SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement (this "Amendment") is entered
into as of December 31, 1997, among LANCER PARTNERSHIP, LTD., a Texas limited
partnership ("Operating Subsidiary"), and LANCER DE MEXICO, S.A. de C.V.,
formerly known as NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V., a corporation
organized under the laws of Mexico ("Mexico Subsidiary") (Operating Subsidiary
and Mexico Subsidiary are hereinafter referred to individually as a "Borrower"
and collectively as "Borrowers"); LANCER CORPORATION, a Texas corporation
("Parent Company"); LAN-LEASING, INC., a Delaware corporation, ("Lan-Leasing"),
LANCER CAPITAL CORPORATION, a Delaware corporation ("Lancer Capital") and LANCER
INTERNATIONAL SALES, INC., a Texas corporation ("Lancer
International")(Lan-Leasing, Lancer Capital, Lancer International and Operating
Subsidiary, individually, a "Guarantor" and collectively, the "Guarantors"); and
THE FROST NATIONAL BANK, a national banking association, individually and as
agent for the Banks acting in the manner and to the extent provided in Article 8
(in such capacity, the "Agent"), NATIONSBANK, N.A., a national banking
association, successor to THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
individually, and each of the lenders which becomes a party hereto as provided
in Section 10.7 (individually, a "Bank" and collectively, the "Banks").
Recitals
I. Borrowers, the Parent Company, the Agent and the other
Banks have heretofore entered into the Credit Agreement dated as of July 15,
1996 (as amended, modified, restated and supplemented from time to time, the
"Credit Agreement").
II. Borrower has requested that the Banks agree to increase
their aggregate Revolving Commitments from $25,000,000 to $30,000,000 until July
15, 1998, and to modify certain of the negative covenants contained in Section
6.1 of the Credit Agreement.
III. The Banks are willing to agree to such requested change
on the terms and conditions set forth in this Amendment.
Agreements
In consideration of the foregoing premises, the mutual agreements
contained herein and other good and valuable consideration and reasonably
equivalent value, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
A. Definitions. Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the respective
meanings set forth in the Credit Agreement.
B. Amendments. The Credit Agreement is hereby amended
as follows:
1. Extension of Increase in Revolving Commitments. To
reflect the increase in the aggregate Revolving Commitments of all
Banks from $25,000,000 to $30,000,000 until July 15, 1998, Annex A
attached to the Credit Agreement is hereby amended and replaced with
Annex A attached to this Amendment. All references in the Credit
Agreement and other Loan Documents to the "Revolving Commitments" of
the Banks shall thereafter refer to such revised amounts.
2. Renewal Revolving Notes. To evidence Revolving
Loans made to Operating Subsidiary by each Bank up to the amount of
such Bank's Revolving Commitment, as revised hereby, Operating
Subsidiary shall execute and deliver to each Bank a Renewal Revolving
Note in the form attached hereto as Exhibit A, payable to the order of
such Bank and in a stated principal amount equal to such Bank's
Revolving Commitment, as revised hereby. On the date hereof, Borrower
shall execute and deliver to each Bank such a Renewal Revolving Note as
a renewal, modification and increase of the existing Revolving Note
issued to such Bank pursuant to the Credit Agreement. All references in
the Credit Agreement and the other Loan Documents to the "Revolving
Notes" of the Banks shall hereafter refer to the Renewal Revolving
Notes executed and delivered pursuant to this Amendment, as further
amended, modified, restated, supplemented, renewed, extended,
increased, refinanced and/or replaced from time to time.
3. Change of Name. The definition of "Australian
Subsidiary" in Annex A attached to the Credit Agreement is hereby
amended to read in its entirety as follows:
"Australian Subsidiary" means Lancer Pacific Pty Ltd,
an Australian corporation, formerly known as Xxxxx Xxxxxx
Holdings Pty. Ltd.
4. Section 6.1(b) is hereby amended to read in its
entirety as follows:
(b) the ratio of (i) EBIT of the Companies determined
on a consolidated basis for the four-quarter period ending as
of the end of any Fiscal Quarter to (ii) the interest expense
of the Companies determined on a consolidated basis for the
four-quarter period ending as of the end of any Fiscal
Quarter, to be less than set out below opposite the period in
which such Fiscal Quarter ends; provided, however, for each
Fiscal Quarter in which an Acquisition is consummated, and
each Fiscal Quarter ending prior thereto, the financial
information necessary to determine the foregoing ratio shall
be adjusted to reflect, on a pro forma basis, such Acquisition
as if it had occurred as of the beginning of the first of such
Fiscal Quarters included in the relevant four-quarter
measurement period:
Fiscal Quarters Ended On or About Ratio
Closing Date through 9/30/97 3.50 to 1.00
10/1/97 through 6/30/98 3.00 to 1.00
7/1/98 through 7/15/01 3.50 to 1.00
5. Section 6.1(c) is hereby amended to read in its
entirety as follows:
(c) the ratio of (i) EBIT of the US Companies
determined on a consolidated basis (consolidated only as to
the US Companies) for the four-quarter period ending as of the
end of any Fiscal Quarter to (ii) the interest expense of the
US Companies determined on a consolidated basis (consolidated
only as to the US Companies) for the four-quarter period
ending as of the end of any Fiscal Quarter, to be less than
set out below opposite the period in which such Fiscal Quarter
ends; provided, however, for each Fiscal Quarter in which an
Acquisition involving a US Company is consummated, and each
Fiscal Quarter ending prior thereto, the financial information
necessary to determine the foregoing ratio shall be adjusted
to reflect, on a pro forma basis, such Acquisition as if it
had occurred as of the beginning of the first of such Fiscal
Quarters included in the relevant four-quarter measurement
period:
Fiscal Quarters Ended On or About Ratio
Closing Date through 9/30/97 2.25 to 1.00
10/1/97 through 6/30/98 2.00 to 1.00
7/1/98 through 7/15/01 2.25 to 1.00
6. Section 6.1(g) is hereby amended to read in its
entirety as follows:
(g) the ratio of (i) Total Funded Debt as of the end
of any Fiscal Quarter to (ii) Consolidated EBITDA for the
four-quarter period ending as of the end of such Fiscal
Quarter, to be more than set out below opposite the period in
which such Fiscal Quarter ends; provided, however, for each
Fiscal Quarter in which an Acquisition is consummated, and
each Fiscal Quarter ending prior thereto, the financial
information necessary to determine Consolidated EBITDA shall
be adjusted to reflect, on a pro forma basis, such Acquisition
as if it had occurred as of the beginning of the first of such
Fiscal Quarters included in the relevant four-quarter
measurement period:
Fiscal Quarters Ended On or About Ratio
Closing Date through 9/30/97 3.00 to 1.00
10/1/97 through 6/30/98 3.25 to 1.00
7/1/98 through 6/30/99 2.75 to 1.00
7/1/99 through 6/30/00 2.50 to 1.00
7/1/00 through 7/15/01 2.25 to 1.00
C. C. In order to induce the Agent and the Banks to enter into
this Amendment, each Borrower hereby represents and warrants to the Agent and
the Banks that, as of the date of this Amendment, (a) the representations and
warranties set forth in the Credit Agreement and each other Loan Document are
true and correct as if made on and as of the date hereof (other than those
representations and warranties expressly limited by their terms to a specific
date), (b) no Default or Event of Default has occurred and is continuing, and
(c) no event has occurred since the date of the most recent financial statements
delivered pursuant to Section 5.1 of the Credit Agreement that has caused a
Material Adverse Effect.
D. Each Borrower hereby acknowledges and agrees that no facts
events, status or conditions presently exist which, either now or with the
passage of time or the giving of notice or both, presently constitute or will
constitute a basis for any claim or cause of action against any of the Banks, or
any defense to the payment of any of the indebtedness evidenced or to be
evidenced by any of the Loan Documents.
E. Parent Company covenants and agrees that, as to the Parent
Guaranty executed and delivered by Parent Company in favor of the Banks as part
of the Loan Documents, (a) the Parent Guaranty is an unconditional guarantee of
payment and performance and not of collection, (b) the Parent Guaranty
represents the primary, absolute and unconditional obligation of Parent Company
and (c) the Parent Guaranty is a continuing guarantee and shall remain in full
force and effect until the termination of the obligations of the Banks to make
Loans and the indefeasible payment in full of the Obligations (as defined in the
Parent Guaranty).
F. Each of the undersigned Guarantors covenants and agrees
that, as to the Affiliate Guaranty executed and delivered by such Guarantor in
favor of the Banks as part of the Loan Documents, (a) such Affiliate Guaranty is
an unconditional guarantee of payment and performance and not of collection, (b)
such Affiliate Guaranty represents the primary, absolute and unconditional
obligation of such Guarantor, and (c) such Affiliate Guaranty is a continuing
guarantee and shall remain in full force and effect until the termination of the
obligations of the Banks to make Loans and the indefeasible payment in full of
the Obligations (as defined in each such Affiliate Guaranty).
G. As to the Stock Pledge Agreement executed and delivered by
Parent Company in favor of the Banks as a part of the Loan Documents, Parent
Company hereby ratifies and confirms the liens and security interests of the
Banks in and to all collateral covered by the Stock Pledge Agreement as security
for the prompt and full payment and performance of the obligations secured by
the Stock Pledge Agreement. In furtherance of the foregoing, all liens and
security interests of the Stock Pledge Agreement (which are hereby acknowledged
to be valid and subsisting) are hereby carried forward, continued, extended,
modified and renewed to secure the prompt and full payment and performance of
the obligations secured by the Stock Pledge Agreement.
H. Each Loan Document is hereby amended and modified to the
extent necessary to give full force and effect to the terms of this Amendment,
and each such Loan Document shall hereafter be construed and interpreted after
giving full force and effect to the terms of this Amendment. As amended,
modified and supplemented pursuant to this Amendment, each Borrower, Parent
Company and each Guarantor hereby ratify, confirm and restate each Loan Document
and agrees that each such Loan Document to which it is a party shall continue in
full force and effect. Each of the Loan Documents now or hereafter executed and
delivered pursuant to the terms hereof or pursuant to the terms of the Credit
Agreement, as amended hereby, or as further evidence of or in connection with
the Credit Agreement, as amended hereby, are hereby amended to the extent
necessary so that any reference in any such documents, instruments or agreements
to the Credit Agreement shall be a reference to the Credit Agreement as amended
hereby.
I. In the event that any one or more of the provisions
contained in this Amendment shall be determined invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Amendment shall not be impaired in any way.
J. When required or implied by the context used, defined terms
used herein shall include the plural as well as the singular, and vice versa.
K. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Texas and applicable federal
laws of the United States of America. This Amendment has been entered into in
Bexar County, Texas and shall be performable for all purposes in Bexar County,
Texas. The courts within the State of Texas shall have jurisdiction over any and
all disputes arising under or pertaining to this Amendment; and any such dispute
shall be heard in the county or judicial district of the principal place of
business of The Frost National Bank.
L. This Amendment shall be binding upon and inure to the
benefit of all parties hereto and their respective successors and assigns;
provided, however, that neither of the Borrowers nor any of their respective
successors or assigns may, without the prior written consent of all of the
Banks, assign any rights, powers, duties or obligations hereunder.
M. This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute but one and the same instrument.
N. This Amendment constitutes a Loan Document.
O. Upon execution of this Amendment by the Banks, each
Borrower, Parent Company and each of the Guarantors shall deliver to the Agent,
in form and substance satisfactory to the Agent, the certificates and documents
described on Annex B.
[signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized signatories as of the day and year
first above written.
OPERATING SUBSIDIARY:
LANCER PARTNERSHIP, LTD.
By: LANCER CAPITAL CORPORATION
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President of Finance
MEXICO SUBSIDIARY:
LANCER DE MEXICO, S.A. de C.V.,
formerly known as NUEVA DISTRIBUIDORA
LANCERMEX, S.A. de C.V.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
PARENT COMPANY:
LANCER CORPORATION
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
GUARANTORS:
LAN-LEASING, INC.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
LANCER CAPITAL CORPORATION
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
LANCER INTERNATIONAL SALES, INC.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
LANCER PARTNERSHIP, LTD.
By: LANCER CAPITAL CORPORATION
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
AGENT/BANKS:
THE FROST NATIONAL BANK,
Individually and as the Agent
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
NATIONSBANK, N.A., successor to THE
BOATMEN'S NATIONAL BANK OF ST. LOUIS
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Assistant Vice President
Annex A-10
ANNEX A
THE FROST NATIONAL BANK
1. Domestic Lending Office:
The Frost National Bank
000 Xxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
2. LIBOR Lending Office:
The Frost National Bank
000 Xxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
3. Term A Commitment:$ 6,100,000
4. Term B Commitment:$ 1,400,000
5. Revolving Commitment:$ 12,500,000 (Closing Date through / /97)
$ 15,000,000 ( / /97 through 7/15/98)
$ 12,500,000 (7/16/98 through 7/15/01)
6. Acquisition Commitment:$ 5,000,000
7. Total Commitment:$25,000,000
8. Information for Notices:
The Frost National Bank
000 Xxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
ANNEX A
NATIONSBANK, N.A., successor to
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
9. Domestic Lending Office:
NationsBank, N.A.
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
10. LIBOR Lending Office:
NationsBank, N.A.
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
11. Term A Commitment:$ 6,100,000
12. Term B Commitment:$ 1,400,000
13. Revolving Commitment:$ 12,500,000 (Closing Date through / /97)
$ 15,000,000 ( / /97 through 7/15/98)
$ 12,500,000 (7/16/98 through 7/15/01)
14. Acquisition Commitment:$ 5,000,000
15. Total Commitment:$25,000,000
16. Information for Notices:
NationsBank, N.A.
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
ANNEX A
Address for Operating Subsidiary:
Lancer Partnership, Ltd.
000 Xxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
Address for Mexico Subsidiary:
Lancer de Mexico, S.A. de C.V.
c/o Lancer Corporation
000 Xxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
Address for Parent Company:
Lancer Corporation
000 Xxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
Annex B-11
ANNEX B
17. Each Borrower, Parent Company and each Guarantor shall
have provided to the Agent a certificate signed by the secretary of such
corporation, which secretary's office and signature shall be confirmed by
another officer of such corporation, dated as of the effective date of this
Amendment attaching thereto or containing therein, and certifying as to the
following: (i) corporate resolutions, as in effect and neither revoked nor
rescinded, duly adopted by the board of directors of such corporation
authorizing the execution, delivery and performance of this Amendment and all
other documents, instruments and agreements in connection therewith (the
"Amendment Documents") to which it is or will be a party, and the transactions
contemplated thereby; and (ii) names, incumbency and specimen signatures of the
officers of such corporation authorized to execute and deliver the Amendment
Documents to which such corporation is a party.
18. Operating Subsidiary shall have executed and delivered to
each Bank a Renewal Revolving Note in the form attached hereto as Exhibit A,
payable to the order of such Bank and in a stated principal amount equal to such
Bank's Revolving Commitment, as revised by this Amendment.
19. All other documents requested by the Agent in connection
with this Amendment.
