders pursuant to the
Working Capital Loan Agreement, and its successors and assigns (including any
replacement or successor agent or additional agent acting for and on behalf of
the Working Capital Lenders).
1.116 "Working Capital Debt" shall mean all obligations, liabilities
and indebtedness of every kind, nature and description owing by any Borrower to
Working Capital Agent or any Working Capital Lender, including principal,
interest, charges, fees, premiums, indemnities, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
arising under the Working Capital Lender Agreements.
1.117 "Working Capital Lender Agreements" shall mean, collectively,
the following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Working Capital
Loan Agreement; (b) the agreements, documents and instruments set forth on
Schedule 1.117 hereto; and (c) all other agreements, documents and instruments
at any time executed and/or delivered by any Borrower with, to or in favor of
Working Capital Lender in connection therewith or related thereto; sometimes
being referred to herein individually as a "Working Capital Lender Agreement".
1.118 "Working Capital Lenders" shall mean, collectively, Congress
in its individual capacity, The CIT Group/Commercial Financing, Inc. and the
other lenders who are from time to time parties to the Working Capital Loan
Agreement as lenders, and their respective successors and assigns, and the
lenders with respect to any Refinancing Indebtedness; each sometimes referred to
herein individually as a "Working Capital Lender".
1.119 "Working Capital Loan Agreement" shall mean the Amended and
Restated Loan and Security Agreement, dated of even date herewith, by and among
Congress, as 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.
SECTION 2. LOAN FACILITY
2.1 The Loan.
(a) On the date hereof, each Lender severally agrees to
make the Loan to the Borrowers, in an aggregate principal amount not to exceed
the amount of such Lender's Commitment.
(b) The Loan is (i) to be repaid, together with interest
and other amounts, in accordance with this Agreement and (ii) secured by all of
the Collateral. The principal amount of the Loan shall be repaid in consecutive
monthly installments (or earlier as provided herein) payable on the first day of
each month commencing January, 2004, each in the amount of $95,833.33; provided,
however, that the last installment payable on the earlier of (i) the maturity
date of this Agreement as set forth in Section 13.1 hereof, and (ii) such
earlier date on which the Loan shall become due and payable in accordance with
the terms of this Agreement and the other Loan Documents, shall be in the amount
necessary to repay in full the unpaid principal amount of the Loan.
19
(c) The aggregate principal amount of the Loan made on
the date hereof shall not exceed the Maximum Credit. Any principal amount of the
Loan which is repaid or prepaid may not be reborrowed.
(d) Borrowers may prepay the Loan, without penalty or
premium, so long as each prepayment is an integral multiple of $100,000.
(e) Agent, on behalf of Borrowers, agrees to record each
Loan on the Register referred to in Section 13.7(b). The Loan recorded on the
Register (the "Registered Loan") may not be evidenced by promissory notes other
than a Registered Note (as defined below). Upon the registration of a Loan, any
promissory note (other than a Registered Note) evidencing the same shall be null
and void and shall be returned to Borrowers. Borrowers agree, at the request of
any Lender, to execute and deliver to such Lender a promissory note in
registered form to evidence such Registered Loan (i.e., containing registered
note language) and registered as provided in Section 13.7(b) hereof (a
"Registered Note"), payable to the order of such Lender and otherwise duly
completed. Once recorded on the Register, the Obligations evidenced by such
Registered Note may not be removed from the Register so long as it remains
outstanding, and a Registered Note may not be exchanged for a promissory note
that is not a Registered Note.
2.2 Commitments. The aggregate amount of each Lender's Pro Rata
Share of the Loan shall not exceed the amount of such Lender's Commitment, as
the same may from time to time be amended in accordance with the provisions
hereof. Each Lender's Commitment shall terminate at 5:00 p.m. (New York City
time) on the date hereof.
2.3 Joint and Several Liability. Each Borrower shall be jointly
and severally liable for all amounts due to Agent and Lenders under this
Agreement and the other Financing Agreements, regardless of which Borrower
actually receives the Loans hereunder or the amount of such Loans received or
the manner in which Agent or any Lender accounts for such Loans or other
extensions of credit on its books and records. All references herein or in any
of the other Financing Agreements to any of the obligations of Borrowers to make
any payment hereunder or thereunder shall constitute joint and several
obligations of Borrowers. The Obligations with respect to Loans made to a
Borrower, and the Obligations arising as a result of the joint and several
liability of a Borrower hereunder, with respect to Loans made to the other
Borrower, shall be separate and distinct obligations, but all such other
Obligations shall be primary obligations of all Borrowers. The Obligations
arising as a result of the joint and several liability of a Borrower hereunder
with respect to Loans or other extensions of credit made to the other Borrower
shall, to the fullest extent permitted by law, be unconditional irrespective of
(a) the validity or enforceability, avoidance or subordination of the
Obligations of the other Borrower or of any promissory note or other document
evidencing all or any part of the Obligations of the other Borrower, (b) the
absence of any attempt to collect the Obligations from the other Borrower, any
Obligor or any other security therefor, or the absence of any other action to
enforce the same, (c) the waiver, consent, extension, forbearance or granting of
any indulgence by Agent or any Lender with respect to any provisions of any
instrument evidencing the Obligations of the other Borrower, or any part
thereof, or any other agreement now or hereafter executed by the other Borrower
and delivered to Agent or any Lender, (d) the failure by Agent or any Lender to
take any steps to perfect and maintain its security interest in, or to preserve
its rights and maintain its security or collateral for the Obligations of the
other Borrower, (e) the
20
election of Agent and Lenders in any proceeding instituted under the Bankruptcy
Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (f) the
disallowance of all or any portion of the claim(s) of Agent or any Lender for
the repayment of the Obligations of the other Borrower under Section 502 of the
Bankruptcy Code, or (g) any other circumstances which might constitute a legal
or equitable discharge or defense of an Obligor or of the other Borrower. With
respect to the Obligations arising as a result of the joint and several
liability of a Borrower hereunder with respect to Loans or other extensions of
credit made to the other Borrower hereunder, each Borrower waives, until the
Obligations shall have been paid in full and this Agreement shall have been
terminated, any right to enforce any right of subrogation or any remedy which
Agent or any Lender now has or may hereafter have against any Borrower or
Obligor and any benefit of, and any right to participate in, any security or
collateral given to Agent or any Lender. At any time an Event of Default exists
or has occurred and is continuing, Agent may proceed directly and at once,
without notice, against any Borrower to collect and recover the full amount, or
any portion of the Obligations, without first proceeding against the other
Borrower or any other Person, or against any security or collateral for the
Obligations. Each Borrower consents and agrees that Agent and Lenders shall be
under no obligation to xxxxxxxx any assets in favor of Borrower(s) or against or
in payment of any or all of the Obligations.
2.4 Mandatory Prepayments. Notwithstanding the provisions of
Section 6.4 hereof, so long as no Event of Default exists or has occurred and is
continuing:
(a) Upon the receipt by any Borrower or any of its
Subsidiaries of any Extraordinary Receipts, Borrowers shall immediately prepay
the Working Capital Debt and the Obligations as set forth below, in an amount
equal to 100% of such Extraordinary Receipts, net of any reasonable expenses
incurred in collecting such Extraordinary Receipts:
(i) if such Extraordinary Receipts are the
proceeds of Inventory or Accounts, then such proceeds shall be applied, first,
to the outstanding principal amount of the WC Revolving Loans, second, to the
outstanding principal amount of the WC Term Loans, and third, to the outstanding
principal amount of the Loan; and
(ii) if such Extraordinary Receipts are the
proceeds of Real Property, then such proceeds shall be applied to the
outstanding principal amount of the Loan; and
(iii) if such Extraordinary Receipts are the
proceeds of any other Collateral (other than Inventory or Accounts and other
than Real Property), then such proceeds shall be applied, at Borrowers' option,
to either (A) the outstanding principal amount of the WC Term Loans, (B) the
outstanding principal amount of the Loan, or (C) the outstanding principal
amount of the WC Revolving Loans so long as the Working Capital Agent
permanently reduces the Revolving Loan Limit (as defined in the Working Capital
Loan Agreement) and establishes and maintains a permanent Reserve against the
aggregate Borrowing Base of all Borrowers, in each case in an amount equal to
the amount of net proceeds that are so applied by Borrowers to the prepayment of
principal of the WC Revolving Loans;
provided, however, that (A) so long as no Default or an Event of Default has
occurred and is continuing, on the date such Person receives Extraordinary
Receipts consisting of insurance
21
proceeds from one or more policies covering, or proceeds from any judgment,
settlement, condemnation or other cause of action in respect of, the loss,
damage, taking or theft of any property or assets, such Extraordinary Receipts
received by the Borrowers may, at the option of the Borrowers, be applied to
repair, refurbish or replace such property or assets or acquire replacement
property or assets for the property or assets so lost, damaged or stolen or
other property or assets used or useful in the business of any Borrower for the
property or assets so disposed, provided, that (x) the Agent for the benefit of
the Lenders has a first-priority Lien (subject to Permitted Liens) on such
replacement (or repaired or restored) property or assets, (y) the Borrowers
deliver a certificate to the Agent within 10 days after the date of receipt of
such Extraordinary Receipts stating that such Extraordinary Receipts shall be
used to repair or refurbish such property or assets or to acquire such
replacement property or assets for the property or assets so lost, damaged or
stolen or such other property or assets used or useful in the business of any
Borrower within 180 days after the date of receipt of such Extraordinary
Receipts (which certificate shall set forth an estimate of the Extraordinary
Receipts to be so expended), and (z) if such Extraordinary Receipts are the
proceeds of Real Property and aggregate $500,000 or more, the Borrowers obtain
the prior written consent of the Agent and (B) if all or any portion of such
Extraordinary Receipts are not so used within the 180-day period, such unused
Extraordinary Receipts shall be applied to prepay the Working Capital Debt and
the Obligations in accordance with this Section 2.4(a). Pending such
reinvestment, the Extraordinary Receipts shall be applied as a prepayment of WC
Revolving Loans but not as a permanent reduction in the Revolving Loan Limit (as
defined in the Working Capital Loan Agreement) and no Reserve shall be taken
against the Borrowing Base. Any Extraordinary Receipts applied to repair,
refurbish or replace Collateral pursuant to and in accordance with this Section
2.4(a) shall not be deemed Capital Expenditures for purposes of this Agreement.
(b) Upon the issuance or sale by any Borrower or any of
its Subsidiaries of Capital Stock of such Borrower or Subsidiary as permitted in
Sections 9.7(b)(iii), (iv) and (v) hereof, or the issuance or incurrence by any
Borrower or any of its Subsidiaries of any Indebtedness of the type described in
Section 9.9(h), Borrowers shall immediately prepay the Working Capital Debt and
the Obligations, in an amount equal to 100% of the Net Cash Proceeds received by
such Person in connection therewith (except to the extent otherwise provided in
Section 9.7(b)(iii)(B)) as follows: first, to the outstanding principal amount
of the WC Term Loans, and second, at Borrower's option to either (A) the
outstanding principal amount of the Loan or (B) the outstanding principal amount
of the WC Revolving Loans so long as the Working Capital Agent permanently
reduces the Revolving Loan Limit (as defined in the Working Capital Loan
Agreement) and establishes and maintains a permanent Reserve against the
aggregate Borrowing Base of all Borrowers, in each case in an amount equal to
the amount of Net Cash Proceeds that are so applied by Borrowers to the
prepayment of principal of the WC Revolving Loans. The provisions of this
subsection (b) shall not be deemed to be implied consent to any such issuance,
incurrence or sale otherwise prohibited by the terms and conditions of this
Agreement.
(c) Upon the sale or disposition of any Collateral by any
Borrower or any of its Subsidiaries as permitted in Sections 9.7(b)(ii), (vi)
and (viii) or upon the sale or disposition of any Collateral of any Borrower or
any of its Subsidiaries not otherwise permitted by the terms of this Agreement
but consented to by Required Lenders, Borrowers shall immediately prepay
22
the Working Capital Debt and the Obligations as set forth below, in an amount
equal to 100% of the Net Cash Proceeds received by such Person in connection
with such sale or disposition:
(i) if such sale or disposition is of Inventory
or Accounts, then such Net Cash Proceeds shall be applied, first, to the
outstanding principal amount of the WC Revolving Loans, second, to the
outstanding principal amount of the WC Term Loans, and third, to the outstanding
principal amount of the Loan; and
(ii) if such sale or disposition is of Real
Property, then such Net Cash Proceeds shall be applied to the outstanding
principal amount of the Loan; and
(iii) if such sale or disposition is of any other
Collateral (other than Inventory, Accounts or Real Property), then such Net Cash
Proceeds shall be applied, first, to the outstanding principal amount of the WC
Term Loans, and second, at Borrower's option to either (A) the outstanding
principal amount of the Loan or (B) the outstanding principal amount of the WC
Revolving Loans so long as the Working Capital Agent permanently reduces the
Revolving Loan Limit (as defined in the Working Capital Loan Agreement) and
establishes and maintains a permanent Reserve against the aggregate Borrowing
Base of all Borrowers, in each case in an amount equal to the amount of Net Cash
Proceeds that are so applied by Borrowers to the prepayment of principal of the
WC Revolving Loans;
provided, however, that, the Net Cash Proceeds of any sale or other disposition
of Equipment permitted by Sections 9.7(b)(ii) and (vi) hereof may be reinvested
by a Borrower to purchase property or assets used or useful in such Borrower's
business at any time within one hundred twenty (120) days after receipt of such
Net Cash Proceeds, provided, that, (i) any such Net Cash Proceeds not so used
within such one hundred twenty (120) day period shall be immediately applied to
the Obligations and the Working Capital Debt in accordance with this Section
2.6(c), (ii) Agent, for itself and the benefit of Lenders, shall have a valid
and perfected first-priority lien on and security interest in such replacement
or new property or assets, and (iii) at the time of receipt of any such Net Cash
Proceeds, no Default or Event of Default shall have occurred and be continuing.
The provisions of this subsection (c) shall not be deemed to be implied consent
to any such sale or disposition otherwise prohibited by the terms and conditions
of this Agreement. Any Net Cash Proceeds reinvested by a Borrower pursuant to
and in accordance with this Section 2.4(c) shall not be deemed to be Capital
Expenditures for purposes of this Agreement.
(d) Notwithstanding the foregoing, if the Working Capital
Agent decides not to require Borrowers to make any payment that, pursuant to the
terms of this Section 2.4, is required to be applied to the Working Capital
Debt, such payment shall be applied to prepay the outstanding principal amount
of the Loan instead.
(e) All prepayments of the WC Term Loans and the Loan
under this Section 2.4 shall be applied against the remaining installments (if
any) of principal due on the WC Term Loans or the Loan, as applicable, in the
inverse order of maturity. Notwithstanding anything to the contrary in this
Section 2.4, all prepayments of principal under this Section 2.4 shall be made
together with accrued and unpaid interest thereon to the date of such
prepayment.
23
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Agent, for the benefit of
Lenders, interest on the outstanding principal amount of the Loan at the
Interest Rate. All interest accruing hereunder on and after the date that any
Event of Default exists or has occurred and is continuing or on and after the
date of termination hereof shall be payable on demand.
(b) Interest shall be payable by Borrowers to Agent, for
the account of Lenders, monthly in arrears on the first Business Day of each
calendar month and shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed. The interest rate on non-contingent
Obligations shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced and shall be based on the Prime Rate in
effect on the last day of the month in which any such change occurs. In no event
shall charges constituting interest payable by Borrowers to Agent and Lenders
exceed the maximum amount or the rate permitted under any applicable law or
regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
3.2 Fees. Borrowers agree to pay to Agent the fees and amounts set
forth in the Fee Letter in the amounts and at the times specified therein.
3.3 Changes in Laws and Increased Costs of Loan. If after the date
hereof, either (i) any change in, or in the interpretation of, any law or
regulation is introduced, including, without limitation, with respect to reserve
requirements, applicable to Lender or any banking or financial institution from
whom any Lender borrows funds or obtains credit (a "Funding Bank"), (ii) a
Funding Bank or any Lender complies with any future guideline or request from
any central bank or other Governmental Authority or (iii) a Funding Bank or any
Lender determines that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof has or would have the effect described below, or a Funding Bank or any
Lender complies with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, and in the case of any event set forth in this clause (iii),
such adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any Lender's capital as a consequence
of its obligations hereunder to a level below the rate that such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration the Funding Bank's or Lender's policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, and the result of
any of the foregoing events described in clauses (i), (ii) or (iii) is or
results in an increase in the cost to any Lender of funding or maintaining the
Loan, then Borrowers shall from time to time upon demand by Agent pay to Agent
additional amounts sufficient to indemnify Lenders against such increased cost
on an after-tax basis (after taking into account applicable deductions and
credits in respect of the amount indemnified). A certificate showing the
calculations for the
24
amount of such increased cost shall be submitted to Administrative Borrower by
Agent and shall be conclusive, absent manifest error.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Loan. Each of the following is a
condition precedent to Agent and Lenders making the Loan hereunder:
(a) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all releases, terminations and such other
documents as Agent may request to evidence and effectuate the termination by
Bank One of the Bank One Financing and the termination and release by it of any
interest in and to any assets and properties of each Borrower, duly authorized,
executed and delivered by it or each of them, including, but not limited to, (i)
UCC termination statements for all UCC financing statements previously filed by
it or any of them or their predecessors, as secured party and any Borrower, as
debtor; and (ii) satisfactions and discharges of any mortgages, deeds of trust
or deeds to secure debt by any Borrower in favor of it or any of them, in form
acceptable for recording with the appropriate Governmental Authority;
(b) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all releases, terminations and such other
documents as Agent may request to evidence and effectuate the termination by CIT
of the CIT Financing and the termination and release by it of any interest in
and to any assets and properties of each Borrower, duly authorized, executed and
delivered by it or each of them, including, but not limited to, (i) UCC
termination statements for all UCC financing statements previously filed by it
or any of them or their predecessors, as secured party and any Borrower, as
debtor; and (ii) satisfactions and discharges of any mortgages, deeds of trust
or deeds to secure debt by any Borrower in favor of it or any of them, in form
acceptable for recording with the appropriate Governmental Authority;
(c) Agent shall have received evidence, in form and
substance satisfactory to Agent, that Borrowers have exchanged the Existing
Senior Subordinated Notes (other than the Remaining Existing Subordinated Note
Indebtedness) for the Senior Subordinated Notes;
(d) Agent shall have received evidence, in form and
substance satisfactory to Agent, that Borrower have exchanged the Existing
Junior Subordinated Notes for the Junior Subordinated Notes;
(e) Borrower shall have transferred all amounts in excess
of $1,000 from LPC's investment account number 390-01616 maintained with
Xxxxxxxxx & Company, Inc. to Working Capital Agent in cash or other immediately
available funds;
(f) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall be in
form and substance reasonably satisfactory to Agent, and Agent shall have
received all information and copies of all documents, including records of
requisite corporate action and proceedings which Agent may have reasonably
requested in connection therewith, such documents where requested by Agent or
its counsel to be certified by appropriate corporate officers or Governmental
Authority (and including a copy of the certificate of incorporation of each
Borrower certified by the Secretary of State (or equivalent Governmental
Authority) which shall set forth the same complete corporate
25
name of such Borrower as is set forth herein and such document as shall set
forth the organizational identification number of each Borrower, if one is
issued in its jurisdiction of incorporation);
(g) no material adverse change shall have occurred in the
assets, business or prospects of Borrowers since the date of Agent's latest
field examination (not including for this purpose the field review referred to
in clause (g) below) and no change or event shall have occurred which would
impair the ability of any Borrower or Obligor to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a party
or the ability of Agent or any Lender to enforce the Obligations or realize upon
the Collateral;
(h) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all consents, waivers, acknowledgments and
other agreements from third persons which Agent may deem necessary or desirable
in order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements other than Collateral Access Agreements by owners
and lessors of leased premises of each Borrower and by processors and warehouses
at which Collateral is located;
(i) Agent shall have received the Intercreditor
Agreement, in form and substance reasonably satisfactory to Agent, duly
authorized, executed and delivered by Working Capital Lender and Borrowers;
(j) after giving effect to (i) the Loan made or to be
made in connection with the transactions hereunder and (ii) the initial Loans
(as defined in the Working Capital Loan Agreement) made or to be made and Letter
of Credit Accommodations (as defined in the Working Capital Loan Agreement)
issued or to be issued in connection with the initial transactions under the
Working Capital Loan Agreement but without giving effect to the Special Reserve,
the Appraisal Reserve and the Rubber Group Reserve, the Excess Availability as
determined by Working Capital Agent, as of the date hereof, shall be not less
than $5,500,000;
(k) Agent shall have received, in form and substance
reasonably satisfactory to Agent, Deposit Account Control Agreements by and
among Working Capital Agent, Agent, each Borrower, as the case may be and each
bank at which such Borrower has a deposit account (other than the Excluded
Deposit Accounts, as defined in Section 5.2(d) hereof), in each case, duly
authorized, executed and delivered by such bank and Borrower, as the case may
be;
(l) Agent shall have received evidence, in form and
substance satisfactory to Agent, that Agent has a valid perfected first priority
security interest in all of the Collateral, subject only to (i) the prior liens
of the Working Capital Agent thereon (except in the case of the Real Property),
(ii) security interests in Equipment to the extent permitted by Section 9.8(l)
hereof, (iii) the security interests, liens and encumbrances on Real Property to
the extent permitted by Section 9.8(m) hereof, and (iv) any security interests
on Insurance Premium Collateral to the extent permitted by Section 9.8(k) hereof
which may have priority;
(m) Agent shall have received and reviewed lien and
judgment search results for the jurisdiction of incorporation of each Borrower,
the jurisdiction of the chief executive
26
office of each Borrower and all jurisdictions in which assets of Borrowers are
located, which search results shall be in form and substance satisfactory to
Agent;
(n) Agent shall have received copies of the shares of the
stock certificates representing all of the issued and outstanding shares of the
Capital Stock of LRG, together with stock powers duly executed in blank with
respect thereto, and shall have received evidence satisfactory to Agent that the
originals of such stock certificates and stock powers have been delivered to the
Working Capital Agent;
(o) Agent shall have received evidence of insurance and
loss payee endorsements required hereunder and under the other Financing
Agreements, in form and substance reasonably satisfactory to Agent, and
certificates of insurance policies and/or endorsements naming Agent as
additional insured or loss payee as its interests may appear, as applicable;
(p) Agent shall have received, in form and substance
reasonably satisfactory to Agent, such opinion letters of counsel to Borrowers
with respect to the Financing Agreements and such other matters as Agent may
reasonably request;
(q) Agent shall have received a true, correct and
complete copy of the Nomura Payoff Agreement, duly authorized, executed and
delivered by the parties thereto;
(r) all representations and warranties contained herein
and in the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the making of the Loan and after giving
effect thereto, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate in all material respects on and
as of such earlier date);
(s) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loan, or (B) the
consummation of the transactions contemplated pursuant to the terms hereof or
the other Financing Agreements or (ii) has or has a reasonable likelihood of
having a Material Adverse Effect;
(t) no Default or Event of Default shall exist or shall
have occurred and be continuing on and as of the date of the making of the Loan
and after giving effect thereto; and
(u) the other Financing Agreements and all instruments
and documents hereunder and thereunder shall have been duly executed and
delivered to Agent, in form and substance satisfactory to Agent.
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SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest. (a) To secure payment and
performance of all Obligations, each Borrower hereby grants to Agent, for itself
and the benefit of Lenders, a continuing security interest in, a lien upon, and
a right of set off against, and hereby assigns to Agent, for itself and the
benefit of Lenders, as security, all personal and real property and fixtures,
and interests in property and fixtures, of each Borrower, whether now owned or
hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by Agent or any Lender, collectively, the "Collateral"), including:
(i) all Accounts;
(ii) all general intangibles, including, without
limitation, all Intellectual Property;
(iii) all goods, including, without limitation,
Inventory and Equipment;
(iv) Real Property and fixtures;
(v) all chattel paper, including, without
limitation, all tangible and electronic chattel paper;
(vi) all instruments, including, without
limitation, all promissory notes;
(vii) all documents;
(viii) all deposit accounts;
(ix) all letters of credit, banker's acceptances
and similar instruments, including all letter-of-credit rights;
(x) all supporting obligations and all present
and future liens, security interests, rights, remedies, title and interest in,
to and in respect of Receivables and other Collateral, including (A) rights and
remedies under or relating to guaranties, contracts of suretyship, letters of
credit and credit and other insurance related to the Collateral, (B) rights of
stoppage in transit, replevin, repossession, reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, (C) goods described in
invoices, documents, contracts or instruments with respect to, or otherwise
representing or evidencing, Receivables or other Collateral, including returned,
repossessed and reclaimed goods, and (D) deposits by and property of account
debtors or other persons securing the obligations of account debtors;
(xi) all (A) investment property (including
securities, whether certificated or uncertificated, securities accounts,
security entitlements, commodity contracts or commodity accounts) and (B)
monies, credit balances, deposits and other property of any Borrower now or
hereafter held or received by or in transit to Agent, any Lender or its
Affiliates or at any other depository or other institution from or for the
account of any Borrower, whether for safekeeping, pledge, custody, transmission,
collection or otherwise;
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(xii) all commercial tort claims, including,
without limitation, those identified in the Information Certificate;
(xiii) to the extent not otherwise described above,
all Receivables;
(xiv) all Records; and
(xv) all products and proceeds of the foregoing,
in any form, including insurance proceeds and all claims against third parties
for loss or damage to, or destruction of or other involuntary conversion of any
kind or nature of, any or all of the other Collateral.
(b) Excluded Collateral. Notwithstanding anything to the
contrary set forth in Section 5.1(a) above, the types or items of Collateral
described in such Section shall not include any Equipment (or proceeds thereof)
which is or becomes subject to a mortgage or other lien or security interest
(including capitalized or finance leases) permitted under Sections 9.8(e) or (l)
hereof if the valid grant of a security interest or lien therein to Agent in
such Equipment is prohibited by the terms of the agreement between such Borrower
and the holder of such mortgage or other lien or security interest or under
applicable law and such prohibition has not been or is not waived, or the
consent of the holder of the mortgage or other lien or security interest has not
been or is not otherwise obtained (it being understood that Borrowers shall have
no obligation to Agent whatsoever to obtain such consent), or under applicable
law such prohibition cannot be waived.
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5.2 Perfection of Security Interests.
(a) Each Borrower irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Agent or its designee
as the secured party and such Borrower as debtor, as Agent may require, and
including any other information with respect to such Borrower or otherwise
required by part 5 of Article 9 of the Uniform Commercial Code of such
jurisdiction as Agent may determine, together with any amendments and
continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Each Borrower
hereby ratifies and approves all financing statements naming Agent or its
designee as secured party and such Borrower, as the case may be, as debtor with
respect to the Collateral (and any amendments with respect to such financing
statements) filed by or on behalf of Agent prior to the date hereof in respect
of the security interest granted pursuant to this Agreement and ratifies and
confirms the authorization of Agent to file such financing statements (and
amendments thereto, if any). Each Borrower hereby authorizes Agent to adopt on
behalf of such Borrower any symbol required for authenticating any electronic
filing. In the event that the description of the collateral in any financing
statement naming Agent or its designee as the secured party and any Borrower as
debtor includes assets and properties of such Borrower that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by such Borrower to the extent of the
Collateral included in such description and it shall not render the financing
statement ineffective as to any of the Collateral or otherwise affect the
financing statement as it applies to any of the Collateral. In no event shall
any Borrower at any time file, or permit, authorize or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Agent or
its designee as secured party and such Borrower as debtor.
(b) Each Borrower does not have any chattel paper
(whether tangible or electronic) or instruments as of the date of this
Agreement, except as set forth in the Information Certificate. In the event that
any Borrower shall be entitled to or shall receive any chattel paper or
instrument after the date hereof, Borrowers shall promptly notify Agent thereof
in writing. Promptly upon the receipt thereof by or on behalf of any Borrower
(including by any agent or representative), such Borrower shall deliver, or
cause to be delivered to Agent (or if the Working Capital Loan Agreement has not
been terminated, to Working Capital Agent, with copies to Agent), all tangible
chattel paper and instruments that such Borrower has or may at any time acquire,
accompanied by such instruments of transfer or assignment duly executed in blank
as Agent may from time to time specify, in each case except as Agent may
otherwise agree. Subject to the terms of the Intercreditor Agreement, at Agent's
option, each Borrower shall, or Agent may at any time on behalf of any Borrower,
cause the original of any such instrument or chattel paper to be conspicuously
marked in a form and manner acceptable to Agent with the following legend
referring to chattel paper or instruments as applicable: "This [chattel
paper][instrument] is subject to the security interest of Ableco Finance LLC, as
Agent, pursuant to the Loan and Security Agreement, dated December 18, 2003, as
the same now exists or may be amended, modified, supplemented, extended,
restated, renewed or replaced, and any sale, transfer, assignment or encumbrance
of this [chattel paper][instrument] violates the rights of such secured party."
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(c) In the event that any Borrower shall at any time hold
or acquire an interest in any electronic chattel paper or any "transferable
record" (as such term is defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction), such
Borrower shall promptly notify Agent thereof in writing. Subject to the terms of
the Intercreditor Agreement, promptly upon Agent's request, such Borrower shall
take, or cause to be taken, such actions as Agent may request to give Agent
control of such electronic chattel paper under Section 9-105 of the UCC and
control of such transferable record under Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or, as the case may be, Section
16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(d) None of the Borrowers has any deposit accounts as of
the date hereof, except as set forth in the Information Certificate. Borrowers
shall not, directly or indirectly, after the date hereof open, establish or
maintain any deposit account unless each of the following conditions is
satisfied: (i) Agent shall have received not less than five (5) Business Days
prior written notice of the intention of any Borrower to open or establish such
account which notice shall specify in reasonable detail and specificity
acceptable to Agent the name of the account, the owner of the account, the name
and address of the bank at which such account is to be opened or established,
the individual at such bank with whom such Borrower is dealing and the purpose
of the account, (ii) the bank where such account is opened or maintained shall
be acceptable to Agent, and (iii) on or before the opening of such deposit
account, such Borrower shall as Agent may specify and subject to the terms of
the Intercreditor Agreement either (A) deliver to Agent (or if the Working
Capital Loan Agreement has not been terminated, to Working Capital Agent, with a
copy to Agent) a Deposit Account Control Agreement with respect to such deposit
account duly authorized, executed and delivered by such Borrower and the bank at
which such deposit account is opened and maintained or (B) arrange for Agent (or
if the Working Capital Loan Agreement has not been terminated, Working Capital
Agent) to become the customer of the bank with respect to the deposit account on
terms and conditions acceptable to Agent. The terms of this subsection (d) shall
not apply to deposit accounts specifically and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of any Borrower's salaried employees (the "Excluded Deposit Accounts").
(e) No Borrower owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.
(i) In the event that any Borrower shall be
entitled to or shall, at any time after the date hereof, hold or acquire any
certificated securities, such Borrower shall promptly endorse, assign and
deliver the same to Agent (or if the Working Capital Loan Agreement has not been
terminated, to Working Capital Agent, with copies to Agent), accompanied by such
instruments of transfer or assignment duly executed in blank as Agent may from
time to time specify. If any securities, now or hereafter acquired by any
Borrower are uncertificated and are issued to such Borrower or its nominee
directly by the issuer thereof, such Borrower shall immediately notify Agent
thereof and shall, as Agent may specify and subject to the terms of the
Intercreditor Agreement, either (A) direct the issuer to agree to comply with
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instructions from Agent as to such securities, without further consent of any
Borrower or such nominee, or (B) arrange for Agent to become the registered
owner of the securities.
(ii) Borrowers shall not, directly or indirectly,
after the date hereof open, establish or maintain any investment account,
securities account, commodity account or any other similar account (other than a
deposit account) with any securities intermediary or commodity intermediary
unless each of the following conditions is satisfied: (A) Agent shall have
received not less than five (5) Business Days prior written notice of the
intention of such Borrower to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the securities
intermediary or commodity intermediary at which such account is to be opened or
established, the individual at such intermediary with whom such Borrower is
dealing and the purpose of the account, (B) the securities intermediary or
commodity intermediary (as the case may be) where such account is opened or
maintained shall be acceptable to Agent, and (C) on or before the opening of
such investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, such Borrower shall as Agent
may specify and subject to the terms of the Intercreditor Agreement either (1)
execute and deliver, and cause to be executed and delivered to Agent (or if the
Working Capital Loan Agreement has not been terminated, to Working Capital
Agent, with a copy to Agent), an Investment Property Control Agreement with
respect thereto duly authorized, executed and delivered by such Borrower and
such securities intermediary or commodity intermediary or (2) arrange for Agent
(or if the Working Capital Loan Agreement has not been terminated, Working
Capital Agent) to become the entitlement holder with respect to such investment
property on terms and conditions acceptable to Agent; provided, that LPC may
maintain its investment account number 390-01616 maintained with Xxxxxxxxx &
Company, Inc. without delivery of an Investment Property Control Agreement so
long as if at any time the balance therein exceeds $1,000, LPC shall promptly
remit such excess to Working Capital Agent.
(f) Borrowers are not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker's acceptance
or similar instrument as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower shall be entitled to or
shall receive any right to payment under any letter of credit, banker's
acceptance or any similar instrument, whether as beneficiary thereof or
otherwise, after the date hereof, such Borrower shall promptly notify Agent
thereof in writing. Such Borrower shall immediately, as Agent may specify and
subject to the terms of the Intercreditor Agreement, (i) either deliver, or use
its reasonable best efforts to cause to be delivered to Agent (or if the Working
Capital Loan Agreement has not been terminated, to Working Capital Agent, with a
copy to Agent), with respect to any such letter of credit, banker's acceptance
or similar instrument, the written agreement of the issuer and any other
nominated Person obligated to make any payment in respect thereof (including any
confirming or negotiating bank), in form and substance satisfactory to Agent,
consenting to the assignment of the proceeds of the letter of credit to Agent,
or Working Capital Agent, as the case may be, by such Borrower and agreeing to
make all payments thereon directly to Agent, or Working Capital Agent, as the
case may be, or as Agent, or Working Capital Agent, as the case may be, may
otherwise direct or (ii) cause Agent (or if the Working Capital Loan Agreement
has not been terminated, Working Capital Agent) to become, at Borrowers'
expense, the transferee beneficiary of the letter of credit, banker's acceptance
or similar instrument (as the case may be).
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(g) Borrowers do not have any pending commercial tort
claims as of the date hereof, except as set forth in the Information
Certificate. In the event that any Borrower shall, at any time after the date
hereof have any pending commercial tort claims, such Borrower shall promptly
notify Agent thereof in writing, which notice shall (i) set forth in reasonable
detail the basis for and nature of such commercial tort claim and (ii) include
the express grant by such Borrower to Agent of a security interest in such
commercial tort claim (and the proceeds thereof). In the event that such notice
does not include such grant of a security interest, the sending thereof by such
Borrower to Agent shall be deemed to constitute such grant to Agent. Upon the
sending of such notice, any commercial tort claim described therein shall
constitute part of the Collateral and shall be deemed included therein. Without
limiting the authorization of Agent provided in Section 5.2(a) hereof or
otherwise arising by the execution by such Borrower of this Agreement or any of
the other Financing Agreements, Agent is hereby irrevocably authorized from time
to time and at any time to file such financing statements naming Agent or its
designee as secured party and such Borrower as debtor, or any amendments to any
financing statements, covering any such commercial tort claim as Collateral. In
addition, each Borrower shall promptly upon Agent's request, execute and
deliver, or cause to be executed and delivered, to Agent such other agreements,
documents and instruments as Agent may reasonably require in connection with
such commercial tort claim.
(h) Borrowers do not have any goods, documents of title
or other Collateral in the custody, control or possession of a third party as of
the date of this Agreement, except (i) as set forth in the Information
Certificate, (ii) goods located in the United States in transit to a location of
a Borrower permitted herein in the ordinary course of business of such Borrower
and in the possession of the carrier transporting such goods, and (iii) the
Pledged Securities (as defined in the Pledge and Security Agreement dated as of
the date hereof, made by LPC in favor of the Agent) in the possession of the
Working Capital Agent. In the event that any goods, documents of title or other
Collateral are at any time after the date hereof in the custody, control or
possession of any other person not referred to in the Information Certificate
(other than such carriers), Borrowers shall promptly notify Agent thereof in
writing. Promptly upon Agent's request, Borrowers shall use its reasonable best
efforts to deliver to Agent a Collateral Access Agreement duly authorized,
executed and delivered by such person and the Borrower that is the owner of such
Collateral.
(i) Borrowers shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority of (subject only to (i) the prior liens of the Working Capital
Agent thereon (except in the case of the Real Property), (ii) security interests
in Equipment to the extent permitted by Sections 9.8(e) or (l) hereof, (iii) the
security interests, liens and encumbrances on Real Property to the extent
permitted by Section 9.8(m) hereof, and (iv) any security interests on Insurance
Premium Collateral to the extent permitted by Section 9.8(k) hereof which may
have priority), and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that any Borrower's signature thereon is required therefor, (ii)
causing Agent's name to be noted as secured party on any certificate of title
for a titled good if such notation is a condition to attachment, perfection or
priority of, or ability of Agent to enforce, the security interest of Agent in
such Collateral, (iii) complying with any provision of any statute, regulation
or treaty of the United States as to any
33
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, and (iv) taking all commercially reasonable actions
to obtain the consents and approvals of any Governmental Authority or third
party, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and taking all commercially reasonable
actions required by any earlier versions of the UCC or by other law, as
applicable in any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Agent shall maintain one or more
loan account(s) on its books in which shall be recorded (a) the Loan and other
Obligations and the Collateral, (b) all payments made by or on behalf of any
Borrower and (c) all other appropriate debits and credits as provided in this
Agreement, including interest, fees, charges, costs and expenses. All entries in
the loan account(s) shall be made in accordance with Agent's customary practices
as in effect from time to time.
6.2 Statements. Agent shall render to Administrative Borrower each
month a statement setting forth the balance in the Borrowers' loan account(s)
maintained by Agent for Borrowers pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement
shall be subject to subsequent adjustment by Agent but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrowers and
conclusively binding upon Borrowers and as an account stated, except to the
extent that Agent receives a written notice from Administrative Borrower of any
specific exceptions of Administrative Borrower thereto within thirty (30) days
after the date such statement has been received by Administrative Borrower.
Until such time as Agent shall have rendered to Administrative Borrower a
written statement as provided above, the balance in any Borrower's loan
account(s) shall be presumptive evidence of the amounts due and owing to Agent
and Lenders by Borrowers.
6.3 Collection of Accounts. Borrowers shall comply with all terms
and provisions of the Working Capital Loan Agreement (or any successor or
replacement agreement acceptable to Agent) with respect to the cash management
of Borrowers; provided that, if the Working Capital Loan Agreement shall have
been terminated and Borrowers shall not have entered into a successor or
replacement agreement acceptable to Agent, then Borrowers shall enter into
control agreements, lockbox agreements and other similar agreements in form and
substance reasonably satisfactory to Agent.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment
Account or to such other place as Agent may designate in writing to Borrowers
from time to time. Other than as expressly set forth in Section 2.4 hereof and
subject to the terms of the Intercreditor Agreement, Agent shall apply payments
received or collected from any Borrower or for the account of any Borrower
(including the monetary proceeds of collections or of realization upon any
Collateral) as follows: first, to pay any fees, indemnities or expense
reimbursements then due to Agent and Lenders from any Borrower; second, to pay
interest due in respect of the Loan (and including any Special Agent Advances);
third, to pay or prepay principal in respect of Special Agent
34
Advances; fourth, to pay principal due in respect of the Loan; fifth, to pay or
prepay any other Obligations whether or not then due, in such order and manner
as Agent determines.
(b) At Agent's option, all principal, interest, fees,
costs, expenses and other charges provided for in this Agreement or the other
Financing Agreements may be charged directly to the loan account(s) of any
Borrower maintained by Agent. Borrowers shall make all payments to Agent and
Lenders on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Agent or any
Lender is required to surrender or return such payment or proceeds to any Person
for any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Agent or such Lender. Borrowers shall be liable to pay to Agent, and do hereby
indemnify and hold Agent and Lenders harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4(b) shall remain effective
notwithstanding any contrary action which may be taken by Agent or any Lender in
reliance upon such payment or proceeds. This Section 6.4 (b) shall survive the
payment of the Obligations and the termination of this Agreement.
6.5 Authorization to Make the Loan. Agent and Lenders are
authorized to make the Loan based upon telephonic or other instructions received
from anyone purporting to be (and believed by Agent to be) an officer of
Administrative Borrower or any Borrower or other authorized person. The Loan
request hereunder shall specify the date on which the requested advance is to be
made (which day shall be the date hereof) and the amount of the Loan. The Loan
under this Agreement shall be conclusively presumed to have been made to, and at
the request of and for the benefit of, any Borrower when deposited to the credit
of any Borrower or otherwise disbursed or established in accordance with the
instructions of any Borrower or in accordance with the terms and conditions of
this Agreement.
6.6 Use of Proceeds. Borrowers shall use the proceeds of the Loan
provided by Agent and Lenders to Borrowers hereunder only for: (a) payments to
each of the persons listed in the disbursement direction letter furnished by
Borrowers to Agent on or about the date hereof, (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements, and (c) general operating, working
capital and other proper corporate purposes of such Borrower not otherwise
prohibited by the terms hereof. None of the proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security or for
the purposes of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Loan to be considered a "purpose credit" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
as amended.
6.7 Appointment of Administrative Borrower as Agent for Requesting
the Loan and Receipt of Loan and Statements.
(a) Each Borrower hereby irrevocably appoints and
constitutes Administrative Borrower as its agent to request and receive the Loan
pursuant to this Agreement and the other
35
Financing Agreements from Agent or any Lender in the name or on behalf of such
Borrower. Agent and Lenders may disburse the Loan to such bank account of
Administrative Borrower or a Borrower or otherwise make the Loan to a Borrower
as Administrative Borrower may designate or direct, without notice to any other
Borrower or Obligor. Notwithstanding anything to the contrary contained herein,
Agent may require that the Loan to or for the account of any Borrower be
disbursed directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the
appointment by Borrowers to act as the agent of Borrowers pursuant to this
Section 6.7. Administrative Borrower shall ensure that the disbursement of the
Loan to Borrowers requested by or paid to or for the account of Borrowers, shall
be paid to or for the account of Borrowers.
(c) Each Borrower hereby irrevocably appoints and
constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.
(d) Any notice, election, representation, warranty,
agreement or undertaking by or on behalf of any other Borrower by Administrative
Borrower shall be deemed for all purposes to have been made by such Borrower, as
the case may be, and shall be binding upon and enforceable against such Borrower
to the same extent as if made directly by such Borrower.
(e) No purported termination of the appointment of
Administrative Borrower as agent as aforesaid shall be effective, except after
ten (10) days' prior written notice to Agent.
6.8 Pro Rata Treatment. Except to the extent otherwise provided in
this Agreement: (a) the making of the Loan shall be made among the Lenders based
on their respective Pro Rata Shares and (b) each payment on account of any
Obligations to or for the account of one or more of Lenders in respect of any
Obligations due on a particular day shall be allocated among the Lenders
entitled to such payments based on their respective Pro Rata Shares and shall be
distributed accordingly.
6.9 Sharing of Payments, Etc.
(a) Each Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim Agent
or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower at any
of its offices, in dollars or in any other currency, against any principal of or
interest on the Loan owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such balances
are then due to such Borrower), in which case it shall promptly notify
Administrative Borrower and Agent thereof; provided, that, such Lender's failure
to give such notice shall not affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from any
Borrower payment of any principal of or interest on the Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
36
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loan or more than its share of
such other amounts then due hereunder or thereunder by any Borrower to such
Lender than the percentage thereof received by any other Lender, it shall
promptly pay to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the portion
of the Loan or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end that all
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
in accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
(c) Each Borrower agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of the Loan or other amounts (as the case may
be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to
exercise any right of setoff, banker's lien, counterclaim or similar right or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other Indebtedness or obligation
of any Borrower. If, under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
6.10 Obligations Several; Independent Nature of Lenders' Rights.
The obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Borrowers shall provide Agent with the following
documents in a form reasonably satisfactory to Agent; provided, that, in the
case of items (i), (ii) and (iii) below, if
37
such documents are provided to Working Capital Agent as well, such documents
shall be provided to Agent in the same form as provided to Working Capital
Agent:
(i) on a regular basis as required by Agent,
schedules of sales made, credits issued and cash received;
(ii) as soon as possible after the end of each
month (but in any event within ten (10) Business Days after the end thereof), on
a monthly basis or more frequently as Agent may request, (A) inventory reports,
(B) inventory reports by location and category (and including the amounts of
Inventory and the value thereof at any leased locations and at premises of
warehouses, processors or other third parties), (C) agings of accounts
receivable (together with a reconciliation to the previous month's aging and
general ledger) and agings of accounts payable (and including information
indicating the amounts owing to owners and lessors of leased premises,
warehouses, processors and other third parties from time to time in possession
of any Collateral);
(iii) upon Agent's request, (A) copies of customer
statements, purchase orders, sales invoices, credit memos, remittance advices
and reports, and copies of deposit slips and bank statements, (B) copies of
shipping and delivery documents, and (C) copies of purchase orders, invoices and
delivery documents for Inventory and Equipment acquired by any Borrower;
(iv) such other reports as to the Collateral as
Agent shall request from time to time.
(b) If any Borrower's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, subject to the terms of the Intercreditor Agreement,
such Borrower hereby irrevocably authorizes such service, contractor, shipper or
agent to deliver such records, reports, and related documents to Agent and to
follow Agent's instructions with respect to further services at any time that an
Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrowers shall notify Agent promptly of: (i) any
material delay in any Borrower's performance of any of its material obligations
to any account debtor or the assertion of any material claims, offsets, defenses
or counterclaims by any account debtor, or any material disputes with account
debtors, or any settlement, adjustment or compromise thereof and (ii) all
material adverse information known to any Borrower relating to the financial
condition of any account debtor. No credit, discount, allowance or extension or
agreement for any of the foregoing shall be granted to any account debtor
without Agent's consent, except in the ordinary course of a Borrower's business
in accordance with practices and policies previously disclosed in writing to
Agent and except as set forth in the schedules delivered to Agent pursuant to
Section 7.1(a) above. Notwithstanding anything in this Agreement to the
contrary, so long as no Event of Default exists or has occurred and is
continuing, Borrowers shall settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor. Notwithstanding anything in
this Agreement to the contrary and subject to the terms of the Intercreditor
Agreement, at any
38
time that an Event of Default exists or has occurred and is continuing, Agent
shall, at its option, upon notice to Borrowers, have the exclusive right to
settle, adjust or compromise any claim, offset, counterclaim or dispute with
account debtors or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown
on any invoice delivered to Agent or schedule thereof delivered to Agent shall
be true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Agent pursuant to the terms of this Agreement, (iii)
except as provided in Section 7.2(a) above, no credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any account
debtor except as reported to Agent in accordance with this Agreement and except
for credits, discounts, allowances or extensions made or given in the ordinary
course of each Borrower's business in accordance with practices and policies
previously disclosed to Agent, there shall be no setoffs, deductions, contras,
defenses, counterclaims or disputes existing or asserted with respect thereto
except as reported to Agent in accordance with the terms of this Agreement, none
of the transactions giving rise thereto will violate any applicable foreign,
Federal, State or local laws or regulations, all documentation relating thereto
will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms.
(c) Agent shall have the right at any time or times after
the termination of the Working Capital Loan Agreement, in Agent's name or in the
name of a nominee of Agent, to verify the validity, amount or any other matter
relating to any Receivables or other Collateral, by mail, telephone, facsimile
transmission or otherwise.
7.3 Inventory Covenants. With respect to the Inventory: (a) each
Borrower shall at all times maintain inventory records reasonably satisfactory
to Agent, keeping correct and accurate records itemizing and describing the
kind, type, quality and quantity of Inventory, such Borrower's cost therefor and
daily withdrawals therefrom and additions thereto; (b) Borrowers shall conduct a
physical count of the Inventory at least once each year but at any time or times
as Agent may request at any time an Event of Default exists or has occurred and
is continuing, and promptly following such physical inventory shall supply Agent
with a report in such form and with such specificity as may be satisfactory to
Agent concerning such physical count; (c) Borrowers shall not remove any
Inventory from the locations set forth or permitted herein, without the prior
written consent of Agent, except for sales of Inventory in the ordinary course
of its business and except to move Inventory directly from one location set
forth or permitted herein to another such location and except for Inventory
shipped from the manufacturer thereof to such Borrower which is in transit to
the locations set forth or permitted herein; (d) Borrowers shall produce, use,
store and maintain the Inventory with all reasonable care and caution and in
accordance with applicable standards of their insurance and in material
conformity with applicable laws (including the requirements of the Federal Fair
Labor Standards Act of 1938, as amended and all rules, regulations and orders
related thereto); (e) none of the Inventory or other Collateral constitutes farm
products or the proceeds thereof; (f) each Borrower assumes all responsibility
and liability arising from or relating to the production, use, sale or other
disposition of the Inventory; (g) Borrowers shall not sell Inventory to any
customer on approval, or any other basis which entitles the customer to return
or may obligate any Borrower to repurchase such Inventory, other than the right
of customers to return any product that does not
39
meet the specifications provided to Borrowers by the customer in accordance with
Borrowers' current practices as in effect on the date hereof; (h) Borrowers
shall keep the Inventory in good and marketable condition; and (i) Borrowers and
shall not, without prior written notice to Agent or the specific identification
of such Inventory in a report with respect thereto provided by Administrative
Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any
Inventory on consignment or approval.
7.4 Equipment and Real Property Covenants. With respect to the
Equipment and Real Property: (a) upon Agent's request, Borrowers shall, at their
expense, no more than once in any twelve (12) month period, but at any time or
times as Agent may request at any time an Event of Default exists or has
occurred and is continuing, deliver or cause to be delivered to Agent written
appraisals (or updates of appraisals) as to the Equipment and/or the Real
Property in form, scope and methodology acceptable to Agent and by an appraiser
acceptable to Agent, addressed to Agent and upon which Agent is expressly
permitted to rely; (b) Borrowers shall keep the Equipment in good order, repair,
running and marketable condition (ordinary wear and tear excepted); (c)
Borrowers shall use the Equipment and Real Property with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
material conformity with all applicable laws; (d) the Equipment is and shall be
used in the business of Borrowers and not for personal, family, household or
farming use; (e) Borrowers shall not remove any Equipment from the locations set
forth or permitted herein, except to the extent necessary to have any Equipment
repaired or maintained in the ordinary course of its business or to move
Equipment directly from one location set forth or permitted herein to another
such location and except for the movement of motor vehicles used by or for the
benefit of such Borrower in the ordinary course of business; (f) the Equipment
is now and shall remain personal property and Borrowers shall not permit any of
the Equipment to be or become a part of or affixed to real property; and (g)
each Borrower assumes all responsibility and liability arising from its use of
the Equipment and Real Property.
7.5 Power of Attorney. Each Borrower hereby irrevocably designates
and appoints Agent (and all persons designated by Agent) as such Borrower's true
and lawful attorney-in-fact, and authorizes Agent, in such Borrower's or Agent's
name, subject to the terms of the Intercreditor Agreement, to: (a) at any time
an Event of Default exists or has occurred and is continuing (i) demand payment
on Receivables or other Collateral, (ii) enforce payment of Receivables by legal
proceedings or otherwise, (iii) exercise all of such Borrower's rights and
remedies to collect any Receivable or other Collateral, (iv) sell or assign any
Receivable upon such terms, for such amount and at such time or times as the
Agent deems advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign
such Borrower's name on any proof of claim in bankruptcy or other similar
document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to such Borrower
and handle and store all mail relating to the Collateral; and (ix) do all acts
and things which are necessary, in Agent's determination, to fulfill such
Borrower's obligations under this Agreement and the other Financing Agreements
and (b) at any time to (i) take control in any manner of any item of payment in
respect of Receivables or constituting Collateral or otherwise received in or
for deposit in the Blocked Accounts or otherwise received by Agent or any
40
Lender, (ii) have access to any lockbox or postal box into which remittances
from account debtors or other obligors in respect of Receivables or other
proceeds of Collateral are sent or received, (iii) endorse such Borrower's name
upon any items of payment in respect of Receivables or constituting Collateral
or otherwise received by Agent and any Lender and deposit the same in Agent's
account for application to the Obligations, (iv) endorse such Borrower's name
upon any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Receivable or any goods pertaining thereto or any
other Collateral, including any warehouse or other receipts, or bills of lading
and other negotiable or non-negotiable documents, and (v) sign such Borrower's
name on any request for verification of Receivables and notices thereof to
account debtors or any secondary obligors or other obligors in respect thereof
(and thereafter Agent shall give Administrative Borrower prompt written notice
thereof). Each Borrower hereby releases Agent and Lenders and their respective
officers, employees and designees from any liabilities arising from any act or
acts under this power of attorney and in furtherance thereof, whether of
omission or commission, except as a result of Agent's or any Lender's own gross
negligence or wilful misconduct as determined pursuant to a final non-appealable
order of a court of competent jurisdiction.
7.6 Right to Cure. Agent may, at its option, upon notice to
Administrative Borrower, (a) cure any default by any Borrower under any material
agreement with a third party that affects the Collateral, its value or the
ability of Agent to collect, sell or otherwise dispose of the Collateral or the
rights and remedies of Agent or any Lender therein or the ability of any
Borrower to perform its obligations hereunder or under any of the other
Financing Agreements, at any time on or after a Default of Event of Default
exists or has occurred and is continuing, (b) pay or bond on appeal any judgment
entered against any Borrower, at any time on or after a Default of Event of
Default exists or has occurred and is continuing, (c) discharge taxes, liens,
security interests or other encumbrances at any time levied on or existing with
respect to the Collateral and pay any amount, incur any expense or perform any
act which, in Agent's judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Agent and Lenders
with respect thereto, provided, that, Agent shall not exercise its right
pursuant to this Section 7.6(c) to discharge such taxes, liens, security
interest or other encumbrances that are permitted under Section 9.8 hereof,
unless either (i) a Default or Event of Default shall exist or have occurred and
be continuing, or (ii) with respect to liens, security interests or other
encumbrances, the beneficiary or holder of such lien, security interest or other
encumbrance has the right to take action against or with respect to the
Collateral which right is not subject to an effective stay pursuant to
applicable law. Agent may add any amounts so expended to the Obligations and
charge any Borrower's account therefor, such amounts to be repayable by
Borrowers on demand. Agent and Lenders shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of any Borrower. Any payment made or other
action taken by Agent or any Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
7.7 Access to Premises. From time to time as requested by Agent,
at the cost and expense of Borrowers, (a) Agent or its designee shall have
complete access to all of each Borrower's premises during normal business hours
and after reasonable notice to Administrative Borrower, or at any time and
without notice to Administrative Borrower if an Event of Default exists or has
occurred and is continuing, for the purposes of inspecting, verifying and
auditing
41
the Collateral and all of each Borrower's books and records, including the
Records, and (b) each Borrower shall promptly furnish to Agent such copies of
such books and records or extracts therefrom as Agent may reasonably request,
and Agent or any Lender or Agent's designee may use during normal business hours
such of any Borrower's personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing (provided, that, Borrowers shall make
such personnel, equipment, supplies and premises available to Agent or its
designee in such manner so that Agent or its designee shall not materially
interfere with the operations of Borrowers) and if an Event of Default exists or
has occurred and is continuing (subject to the terms of the Intercreditor
Agreement) for the collection of Receivables and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants to Agent and
Lenders the following (which shall survive the execution and delivery of this
Agreement):
8.1 Corporate Existence, Power and Authority. Each Borrower is a
corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a Material Adverse Effect. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder (a) are all within each
Borrower's corporate powers, (b) have been duly authorized by all necessary
corporate action, (c) are not in contravention of law or the terms of any
Borrower's certificate of incorporation, by-laws, or other organizational
documentation, or any material indenture, agreement or undertaking to which any
Borrower is a party or by which any Borrower or its property are bound and (d)
will not result in the creation or imposition of, or require or give rise to any
obligation to grant any lien, security interest, charge or other encumbrance
upon any property of any Borrower except in favor of Agent pursuant to this
Agreement and the other Financing Agreements and as contemplated by this
Agreement. This Agreement and the other Financing Agreements to which any
Borrower is a party constitute legal, valid and binding obligations of such
Borrower enforceable in accordance with their respective terms.
8.2 Name; State of Organization; Chief Executive Office;
Collateral Locations.
(a) The exact legal name of each Borrower is as set forth
on the signature page of this Agreement and in the Information Certificate. No
Borrower has, during the five years prior to the date of this Agreement, been
known by or used any other corporate or fictitious name or been a party to any
merger or consolidation, or acquired all or substantially all of the assets of
any Person, or acquired any of its material property or assets out of the
ordinary course of business, except as set forth in the Information Certificate.
(b) Each Borrower is an organization of the type and
organized in the jurisdiction set forth in the Information Certificate. The
Information Certificate accurately sets forth the organizational identification
number of each Borrower or accurately states that such
42
Borrower has none and accurately sets forth the federal employer identification
number of each Borrower.
(c) The chief executive office and mailing address of
each Borrower and each Borrower's Records concerning Accounts are located only
at the addresses identified as such in Schedule 8.2 to the Information
Certificate and its only other places of business and the only other locations
of Collateral, if any, are the addresses set forth in Schedule 8.2 to the
Information Certificate, subject to the rights of any Borrower to establish new
locations in accordance with Section 9.2 below. The Information Certificate
correctly identifies any of such locations which are not owned by a Borrower and
sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change. All
financial statements relating to any Borrower which have been or may hereafter
be delivered by any Borrower to Agent and Lenders have been prepared in
accordance with GAAP (except as to any interim financial statements, to the
extent such statements are subject to normal year-end adjustments and do not
include certain footnote disclosures) and fairly present in all material
respects the financial condition and the results of operation of such Borrower
as at the dates and for the periods set forth therein. Except as disclosed in
any interim financial statements furnished by Borrowers to Agent prior to the
date of this Agreement, there has been no act, condition or event which has had
or is reasonably likely to have a Material Adverse Effect since the date of the
most recent audited financial statements of any Borrower furnished by any
Borrower to Agent prior to the date of this Agreement.
8.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Agent under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens indicated on
Schedule 8.4 to the Information Certificate and the other liens permitted under
Section 9.8 hereof. Each Borrower has good and insurable fee simple title to or
valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof.
8.5 Tax Returns. Each Borrower has filed, or caused to be filed,
in a timely manner all tax returns, reports and declarations which are required
to be filed by it. All information in such tax returns, reports and declarations
is complete and accurate in all material respects. Each Borrower has paid or
caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower and with respect to which reserves have been set
aside on its books in accordance with GAAP. Adequate provision has been made for
the payment of all accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on Schedule 8.6 to the
Information Certificate, (a) there is no investigation by any Governmental
Authority pending, or to the best of any Borrower's knowledge threatened,
against or affecting any Borrower, its respective assets or business and (b)
there is no action, suit, proceeding or claim by any Person pending, or to the
43
best of any Borrower's knowledge threatened, against any Borrower or its assets
or goodwill, or against or affecting any transactions contemplated by this
Agreement, in each case, which if adversely determined against such Borrower has
or could reasonably be expected to have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) None of the Borrowers are in default in any respect
under, or in violation in any respect of the terms of, any material agreement,
contract, instrument, lease or other commitment to which it is a party or by
which it or any of its assets are bound (other than defaults or events of
default under the Remaining Existing Senior Subordinated Notes) where such
default or violation has or could reasonably be expected to have a Material
Adverse Effect. Borrowers are in compliance with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
relating to their respective businesses, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health Act
of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA,
the Code, as amended, and the rules and regulations thereunder where the failure
to so comply has or could reasonably be expected to have a Material Adverse
Effect, and all Environmental Laws where the failure to so comply has or could
reasonably be expected to have a Material Adverse Effect.
(b) Each of the Borrowers have obtained all material
permits, licenses, approvals, consents, certificates, orders or authorizations
of any Governmental Authority required for the lawful conduct of its business
(the "Permits") where the failure to obtain such Permits has or could reasonably
be expected to have a Material Adverse Effect. All of the Permits are valid and
subsisting and in full force and effect where the failure of any of the Permits
to be valid and subsisting has or could reasonably be expected to have a
Material Adverse Effect. There are no actions, claims or proceedings pending or
to the best of any Borrower's knowledge, threatened that seek the revocation,
cancellation, suspension or modification of any of the Permits where the
revocation, cancellation, suspension or modification of any of the Permits has
or could reasonably be expected to have a Material Adverse Effect.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the
Information Certificate, Borrowers and any of their Subsidiaries have not
generated, used, stored, treated, transported, manufactured, handled, produced
or disposed of any Hazardous Materials, on or off its premises (whether or not
owned by it) in any manner which at any time violates in any material respect
any applicable Environmental Law or Permit, and the operations of Borrowers and
any Subsidiary of any Borrower complies in all material respects with all
Environmental Laws and all Permits where the failure to so comply has or could
reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 8.8 to the
Information Certificate, to the Borrowers' knowledge, there has been no
investigation by any Governmental Authority or any proceeding, complaint, order,
directive, claim, citation or notice by any Governmental Authority or any other
person nor is any pending or to the best of any Borrower's knowledge threatened,
44
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by any Borrower or any of their respective Subsidiaries or the
release, spill or discharge, threatened or actual, of any Hazardous Material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which has or could reasonably be expected to have a
Material Adverse Effect.
(c) Except as set forth on Schedule 8.8 to the
Information Certificate, Borrowers and their Subsidiaries have no knowledge of
any material liability (contingent or otherwise) in connection with a release,
spill or discharge, threatened or actual, of any Hazardous Materials or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials.
(d) Borrowers and their Subsidiaries have all Permits
required to be obtained or filed in connection with the operations of Borrowers
under any Environmental Law and all of such licenses, certificates, approvals or
similar authorizations and other Permits are valid and in full force and effect
where the failure to have obtained or filed such has or could reasonably be
expected to have a Material Adverse Effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other Federal or State
law. Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service and
to the best of any Borrower's knowledge, nothing has occurred which would cause
the loss of such qualification. Each Borrower and its ERISA Affiliates have made
all required contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending, or to the best of any
Borrower's knowledge, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan that if adversely determined
would have or could reasonably be expected to have a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules in any material respect with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) the current value of each Plan's assets (determined in
accordance with the assumptions used for funding such Plan pursuant to Section
412 of the Code) are not less than such Plan's liabilities under Section
4001(a)(16) of ERISA; (iii) each Borrower, and their ERISA Affiliates, have not
incurred and do not reasonably expect to incur, any liability under Title IV of
ERISA with respect to any Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) each Borrower, and their ERISA Affiliates, have not
incurred and do not reasonably expect to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) each Borrower, and their ERISA Affiliates, have not
engaged in a transaction that would be subject to Section 4069 or 4212(c) of
ERISA.
45
8.10 Bank Accounts. All of the deposit accounts, investment
accounts or other accounts in the name of or used by any Borrower maintained at
any bank or other financial institution are set forth on Schedule 8.10 to the
Information Certificate, subject to the right of each Borrower to establish new
accounts in accordance with Section 5.2 hereof.
8.11 Intellectual Property. Each Borrower owns or licenses or
otherwise has the right to use all material Intellectual Property necessary for
the operation of its business as presently conducted or proposed to be
conducted. As of the date hereof, Borrowers do not have any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any State thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 8.11 to the Information
Certificate and has not granted any licenses with respect thereto other than as
set forth in Schedule 8.11 to the Information Certificate. No event has occurred
which permits or would permit after notice or passage of time or both, the
revocation, suspension or termination of such rights. To the best of any
Borrower's knowledge, no slogan or other advertising device, product, process,
method, substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by any
Borrower infringes any patent, trademark, servicemark, tradename, copyright,
license or other Intellectual Property owned by any other Person presently and
no claim or litigation is pending or, to the knowledge of any Borrower,
threatened against or affecting any Borrower contesting its right to sell or use
any such Intellectual Property. Schedule 8.11 to the Information Certificate
sets forth all of the material agreements or other arrangements of each Borrower
pursuant to which such Borrower has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property that
are material to the operation of its business as conducted on the date hereof
owned by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of such Borrower (other than
such agreements which are generally commercially available for a fee) as in
effect on the date hereof (collectively, together with such agreements or other
arrangements as may be entered into by any Borrower after the date hereof,
collectively, the "License Agreements" and individually, a "License Agreement").
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) None of the Borrowers has any direct or indirect
Subsidiaries or Affiliates or is engaged in any joint venture or partnership
except as set forth in Schedule 8.12 to the Information Certificate.
(b) Each Borrower is the record and beneficial owner of
all of the issued and outstanding shares of Capital Stock of each of the
Subsidiaries listed on Schedule 8.12 to the Information Certificate as being
owned by such Borrower and there are no proxies, irrevocable or otherwise, with
respect to such shares and no equity securities of any of the Subsidiaries are
or may become required to be issued by reason of any options, warrants, rights
to subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is or may become bound to issue additional shares of it Capital Stock or
securities convertible into or exchangeable for such shares.
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(c) The issued and outstanding shares of Capital Stock of
LRG are directly and beneficially owned and held by the persons indicated in the
Information Certificate, and all of such shares have been duly authorized and
are fully paid and non-assessable, free and clear of all claims, liens, pledges
and encumbrances of any kind, except as disclosed in writing to Agent prior to
the date hereof.
(d) Borrowers, taken as a whole, are Solvent and will
continue to be Solvent after the creation of the Obligations and the obligations
under the Working Capital Loan Agreement, the security interests of Agent and
Working Capital Agent and the other transactions contemplated hereunder and
under the Working Capital Loan Agreement.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information
Certificate is a list (including dates of termination) of all collective
bargaining or similar agreements between or applicable to each Borrower and any
union, labor organization or other bargaining agent in respect of the employees
of any Borrower on the date hereof.
(b) There is (i) no significant unfair labor practice
complaint pending against any Borrower or, to the best of any Borrower's
knowledge, threatened against it, before the National Labor Relations Board, and
no significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
any Borrower or, to best of any Borrower's knowledge, threatened against it, and
(ii) no significant strike, labor dispute, slowdown or stoppage is pending
against any Borrower or, to the best of any Borrower's knowledge, threatened
against any Borrower which has or could reasonably be expected to have a
Material Adverse Effect.
8.14 Restrictions on Subsidiaries. Except for restrictions
contained in this Agreement or any other agreement with respect to Indebtedness
of any Borrower permitted hereunder as in effect on the date hereof, there are
no contractual or consensual restrictions on any Borrower or any of its
Subsidiaries which prohibit or otherwise restrict (a) the transfer of cash or
other assets (i) between any Borrower and any of its Subsidiaries or (ii)
between any Subsidiaries of any Borrower or (b) the ability of any Borrower or
any of its Subsidiaries to incur the Obligations or grant security interests to
Agent or any Lender in the Collateral.
8.15 Material Contracts. Schedule 8.15 to the Information
Certificate sets forth all Material Contracts to which any Borrower is a party
or is bound as of the date hereof. Borrowers have delivered true, correct and
complete copies of such Material Contracts to Agent on or before the date
hereof. Borrowers are not in breach or in default in any material respect of or
under any Material Contract and have not received any notice of the intention of
any other party thereto to terminate any Material Contract.
8.16 Payable Practices. Each Borrower have not made any material
change in the historical accounts payable practices from those in effect
immediately prior to the date hereof.
8.17 Accuracy and Completeness of Information. All information
furnished by or on behalf of any Borrower in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby,
47
including all information on the Information Certificate is true and correct in
all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading as of the date which such information is dated or
certified. No event or circumstance has occurred since the date of the most
recent audited financial statements delivered by Borrowers to Agent which has
had or could reasonably be expected to have a Material Adverse Affect, which has
not been fully and accurately disclosed to Agent in writing prior to the date
hereof.
8.18 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be
conclusively presumed to have been relied on by Agent and Lenders regardless of
any investigation made or information possessed by Agent or any Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which any Borrower shall now
or hereafter give, or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
(a) Each Borrower shall at all times preserve, renew and
keep in full force and effect its corporate existence and rights and franchises
with respect thereto and maintain in full force and effect all licenses,
trademarks, tradenames, approvals, authorizations, leases, contracts and Permits
necessary to carry on the business as presently conducted.
(b) No Borrower shall change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days prior written notice from any Borrower of such proposed change
in its corporate name, which notice shall accurately set forth the new name; and
(ii) Agent shall have received a copy of the amendment to the Certificate of
Incorporation of such Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation or organization of such
Borrower promptly after it becomes available.
(c) No Borrower shall change its chief executive office
or its mailing address or organizational identification number (or if it does
not have one, shall not acquire one) unless Agent shall have received not less
than thirty (30) days' prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. No Borrower shall change
its type of organization, jurisdiction of organization or other legal structure
except as otherwise permitted pursuant to Section 9.7(a) of this Agreement.
9.2 New Collateral Locations. Each Borrower may open any new
location within the continental United States provided such Borrower (a) gives
Agent thirty (30) days prior written notice of the intended opening of any such
new location and (b) executes and delivers, or causes to be executed and
delivered, to Agent such agreements, documents, and instruments as Agent
48
may deem reasonably necessary or desirable to protect its interests in the
Collateral at such location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower shall, and shall cause any Subsidiary
to, at all times, comply in all material respects with all laws, rules,
regulations, licenses, approvals, orders and other Permits applicable to it and
duly observe all requirements of any foreign, Federal, State or local
Governmental Authority, including ERISA, the Code, the Occupational Safety and
Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and all statutes, rules, regulations, orders, permits and stipulations
relating to environmental pollution and employee health and safety, including
all of the Environmental Laws, where the failure to so comply has or could
reasonably be expected to have a Material Adverse Effect.
(b) Borrowers shall give written notice to Agent promptly
upon any Borrower's receipt of any notice of, or any Borrower's otherwise
obtaining knowledge of, (i) the occurrence of any event involving the release,
spill or discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by any Borrower or (B) the release, spill or discharge,
threatened or actual, of any Hazardous Material other than in the ordinary
course of business and other than as permitted under any applicable
Environmental Law which, in the case of any of the foregoing, is reasonably
likely to result in a material liability. Copies of all environmental surveys,
audits, assessments, feasibility studies and results of remedial investigations
made after the date hereof shall be promptly furnished, or caused to be
furnished, by such Borrower or Agent. Each Borrower shall take prompt action to
respond to any material non-compliance with any of the Environmental Laws and
shall report to Agent on such response.
(c) Without limiting the generality of the foregoing,
whenever Agent reasonably determines that there is non-compliance, or any
condition which requires any action by or on behalf of any Borrower in order to
avoid any non-compliance, with any Environmental Law, Borrowers shall, at
Agent's request and Borrowers' expense: (i) cause an independent environmental
engineer reasonably acceptable to Agent to conduct such tests of the site where
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
(d) Each Borrower shall indemnify and hold harmless Agent
and Lenders and their respective directors, officers, employees, agents,
invitees, representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material related to any Borrower or any of its real or personal
property, including the costs of any required or necessary repair,
49
cleanup or other remedial work with respect to any property of any Borrower and
the preparation and implementation of any closure, remedial or other required
plans. All representations, warranties, covenants and indemnifications in this
Section 9.3 shall survive the payment of the Obligations and the termination of
this Agreement.
9.4 Payment of Taxes and Claims. Each Borrower shall, and shall
cause any Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to such Borrower or
Subsidiary, as the case may be, and with respect to which adequate reserves have
been set aside on its books. Each Borrower shall be liable for any tax or
penalties imposed on Agent or any Lender as a result of the financing
arrangements provided for herein and each Borrower agrees to indemnify and hold
Agent harmless with respect to the foregoing, and to repay to Agent, for the
benefit of Lenders, on demand the amount thereof, and until paid by such
Borrower such amount shall be added and deemed part of the Loan, provided, that,
nothing contained herein shall be construed to require any Borrower to pay any
income or franchise taxes attributable to the income of Lenders from any amounts
charged or paid hereunder to Lenders. The foregoing indemnity shall survive the
payment of the Obligations and the termination of this Agreement.
9.5 Insurance. Each Borrower shall, and shall cause any Subsidiary
to, at all times, maintain with financially sound and reputable insurers
insurance with respect to the Collateral against loss or damage and all other
insurance of the kinds and in the amounts customarily insured against or carried
by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer. Borrowers shall
furnish certificates, policies or endorsements to Agent as Agent shall
reasonably require as proof of such insurance, and, if any Borrower fails to do
so within five (5) days after written request by Agent, Agent is authorized, but
not required, to obtain such insurance at the expense of Borrowers. All policies
shall provide for at least thirty (30) days prior written notice to Agent of any
cancellation or reduction of coverage and that Agent may act as attorney for
each Borrower in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrowers shall cause Agent to be named as a loss payee and an
additional insured as its interests may appear (but without any liability for
any premiums) under such insurance policies and Borrowers shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance reasonably satisfactory to Agent. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Agent as its interests may appear and further specify that Agent and Lenders
shall be paid regardless of any act or omission by any Borrower, except, that,
the proceeds of such insurance with respect to Equipment that is subject to
liens permitted under Sections 9.8(e) or 9.8(l) shall not be payable to Agent
and Lenders. Without limiting any other rights of Agent or Lenders and subject
to the terms of the Intercreditor Agreement, any and all insurance proceeds
received at any time may be applied to the cost of repairs, refurbishment or
replacement of Collateral and/or to the payment of the Obligations and the
Working Capital Debt, so long as no Event of Default exists or has occurred and
is continuing, in accordance with Section 2.4 hereof and, at any time an Event
of Default has occurred and is continuing, in accordance with Section 6.4
hereof.
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9.6 Financial Statements and Other Information.
(a) Each Borrower shall, and shall cause any Subsidiary
to, keep proper books and records in which true and complete entries shall be
made of all dealings or transactions of or in relation to the Collateral and the
business of such Borrower and its Subsidiaries in accordance with GAAP.
Borrowers shall promptly furnish to Agent and Lenders all such financial and
other information as Agent shall reasonably request relating to the Collateral
and the assets, business and operations of Borrowers, and Borrower shall notify
the auditors and accountants of Borrowers that Agent is authorized to obtain
such information directly from them, provided, that, Agent shall give Borrowers
notice concurrently with Agent's request for any such information. Without
limiting the foregoing, Borrowers shall furnish or cause to be furnished to
Agent, the following: (i) within thirty (30) days after the end of each fiscal
month (or within forty-five (45) days after the end of a fiscal month that is
also the end of a fiscal quarter, as applicable), monthly unaudited consolidated
financial statements, and unaudited consolidating financial statements
(including in each case balance sheets, statements of income and loss,
statements of cash flow, and statements of shareholders' equity), all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Borrowers and their Subsidiaries as of the end of and through
such fiscal month, certified to be correct by the chief financial officer of
each Borrower, subject to normal year-end adjustments and no footnotes and
accompanied by a compliance certificate substantially in the form of Exhibit C
hereto, along with a schedule in a form satisfactory to Agent of the
calculations used in determining, (A) as of the end of such month, whether
Borrowers are in compliance with the covenants set forth in Sections 9.17, 9.18,
9.19 and 9.20 of this Agreement for such month and (B) as of the end of each
quarter, whether Borrowers are in compliance with the conditions set forth in
Section 9.9(b) of this Agreement for such quarter and (ii) within one hundred
twenty (120) days after the end of each fiscal year, audited consolidated
financial statements and unaudited consolidating financial statements of
Borrowers and their Subsidiaries (including in each case balance sheets,
statements of income and loss, statements of cash flow, and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting in all material respects the financial position and
the results of the operations of Borrowers and their Subsidiaries as of the end
of and for such fiscal year, together with the unqualified opinion of
independent certified public accountants with respect to the audited
consolidated financial statements, which accountants shall be an independent
accounting firm selected by Borrowers and reasonably acceptable to Agent, that
such audited consolidated financial statements have been prepared in accordance
with GAAP, and present fairly the results of operations and financial condition
of Borrowers and their respective Subsidiaries as of the end of and for the
fiscal year then ended.
(b) Borrowers shall promptly notify Agent in writing of
the details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $250,000 or which if
adversely determined would have or could reasonably be expected to have a
Material Adverse Effect, (ii) any Material Contract being terminated or amended
in any material respect or any new Material Contract entered into (in which
event Borrowers shall provide Agent with a copy of such Material Contract),
(iii) any order, judgment or decree in excess of $500,000 shall have been
entered against any Borrower any of its properties or assets, (iv) any
notification of a material violation of laws or regulations received by any
Borrower, (v) any ERISA Event, and (vi) the occurrence of any Default or Event
of Default.
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(c) Borrowers shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports which
any Borrower sends to its stockholders generally and copies of all reports and
registration statements which any Borrower files with the Securities and
Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(d) Borrowers shall furnish or cause to be furnished to
Agent such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrowers, as Agent may, from time to time,
reasonably request. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrowers to any court or other Governmental Authority or to any Lender or
Participant or prospective Lender or Participant or any Affiliate of any Lender
or Participant subject to and in accordance with the confidentiality provisions
contained in Section 13.5 of this Agreement. Each Borrower hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Agent, at
Borrowers' expense, copies of the financial statements of any Borrower and any
reports or management letters prepared by such accountants or auditors on behalf
of any Borrower and to disclose to Agent and Lenders such information as they
may have regarding the business of any Borrower. Any documents, schedules,
invoices or other papers delivered to Agent or any Lender may be destroyed by
Agent or such Lender one (1) year after the same are delivered to Agent or such
Lender, except as otherwise designated by Administrative Borrower to Agent or
such Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each
Borrower shall not, and shall not permit any Subsidiary to, directly or
indirectly,
(a) merge into or with or consolidate with any other
Person or permit any other Person to merge into or with or consolidate with it
except that any wholly-owned Subsidiary of a Borrower may merge with and into or
consolidate with any other wholly-owned Subsidiary of a Borrower and any
Borrower may merge with and into or consolidate with any other Borrower,
provided, that, each of the following conditions is satisfied as determined by
Agent in good faith: (i) Agent shall have received not less than ten (10)
Business Days' prior written notice of the intention of such Subsidiaries to so
merge or consolidate, which notice shall set forth in reasonable detail
satisfactory to Agent, the persons that are merging or consolidating, which
person will be the surviving entity, the locations of the assets of the persons
that are merging or consolidating, and the material agreements and documents
relating to such merger or consolidation, (ii) Agent shall have received such
other information with respect to such merger or consolidation as Agent may
reasonably request, (iii) as of the effective date of the merger or
consolidation and after giving effect thereto, no Default or Event of Default
shall exist or have occurred, (iv) Agent shall have received, true, correct and
complete copies of all agreements, documents and instruments relating to such
merger or consolidation, including, but not limited to, the certificate or
certificates of merger to be filed with each appropriate Secretary of State
(with a copy as filed promptly after such filing), (v) the surviving corporation
shall expressly confirm, ratify and assume the Obligations and the Financing
Agreements to which it is a party in writing, in form and substance satisfactory
to Agent, and Borrowers shall execute and deliver such other agreements,
documents and instruments as Agent may reasonably request in connection
therewith;
52
(b) sell, issue, assign, lease, license, transfer,
abandon or otherwise dispose of any Capital Stock or any of its other assets to
any other Person, except for
(i) sales of Inventory in the ordinary course of
business,
(ii) the sale or other disposition of Equipment
(including worn-out or obsolete Equipment or Equipment no longer used or useful
in the business of any Borrower) so long as such sales or other dispositions do
not involve Equipment having an aggregate fair market value in excess of
$250,000 for all such Equipment disposed of in any fiscal year of Borrowers or
as Agent may otherwise agree, and
(iii) the issuance and sale by any Borrower of
Capital Stock of such Borrower after the date hereof; provided, that, (A) the
terms of such Capital Stock, and the terms and conditions of the purchase and
sale thereof, shall not include any terms that include any limitation on the
right of any Borrower to request or receive the Loan or the right of any
Borrower to amend or modify any of the terms and conditions of this Agreement or
any of the other Financing Agreements or otherwise in any way relate to or
affect the arrangements of Borrowers with Agent and Lenders, (B) except as Agent
may otherwise agree in writing, all of the Net Cash Proceeds of the sale and
issuance of such Capital Stock (other than proceeds of Capital Stock to be used
for the exchange of Remaining Existing Senior Subordinated Notes in accordance
with Section 9.10(i) hereof) shall be paid to Agent or Working Capital Agent for
application to the Obligations and the Working Capital Debt in accordance with
Section 2.4(b) of this Agreement, (C) after giving effect to such issuance and
sale, no Change of Control shall occur and (D) as of the date of such issuance
and sale and after giving effect thereto, no Default or Event of Default shall
exist or have occurred,
(iv) the issuance of Capital Stock of any
Borrower consisting of common stock pursuant to an employee stock option or
grant or similar equity plan or 401(k) plans of such Borrower for the benefit of
its employees, directors and consultants, provided, that, in no event shall such
Borrower be required to issue, or shall such Borrower issue, Capital Stock
pursuant to such stock plans or 401(k) plans which would result in a Change of
Control or other Event of Default,
(v) the issuance and sale by LPC of Capital
Stock (including, without limitation, in connection with the exercise of
warrants to purchase such Capital Stock) pursuant to and in accordance with the
Warrant Agent Agreement and the Exchange Agreement as in effect on the date
hereof; provided, that, (A) except as Agent may otherwise agree in writing, all
of the Net Cash Proceeds of the sale and issuance of such Capital Stock shall be
paid to Agent or Working Capital Agent for application to the Obligations and
the Working Capital Debt, prior to the occurrence and continuance of an Event of
Default, in accordance with Section 2.4(b) of this Agreement and, subject to the
terms of the Intercreditor Agreement, at any time an Event of Default has
occurred and is continuing, in accordance with Section 6.4 of this Agreement,
and (B) after giving effect to any such issuance and sale, no Change of Control
shall occur,
(vi) the sale or other disposition of Collateral
not otherwise permitted above so long as such sales or other dispositions do not
involve Collateral having an aggregate fair market value in excess of $200,000
for all such Collateral disposed of in any fiscal year of
53
Borrowers, provided, that, (A) Agent shall have received not less than five (5)
Business Days' prior written notice of such sale or disposition, (B) except as
Agent may otherwise agree in writing, all of the net proceeds of such sale or
disposition shall be paid to Agent or Working Capital Agent for application to
the Obligations and the Working Capital Debt in accordance with Section 2.4(c)
of this Agreement, and (C) as of the date of any such sale or disposition, and
after giving effect thereto, no Default or Event of Default shall exist or shall
have occurred and be continuing,
(vii) the intercompany loans and dividend payments
to the extent expressly permitted by Sections 9.10(g), 9.11 and 9.12,
(viii) the sale or disposition of the Real Property
located in Casa Grande, Pinal County, Arizona; provided, that, (A) the net cash
proceeds of such sale shall be at least $2,250,000, (B) except as Agent may
otherwise agree in writing, all of the net cash proceeds of such sale or
disposition shall be paid to Agent for application to the Obligations in
accordance with Section 2.4(c)(ii) of this Agreement, and (C) as of the date of
such sale or disposition and after giving effect thereto, no Default or Event of
Default shall exist or have occurred,
(c) wind up, liquidate or dissolve; or
(d) agree to do any of the foregoing except if
conditioned on approval by Agent.
9.8 Encumbrances. Each Borrower shall not, and shall not permit
any Subsidiary to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets or properties, including the Collateral, or file
or permit the filing of, or permit to remain in effect, any financing statement
or other similar notice of any security interest or lien with respect to any
such assets or properties, except:
(a) the security interests and liens of Agent for itself
and the benefit of Lenders;
(b) liens securing the payment of taxes, assessments or
other governmental charges or levies either not yet overdue or the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower or Subsidiary, as the case may be and
with respect to which reserves have been set aside on its books as required by
GAAP;
(c) non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course of such Borrower's
or Subsidiary's business to the extent: (i) such liens secure Indebtedness which
is not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower or
such Subsidiary, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which reserves have been set aside on
its books as required by GAAP;
54
(d) zoning restrictions, easements, licenses, covenants
and other restrictions affecting the use of Real Property which do not interfere
in any material respect with the use of such Real Property or ordinary conduct
of the business of such Borrower or such Subsidiary as presently conducted
thereon or materially impair the value of the Real Property (or, in the case of
leasehold interests, the value of Borrowers' interest in the Real Property) that
is subject thereto;
(e) purchase money or other types of security interests
in Equipment and the proceeds thereof (including Capitalized Leases) acquired
after the date hereof, to the extent the Indebtedness secured by such security
interests is permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by any Borrower after
the date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of such Borrower as of the date hereof;
(g) pledges and deposits of cash by any Borrower after
the date hereof to secure the performance of tenders, bids, leases, trade
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations in each case in the ordinary course of business
consistent with the current practices of such Borrower as of the date hereof;
(h) liens arising from (i) operating leases and the
precautionary UCC financing statement filings in respect thereof and (ii)
equipment or other materials which are not owned by any Borrower located on the
premises of such Borrower (but not in connection with, or as part of, the
financing thereof) from time to time in the ordinary course of business and
consistent with current practices of such Borrower and the precautionary UCC
financing statement filings in respect thereof;
(i) the security interests in and liens upon the
Collateral (other than the Real Property) in favor of the Working Capital Agent
to secure the Working Capital Debt, provided, that, such security interests and
liens in favor of the Working Capital Agent are and shall at all times be
subject to the terms of the Intercreditor Agreement;
(j) judgments and other similar liens arising in
connection with court proceedings that do not constitute an Event of Default,
provided, that, (i) such liens are being contested in good faith and by
appropriate proceedings diligently pursued, (ii) adequate reserves or other
appropriate provision, if any, as are required by GAAP have been made therefor,
(iii) a stay of enforcement of any such liens is in effect and (iv) Agent may
establish a Reserve with respect thereto;
(k) the security interests and liens of an Insurance
Premium Finance Party on the Insurance Premium Collateral to secure the
Indebtedness described in and to the extent permitted by Section 9.9(l) hereof;
(l) the security interests and liens set forth on
Schedule 8.4 to the Information Certificate; and
(m) the security interests, liens and encumbrances on
Real Property that are expressly permitted by the terms of the Mortgages.
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9.9 Indebtedness. Each Borrower shall not, and shall not permit
any Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse,
or otherwise become responsible for (directly or indirectly), the Indebtedness,
performance, obligations or dividends of any other Person, except:
(a) the Obligations;
(b) purchase money or other types of Indebtedness
(including Capitalized Leases) arising after the date hereof to the extent
secured by purchase money or other types of security interests in Equipment and
the proceeds thereof (including Capitalized Leases) so long as (i) such security
interests or liens do not apply to any property of such Borrower or Subsidiary
other than the Equipment acquired after the date of this Agreement, (ii) the
Indebtedness secured thereby does not exceed the cost of the Equipment so
acquired, and (iii) the aggregate amount of Indebtedness incurred pursuant to
this Section 9.9(b) after the date hereof in any fiscal year shall not exceed
the lesser of (A) $2,500,000 and (B) forty percent (40%) of the aggregate
Capital Expenditures made by Borrowers in the applicable fiscal year; provided,
that, with respect to Indebtedness permitted to be incurred pursuant to this
Section 9.9(b) other than purchase money Indebtedness:
(i) Agent shall have received five (5) Business
Days' prior written notice of the intention of Borrowers to incur such
Indebtedness,
(ii) Agent shall have received true, correct and
complete copies of the agreements, documents and instruments evidencing or
otherwise related to such Indebtedness, duly authorized, executed and delivered
by the parties thereto,
(iii) Agent shall have received true, correct and
complete copies of any amendments to the documentation evidencing such
Indebtedness which amend, modify, alter or change in any material respect the
terms of such Indebtedness,
(iv) Borrowers shall not, directly or indirectly,
redeem, retire, defease, purchase or otherwise acquire such Indebtedness or set
aside or otherwise deposit or invest any sums for such purpose, except with
respect to the exercise of a purchase option on Equipment subject to such
Indebtedness, (v) Borrowers shall furnish to Agent all notices of default or
demands for payment in connection with such Indebtedness either received by any
Borrower or on its behalf, promptly after the receipt thereof, and
(vi) as of the date of incurring such
Indebtedness and after giving effect thereto, no Default or Event of Default
shall exist or have occurred and be continuing;
(c) guarantees by any Borrower of the Obligations of the
other Borrowers in favor of Agent for the benefit of Lenders;
(d) the Indebtedness of any Borrower to any other
Borrower arising after the date hereof pursuant to loans by any Borrower
permitted under Section 9.10(g) hereof;
56
(e) Indebtedness of Borrowers to Working Capital Agent
and the lenders party to the Working Capital Loan Agreement evidenced by or
arising under the Working Capital Lender Agreements (as in effect on the date
hereof or as amended in accordance with clause (v) below), provided, that:
(i) the principal amount of such Indebtedness
shall not exceed the sum of (A) the lesser of (1) $23,500,000 and (2) 100% of
the Borrowing Base, plus (B) the Term Loans (as defined in the Working Capital
Loan Agreement as in effect on the date hereof) in an amount equal to
$13,500,000 as reduced from time to time by the principal payments and
prepayments thereof, whether optional or mandatory;
(ii) as of the date hereof, no event of default,
or event which with notice or passage of time or both would constitute an event
of default exists, or has occurred under the Working Capital Lender Agreements,
(iii) Agent shall have received true, correct and
complete copies of all of the Working Capital Lender Agreements, as duly
authorized, executed and delivered by the parties thereto,
(iv) Borrowers shall not, directly or indirectly,
make, or be required to make, any payments in respect of such Indebtedness,
except, that, Borrowers may make payments in respect of the WC Revolving Loans
and Borrowers may make regularly scheduled payments and payments required by the
terms of Section 2.4 hereof of principal, interest and fees and other amounts in
respect of the Working Capital Debt in accordance with the terms of the Working
Capital Lender Agreements as in effect on the date hereof;
(v) Borrowers shall not, directly or indirectly,
(A) amend, modify, alter or change in any material respect any of the material
terms of such Indebtedness or any of the Working Capital Lender Agreements as in
effect on the date hereof, except, that, Borrowers may, after prior written
notice to Agent, amend, modify, alter or change the terms thereof so as to
forgive or cancel any portion of such Indebtedness other than pursuant to
payments thereof, or to reduce the interest rate or any fees in connection
therewith, or to release any liens on or security interests in any assets or
properties of Borrowers, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, except as permitted by clause (iv) above, and
(vi) Borrowers shall furnish to Agent all notices
of default or demands for payment in connection with such Indebtedness either
received by such Borrower or on its behalf promptly after the receipt thereof,
and all such notices or demands sent by any Borrower or on its behalf
concurrently with the sending thereof, as the case may be;
(f) Indebtedness of LPC evidenced by the Senior
Subordinated Notes as in effect on the date hereof or as permitted to be amended
pursuant to the terms hereof, provided, that:
(i) the aggregate principal amount of such
Indebtedness shall not exceed $42,476,099, less the aggregate amount of all
repayments or redemptions, whether
57
optional or mandatory, in respect thereof, plus interest thereon at the rate
provided for in the Senior Subordinated Notes as in effect on the date hereof,
(ii) the Obligations are and shall at all time
constitute "Senior Debt" as such term is defined in the Senior Subordinated Note
Indenture as in effect on the date hereof and Agent and Lenders are and shall be
entitled to all of the rights and benefits thereof under the Senior Subordinated
Note Indenture as in effect on the date hereof and there shall be no other
"Senior Debt" except for Indebtedness permitted by Section 9.9 hereof or as
Agent may otherwise agree,
(iii) Borrowers shall not, directly or indirectly,
make any payments in respect of such Indebtedness, except that they may make
regularly scheduled payments of interest and fees, if any, in respect of such
Indebtedness when due in accordance with the terms of the Senior Subordinated
Notes and the Senior Subordinated Note Indenture as in effect on the date
hereof,
(iv) Borrowers shall not, directly or indirectly,
amend, modify, alter or change in any material respect any terms of such
Indebtedness or any of the Senior Subordinated Notes or the Senior Subordinated
Note Indenture, except that Borrowers may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof or defer the timing of any payments in respect thereof, or to forgive or
cancel any portion of such Indebtedness other than pursuant to payments thereof,
or to reduce the interest rate or any fees in connection therewith, and
(v) Borrowers shall not, directly or indirectly,
redeem, retire, defease, purchase or otherwise acquire all or any part of such
Indebtedness other than at maturity (as set forth in the Senior Subordinated
Note Indenture as in effect on the date hereof or as extended after the date
hereof), or set aside or otherwise deposit or invest any sums for such purpose,
except, that, Borrowers may redeem or purchase all or any part of such
Indebtedness after one (1) year from the date of this Agreement, provided, that,
as of the date of any such redemption or purchase or any payment in respect
thereof and after giving effect thereto: (i) Borrowers shall give to Agent
written notice thereof on the day Borrowers so redeem or purchase all or any
part of such Indebtedness, which notice shall specify the maximum amount that
Borrowers will pay in respect thereof and the range of the principal amount of
the Senior Subordinated Notes which Borrowers anticipate will be so redeemed or
purchased, (ii) as of the date of any such redemption or purchase or payments in
respect thereof and after giving effect thereto, the aggregate amount of the
Excess Availability of Borrowers shall be not less than $5,750,000 and (iii) as
of the date of any such redemption or purchase or payment in respect thereof and
after giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing;
(g) Indebtedness of LPC evidenced by the Junior
Subordinated Notes as in effect on the date hereof or as permitted to be amended
pursuant to the terms hereof, provided, that:
(i) the aggregate principal amount of such
Indebtedness shall not exceed $346,667, less the aggregate amount of all
repayments or redemptions, whether optional
58
or mandatory, in respect thereof, plus interest thereon at the rate provided for
in the Junior Subordinated Notes as in effect on the date hereof,
(ii) the Obligations are and shall at all time
constitute "Senior Debt" as such term is defined in the Junior Subordinated
Notes as in effect on the date hereof and Agent and Lenders are and shall be
entitled to all of the rights and benefits thereof under the Junior Subordinated
Notes as in effect on the date hereof and there shall be no other "Senior Debt"
except for Indebtedness permitted by Section 9.9 hereof or as Agent may
otherwise agree,
(iii) Borrowers shall not, directly or indirectly,
make any payments in respect of such Indebtedness, except that they may make
regularly scheduled payments of interest and fees, if any, in respect of such
Indebtedness when due in accordance with the terms of the Junior Subordinated
Notes as in effect on the date hereof,
(iv) Borrowers shall not, directly or indirectly,
amend, modify, alter or change in any material respect any terms of such
Indebtedness or any of the Junior Subordinated Notes, except that Borrowers may,
after prior written notice to Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof or defer the timing of any payments
in respect thereof, or to forgive or cancel any portion of such Indebtedness
other than pursuant to payments thereof, or to reduce the interest rate or any
fees in connection therewith, and
(v) Borrowers shall not, directly or indirectly,
redeem, retire, defease, purchase or otherwise acquire all or any part of such
Indebtedness other than at maturity (as set forth in the Junior Subordinated
Notes as in effect on the date hereof or as extended after the date hereof), or
set aside or otherwise deposit or invest any sums for such purpose, except,
that, Borrowers may redeem or purchase all or any part of such Indebtedness
after one (1) year from the date of this Agreement, provided, that, as of the
date of any such redemption or purchase or any payment in respect thereof and
after giving effect thereto: (i) Borrowers shall give to Agent written notice
thereof on the day Borrowers so redeem or purchase all or any part of such
Indebtedness, which notice shall specify the maximum amount that Borrowers will
pay in respect thereof and the range of the principal amount of the Junior
Subordinated Notes which Borrowers anticipate will be so redeemed or purchased,
(ii) as of the date of any such redemption or purchase or payments in respect
thereof and after giving effect thereto, the aggregate amount of the Excess
Availability of Borrowers shall be not less than $4,000,000 and (iii) as of the
date of any such redemption or purchase or payment in respect thereof and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing;
(h) unsecured Indebtedness of any Borrower arising after
the date hereof to any third person (but not to any other Borrower), provided,
that, each of the following conditions is satisfied as determined by Agent:
(i) Agent shall have received not less than ten
(10) days prior written notice of the intention of such Borrower to incur such
Indebtedness, which notice shall set forth in reasonable detail satisfactory to
Agent the amount of such Indebtedness, the person or persons to whom such
Indebtedness will be owed, the interest rate, the schedule of repayments and
maturity date with respect thereto and such other information as Agent may
request with respect thereto,
59
(ii) the agreements, documents and instruments
evidencing or otherwise related to such Indebtedness shall be in form and
substance satisfactory to Agent and Agent shall have received true, correct and
complete copies thereof, duly authorized, executed and delivered by the parties
thereto,
(iii) such Indebtedness shall be subject and
subordinate in right of payment to the indefeasible payment and satisfaction in
full of all of the Obligations, pursuant to terms and conditions satisfactory to
Agent,
(iv) except as Agent may otherwise agree in
writing, all of the cash proceeds of the loans or other accommodations giving
rise to such Indebtedness (other than proceeds of such loans to be used for the
purchase or exchange of Remaining Existing Senior Subordinated Notes in
accordance with Section 9.10(i) hereof) shall be paid to Agent or Working
Capital Agent for application to the Obligations and the Working Capital Debt in
accordance with Section 2.4(b) hereof,
(v) as of the date of incurring such
Indebtedness and after giving effect thereto, no Default or Event of Default
shall exist or have occurred and be continuing,
(vi) Borrowers shall not, directly or indirectly,
(A) amend, modify, alter or change in any material respect the terms of such
Indebtedness or any agreement, document or instrument related thereto, except,
that, Borrowers may, after prior written notice to Agent, amend, modify, alter
or change the terms thereof so as to extend the maturity thereof, or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness or set aside or
otherwise deposit or invest any sums for such purpose, and
(vii) Borrowers shall furnish to Agent all default
notices or demands for payment in connection with such Indebtedness either
received by any Borrower or on its behalf promptly after the receipt thereof, or
sent by any Borrower or on its behalf concurrently with the sending thereof, as
the case may be;
(i) the Indebtedness set forth on Schedule 9.9 to the
Information Certificate; provided, that, (i) Borrowers may only make regularly
scheduled payments of principal and interest in respect of such Indebtedness in
accordance with the terms of the agreement or instrument evidencing or giving
rise to such Indebtedness as in effect on the date hereof, (ii) Borrowers shall
not, directly or indirectly, (A) amend, modify, alter or change in any material
respect the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof except, that, Borrowers may,
after prior written notice to Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (iii) Borrowers shall
furnish to Agent all notices or demands in connection with such Indebtedness
60
either received by any Borrower or on its behalf, promptly after the receipt
thereof, or sent by any Borrower or on its behalf, concurrently with the sending
thereof, as the case may be;
(j) the Remaining Existing Subordinated Note
Indebtedness, which may be purchased for cash or exchanged for Senior
Subordinated Notes or other unsecured Indebtedness and/or Capital Stock to the
extent expressly permitted by Section 9.10(i) hereof;
(k) Indebtedness of Borrowers or any other Subsidiary of
Borrowers arising after the date hereof issued in exchange for, or the proceeds
of which are used to refinance, replace or substitute for, Indebtedness
permitted under Section 9.9(e) hereof (the "Refinancing Indebtedness");
provided, that, as to any such Refinancing Indebtedness, each of the following
conditions is satisfied:
(i) Agent shall have received not less than ten
(10) Business Days' prior written notice of the intention to incur such
Indebtedness, which notice shall set forth in detail reasonably satisfactory to
Agent, the amount of such Indebtedness, the schedule of repayments and maturity
date with respect thereto and such other information with respect thereto as
Agent may reasonably request,
(ii) promptly upon Agent's request, Agent shall
have received true, correct and complete copies of all agreements, documents and
instruments evidencing or otherwise related to such Indebtedness, as duly
authorized, executed and delivered by the parties thereto,
(iii) the Refinancing Indebtedness shall have a
Weighted Average Life to Maturity and a final maturity equal to or greater than
the Weighted Average Life to Maturity and the final maturity, respectively, of
the Indebtedness being refinanced, replaced, or substituted for,
(iv) the Refinancing Indebtedness shall rank in
right of payment no more senior relative to, and be at least as subordinated (if
subordinated) to, the Obligations as the Indebtedness being refinanced, replaced
or substituted for, and the provider of such Refinancing Indebtedness shall
enter into an intercreditor agreement with the Agent on terms and conditions
substantially similar to the Intercreditor Agreement,
(v) the Refinancing Indebtedness shall be
secured by substantially the same assets that secure the Indebtedness so
refinanced, replaced or substituted for,
(vi) the Refinancing Indebtedness shall not
include terms and conditions with respect to any Borrower or Obligor which are
more burdensome or restrictive in any material respect than those included in
the Indebtedness so refinanced, replaced or substituted for,
(vii) such Indebtedness incurred by any Borrower
or Obligor shall be at rates and with fees or other charges higher or greater
than the Indebtedness so refinanced, replaced or substituted for,
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(viii) the principal amount of such Refinancing
Indebtedness shall not exceed the principal amount of the Indebtedness so
refinanced, replaced or substituted for (plus the amount of reasonable
refinancing fees and expenses incurred in connection therewith),
(ix) 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,
(x) Borrowers and Obligors may only make
regularly scheduled payments and mandatory prepayments of principal, interest
and fees, if any, in respect of such Refinancing Indebtedness to the extent such
payments would have been permitted hereunder in respect of the Indebtedness so
refinanced, replaced or substituted for (and except as otherwise permitted
below),
(xi) Borrowers and Obligors shall not, directly
or indirectly, (A) amend, modify, alter or change any terms of the agreements
with respect to such Refinancing Indebtedness, except that Borrowers and
Obligors may, after prior written notice to Agent, amend, modify, alter or
change the terms thereof to the extent permitted with respect to the
Indebtedness so refinanced, replaced or substituted for, or (B) redeem, retire,
defease, purchase or otherwise acquire such Refinancing Indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose (other than with
Refinancing Indebtedness to the extent permitted herein and to the extent
permitted with respect to the Indebtedness so refinanced, replaced or
substituted for), and
(xii) Borrowers and Obligors shall furnish to
Agent copies of all notices of default or demands for payment in connection with
such Refinancing Indebtedness received by any Borrower or Obligor or on its
behalf promptly after the receipt thereof or sent by any Borrower or Obligor or
on its behalf concurrently with the sending thereof, as the case may be;
(l) Indebtedness of Borrowers to an Insurance Premium
Finance Party in connection with insurance policies maintained by Borrowers
arising as a result of such Insurance Premium Finance Party entering into
arrangements to allow Borrowers to pay all or a portion of the applicable
insurance premiums on such insurance policies in installments rather than in one
lump sum annual payment; provided, that,
(i) the Insurance Premium Finance Party to which
such Indebtedness is owed shall only have the right to cancel or terminate the
insurance policy subject to its security interest, and shall only cancel or
terminate any such policy after ten (10) days prior written notice to Agent and
may only take such action with respect to such policy in the event that (A) a
Borrower has failed to make a regularly scheduled installment payment in respect
of the Indebtedness owed to such Insurance Premium Finance Party when due and
described in this Section 9.9(l) and (B) any applicable cure period with respect
thereto has expired,
(ii) Upon Agent's request, Borrowers shall
promptly deliver to Agent true, correct and complete copies of all agreements
related to such Indebtedness, as duly authorized, executed and delivered by the
parties thereto,
62
(iii) such Indebtedness shall be unsecured except
to the extent permitted under Section 9.8(k) hereof, and
(iv) Borrowers shall furnish to Agent all default
notices or demands for payment in connection with such Indebtedness either
received by Borrowers or on their behalf after the receipt thereof, or sent by
Borrowers or on their behalf, concurrently with the sending thereof, as the case
may be; and
(m) the unsecured Nomura Debt to the extent outstanding
as provided in or pursuant to the Nomura Payoff Agreement as in effect on the
date hereof.
9.10 Loans, Investments, Etc. Each Borrower shall not, and shall
not permit any Subsidiary to, directly or indirectly, make any loans or advance
money or property to any person, or invest in (by capital contribution, dividend
or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all
or a substantial part of the assets or property of any person, or form or
acquire any Subsidiaries, or agree to do any of the foregoing (unless
conditioned upon Agent's consent), except:
(a) the endorsement of instruments for collection or
deposit in the ordinary course of business;
(b) investments in cash or Cash Equivalents, provided,
that, the terms and conditions of Section 5.2 hereof shall have been satisfied
with respect to the deposit account, investment account or other account in
which such cash or Cash Equivalents are held;
(c) the existing equity investments of each Borrower as
of the date hereof in its Subsidiaries, provided, that, no Borrower shall have
any further obligations or liabilities to make any capital contributions or
other additional investments or other payments to or in or for the benefit of
any of such Subsidiaries, except, that, a Borrower may make capital
contributions to another Borrower in the form of dividend payments to the extent
expressly permitted by Sections 9.11 and 9.12 hereof;
(d) loans and advances by any Borrower to employees of
such Borrower after the date hereof not to exceed the principal amount of
$250,000 in the aggregate at any time outstanding;
(e) stock or obligations issued to any Borrower by any
Person (or the representative of such Person) in respect of Indebtedness of such
Person owing to such Borrower in connection with the insolvency, bankruptcy,
receivership or reorganization of such Person or a composition or readjustment
of the debts of such Person; provided, that, the original of any such stock or
instrument evidencing such obligations shall be promptly delivered to Agent (or
if the Working Capital Loan Agreement has not been terminated, to Working
Capital Agent, with copies to Agent), upon Agent's request, together with such
stock power, assignment or endorsement by such Borrower as Agent may request;
(f) obligations of account debtors to any Borrower
arising from Accounts which are past due evidenced by a promissory note made by
such account debtor payable to such Borrower; provided, that, promptly upon the
receipt of the original of any such promissory note
63
by such Borrower, such promissory note shall be endorsed to the order of Agent
(or if the Working Capital Loan Agreement has not been terminated, to Working
Capital Agent) by such Borrower and promptly delivered to Agent (or if the
Working Capital Loan Agreement has not been terminated, to Working Capital
Agent, with copies to Agent) as so endorsed;
(g) loans by a Borrower to another Borrower after the
date hereof, provided, that, (i) upon Agent's request, Borrowers shall provide
to Agent a report in form and substance satisfactory to Agent of the outstanding
amount of such loans as of the last day of the immediately preceding month and
indicating any loans made and payments received during the immediately preceding
month, (ii) if any such loan shall be evidenced by a promissory note or other
instrument, the single original of such note or other instrument shall be
promptly delivered to Agent (or if the Working Capital Loan Agreement has not
been terminated, to Working Capital Agent, with copies to Agent) upon its
request to hold as part of the Collateral, with such endorsement and/or
assignment by the payee of such note or other instrument as Agent, or Working
Capital Agent, as applicable, may require, (iii) as of the date of any such loan
and after giving effect thereto, the Borrower making such loan shall be Solvent
and (iv) as of the date of any such loan and after giving effect thereto, no
Default or Event of Default shall exist or have occurred and be continuing;
(h) the loans and advances set forth on Schedule 9.10 to
the Information Certificate; provided, that, as to such loans and advances,
Borrowers shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto and Borrowers shall furnish to Agent all default notices or
demands for payment in connection with such loans and advances received by any
Borrower or on its behalf, promptly after the receipt thereof, or sent by any
Borrower or on its behalf, concurrently with the sending thereof, as the case
may be;
(i) the purchase of the Remaining Existing Subordinated
Note Indebtedness or the exchange of such Indebtedness for Indebtedness on terms
substantially similar to the Senior Subordinated Notes or for other unsecured
Indebtedness, cash and/or Capital Stock in accordance with Sections 9.9(j) and
9.7(b)(iii) hereof, respectively; provided, that, as of the date of any such
purchase, no Default or Event of Default shall exist or have occurred and be
continuing;
(j) the exchange of the Existing Junior Subordinated
Notes for the Junior Subordinated Notes and, to the extent permitted by Section
9.7(b)(v) hereof, the exchange of defaulted interest for Capital Stock of LPC
pursuant to the Exchange Agreement and the issuance of warrants pursuant to the
Warrant Exchange Agreement in connection with the exchange of Existing Senior
Subordinated Notes and Existing Junior Subordinated Notes; and
(k) the payment of dividends by Borrowers to the extent
permitted by Sections 9.11 and 9.12 hereof.
9.11 Dividends and Redemptions. Each Borrower shall not, directly
or indirectly, declare or pay any dividends on account of any shares of class of
any Capital Stock of such Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of
64
Capital Stock (or set aside or otherwise deposit or invest any sums for such
purpose) for any consideration or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing, except that:
(a) any Borrower may declare and pay such dividends or
redeem, retire, defease, purchase or otherwise acquire any shares of any class
of Capital Stock for consideration in the form of shares of common stock (so
long as after giving effect thereto no Change of Control or other Default or
Event of Default shall exist or occur);
(b) Borrowers may pay dividends to the extent permitted
in Section 9.12 below;
(c) any Subsidiary of a Borrower (other than LRG except
as permitted in clause (d) below) may pay dividends to a Borrower;
(d) LRG may pay dividends to LPC; provided, that, (i)
after giving effect to any such dividend payment, the Excess Availability of LRG
shall be not less than $2,000,000 and (ii) as of the date of such dividend
payment and after giving effect thereto, no Default or Event of Default shall
exist or have occurred and be continuing;
(e) Borrowers may repurchase Capital Stock consisting of
common stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan, provided, that, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such repurchase and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the material terms of any
indenture, agreement or undertaking to which such Borrower is a party or by
which such Borrower or its property are bound, and the aggregate amount of all
payments for such repurchases in any calendar year shall not exceed $200,000;
and
(f) LPC may declare and pay cash dividends in respect of,
and redeem, cancel or retire, the Series B Preferred Stock in accordance with
the terms of the Restated Certificate of Incorporation of LPC as in effect on
the date hereof so long as (i) (A) the aggregate amount of all payments in
respect of dividends due prior to December 31, 2003 shall not exceed $106,000,
(B) the aggregate amount of all payments in respect of dividends (not including
those permitted in clause (A) above) in any fiscal year shall not exceed
$30,000, and (C) the aggregate amount of all such payments in respect of
redemptions, cancellations or retirements (exclusive of dividends) shall not
exceed $660,000 (which amount includes past due payments of up to $270,000) and
(ii) on the date of any such payment, redemption, cancellation or retirement and
after giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing.
9.12 Transactions with Affiliates. Each Borrower shall not,
directly or indirectly:
(a) purchase, acquire or lease any property from, or
sell, transfer or lease any property to, any officer, director or other
Affiliate of such Borrower, except in the ordinary
65
course of and pursuant to the reasonable requirements of such Borrower's
business (as the case may be) and upon fair and reasonable terms no less
favorable to such Borrower than such Borrower would obtain in a comparable arm's
length transaction with an unaffiliated person; or
(b) make any payments (whether by dividend, loan or
otherwise) of management, consulting or other fees for management or similar
services, or of any Indebtedness owing to any officer, employee, shareholder,
director or any other Affiliate of such Borrower, except (i) reasonable
compensation to, and reimbursement of reasonable expenses incurred by, officers,
employees and directors for services rendered to such Borrower in the ordinary
course of business, (ii) payments by any Borrower to any other Borrower for
actual and necessary reasonable out-of-pocket legal and accounting, insurance,
marketing, payroll and similar types of services paid for by any Borrower on
behalf of such other Borrower, in the ordinary course of their respective
businesses or as the same may be directly attributable to such Borrower and for
the payment of taxes by or on behalf of such Borrower, (iii) the grant of stock
options, restricted stock awards, stock appreciation rights or similar rights to
employees, officers or directors pursuant to a plan approved by the Board of
Directors of the applicable Borrower (so long as after giving effect thereto no
Change of Control or other Default or Event of Default shall exist or occur),
(iv) loans or advances to employees permitted by Section 9.10(d) of this
Agreement, (v) the payment of reasonable fees to the directors of any Borrower
who are not employees of such Borrower, (vi) the transactions contemplated by
the Exchange Agreement and the Warrant Agent Agreement as permitted by Section
9.7(b)(v), and (vii) regularly scheduled payments in respect of the Senior
Subordinated Notes and the Junior Subordinated Notes to officers, directors or
employees of LPC in their capacity as holders thereof to the extent permitted in
Sections 9.9(f)(iii) and (g)(iii), respectively.
9.13 Compliance with ERISA. Each Borrower shall, and shall cause
each of its ERISA Affiliates, to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
Federal and State law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) not terminate any of such
Plans so as to incur any material liability to the Pension Benefit Guaranty
Corporation; (d) not allow or suffer to exist any prohibited transaction
involving any of such Plans or any trust created thereunder which would subject
such Borrower or such ERISA Affiliate to a material tax or penalty or other
liability on prohibited transactions imposed under Section 4975 of the Code or
ERISA; (e) make all required contributions to any Plan which it is obligated to
pay under Section 302 of ERISA, Section 412 of the Code or the terms of such
Plan; (f) not allow or suffer to exist any accumulated funding deficiency,
whether or not waived, with respect to any such Plan; or (g) allow or suffer to
exist any occurrence of a reportable event or any other event or condition which
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such Plan that is a single employer plan, which termination
could result in any material liability to the Pension Benefit Guaranty
Corporation.
9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower shall, for
financial reporting purposes, cause its, and each of its Subsidiaries' (a)
fiscal years to end on December 31 of each year and (b) fiscal quarters to end
on March 31, June 30, September 30, and December 31 of each year.
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9.15 Change in Business. Each Borrower shall not engage in any
business other than the business of such Borrower on the date hereof and any
business reasonably related, ancillary or complimentary to the business in which
such Borrower is engaged on the date hereof.
9.16 Limitation of Restrictions Affecting Subsidiaries. Each
Borrower shall not, directly, or indirectly, create or otherwise cause or suffer
to exist any encumbrance or restriction which prohibits or limits the ability of
any Subsidiary of such Borrower to (a) pay dividends or make other distributions
or pay any Indebtedness owed to such Borrower or any Subsidiary of such
Borrower; (b) make loans or advances to such Borrower or any Subsidiary of such
Borrower, (c) transfer any of its properties or assets to such Borrower or any
Subsidiary of such Borrower; or (d) create, incur, assume or suffer to exist any
lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, other than encumbrances and restrictions arising under (i)
applicable law, (ii) this Agreement, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of such
Borrower or any Subsidiary of such Borrower, (iv) customary restrictions on
dispositions of real property interests found in reciprocal easement agreements
of such Borrower or any Subsidiary of such Borrower, (v) any agreement relating
to permitted Indebtedness incurred by a Subsidiary of such Borrower prior to the
date on which such Subsidiary was acquired by such Borrower and outstanding on
such acquisition date, and (vi) the extension or continuation of contractual
obligations in existence on the date hereof; provided, that, any such
encumbrances or restrictions contained in such extension or continuation are no
less favorable to Agent and Lenders than those encumbrances and restrictions in
effect on the date hereof under or pursuant to the contractual obligations so
extended or continued.
9.17 Leverage Ratio. Borrowers and their Subsidiaries, on a
consolidated basis, shall, not permit the ratio of consolidated secured
Indebtedness (including letters of credit) to consolidated EBITDA as of the end
of each trailing twelve month period of Borrowers and their Subsidiaries for
which the last month ends on a date set forth below to be greater than the
applicable ratio set forth below:.
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Leverage Ratio Applicable Period
-------------- -----------------
3.35:1.00 For the Trailing Twelve Months Ending
December 31, 2003
3.35:1.00 For the Trailing Twelve Months Ending
January 31, 2004
3.35:1.00 For the Trailing Twelve Months Ending
February 29, 2004
3.35:1.00 For the Trailing Twelve Months Ending
March 31, 2004
3.35:1.00 For the Trailing Twelve Months Ending
April 30, 2004
3.35:1.00 For the Trailing Twelve Months Ending
May 31, 2004
3.00:1.00 For the Trailing Twelve Months Ending
June 30, 2004
3.00:1:00 For the Trailing Twelve Months Ending
July 31, 2004
3.00:1.00 For the Trailing Twelve Months Ending
August 31, 2004
2.75:1.00 For the Trailing Twelve Months Ending
September 30, 2004
2.75:1.00 For the Trailing Twelve Months Ending
October 31, 2004
2.75:1.00 For the Trailing Twelve Months Ending
November 30, 2004
2.50:1.00 Each Trailing Twelve Months Period
Thereafter
9.18 Minimum EBITDA. Borrowers and their Subsidiaries, on a
consolidated basis, shall, at all times have, and shall maintain, EBITDA,
measured on a quarter-end basis, of at least the required amount set forth in
the following table for the applicable period set forth opposite thereto:
Applicable Amount Applicable Period
----------------- -----------------
$10,000,000 For the trailing twelve months
ending December 31, 2003
$10,000,000 For the trailing twelve months
ending March 31, 2004
$12,000,000 For the trailing twelve months
ending June 30, 2004
$14,000,000 For the trailing twelve months ending
September 30, 2004
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Applicable Amount Applicable Period
----------------- -----------------
$14,000,000 For the trailing twelve months ending
December 31, 2004
$16,000,000 For each trailing twelve months thereafter
9.19 Fixed Charge Coverage Ratio. Each Borrower and its
Subsidiaries shall, at all times have, and shall maintain, a Fixed Charge
Coverage Ratio, measured on a quarter-end basis, of at least the required amount
set forth in the following table for the applicable period set forth opposite
thereto:
Fixed Charge Coverage Ratio Applicable Period
--------------------------- -----------------
0.50:1.00 For the three months ending
December 31, 2003
1.10:1.00 For the three months ending
March 31, 2004
1.10:1.00 For the six months ending June 30, 2004
1.10:1.00 For the nine months ending
September 30, 2004
1.10:1.00 For the twelve months ending
December 31, 2004
1.15:1.00 For the trailing twelve months ending
March 31, 2005
1.15:1.00 For the trailing twelve months ending
June 30, 2005
1.15:1.00 For the trailing twelve months ending
September 30, 2005
1.15:1.00 For the trailing twelve months ending
December 31, 2005
1.20:1.00 For each trailing twelve months thereafter
9.20 Maximum Capital Expenditures. Borrowers shall not, in the
aggregate, make Capital Expenditures (other than those financed by Indebtedness
permitted under Section 9.9(b) hereof) in excess of $5,000,000 in any fiscal
year.
9.21 License Agreements.
(a) Each Borrower shall (i) promptly and faithfully
observe and perform all of the material terms, covenants, conditions and
provisions of the material License Agreements to which it is a party to be
observed and performed by it, at the times set forth therein, if any, (ii) not
do, permit, suffer or refrain from doing anything that could reasonably be
expected to result in a default under or breach of any of the terms of any
material License Agreement, (iii) not cancel, surrender, modify, amend, waive or
release any material License Agreement in any material respect or any term,
provision or right of the licensee thereunder in any material respect, or
consent to or permit to occur any of the foregoing if any of the foregoing would
have a Material Adverse Effect; except, that, subject to Section 9.21(b) below,
such Borrower may
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cancel, surrender or release any material License Agreement in the ordinary
course of the business of such Borrower; provided, that, such Borrower (as the
case may be) shall give Agent not less than thirty (30) days prior written
notice of its intention to so cancel, surrender and release any such material
License Agreement, (iv) give Agent prompt written notice of any material License
Agreement entered into by such Borrower after the date hereof, together with a
true, correct and complete copy thereof and such other information with respect
thereto as Agent may request, (v) give Agent prompt written notice of any
material breach of any obligation, or any default, by any party under any
material License Agreement, and deliver to Agent (promptly upon the receipt
thereof by such Borrower in the case of a notice to such Borrower and
concurrently with the sending thereof in the case of a notice from such
Borrower) a copy of each notice of default and every other notice and other
communication received or delivered by such Borrower in connection with any
material License Agreement which relates to the right of such Borrower to
continue to use the property subject to such License Agreement, and (vi) furnish
to Agent, promptly upon the request of Agent, such information and evidence as
Agent may reasonably require from time to time concerning the observance,
performance and compliance by such Borrower or the other party or parties
thereto with the material terms, covenants or provisions of any material License
Agreement.
(b) Each Borrower will either exercise any option to
renew or extend the term of each material License Agreement to which it is a
party in such manner as will cause the term of such material License Agreement
to be effectively renewed or extended for the period provided by such option and
give prompt written notice thereof to Agent or give Agent prior written notice
that such Borrower does not intend to renew or extend the term of any such
material License Agreement or that the term thereof shall otherwise be expiring,
not less than sixty (60) days prior to the date of any such non-renewal or
expiration. In the event of the failure of such Borrower to extend or renew any
material License Agreement to which it is a party, Agent shall have, and is
hereby granted, the irrevocable right and authority, at its option, at any time
that an Event of Default shall exist or have occurred and be continuing, to
renew or extend the term of such material License Agreement, whether in its own
name and behalf, or in the name and behalf of a designee or nominee of Agent or
in the name and behalf of such Borrower. At any time that an Event of Default
shall exist or have occurred and be continuing, Agent may, but shall not be
required to, perform any or all of such obligations of such Borrower under any
of the License Agreements, including, but not limited to, the payment of any or
all sums due from such Borrower thereunder. Any sums so paid by Agent shall
constitute part of the Obligations.
9.22 After Acquired Real Property. If any Borrower or any
Subsidiary of any Borrower hereafter acquires any Real Property, fixtures or any
other property that is of the kind or nature described in the Mortgages and such
Real Property, fixtures or other property at any one location has a fair market
value in an amount equal to or greater than $30,000 (or if a Default or Event of
Default exists, then regardless of the fair market value of such assets),
without limiting any other rights of Agent and Lenders, or duties or obligations
of any Borrower or Subsidiary, promptly upon Agent's request, such Borrower
shall, or shall cause its Subsidiaries to, execute and deliver to Agent a
mortgage, deed of trust or deed to secure debt, as Agent may determine, in form
and substance satisfactory to Agent in its good faith determination and in form
appropriate for recording in the real estate records of the jurisdiction in
which such Real Property or other property is located granting to Agent a first
and only lien and mortgage on and security interest in such Real Property,
fixtures or other property (except as such Borrower or
70
Subsidiary would otherwise be permitted to incur hereunder or under the
Mortgages or as otherwise consented to in writing by Agent) and such other
agreements, documents and instruments as Agent may require in good faith
connection therewith.
9.23 Additional Guaranties and Collateral Security. Each Borrower
shall cause:
(a) each Subsidiary of any Borrower not in existence on
the date hereof, to execute and deliver to Agent promptly and in any event
within 3 days after the formation, acquisition or change in status thereof (A) a
guaranty guaranteeing the Obligations, (B) a security agreement, (C) if such
Subsidiary has any Subsidiaries, a pledge agreement together with (x)
certificates evidencing all of the Capital Stock of any Person owned by such
Subsidiary, (y) undated stock powers executed in blank with signature
guaranteed, and (z) such opinion of counsel and such approving certificate of
such Subsidiary as Agent may reasonably request in respect of complying with any
legend on any such certificate or any other matter relating to such shares, (D)
one or more Mortgages creating on the Real Property of such Subsidiary a
perfected, first priority lien on such real property, a title insurance policy
covering such real property, a current ALTA survey thereof and a surveyor's
certificate, each in form and substance reasonably satisfactory to Agent,
together with such other agreements, instruments and documents as the Agent may
reasonably require, and (E) such other agreements, instruments, approvals, legal
opinions or other documents reasonably requested by the Agent in order to
create, perfect, establish the first priority of or otherwise protect any lien
purported to be covered by any such security agreement, pledge agreement or
Mortgage or otherwise to effect the intent that such Subsidiary shall become
bound by all of the terms, covenants and agreements contained in the Financing
Agreements and that all property and assets of such Subsidiary shall become
Collateral for the Obligations; and
(b) each owner of the Capital Stock of any such
Subsidiary to execute and deliver promptly and in any event within 3 days after
the formation or acquisition of such Subsidiary a pledge agreement, together
with (A) certificates evidencing all of the Capital Stock of such Subsidiary,
(B) undated stock powers or other appropriate instruments of assignment executed
in blank with signature guaranteed, (C) such opinion of counsel and such
approving certificate of such Subsidiary as Agent may reasonably request in
respect of complying with any legend on any such certificate or any other matter
relating to such shares and (D) such other agreements, instruments, approvals,
legal opinions or other documents reasonably requested by Agent.
(c) Notwithstanding anything to the contrary set forth in
this Section 9.23, only 65% of the shares of Capital Stock of each such
Subsidiary organized outside of the United States shall be pledged as
Collateral.
9.24 Costs and Expenses. Borrowers shall pay to Agent on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, syndication,
administration, collection, liquidation, enforcement and defense of the
Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or
71
recording (including Uniform Commercial Code financing statement filing taxes
and fees, documentary taxes, intangibles taxes and mortgage recording taxes and
fees, if applicable); (b) costs and expenses and fees for insurance premiums,
environmental audits, title insurance premiums, surveys, assessments,
engineering reports and inspections, appraisal fees and search fees, costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Agent's customary charges and fees with respect thereto; (c) costs and expenses
of preserving and protecting the Collateral; (d) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Agent, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Agent or any Lender arising out of the transactions contemplated hereby and
thereby (including preparations for and consultations concerning any such
matters); (e) all reasonable out-of-pocket expenses and costs heretofore and
from time to time hereafter incurred by Agent during the course of periodic
field examinations of the Collateral and such Borrower's operations, plus a per
diem charge at the rate of $1,500 per person per day for Agent's examiners in
the field and office (which per diem charges shall not exceed the aggregate
amount of $50,000 during the term of this Agreement, provided, that, any per
diem charge incurred at any time that a Default or Event of Default shall exist
or have occurred and be continuing shall not be included for purposes of such
$50,000 limitation); and (f) the reasonable fees and disbursements of counsel
(including legal assistants) to Agent in connection with any of the foregoing.
9.25 Further Assurances. At the request of Agent at any time and
from time to time, Borrowers shall, at their expense, duly execute and deliver,
or cause to be duly executed and delivered, such further agreements, documents
and instruments, and do or cause to be done such further acts as may be
necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Borrower fails to pay any of the Obligations
when due or (ii) any Borrower or Obligor fails to perform any of the covenants
contained in Sections 9.3, 9.4, 9.13, 9.14, 9.15, and 9.16 of this Agreement and
such failure shall continue for ten (10) days; provided, that, such ten (10) day
period shall not apply in the case of: (A) any failure to observe any such
covenant which is not capable of being cured at all or within such ten (10) day
period or which has been the subject of a prior failure within a six (6) month
period or (B) an intentional breach by any Borrower or Obligor of any such
covenant or (iii) any Borrower or Obligor fails to perform any of the terms,
covenants, conditions or provisions contained in this Agreement or any of the
other Financing Agreements other than those described in Sections 10.1(a)(i) and
10.1(a)(ii) above;
72
(b) any representation, warranty or statement of fact
made by any Borrower to Agent in this Agreement, the other Financing Agreements
or any other written agreement, schedule or confirmatory assignment shall when
made or deemed made be false or misleading in any material respect;
(c) any Obligor revokes or terminates or purports to
revoke or terminate or fails to perform any of the terms, covenants, conditions
or provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender executed and delivered pursuant to this Agreement;
(d) any judgment for the payment of money is rendered
against any Borrower or Obligor in excess of $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 or Obligor
that has or is reasonably likely to have a Material Adverse Effect or against
any of the Collateral having a value in excess of $250,000 and, after giving
effect to any Reserve established by Working Capital Agent in respect of any
such judgment, injunction, attachment, garnishment or execution against any
Collateral having a value in excess of $250,000, the Excess Availability of
Borrowers shall be less than $2,000,000 in the aggregate;
(e) any Borrower or Obligor dissolves or suspends or
discontinues doing business, except as permitted pursuant to Section 9.7 hereof;
(f) any Borrower or Obligor makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or calls a
meeting of its creditors or principal creditors in connection with a moratorium
or adjustment of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower or Obligor or all or any part of its
properties and such case or proceeding is not dismissed within forty-five (45)
days after the date of its filing or any Borrower or Obligor shall file any
answer admitting the allegations made in such proceeding or not contesting such
petition or application or indicates its consent to, acquiescence in or approval
of, any such action or proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or Obligor or for all or any part of its
property;
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(i) (A) any default in the payment of principal, interest
or other monetary obligations in respect of any Indebtedness of any Borrower
(other than Indebtedness owing to Agent or Lenders pursuant to the Financing
Agreements and the Remaining Existing Subordinated Indebtedness), in any such
case in an amount in excess of $500,000, which default continues beyond the
applicable cure period, if any, with respect thereto and is not waived in
writing or (B) any default (other than a default in payment of principal,
interest or other monetary obligations) in respect of any Indebtedness of any
Borrower (other than Indebtedness owing to Agent or Lenders pursuant to the
Financing Agreements and the Remaining Existing Subordinated Indebtedness),
which default continues beyond the applicable cure period, if any, and is not
waived in writing and the holders of such Indebtedness accelerate such
Indebtedness or otherwise exercise their remedies in respect of such default, or
(C) any default by any Borrower under any Material Contract (other than
agreements or contracts entered into in respect of borrowed money), which
default continues for more than the applicable cure period with respect thereto
(and is not waived in writing) if the other party to such Material Contract
exercises its remedies with respect to such default and such exercise results in
termination of such Material Contract or a liability on the part of any Borrower
in excess of $500,000;
(j) any material provision hereof or of any of the other
Financing Agreements shall for any reason cease to be valid, binding and
enforceable with respect to any party hereto or thereto (other than Agent) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral subject thereto (except as otherwise permitted herein or therein);
(k) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of any Borrower in an aggregate
amount in excess of $1,000,000;
(l) any Change of Control;
(m) the indictment by any Governmental Authority of any
Borrower or Obligor of which any Borrower, Obligor or Agent receives notice as
to which there is a reasonable possibility of an adverse determination, in the
good faith determination of Agent, under any criminal statute, or commencement
or threatened commencement of criminal or civil proceedings against such
Borrower or Obligor, pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of (i) any of the Collateral
having a value in excess of $250,000 and, after giving effect to any Reserve
established by Working Capital Agent in respect of any such possible forfeiture,
the Excess Availability of Borrowers shall be less than $2,000,000 in the
aggregate or (ii) any other property of any Borrower which is necessary or
material to the conduct of its business;
(n) there shall be an act, condition or event that has a
Material Adverse Effect after the date hereof;
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(o) there shall be no Excess Availability after giving
effect to any Rubber Group Reserve established pursuant to the terms of the
Working Capital Loan Agreement; or
(p) an event of default shall exist or have occurred and
be continuing under any of the Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has
occurred and is continuing, Agent and Lenders shall have all rights and remedies
provided in this Agreement, the other Financing Agreements, the UCC and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by any Borrower or Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against any Borrower or Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the generality of the foregoing, at
any time an Event of Default exists or has occurred and is continuing, Agent
may, at its option and shall upon the direction of the Required Lenders, (i)
upon notice to Administrative Borrower, accelerate the payment of all
Obligations and demand immediate payment thereof to Agent for itself and the
benefit of Lenders (provided, that, upon the occurrence of any Event of Default
described in Sections 10.1(g) and 10.1(h), all Obligations shall automatically
become immediately due and payable), and (ii) terminate this Agreement
(provided, that, upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all obligations of the Agent or a Lender hereunder
shall automatically terminate).
(c) Without limiting the foregoing and subject to the
terms of the Intercreditor Agreement, at any time an Event of Default exists or
has occurred and is continuing, Agent may, in its discretion, and upon the
direction of the Required Lenders, shall (i) with or without judicial process or
the aid or assistance of others, enter upon any premises on or in which any of
the Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral,
(ii) require any Borrower or Obligor, at Borrowers' expense, to assemble and
make available to Agent any part or all of the Collateral at any place and time
designated by Agent, (iii) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (iv) remove any or all of the Collateral
from any premises on or in which the same may be located for the purpose of
effecting the sale, foreclosure or other disposition thereof or for any other
purpose, (v) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including entering into contracts with respect thereto,
public or private sales at any exchange, broker's board, at any office of Agent
or elsewhere) at such prices or terms as Agent may deem reasonable, for cash,
upon credit or for future delivery, with the Agent having the right to purchase
the whole or any part of the
75
Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of any Borrower or Obligor, which right or equity
of redemption is hereby expressly waived and released by Borrowers and Obligors
and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased
by Agent upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Agent. If notice of disposition of Collateral is required by law, ten (10) days
prior notice by Agent to Administrative Borrower designating the time and place
of any public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrowers and Obligors waive any other notice. In the event Agent
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, each Borrower and Obligor waives the
posting of any bond which might otherwise be required.
(d) Subject to the terms of the Intercreditor Agreement,
at any time or times that an Event of Default exists or has occurred and is
continuing, Agent may, in its discretion, enforce the rights of any Borrower or
Obligor against any account debtor, secondary obligor or other obligor in
respect of any of the Accounts or other Receivables. Without limiting the
generality of the foregoing and subject to the terms of the Intercreditor
Agreement, Agent may, in its discretion, at such time or times (i) notify any or
all account debtors, secondary obligors or other obligors in respect thereof
that the Receivables have been assigned to Agent and that Agent has a security
interest therein and Agent may direct any or all accounts debtors, secondary
obligors and other obligors to make payment of Receivables directly to Agent,
(ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions,
any and all Receivables or other obligations included in the Collateral and
thereby discharge or release the account debtor or any secondary obligors or
other obligors in respect thereof without affecting any of the Obligations,
(iii) demand, collect or enforce payment of any Receivables or such other
obligations, but without any duty to do so, and Agent and Lenders shall not be
liable for any failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests and the interests of Lenders. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request and subject
to the terms of the Intercreditor Agreement, all invoices and statements sent to
any account debtor shall state that the Accounts and such other obligations have
been assigned to Agent and are payable directly and only to Agent and Borrowers
and Obligors shall deliver to Agent such originals of documents evidencing the
sale and delivery of goods or the performance of services giving rise to any
Accounts as Agent may require. In the event any account debtor returns Inventory
when an Event of Default exists or has occurred and is continuing, Borrowers
shall, upon Agent's request and subject to the terms of the Intercreditor
Agreement, hold the returned Inventory in trust for Agent, segregate all
returned Inventory from all of its other property, dispose of the returned
Inventory solely according to Agent's instructions, and not issue any credits,
discounts or allowances with respect thereto without Agent's prior written
consent.
(e) To the extent that applicable law imposes duties on
Agent or any Lender to exercise remedies in a commercially reasonable manner
(which duties cannot be waived under such law), each Borrower acknowledges and
agrees that it is not commercially unreasonable for Agent or any Lender (i) to
fail to incur expenses reasonably deemed significant by Agent or any
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Lender to prepare Collateral for disposition or otherwise to complete raw
material or work in process into finished goods or other finished products for
disposition, (ii) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not required by other law, to
fail to obtain consents of any Governmental Authority or other third party for
the collection or disposition of Collateral to be collected or disposed of,
(iii) to fail to exercise collection remedies against account debtors, secondary
obligors or other persons obligated on Collateral or to remove liens or
encumbrances on or any adverse claims against Collateral, (iv) to exercise
collection remedies against account debtors and other persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other persons, whether or not in the
same business as any Borrower, for expressions of interest in acquiring all or
any portion of the Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets, (ix) to dispose of assets in
wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Agent or Lenders
against risks of loss, collection or disposition of Collateral or to provide to
Agent or Lenders a guaranteed return from the collection or disposition of
Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the
services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of the
Collateral. Each Borrower acknowledges that the purpose of this Section is to
provide non-exhaustive indications of what actions or omissions by Agent or any
Lender would not be commercially unreasonable in the exercise by Agent or any
Lender of remedies against the Collateral and that other actions or omissions by
Agent or any Lender shall not be deemed commercially unreasonable solely on
account of not being indicated in this Section. Without limitation of the
foregoing, nothing contained in this Section shall be construed to grant any
rights to any Borrower or to impose any duties on Agent or Lenders that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section.
(f) For the purpose of enabling Agent to exercise the
rights and remedies hereunder, each Borrower and Obligor hereby grants to Agent,
to the extent assignable, an irrevocable, non-exclusive license (exercisable at
any time an Event of Default shall exist or have occurred and only for so long
as the same is continuing) without payment of royalty or other compensation to
any Borrower or Obligor, to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles, designs,
logos and other source of business identifiers and other Intellectual Property
and general intangibles now owned or hereafter acquired by any Borrower or
Obligor, wherever the same maybe located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.
(g) Subject to the terms of the Intercreditor Agreement,
Agent may apply the cash proceeds of Collateral actually received by Agent from
any sale, lease, foreclosure or other disposition of the Collateral to payment
of the Obligations, in whole or in part and in such order as Agent may elect,
whether or not then due. Borrowers shall remain liable to Agent and
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Lenders for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and expenses.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (except as otherwise provided
therein) and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of New York but excluding any principles of conflicts
of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of New York.
(b) Borrowers, Agent and Lenders irrevocably consent and
submit to the non-exclusive jurisdiction of the Supreme Court of the State of
New York for New York County and the United States District Court for the
Southern District of New York, whichever Agent may elect, and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Agent and Lenders shall
have the right to bring any action or proceeding against any Borrower or its
property in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against any Borrower or its property).
(c) Each Borrower hereby waives personal service of any
and all process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its address set
forth herein and service so made shall be deemed to be completed five (5) days
after the same shall have been so deposited in the U.S. mails, or, at Agent's
option, by service upon any Borrower (or Administrative Borrower on behalf of
such Borrower) in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, such Borrower shall appear in answer
to such process, failing which such Borrower shall be deemed in default and
judgment may be entered by Agent against such Borrower for the amount of the
claim and other relief requested.
(d) BORROWERS, AGENT AND LENDERS EACH HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
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BORROWERS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT ANY BORROWER, AGENT OR ANY LENDER MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to any
Borrower (whether in tort, contract, equity or otherwise) for losses suffered by
such Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by a
final and non-appealable judgment or court order binding on Agent and such
Lender, that such losses were the result of acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Agent and Lenders
shall be entitled to the benefit of the rebuttable presumption that it acted in
good faith and with the exercise of ordinary care in the performance by it of
the terms of this Agreement. Each Borrower: (i) certifies that neither Agent,
any Lender nor any representative, agent or attorney acting for or on behalf of
Agent or any Lender has represented, expressly or otherwise, that Agent and
Lenders would not, in the event of litigation, seek to enforce any of the
waivers provided for in this Agreement or any of the other Financing Agreements
and (ii) acknowledges that in entering into this Agreement and the other
Financing Agreements, Agent and Lenders are relying upon, among other things,
the waivers and certifications set forth in this Section 11.1 and elsewhere
herein and therein.
11.2 Waiver of Notices. Each Borrower hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and chattel paper, included in or evidencing
any of the Obligations or the Collateral, and any and all other demands and
notices of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for herein.
No notice to or demand on any Borrower which Agent or any Lender may elect to
give shall entitle such Borrower to any other or further notice or demand in the
same, similar or other circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing
Agreement nor any terms hereof or thereof may be amended, waived, discharged or
terminated unless such amendment, waiver, discharge or termination is in writing
signed by Agent and the Required Lenders or at Agent's option, by Agent with the
authorization of the Required Lenders, and as to amendments to any of the
Financing Agreements (other than with respect to any provision of Section 12
hereof), by any Borrower; except, that, no such amendment, waiver, discharge or
termination shall:
(i) reduce the interest rate or any fees or
extend the time of payment of principal, interest or any fees or reduce the
principal amount of the Loan, in each case without the consent of each Lender
directly affected thereby,
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(ii) release any Collateral (except as expressly
required hereunder or under any of the other Financing Agreements or applicable
law and except as permitted under Section 12.11(b) hereof), without the consent
of Agent and all Lenders,
(iii) reduce any percentage specified in the
definition of Required Lenders, without the consent of Agent and all of Lenders,
(iv) consent to the assignment or transfer by any
Borrower of any of their rights and obligations under this Agreement, without
the consent of Agent and all of Lenders, or
(v) amend, modify or waive any terms of this
Section 11.3 hereof, without the consent of Agent and all of Lenders.
(b) Agent and Lenders shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of its
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in
Section 11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Ableco shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Ableco of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Ableco or such Eligible Transferee as Ableco may specify, such Non-Consenting
Lender's portion of the Loan and all rights and interests of such Non-Consenting
Lender pursuant thereto. Ableco shall provide the Non-Consenting Lender with
prior written notice of its intent to exercise its right under this Section,
which notice shall specify on date on which such purchase and sale shall occur.
Such purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Ableco, or such Eligible Transferee
specified by Ableco, shall pay to the Non-Consenting Lender (except as Ableco
and such Non-Consenting Lender may otherwise agree) the amount equal to: (i) the
principal balance of the Loan held by the Non-Consenting Lender outstanding as
of the close of business on the business day immediately preceding the effective
date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect
of interest and fees payable to the Non-Consenting Lender to the effective date
of the purchase (but in no event shall the Non-Consenting Lender be deemed
entitled to any early termination fee), minus (iii) the amount of the closing
fee received by the Non-Consenting Lender pursuant to the terms hereof or of any
of the other Financing Agreements multiplied by the fraction, the numerator of
which is the number of months remaining in the then current term of the Credit
Facility and the denominator of which is the
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number of months in the then current term thereof. Such purchase and sale shall
be effective on the date of the payment of such amount to the Non-Consenting
Lender.
(d) The consent of Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of Agent hereunder
or under any of the other Financing Agreements, in addition to the consent of
the Lenders otherwise required by this Section.
11.4 Waiver of Counterclaims. Each Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Each Borrower shall, jointly and severally,
indemnify and hold Agent and each Lender, and its officers, directors, agents,
employees, advisors and counsel and their respective Affiliates (each such
person being an "Indemnitee"), harmless from and against any and all losses,
claims, damages, liabilities, costs or expenses (including reasonable attorneys'
fees and expenses) imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court costs,
and the fees and expenses of counsel, except that Borrowers shall not have any
obligation under this Section 11.5 to indemnify an Indemnitee with respect to a
matter covered hereby resulting from the gross negligence or wilful misconduct
of such Indemnitee as determined pursuant to a final, non-appealable order of a
court of competent jurisdiction (but without limiting the obligations of
Borrowers as to any other Indemnitee). To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Borrowers shall pay the maximum
portion which it is permitted to pay under applicable law to Agent and Lenders
in satisfaction of indemnified matters under this Section. To the extent
permitted by applicable law, no Borrower shall assert, and each Borrower hereby
waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. All amounts due under this Section shall be
payable upon demand. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Ableco to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Financing Agreements, and shall not by reason of
this Agreement or any other Financing Agreement be a trustee or fiduciary for
any
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Lender; (b) shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any of the other
Financing Agreements, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Financing Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing Agreement
or any other document referred to or provided for herein or therein or for any
failure by any Borrower or any Obligor or any other Person to perform any of its
obligations hereunder or thereunder; and (c) shall not be responsible to Lenders
for any action taken or omitted to be taken by it hereunder or under any other
Financing Agreement or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
Agent may deem and treat the payee of any note as the holder thereof for all
purposes hereof unless and until the assignment thereof pursuant to an agreement
(if and to the extent permitted herein) in form and substance satisfactory to
Agent shall have been delivered to and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of Lenders as is required in such circumstance, and such instructions of
such Agents and any action taken or failure to act pursuant thereto shall be
binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice
of the occurrence of a Default or an Event of Default or other failure of a
condition precedent to the Loan hereunder, unless and until Agent has received
written notice from a Lender, or a Borrower specifying such Event of Default or
any unfulfilled condition precedent, and stating that such notice is a "Notice
of Default or Failure of Condition". In the event that Agent receives such a
Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.7) take such action
with respect to any such Event of Default or failure of condition precedent as
shall be directed by the Required Lenders; provided, that, unless and until
Agent shall have received such directions, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to or by
reason of such Event of Default or failure of condition precedent, as it shall
deem advisable in the best interest of Lenders.
(b) Except with the prior written consent of Agent, no
Lender may assert or exercise any enforcement right or remedy in respect of the
Loan or other Obligations, as against any Borrower or Obligor or any of the
Collateral or other property of any Borrower or Obligor.
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12.4 Ableco in its Individual Capacity. With respect to its
Commitment and the portion of the Loan made by it (and any successor acting as
Agent), so long as Ableco shall be a Lender hereunder, it shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include Ableco in its individual
capacity as Lender hereunder. Ableco (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender) lend money to,
make investments in and generally engage in any kind of business with Borrowers
(and any of its Subsidiaries or Affiliates) as if it were not acting as Agent,
and Ableco and its Affiliates may accept fees and other consideration from any
Borrower and any of its Subsidiaries and Affiliates for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrowers hereunder and without limiting any
obligations of Borrowers hereunder) ratably, in accordance with their Pro Rata
Shares, for any and all claims of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Lender)
arising out of or by reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Financing Agreement or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on Agent or other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of Borrowers and Obligors and has made its own decision to
enter into this Agreement and that it will, independently and without reliance
upon Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Financing Agreements. Agent shall not be required to keep itself informed
as to the performance or observance by any Borrower or Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of any Borrower or Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from any
Borrower or Obligor which is required to be provided to Lenders or deemed to be
requested by Lenders hereunder and with a copy of any Notice of Default or
Failure of Condition received by Agent from any Borrower or any Lender;
provided, that, Agent shall not be liable to any Lender for any failure to do
so, except to the extent that such failure is attributable to Agent's own gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Except for notices, reports and
other documents expressly required to be furnished to Lenders by Agent
hereunder, Agent shall not have any duty or responsibility to provide any Lender
with any other credit or other information concerning the affairs, financial
condition or business of any Borrower or Obligor that may come into the
possession of Agent.
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12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 [Intentionally Omitted.]
12.9 Concerning the Collateral and the Related Financing
Agreements. Each Lender authorizes and directs Agent to enter into this
Agreement and the other Financing Agreements. Each Lender agrees that any action
taken by Agent or Required Lenders in accordance with the terms of this
Agreement or the other Financing Agreements and the exercise by Agent or
Required Lenders of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders.
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report and report with respect to the Borrowing Base prepared or
received by Agent (each field audit or examination report and report with
respect to the Borrowing Base being referred to herein as a "Report" and
collectively, "Reports"), appraisal and financial statements;
(b) expressly agrees and acknowledges that Agent (i) does
not make any representation or warranty as to the accuracy of any Report,
appraisal or financial statement or (ii) shall not be liable for any information
contained in any Report, appraisal or financial statement;
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that Agent or any other party
performing any audit or examination will inspect only specific information
regarding Borrowers and will rely significantly upon Borrowers' books and
records, as well as on representations of Borrowers' personnel; and
(d) agrees to keep all Reports confidential and strictly
for its internal use in accordance with the terms of Section 13.5 hereof, and
not to distribute or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any
time on or after an Event of Default and for so long as the same is continuing
or upon any other failure of a condition precedent to the Loan hereunder, make
such disbursements and advances ("Special Agent Advances") which Agent, in its
sole discretion, (i) deems necessary or desirable either to preserve or protect
the Collateral or any portion thereof or (ii) to enhance the likelihood or
maximize the amount of repayment by Borrowers of the Loan and other Obligations,
provided,
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that, the aggregate principal amount of the Special Agent Advances pursuant to
this clause (ii) shall not exceed the aggregate amount of ten (10%) percent of
the Maximum Credit or (iii) to pay any other amount chargeable to any Borrower
pursuant to the terms of this Agreement or any of the other Financing Agreements
consisting of costs, fees and expenses. Special Agent Advances shall be
repayable on demand and together with all interest thereon shall constitute
Obligations secured by the Collateral. Special Agent Advances shall not
constitute a portion of the Loan but shall otherwise constitute Obligations
hereunder. Interest on Special Agent Advances shall be payable at the Interest
Rate then applicable to the Loan and shall be payable on demand. Each Lender
agrees that it shall make available to Agent, upon Agent's demand, in
immediately available funds, the amount equal to such Lender's Pro Rata Share of
each such Special Agent Advance. If such funds are not made available to Agent
by such Lender, Agent shall be entitled to recover such funds, on demand from
such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to Agent at the Federal Funds
Rate for each day during such period (as published by the Federal Reserve Bank
of New York or at Agent's option based on the arithmetic mean determined by
Agent of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of the three leading
brokers of Federal funds transactions in New York City selected by Agent) and if
such amounts are not paid within three (3) days of Agent's demand, at the
highest Interest Rate provided for in Section 3.1 hereof applicable to the Loan.
(b) Lenders hereby irrevocably authorize Agent, at its
option and in its discretion to release any security interest in, mortgage or
lien upon, any of the Collateral (i) payment and satisfaction of all of the
Obligations and delivery of cash collateral to the extent required under Section
13.1 below, or (ii) constituting property being sold or disposed of if
Administrative Borrower or any Borrower certifies to Agent that the sale or
disposition is made in compliance with Section 9.7 hereof (and Agent may rely
conclusively on any such certificate, without further inquiry), or (iii)
constituting property in which any Borrower did not own an interest at the time
the security interest, mortgage or lien was granted or at any time thereafter,
or (iv) having a value in the aggregate in any twelve (12) month period of less
than $500,000, and to the extent Agent may release its security interest in and
lien upon any such Collateral pursuant to the sale or other disposition thereof,
such sale or other disposition shall be deemed consented to by Lenders, or (v)
if required or permitted under the terms of any of the other Financing
Agreements, including any intercreditor agreement, or (vi) approved, authorized
or ratified in writing by all of Lenders. Except as provided above, Agent will
not release any security interest in, mortgage or lien upon, any of the
Collateral without the prior written authorization of all of Lenders. Upon
request by Agent at any time, Lenders will promptly confirm in writing Agent's
authority to release particular types or items of Collateral pursuant to this
Section.
(c) Without any manner limiting Agent's authority to act
without any specific or further authorization or consent by the Required
Lenders, each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section. Agent
shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the security interest,
mortgage or liens granted to Agent upon any Collateral to the extent set forth
above; provided, that, (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to liability or
create any obligations or entail any consequence other than the release of
85
such security interest, mortgage or liens without recourse or warranty and (ii)
such release shall not in any manner discharge, affect or impair the Obligations
or any security interest, mortgage or lien upon (or obligations of any Borrower
in respect of) the Collateral retained by such Borrower.
(d) Agent shall have no obligation whatsoever to any
Lender or any other Person to investigate, confirm or assure that the Collateral
exists or is owned by any Borrower or is cared for, protected or insured or has
been encumbered, or that the liens and security interests granted to Agent
pursuant hereto or any of the Financing Agreements or otherwise have been
properly or sufficiently or lawfully created, perfected, protected or enforced
or are entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this Agreement or in any of the other Financing
Agreements, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, Agent may act in any manner it may
deem appropriate, in its discretion, given Agent's own interest in the
Collateral as a Lender and that Agent shall have no duty or liability whatsoever
to any other Lender.
12.12 Agency for Perfection. Each Lender hereby appoints Agent and
each other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
12.13 Successor Agent. Agent may resign as Agent upon thirty (30)
days' notice to Lenders and Administrative Borrower. If Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
agent for Lenders. If no successor agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with
Lenders and Administrative Borrower, a successor agent from among Lenders. Upon
the acceptance by the Lender so selected of its appointment as successor agent
hereunder, such successor agent shall succeed to all of the rights, powers and
duties of the retiring Agent and the term "Agent" as used herein and in the
other Financing Agreements shall mean such successor agent and the retiring
Agent's appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Section
12 shall inure to its benefit as to any actions taken or omitted by it while it
was Agent under this Agreement. If no successor agent has accepted appointment
as Agent by the date which is thirty (30) days after the date of a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nonetheless thereupon become effective and Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
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SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements
shall become effective as of the date set forth on the first page hereof and
shall continue in full force and effect for a term ending on June 30, 2006 (the
"Renewal Date") unless renewed pursuant to the following sentence or sooner
terminated pursuant to the terms hereof. Borrowers shall have the option to
renew this Agreement and the other Financing Agreements for one additional
successive term effective as of the Renewal Date through June 30, 2007;
provided, that (i) the Working Capital Loan Agreement and the other Working
Capital Lender Agreements are also renewed until at least June 30, 2007, (ii)
Borrower provides to Agent written notice of such intention to renew (which
notice shall be irrevocable) at least sixty (60) days prior to the Renewal Date,
and (iii) no Default or Event of Default has occurred and is continuing from the
time that Agent receives the notice set forth in clause (ii) above until the
Renewal Date. In addition, Borrowers may terminate this Agreement at any time
upon ten (10) days prior written notice to Agent (which notice shall be
irrevocable) and Agent may, at its option, and shall at the direction of
Required Lenders, terminate this Agreement at any time an Event of Default
exists or has occurred and is continuing. Upon the Renewal Date or any other
effective date of termination of the Financing Agreements, Borrowers shall pay
to Agent all outstanding and unpaid Obligations and shall furnish cash
collateral to Agent (or at Agent's option, a letter of credit issued for the
account of Borrowers and at Borrowers' expense, in form and substance
satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as
beneficiary) in such amounts as Agent determines are reasonably necessary to
secure Agent and Lenders from loss, cost, damage or expense, including
reasonable attorneys' fees and expenses, in connection with any contingent
Obligations, including checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
and indefeasible payment and any continuing obligations of Agent or any Lender
pursuant to any Deposit Account Control Agreement. Such payments in respect of
the Obligations and cash collateral shall be remitted by wire transfer in
Federal funds to the Agent Payment Account or such other bank account of Agent,
as Agent may, in its discretion, designate in writing to Administrative Borrower
for such purpose. Interest shall be due until and including the next Business
Day, if the amounts so paid by Borrowers to the Agent Payment Account or other
bank account designated by Agent are received in such bank account later than
12:00 noon, New York City time.
(b) No termination of this Agreement or the other
Financing Agreements shall relieve or discharge any Borrower of its respective
duties, obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and Agent's continuing security interest in the Collateral and the rights
and remedies of Agent and Lenders hereunder, under the other Financing
Agreements and applicable law, shall remain in effect until all such Obligations
have been fully and finally discharged and paid. Accordingly, each Borrower
waives any rights it may have under the UCC to demand the filing of termination
statements with respect to the Collateral and Agent shall not be required to
send such termination statements to Borrowers, or to file them with any filing
office, unless and until this Agreement shall have been terminated in accordance
with its terms and all Obligations paid and satisfied in full in immediately
available funds.
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13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1,
Article 8 or Article 9 of the UCC shall have the meanings given therein unless
otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to any Borrower, Agent and Lenders
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement
shall mean "including, without limitation" and the word "will" when used in this
Agreement shall be construed to have the same meaning and effect as the word
"shall".
(f) An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section 11.3
or is cured in a manner satisfactory to Agent, if such Event of Default is
capable of being cured as determined by Agent.
(g) All references to the term "good faith" used herein
when applicable to Agent or any Lender shall mean, notwithstanding anything to
the contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrowers shall have the burden of proving any lack of
good faith on the part of Agent or any Lender alleged by any Borrower at any
time.
(h) Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall be
computed unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the financial statements of Borrowers most recently
received by Agent prior to the date hereof. Notwithstanding anything to the
contrary contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term "unqualified
opinion" as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is not only unqualified but also does not
include any explanatory note or language, including any explanation,
supplemental comment or other comment concerning the ability of the applicable
person to continue as a going concern or otherwise.
(i) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including", the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including".
88
(j) Unless otherwise expressly provided herein, (i)
references herein to any agreement, document or instrument shall be deemed to
include all subsequent amendments, modifications, supplements, extensions,
renewals, restatements or replacements with respect thereto, but only to the
extent the same are not prohibited by the terms hereof or of any other Financing
Agreement, and (ii) references to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(l) This Agreement and other Financing Agreements may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are
the result of negotiations among and have been reviewed by counsel to Agent and
the other parties, and are the products of all parties. Accordingly, this
Agreement and the other Financing Agreements shall not be construed against
Agent or Lenders merely because of Agent's or any Lender's involvement in their
preparation.
13.3 Notices. All notices, requests and demands hereunder shall be
in writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section):
If to any Borrower: Lexington Precision Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: President
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to: Xxxxx Xxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
If to Agent: Ableco Finance LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
00
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to: Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
13.4 Partial Invalidity. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 Confidentiality.
(a) Agent and each Lender shall use all reasonable
efforts to keep confidential, in accordance with its customary procedures for
handling confidential information and safe and sound lending practices, any
non-public information supplied to it by any Borrower pursuant to this
Agreement, provided, that, nothing contained herein shall limit the disclosure
of any such information: (i) to the extent required by statute, rule,
regulation, subpoena or court order provided Administrative Borrower, if
practicable, is given prior notice of any such disclosure and in all other
instances Administrative Borrower is given notice of any such disclosure
promptly after Agent's or such Lender's disclosure of such information, (ii) to
bank examiners and other regulators, auditors and/or accountants, in connection
with any litigation to which Agent or such Lender is a party, (iii) to any
Lender or Participant (or prospective Lender or Participant) or to any Affiliate
of any Lender so long as such Lender or Participant (or prospective Lender or
Participant) or Affiliate shall have instructed in writing, and by acceptance of
the information be deemed to have agreed, to treat such information as
confidential in accordance with this Section 13.5, or (iv) to counsel for Agent
or any Lender or Participant (or prospective Lender or Participant).
(b) In the event that Agent or any Lender receives a
request or demand to disclose any confidential information pursuant to any
subpoena or court order, Agent or such Lender, as the case may be, agrees (i) to
the extent permitted by applicable law or if permitted by applicable law, to the
extent Agent or such Lender determines in good faith that it will not create any
risk of liability to Agent or such Lender, Agent or such Lender will promptly
notify Administrative Borrower of such request so that Administrative Borrower
may seek a protective order or other appropriate relief or remedy and (ii) if
disclosure of such information is required, disclose such information and,
subject to reimbursement by Borrowers of Agent's or such Lender's expenses,
cooperate with Administrative Borrower in the reasonable efforts to obtain an
order or other reliable assurance that confidential treatment will be accorded
to such portion of
90
the disclosed information which Administrative Borrower so designates, to the
extent permitted by applicable law or if permitted by applicable law, to the
extent Agent or such Lender determines in good faith that it will not create any
risk of liability to Agent or such Lender.
(c) In no event shall this Section 13.5 or any other
provision of this Agreement, any of the other Financing Agreements or applicable
law be deemed: (i) to apply to or restrict disclosure of information that has
been or is made public by any Borrower, or any third party or otherwise becomes
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent or any Lender (or any Affiliate of any Lender)
on a non-confidential basis from a person other than a Borrower, (iii) to
require Agent or any Lender to return any materials furnished by a Borrower to
Agent or a Lender or prevent Agent or a Lender from responding to routine
informational requests in accordance with the Code of Ethics for the Exchange of
Credit Information promulgated by The Xxxxxx Xxxxxx Associates or other
applicable industry standards relating to the exchange of credit information.
The obligations of Agent and Lenders under this Section 13.5 shall supersede and
replace the obligations of Agent and Lenders under any confidentiality letter
signed prior to the date hereof.
(d) Notwithstanding anything to the contrary set forth
herein or in any of the other Financing Agreements or any other written or oral
understanding or agreement, (i) any obligations of confidentiality contained
herein, in any of the other Financing Agreements or any such other understanding
or agreement do not apply and have not applied from the commencement of
discussions between the parties to the tax treatment and tax structure of the
transactions contemplated herein (and any related transactions or arrangements),
and (ii) each party (and each of its employees, representatives, or other
agents) may disclose to any and all persons the tax treatment and tax
structuring of the transactions contemplated herein and all materials of any
kind (including opinions or other tax analyses) that are provided to such party
relating to such tax treatment and tax structure, all within the meaning of
Treasury Regulation Section 1.6011-4; provided, that, each party recognizes that
the privilege that it may, in its discretion, maintain with respect to the
confidentiality of a communication relating to the transactions contemplated
herein, including a confidential communication with its attorney or a
confidential communication with a federally authorized tax practitioner under
Section 7525 of the Internal Revenue Code, is not intended to be affected by the
foregoing. Borrowers do not intend to treat the Loan and related transactions as
being a "reportable transaction" (within the meaning of Treasury Regulation
Section 1.6011-4). In the event Borrowers determine to take any action
inconsistent with such intention, it will promptly notify Agent thereof. Each
Borrower acknowledges that one or more of Lenders may treat its portion of the
Loan as part of a transaction that is subject to Treasury Regulation Section
1.6011-4 or Section 301.6112-1, and the Agent and such Lender or Lenders, as
applicable, may file such IRS forms or maintain such lists and other records as
they may determine is required by such Treasury Regulations.
13.6 Successors. This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Agent, Lenders, Borrowers, and their
respective successors and assigns, except that no Borrower may assign its rights
under this Agreement and the other Financing Agreements without the prior
written consent of Agent and Lenders. Any such purported assignment without such
express prior written consent shall be void. No Lender may assign its rights and
obligations
91
under this Agreement without the prior written consent of Agent, except as
provided in Section 13.7 below. The terms and provisions of this Agreement and
the other Financing Agreements are for the purpose of defining the relative
rights and obligations of Borrowers, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party beneficiaries
of any of the terms and provisions of this Agreement or any of the other
Financing Agreements.
13.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of
Agent, assign all or, if less than all, a portion equal to at least $1,000,000
in the aggregate for the assigning Lender (except such minimum amount shall not
apply to an assignment by a Lender to an Affiliate of such Lender or an Approved
Fund), of such rights and obligations under this Agreement to one or more
Eligible Transferees or Approved Funds (but not including for this purpose any
assignments in the form of a participation), each of which assignees shall
become a party to this Agreement as a Lender by execution of an Assignment and
Acceptance; provided, that, (i) such transfer or assignment will not be
effective until recorded by Agent on the Register (as defined below) and (ii)
Agent shall have received for its sole account payment of a processing fee from
the assigning Lender or the assignee in the amount of $5,000 (except the payment
of such fee shall not be required in connection with an assignment by a Lender
to an Affiliate of such Lender or an Approved Fund).
(b) Agent shall maintain a register of the names and
addresses of Lenders, their Commitments and the principal amount of their
portion of the Loan (the "Register"). Agent shall also maintain a copy of each
Assignment and Acceptance delivered to and accepted by it and shall modify the
Register to give effect to each Assignment and Acceptance. The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and any Borrowers, Obligors, Agent and Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by Administrative
Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(c) Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, the assignee thereunder shall be a party hereto and to the other
Financing Agreements and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder and thereunder and the assigning
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and
Acceptance, the assignor and assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness,
92
sufficiency or value of this Agreement or any of the other Financing Agreements
furnished pursuant hereto, (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Borrower, Obligor or any of their Subsidiaries or the performance or
observance by any Borrower or Obligor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning any Borrower or Obligor in
the possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more
banks or other entities in or to all or a portion of its rights and obligations
under this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of the Loan owing to it, without the consent of
Agent or the other Lenders); provided, that, (i) such Lender's obligations under
this Agreement and the other Financing Agreements shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, and Borrowers, the other Lenders and Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other
Financing Agreements, and (iii) the Participant shall not have any rights under
this Agreement or any of the other Financing Agreements (the Participant's
rights against such Lender in respect of such participation to be those set
forth in the agreement executed by such Lender in favor of the Participant
relating thereto) and all amounts payable by any Borrower or Obligor hereunder
shall be determined as if such Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit
any Lender from pledging its portion of the Loan hereunder to a Federal Reserve
Bank in support of borrowings made by such Lenders from such Federal Reserve
Bank; provided, that, no such pledge shall release such Lender from any of its
obligations hereunder or substitute any such pledgee for such Lender as a party
hereto.
(g) Borrowers agree to cooperate with Agent or any Lender
permitted to sell assignments or participations under this Section 13.7 and upon
request shall take such commercially reasonable actions in order to enable or
effect any such assignment or participation, including (but not limited to) the
execution and delivery of any and all agreements, notes and other documents and
instruments as shall be reasonably requested by Agent or any Lender and the
delivery of informational materials, appraisals or other documents for, and the
93
participation of relevant management in meetings and conference calls with,
potential Lenders or Participants.
(h) A Registered Loan (and the Registered Note, if any,
evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Note shall expressly so provide). Any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register,
together with the surrender of the Registered Note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such Registered Note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new Registered Notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the Registered Note, if any evidencing the same), Agent
and Borrowers shall treat the Person in whose name such Loan (and the Registered
Note, if any, evidencing the same) is registered as the owner thereof for the
purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary. In the case of an assignment by a Lender
to any of its Approved Funds that is not reflected in Agent's Register, the
assigning Lender shall maintain a comparable register on behalf of Agent.
(i) In the event that any Lender sells participations in
a Registered Loan, such Lender shall maintain a register on which it enters the
name of all participants in such Registered Loan (the "Participant Register"). A
Registered Loan (and the Registered Note, if any, evidencing the same) may be
participated in whole or in part only by registration of such participation on
the Participant Register (and each Registered Note shall expressly so provide).
Any participation of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
13.8 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represents the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
13.9 Counterparts, Etc. This Agreement or any of the other
Financing Agreements may be executed in any number of counterparts, each of
which shall be an original, but all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of this Agreement or
any of the other Financing Agreements by telefacsimile shall have the same force
and effect as the delivery of an original executed counterpart of this Agreement
or any of such other Financing Agreements. Any party delivering an executed
counterpart of any such agreement by telefacsimile shall also deliver an
original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of such agreement.
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95
IN WITNESS WHEREOF, Agent, Lenders, Borrowers have caused these
presents to be duly executed as of the day and year first above written.
AGENT BORROWERS
ALBECO FINANCE LLC, as Agent LEXINGTON PRECISION CORPORATION
By: /s/ Xxxxxx Xxxx
_____________________________ By: /s/ Xxxxxx Xxxxxx
__________________________________
Title: Senior Vice President
__________________________ Title: President
_______________________________
LEXINGTON RUBBER GROUP, INC.
By: /s/ Xxxxxx Xxxxxx
__________________________________
Title: President
_______________________________
LENDERS
ABLECO FINANCE LLC
By: /s/ Xxxxxx Xxxx
_____________________________
Title: Senior Vice President
__________________________
Commitment: $11,500,000
96
EXHIBIT A
to
LOAN AND SECURITY AGREEMENT
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of _____________, 2003 is made between
________________________ (the "Assignor") and ____________________ (the
"Assignee").
W I T N E S S E T H:
WHEREAS, Ableco Finance LLC, in its capacity as agent pursuant
to the Loan Agreement (as hereinafter defined) acting for and on behalf of the
parties thereto as lenders (in such capacity, "Agent"), and the parties to the
Loan Agreement as lenders (individually, each a "Lender" and collectively,
"Lenders") have entered or are about to enter into financing arrangements
pursuant to which Agent and Lenders may make loans to Lexington Precision
Corporation and Lexington Rubber Group, Inc. (collectively, "Borrowers") as set
forth in the Loan and Security Agreement, dated December 18, 2003, by and among
Borrowers, Agent and Lenders (as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, the
"Loan Agreement"), and the other agreements, documents and instruments referred
to therein or at any time executed and/or delivered in connection therewith or
related thereto (all of the foregoing, together with the Loan Agreement, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, being collectively referred to herein as the
"Financing Agreements");
WHEREAS, as provided under the Loan Agreement, Assignor has
made a Loan (the "Committed Loan") to Borrowers in an aggregate amount of
$___________ (the "Loan Amount");
WHEREAS, Assignor wishes to assign to Assignee [part of the]
[all] rights and obligations of Assignor under the Loan Agreement in respect of
its Committed Loan in an amount equal to $______________ (the "Assigned
Committed Loan Amount") on the terms and subject to the conditions set forth
herein and Assignee wishes to accept assignment of such rights and to assume
such obligations from Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
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1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and
Assignee hereby purchases, assumes and undertakes from Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) an interest in (i) the Committed Loan of Assignor and
(ii) all related rights, benefits, obligations, liabilities and indemnities of
the Assignor (in its capacity as a Lender) under and in connection with the Loan
Agreement and the other Financing Agreements, so that after giving effect
thereto, the Committed Loan of Assignee shall be as set forth below and the Pro
Rata Share of Assignee shall be _______ (__%) percent.
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), Assignee shall be a party to the Loan Agreement and succeed
to all of the rights and be obligated to perform all of the obligations of a
Lender under the Loan Agreement, including the requirements concerning
confidentiality and the payment of indemnification. Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Committed Loan of Assignor shall, as of
the Effective Date, be reduced by an amount equal to the Assigned Committed Loan
Amount and Assignor shall relinquish its rights and be released from its
obligations under the Loan Agreement to the extent such obligations have been
assumed by Assignee; provided, that, Assignor shall not relinquish its rights
under Sections 2.1, 6.4, 6.8 and 6.9 of the Loan Agreement to the extent such
rights relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date Assignee's Committed Loan will be $_____________.
(d) After giving effect to the assignment and assumption set forth
herein, on the Effective Date Assignor's Committed Loan will be $______________
(as such amount may be further reduced by any other assignments by Assignor on
or after the date hereof).
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing Assignee's Pro Rata Share of the principal amount of the Committed
Loan.
(b) Assignee shall pay to Agent the processing fee in the amount
specified in Section 13.7(a) of the Loan Agreement.
3. Reallocation of Payments. Any interest, fees and other
payments accrued to the Effective Date with respect to the Committed Loan shall
be for the account of Assignor. Any interest, fees and other payments accrued on
and after the Effective Date with respect to the Assigned Committed Loan Amount
shall be for the account of Assignee. Each of Assignor and Assignee agrees that
it will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.
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4. Independent Credit Decision. Assignee acknowledges that it has
received a copy of the Loan Agreement and the Schedules and Exhibits thereto,
together with copies of the most recent financial statements of Borrowers, and
such other documents and information as it has deemed appropriate to make its
own credit and legal analysis and decision to enter into this Assignment and
Acceptance and agrees that it will, independently and without reliance upon
Assignor, Agent or any Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Loan Agreement.
5. Effective Date; Notices.
(a). As between Assignor and Assignee, the effective date for this
Assignment and Acceptance shall be _______________, 200_ (the "Effective Date");
provided, that, the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by Assignor and Assignee;
(ii) the consent of Agent as required for an effective
assignment of the Assigned Committed Loan Amount by Assignor to Assignee shall
have been duly obtained and shall be in full force and effect as of the
Effective Date;
(iii) written notice of such assignment, together with
payment instructions, addresses and related information with respect to
Assignee, shall have been given to Agent;
(iv) Assignee shall pay to Assignor all amounts due to
Assignor under this Assignment and Acceptance; and
(v) the processing fee referred to in Section 2(b) hereof
shall have been paid to Agent.
(b) Promptly following the execution of this Assignment
and Acceptance, Assignor shall deliver to Agent for acknowledgment by Agent, a
Notice of Assignment in the form attached hereto as Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]
(a) Assignee hereby appoints and authorizes Assignor in
its capacity as Agent to take such action as agent on its behalf to exercise
such powers under the Loan Agreement as are delegated to Agent by Lenders
pursuant to the terms of the Loan Agreement.
(b) Assignee shall assume no duties or obligations held
by Assignor in its capacity as Agent under the Loan Agreement.]
7. Withholding Tax. Assignee (a) represents and warrants to
Assignor, Agent and Borrowers that under applicable law and treaties no tax will
be required to be withheld by Assignee, Agent or Borrowers with respect to any
payments to be made to Assignee
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hereunder or under any of the Financing Agreements, (b) agrees to furnish (if it
is organized under the laws of any jurisdiction other than the United States or
any State thereof) to Agent and Borrowers prior to the time that Agent or
Borrowers are required to make any payment of principal, interest or fees
hereunder, duplicate executed originals of either U.S. Internal Revenue Service
Form W-8BEN or W-8ECI, as applicable (wherein Assignee claims entitlement to the
benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new such Forms upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by Assignee, and (c) agrees to
comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
8. Representations and Warranties.
(a) Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any security interest, lien, encumbrance
or other adverse claim, (ii) it is duly organized and existing and it has the
full power and authority to take, and has taken, all action necessary to execute
and deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment
and Acceptance and to fulfill its obligations hereunder, (iii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance, and apart from any agreements or undertakings
or filings required by the Loan Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance, and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Agreement or any of the
other Financing Agreements or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Agreement or any other instrument
or document furnished pursuant thereto. Assignor makes no representation or
warranty in connection with, and assumes no responsibility with respect to, the
solvency, financial condition or statements of Borrowers or any of their
respective Affiliates, or the performance or observance by Borrowers or any
other Person, of any of its respective obligations under the Loan Agreement or
any other instrument or document furnished in connection therewith.
(c) Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder, (ii) no notices to, or consents,
authorizations or approvals of, any Person
A-4
are required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance, and apart from any
agreements or undertakings or filings required by the Loan Agreement, no further
action by, or notice to, or filing with, any Person is required of it for such
execution, delivery or performance; and (iii) this Assignment and Acceptance has
been duly executed and delivered by it and constitutes the legal, valid and
binding obligation of Assignee, enforceable against Assignee in accordance with
the terms hereof, subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general application relating to or
affecting creditors' rights to general equitable principles.
9. Further Assurances. Assignor and Assignee each hereby
agree to execute and deliver such other instruments, and take such other action,
as either party may reasonably request in connection with the transactions
contemplated by this Assignment and Acceptance, including the delivery of any
notices or other documents or instruments to Borrowers or Agent, which may be
required in connection with the assignment and assumption contemplated hereby.
10. Miscellaneous
(a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other for further breach thereof.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) Assignor and Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Assignor and
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in New York County, New York over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court. Each party to
this Assignment and Acceptance hereby irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
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OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN
AGREEMENT, ANY OF THE OTHER FINANCING AGREEMENTS OR ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN).
IN WITNESS WHEREOF, Assignor and Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:____________________________________
Title:_________________________________
[ASSIGNEE]
By:____________________________________
Title:_________________________________
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SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
___, 20__
________________________________
________________________________
________________________________
Attn.:_________________________
Re:_____________________________
Ladies and Gentlemen:
Ableco Finance LLC, in its capacity as agent pursuant to the
Loan Agreement (as hereinafter defined) acting for and on behalf of the parties
thereto as lenders (in such capacity, "Agent"), and the parties to the Loan
Agreement as lenders (individually, each a "Lender" and collectively, "Lenders")
have entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans to Lexington Precision Corporation and
Lexington Rubber Group, Inc. (collectively, "Borrowers") as set forth in the
Loan and Security Agreement, dated _____________, 2003, by and among Borrowers,
Agent and Lenders (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement"),
and the other agreements, documents and instruments referred to therein or at
any time executed and/or delivered in connection therewith or related thereto
(all of the foregoing, together with the Loan Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, being collectively referred to herein as the "Financing
Agreements"). Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement.
i. We hereby give you notice of, and request your
consent to, the assignment by
__________________________ (the "Assignor") to
___________________________ (the "Assignee") such
that after giving effect to the assignment Assignee
shall have an interest equal to ________ (__%)
percent of the total Loan pursuant to the Assignment
and Acceptance Agreement attached hereto (the
"Assignment and Acceptance"). We understand that the
Assignor's portion of the Loan shall be reduced by
$_____________, as the same may be further reduced by
other assignments on or after the date hereof.
ii. Assignee agrees that, upon receiving the consent
of Agent to such assignment, Assignee will be bound
by the terms of the Loan Agreement as fully and to
the same extent as if the Assignee were the Lender
originally holding such interest under the Loan
Agreement.
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iii. The following administrative details apply to
Assignee:
(A) Notice address:
Assignee name:______________________________
Address: ______________________________
______________________________
Attention: ______________________________
Telephone: ______________________________
Telecopier: ______________________________
(B) Payment instructions:
Account No.: ______________________________
At: ______________________________
______________________________
______________________________
Reference: ______________________________
Attention: ______________________________
iv. You are entitled to rely upon the
representations, warranties and covenants of each of
Assignor and Assignee contained in the Assignment and
Acceptance.
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IN WITNESS WHEREOF, Assignor and Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:_________________________________________
Title:______________________________________
[NAME OF ASSIGNEE]
By:_________________________________________
Title:______________________________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
ABLECO FINANCE LLC, as Agent
By:______________________________
Title:___________________________
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EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
Compliance Certificate
To: Ableco Finance LLC,
as Agent
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Pursuant to Section 9.6 of the Loan Agreement (as defined
below), Lexington Precision Corporation, a Delaware corporation and Lexington
Rubber Group, Inc., a Delaware corporation (collectively, "Borrower"), hereby
certify as follows:
1. Capitalized terms used herein without definition
shall have the meanings given to such terms in the Loan and Security Agreement,
dated December 18, 2003, by and among Ableco Finance LLC, in its capacity as
agent for the parties thereto as lenders (in such capacity, "Agent") and the
parties thereto as lenders (collectively, "Lenders") and Borrowers (as such Loan
and Security Agreement is amended, modified or supplemented, from time to time,
the "Loan Agreement").
2. The Borrowers have reviewed the terms of the Loan
Agreement, and the transactions and the financial condition of Borrowers, during
the fiscal month ending ____________.
3. The review described in Section 2 above did not
disclose the existence at the end of such fiscal month, and Borrowers have no
knowledge of the existence and continuance on the date hereof, of any condition
or event which constitutes a Default or an Event of Default, except as set forth
on Schedule I attached hereto. Schedule I attached hereto sets forth the
exceptions, if any, to this Section 3 listing, in detail, the nature of such
Default of Event of Default and the action which Borrowers have taken, are
taking, or propose to take with respect to such Default or Event of Default.
4. Borrowers further certify that, based on the review
described in Section 2 above, no Borrower has at any time during or at the end
of such fiscal month, except as specifically described on Schedule II attached
hereto, as previously described or disclosed to you in writing, or as permitted
by the Loan Agreement, done any of the following:
(a) Changed its respective corporate name, or transacted
business under any trade name, style, or fictitious
name, other than those previously described to you
and set forth in the Financing Agreements.
B-1
(b) Changed the location of its chief executive office,
changed its jurisdiction of incorporation, changed
its type of organization or changed the location of
or disposed of any of its properties or assets, or
established any new asset locations.
(c) Materially changed the terms upon which it sells
goods (including sales on consignment) or provides
services, nor has any vendor or trade supplier to any
Borrower during or at the end of such period
materially adversely changed the terms upon which it
supplies goods to any Borrower.
5. Attached hereto as Schedule III are the calculations
used in determining, as of the end of such fiscal month whether Borrowers are in
compliance with the covenants set forth in Sections 9.17, 9.18, 9.19 and 9.20 of
the Loan Agreement for such fiscal month and (ii) as of the end of each fiscal
quarter whether Borrowers are in compliance with the conditions set forth in
Section 9.9(b) of the Loan Agreement for such fiscal quarter.
The foregoing certifications are made and delivered by the
undersigned this day of ___________, 20__.
Very truly yours,
LEXINGTON PRECISION CORPORATION
By:____________________________
Title:_________________________
LEXINGTON RUBBER GROUP, INC.
By:____________________________
Title:_________________________
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