Exhibit 10(n)
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FOURTH AMENDED AND
RESTATED CREDIT AGREEMENT
BY AND AMONG
ADESA CORPORATION,
ADESA FUNDING CORPORATION,
THE BANKS PARTIES HERETO,
AND
BANK ONE, INDIANAPOLIS, N.A.
AS AGENT
JULY 28, 1995
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INDEX TO
CREDIT AGREEMENT
Page
----
Preamble......................................................................1
Section 1. ACCOUNTING TERMS -- DEFINITIONS.................................1
Section 2. THE LOANS......................................................13
2.a. ADESA Revolver......................................................13
(i) The ADESA Revolver Commitment......................13
(ii) Method of Borrowing................................14
(iii) Interest on the ADESA Revolver.....................15
(iv) Extensions of Maturity Date........................15
(v) Closing Fee and Unused Commitment Fee..............16
(vi) Sublimit for Canadian Dollar Loans.................16
2.b. The Line of Credit.........................................18
(i) The Commitment -- Use of Proceeds.................18
(ii) Method of Borrowing...............................19
(iii) Interest on the Line of Credit....................20
(iv) Extensions of Maturity Date.......................20
(v) Standby Letters of Credit.........................20
(vi) Mandatory Monthly Paydown.........................21
2.c. Procedures for Electing LIBOR-based Rates --
Certain Effects of Election...............................22
2.d. Provisions Applicable to All of the Loans..................23
(i) Calculation of Interest...........................23
(ii) Manner of Payment - Application...................23
(iii) Disbursement of Advances and Agent Reliance on
Bank Funding.....................................24
(iv) Agent Fee.........................................25
Section 3. THE LETTER OF CREDIT...........................................25
3.a. Reimbursement..............................................25
3.b. Risk Participations........................................26
3.c. Commission and Transaction Fees............................27
3.d. Additional Amounts Payable.................................28
3.e. Place and Application of Payments -- Calculation of
Interest..................................................29
3.f. Presentment and Collection.................................29
3.g. Proceeds of the Floating Rate Notes........................29
3.h. Cancellation Fee...........................................29
i
Section 4. REPRESENTATIONS AND WARRANTIES.................................30
4.a. Organization of ADESA and Funding..........................30
4.b. Authorization: No Conflict.................................30
4.c. Validity and Binding Nature................................30
4.d. Financial Statements.......................................31
4.e. Litigation and Contingent Liabilities......................31
4.f. Liens......................................................31
4.g. Employee Benefit Plans.....................................31
4.h. Payment of Taxes...........................................31
4.i. Investment Company Act.....................................32
4.j. Regulation U...............................................32
4.k. Hazardous Substances.......................................32
4.l. Other Representations......................................32
4.m. The Subsidiaries...........................................33
4.n. Corporate Names............................................33
Section 5. COLLATERAL FOR THE OBLIGATIONS.................................33
5.a. The ADESA Security Agreement...............................33
5.b. Guaranties.................................................34
5.c. The Mortgages..............................................34
5.d. Subsidiary Security Agreements -- Subsidiary Pledge
Agreements................................................35
5.e. Pledged Notes..............................................36
5.f. Sinking Fund Reserve.......................................37
5.g. Pledge of Investment Account B.............................38
5.h. Pledge of Stock of Funding and the Subsidiaries............38
5.i. Pledge of Inter-Company Notes, Inter-Company Security
Agreements and Inter-Company Mortgages....................39
5.j. Agent as Collateral Agent for Banks........................40
5.k. Adjustments to Collateral..................................40
Section 6. AFFIRMATIVE COVENANTS..........................................41
6.a. Corporate Existence........................................41
6.b. Reports, Certificates and Other Information................41
(i) Annual Statements.................................41
(ii) Monthly Statements of ADESA.......................42
(iii) Certificates......................................42
(iv) Orders............................................42
(v) Notice of Default or Litigation...................43
(vi) Other Information.................................43
(vii) Budget............................................43
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6.c. Books, Records and Inspections.............................43
6.d. Insurance..................................................43
6.e. Taxes and Liabilities......................................43
6.f. Compliance with Legal and Regulatory Requirements..........43
6.g. Financial Covenants........................................44
(i) Tangible Capital Base.............................44
(ii) Leverage..........................................44
(iii) Coverage..........................................44
(iv) Funded Debt.......................................44
6.h. Primary Banking Relationship...............................45
6.i. Investment Agency Account..................................45
6.j. Employee Benefit Plans.....................................45
6.k. Hazardous Substances.......................................45
6.l. Sinking Fund Reserve Payments..............................46
6.m. Obligations Under the Floating Rate Note Documents.........46
Section 7. NEGATIVE COVENANTS OF ADESA....................................46
7.a. Restricted Payments........................................47
7.b. Liens......................................................47
7.c. Restriction on Granting Negative Pledges...................48
7.d. Guarantees, Loans or Advances..............................48
7.e. Mergers, Consolidations, Sales, Acquisition or Formation
of Subsidiaries...........................................49
7.f. Margin Stock...............................................50
7.g. Other Agreements...........................................50
7.h. Judgments..................................................50
7.i. Principal Office...........................................50
7.j. Hazardous Substances.......................................50
7.k. Debt.......................................................50
7.l. Limitation on Activities of Funding........................51
Section 8. CONDITIONS OF LENDING..........................................51
8.a. No Default.................................................51
8.b. Documents to be Furnished at Closing.......................51
8.c. Documents to be Furnished at Time of Each Advance under the
ADESA Revolver and the Line of Credit.....................53
Section 9. EVENTS OF DEFAULT..............................................53
9.a. Nonpayment of the Loans....................................53
9.b. Nonpayment of Monetary Obligations.........................53
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9.c. Nonpayment of Other Indebtedness for Borrowed Money........53
9.d. Other Material Obligations.................................53
9.e. Bankruptcy, Insolvency, etc................................54
9.f. Warranties and Representations.............................54
9.g. Violations of Affirmative and Negative Covenants and
Floating Rate Note Document Obligations...................54
9.h. Failure to Make Sinking Fund Reserve Payments..............54
9.i. Failure to Make Mandatory Loan Reductions..................54
9.j. Noncompliance With Other Provisions of this Agreement......54
9.k. Noncompliance with the AFC Agreement and the AHC Loan
Agreement.................................................54
Section 10. EFFECT OF EVENT OF DEFAULT.....................................55
10.a. Acceleration of the Loans..................................55
10.b. Refusal to Reinstate an Interest Drawing...................55
10.c. Floating Rate Note Document Remedies.......................55
10.d. Deposit to Secure Payment of the Reimbursement Obligation..55
10.e. Other Remedies.............................................56
Section 11. CHANGE OF CIRCUMSTANCES........................................56
11.a. Change in Law..............................................56
11.b. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy Of, LIBOR or Interbank Rate.....................57
11.c. Increased Cost and Reduced Return..........................57
11.d. Lending Offices............................................58
11.e. Discretion of Bank as to Manner of Funding.................58
Section 12. THE AGENT......................................................59
12.a. Appointment................................................59
12.b. Agent and its Affiliates...................................59
12.c. Action by Agent............................................59
12.d. Consultation with Experts..................................60
12.e. Liability of Agent: Credit Decision........................60
12.f. Costs and Expenses.........................................61
12.g. Indemnity..................................................61
12.h. Resignation of Agent and Successor Agent...................61
12.i. Reliance by ADESA..........................................62
Section 13. MISCELLANEOUS..................................................62
13.a. Waiver.....................................................62
13.b. Payments Free of Withholding...............................62
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13.c. Notices....................................................63
13.d. Costs, Expenses and Taxes..................................63
13.e. Non-Business Day...........................................64
13.f. Survival of Representations................................64
13.g. Successors and Assigns.....................................64
13.h. Participants and Note Assignees............................65
13.i. Assignment of Commitments by Banks.........................65
13.j. Amendments.................................................65
13.k. Set-Off....................................................66
13.l. Counterparts...............................................66
13.m. Severability...............................................66
13.n. Captions...................................................66
13.o. Governing Law - Jurisdiction...............................67
13.p. Prior Agreements, Etc......................................67
Signature Pages..............................................................67
Exhibit List.................................................................69
Schedule A...................................................................70
Schedule 4e..................................................................71
Schedule 4 m.................................................................72
v
FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT
(Incorporating a Pledge Agreement)
ADESA CORPORATION, an Indiana corporation ("ADESA"), ADESA FUNDING
CORPORATION, an Indiana corporation ("Funding"), and BANK ONE, INDIANAPOLIS,
National Association, a national banking association with its principal office
in Indianapolis, Indiana, as Agent (the "Agent"), and the Banks listed on
Schedule A attached hereto (each a "Bank", and collectively referred to
hereafter as the "Banks") agree that the Third Amended and Restated Credit
Agreement (Incorporating a Pledge Agreement) among ADESA, Funding, Automotive
Finance Corporation ("AFC") and Bank One, Indianapolis, National Association
("Bank One"), dated June 30, 1994 and effective July 1, 1994, is hereby amended
and restated in its entirety so that hereafter it will read as follows:
Section 1. ACCOUNTING TERMS -- DEFINITIONS. All accounting and
financial terms used in this Agreement are used with the meanings such terms
would be given in accordance with generally accepted accounting principles
except as may be otherwise specifically provided in this Agreement. The
following terms have the meanings indicated when used in this Agreement with the
initial letter capitalized:
a. ADESA. "ADESA" is used as defined in the preamble.
b. ADESA Revolver. "ADESA Revolver" is used as defined in Section 2.a.
c. ADESA Revolver Commitment. "ADESA Revolver Commitment" means the
agreement of the Banks to extend the ADESA Revolver in the maximum
principal amount set forth in Section 2.a.
d. ADESA Revolving Notes. "ADESA Revolving Notes" is used as defined in
Section 2.a(ii).
e. ADESA Security Agreement. "ADESA Security Agreement" is used as defined
in Section 5.a.
f. Advance. "Advance" means a disbursement of proceeds of the ADESA
Revolver or the Line of Credit, as the context requires.
g. AFC. "AFC" means Automotive Finance Corporation and its wholly-owned
subsidiary, AFC Funding Corporation.
h. AFC Agreement. "AFC Agreement" means that certain Credit Agreement
between AFC and certain Banks parties thereto, dated April 25, 1995,
under which ADESA has agreed to guarantee certain obligations of AFC as
more fully described therein.
i. Agent. "Agent" means Bank One, Indianapolis, N.A. in its capacity as
agent for the Banks and not in its individual capacity as one of the
Banks, its successors and assigns as Agent hereunder.
j. Aggregate Commitment. "Aggregate Commitment" means the agreement of the
Banks to extend the ADESA Revolver, the Letter of Credit and the Line of
Credit to ADESA until the applicable Maturity Dates. As the context
requires, the term may also refer to the individual maximum principal
amount which may be outstanding under each of the respective Loans and
the Maximum Available Credit.
k. Agreement. "Agreement" means this Fourth Amended and Restated Credit
Agreement among ADESA, Funding, the Agent and the Banks, as it may from
time to time be amended.
l. AHC. "AHC" means Asset Holding Corporation, a Delaware corporation,
which holds 100% of the limited partnership interests of Asset Holdings
III, L.P.
m. AHC Lease Transaction. "AHC Lease Transaction" means the lease of
auction facilities located in Framingham, Massachusetts, Charlotte,
North Carolina and Knoxville, Tennessee by ADESA or a Subsidiary, from
AHC or its limited partnerships.
n. AHC Loan Agreement. "AHC Loan Agreement" means that certain Note
Purchase Agreement between Asset Holdings III, L.P. as Seller, Principal
Mutual Life Insurance Company, as Purchaser, and ADESA as Guarantor,
dated November 22, 1994 together with a Collateral Trust Indenture of
the same date, between the Seller and PNC Bank, Kentucky, Inc. as
Security Trustee, and pursuant to which ADESA or its applicable
Subsidiaries entered into AHC Lease Transactions.
o. Applicable Letter of Credit and L/C Commission Rate. "Applicable Letter
of Credit and L/C Commission Rate" means the per annum rate at which the
commissions due to the Banks on account of the Letter of Credit or any
L/C on each Commission Due Date will be calculated, determined on each
Commission Due Date by reference to the ratio of ADESA's Funded Debt as
of the end of the immediately prior Determinative Quarter End, to its
EBITDAL, for the four quarters ending on such Determinative Quarter End,
in accordance with the following table:
Ratio of Funded Debt Applicable
to EBITDAL Letter of Credit and L/C
Commission Rate
4.0:1.0 or Greater 1.875%
3.0 through 3.99:1.0 1.625%
2.0 through 2.99:1.0 1.375%
0.0 through 1.99:1.0 1.125%
Initially, the Applicable Commission Rate shall be determined based upon the
ratio of Funded Debt to EBITDAL as of June 30, 1995. Thereafter, the Applicable
Commission
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Rate shall be determined and adjusted in the same manner as the determination of
"Applicable Spread" as that term is defined in Section 1(n).
p. Applicable Spreads. "Applicable Spreads" mean the Prime-based Applicable
Spread, the LIBOR-based Applicable Spread or the Interbank-based
Applicable Spread, as the context requires, and shall be that number of
percentage points to be taken into account in determining the per annum
rate at which interest will accrue on each of the ADESA Revolver, or the
Line of Credit, determined by reference to the ratio of ADESA's Funded
Debt, as of the end of the immediately prior Determinative Quarter End,
to its EBITDAL for the four quarters ending on such Determinative
Quarter End, in accordance with the following tables for each Loan:
A. ADESA Revolver
Ratio of Funded Debt Prime-based LIBOR-based
to EBITDAL Applicable Spread or Interbank-based
Applicable Spread
4.0:1.0 or Greater .75% 2.50%
3.0 through 3.99:1.0 .50% 2.25%
2.0 through 2.99:1.0 0% 1.75%
0.0 through 1.99:1.0 0% 1.50%
B. Line of Credit
Ratio of Funded Prime-based
Debt to EBITDAL Applicable Spread
4.0:1.0 or Greater .50%
3.0 through 3.99:1.0 .25%
0.0 through 2.99:1.0 0%
Initially, the Applicable Spreads shall be determined based upon the
ratio of Funded Debt to EBITDAL as of June 30, 1995. Thereafter, the
Applicable Spreads shall be determined on the basis of the financial
statements of ADESA for each fiscal quarter furnished to the Agent
pursuant to the requirements of Section 6.b(ii) with prospective effect
for the following fiscal quarter. Interest will accrue and be payable in
any fiscal quarter on the basis of the Applicable Spreads in effect
during the preceding fiscal quarter until ADESA's financial statements
for the preceding fiscal quarter are delivered to the Agent. On the
first interest payment date which follows delivery of such financial
statements in any fiscal quarter, an appropriate adjustment shall be
made for interest accrued and paid on prior interest payment dates in
that quarter, any overpayment being credited against the interest
payment then due and payable by ADESA to the Banks and any deficiency
being then due and payable by ADESA to the Banks. It is noted that the
3
above tables provide Applicable Spreads for a ratio of Funded Debt to
EBITDAL greater than that which will be permissible under the terms of
Section 6.g(v) prior to the Maturity Date of the ADESA Revolver and the
Letter of Credit. For the avoidance of doubt it is noted that it is the
intent of the parties that the Banks shall be free to exercise all
remedies otherwise provided in this Agreement in the event of the
violation by ADESA of the covenant stated in Section 6.g(v),
notwithstanding the accrual of interest on the Loans at rates determined
in accordance with this definition.
q. Application for Loan Advance. "Application for Loan Advance" or
"Application" means, as the context requires, a written application of
ADESA for a disbursement of proceeds of the ADESA Revolver or the Line
of Credit, substantially in the form of Exhibit "A" attached hereto.
r. Authorized Officer. "Authorized Officer" means the President, the Chief
Financial Officer or the Chief Accounting Officer of ADESA or such other
officer whose authority to perform acts to be performed only by an
Authorized Officer under the terms of this Agreement is evidenced to the
Agent by a certified copy of an appropriate resolution of the Board of
Directors of ADESA.
s. Bank One. "Bank One" is used as defined in the preamble.
t. Banks. "Banks" is used as defined in the preamble.
u. Banking Day. "Banking Day" means a day on which the principal office of
the Agent in the City of Indianapolis, Indiana, is open for the purpose
of conducting substantially all of the Agent's business activities; and
if the applicable Banking Day relates to the borrowing or payment of a
LIBOR-based Rate Advance or an Interbank-based Rate Advance, a day on
which banks are dealing in United States Dollars in the interbank market
in London, England, Grand Cayman, British West Indies, the United States
and Canada.
v. Blocked Account. "Blocked Account" is used as defined in Section 3.a.
w. Business Day. "Business Day" means any day which is not a Saturday,
Sunday, a day on which the New York Stock Exchange is closed, or a legal
holiday on which either the Agent's principal office in the City of
Indianapolis, Indiana, or the principal office of the Trustee in the
City of Philadelphia, Pennsylvania, is authorized to remain closed; and
if the applicable Business Day relates to the borrowing or payment of a
LIBOR-based Rate Advance or an Interbank-based Rate Advance, a day on
which banks are dealing in United States Dollars in the interbank market
in London, England, Grand Cayman, British West Indies, the United States
and Canada.
x. Code. "Code" means the Internal Revenue Code of 1986, as amended.
y. Commission Due Date. "Commission Due Date" is used as defined in Section
3.c.
4
z. Commitment. "Commitment" means for each Bank, its commitment to make
Loans in the amount set forth on Schedule A, together with each Bank's
share of the Maximum Available Credit exposure for the Letter of Credit.
aa. Coverage. "Coverage" means the ratio computed on a consolidated basis
(exclusive of AFC) for each period of four (4) consecutive fiscal
quarters of ADESA equal to the sum of ADESA's consolidated net income
plus depreciating amortization expense, excluding amortization related
to any environmental liabilities, and interest expense, plus lease
expenses related to any AHC Lease Transaction, plus or minus gains or
losses from the sale of assets or other extraordinary gain or loss items
(net of any related tax benefits), plus or minus any change in deferred
income taxes, over the sum of principal payments on unsubordinated
long-term debt plus interest expense, capital expenditures, and lease
expenses related to any AHC Lease Transaction. For purposes of this
definition, capital expenditures shall mean all capital expenditures
except those expressly related to the acquisition or start-up of an auto
auction, or which are funded with purchase money financing.
bb. Credit Document. The term "Credit Document" includes this Agreement, the
Notes, the Mortgages, the Security Agreements, the Guaranty Agreements,
the Pledge Agreement, the ECIDA Lease, any Reimbursement Agreement and
any other instrument or document which evidences or secures the
Obligations or any of them or which expresses an agreement as to terms
applicable to the Obligations or any of them.
cc. Determinative Quarter End. "Determinative Quarter End" means, as of any
date the Applicable Letter of Credit Commission Rate, an Applicable
Spread, or the Unused Commitment Fee is to be determined, the end of the
most recent fiscal quarter of ADESA for which consolidated financial
statements are then required to have been furnished to the Agent
pursuant to the requirements of Section 6.b, provided that the initial
Determinative Quarter End for this Agreement shall be June 30, 1995.
dd. Drawing. "Drawing" means an Interest Drawing, a Principal Drawing or a
Remarketing Drawing as the context requires, and when used in the plural
form, refers to all or any combination of them.
ee. EBITDAL. "EBITDAL" means ADESA's net income plus interest expense,
income taxes, depreciation, and amortization expense, excluding
amortization related to any environmental liabilities, plus lease
expenses under AHC Lease Transactions, determined on a consolidated
basis, exclusive of AFC.
ff. ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
gg. Event of Default. "Event of Default" means any of the events described
in Section 9.
5
hh. Floating Rate Note Documents. "Floating Rate Note Documents" means the
Floating Rate Notes, the Trust Indenture and any other document or
agreement executed by ADESA or Funding as an incident to the issuance of
the Floating Rate Notes other than the Credit Documents.
ii. Floating Rate Notes. "Floating Rate Notes" means the $35,000,000 in
aggregate principal amount of ADESA Funding Corporation Floating Rate
Notes issued by Funding pursuant to the Trust Indenture.
jj. Funded Debt. "Funded Debt" means all liabilities of ADESA and its
Subsidiaries (excluding liabilities of AFC) for borrowed money plus
indebtedness incurred under AHC Lease Transactions plus capitalized
leases plus the amount of ADESA's guaranty to repurchase AFC's dealer
receivables under the AFC Agreement less the balance in the Sinking Fund
Reserve, and less the restricted cash equivalents of AHC.
kk. Funding. "Funding" is used as defined in the preamble.
ll. Guaranty Agreements. "Guaranty Agreements" means all or any combination,
as the context requires, of the guaranty agreements described in Section
5.b, and when used in the singular form, refers to whichever of the
Guaranty Agreements the context requires.
mm. Hazardous Substance. "Hazardous Substance" means any hazardous or toxic
substance regulated by any federal, state, Canadian, Canadian provincial
or local statute or regulation including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act,
the Resource Conservation and Recovery Act and the Toxic Substance
Control Act, or by any federal, state, Canadian, Canadian provincial or
local governmental agencies having jurisdiction over the control of any
such substance including but not limited to the United States
Environmental Protection Agency.
nn. Interbank-based Applicable Spread. "Interbank-based Applicable Spread"
means that Applicable Spread added to the Interbank Rate to equal the
Interbank-based Rate in accordance with the tables set forth under the
definition of Applicable Spreads.
oo. Interbank-based Rate. "Interbank-based Rate" means that per annum rate
of interest which is equal to the Interbank Rate plus the Applicable
Spread.
pp. Interbank Rate. "Interbank Rate" means for each Interest Period for
which ADESA has requested to borrow funds in Canadian dollars under the
ADESA Revolver, the per annum rate of interest at which deposits in
Canadian dollars for a period equal to such Interest Period and in an
amount equal to the relevant Advance, would be offered by the Agent's
Grand Cayman Branch, Grand Cayman, British West Indies, to major banks
in the offshore interbank market upon request of such banks at
approximately 10:00 A.M. New York time two (2) Banking Days prior to the
commencement of such Interest Period.
6
qq. Inter-Company Notes. "Inter-Company Notes" means all or any combination,
as the context requires, of the promissory notes described as such in
Section 5.i, and when used in the singular form, means whichever of the
Inter-Company Notes the context requires.
rr. Inter-Company Security Agreements. "Inter-Company Security Agreements"
means all or any combination, as the context requires, of the Security
Agreements described as such in Section 5.i, and when used in the
singular form, means whichever of the Inter-Company Security Agreements
the context requires.
ss. Interest Drawing. "Interest Drawing" is used as defined in the Letter of
Credit.
tt. Interest Payment Date. "Interest Payment Date" means any Banking Day on
which accrued interest becomes due and payable on any of the Loans.
uu. Interest Period. "Interest Period" means with respect to Canadian dollar
loans, a period of three months or six months selected by ADESA, and
with respect to LIBOR-based Rate Advances a period of one month, two
months, three months, four months, five months or six months selected by
ADESA.
vv. Investment Account A. "Investment Account A" is used as defined in
Section 5.f.
ww. Investment Account B. "Investment Account B" is used as defined in
Section 6.i.
xx. L/C. "L/C" is used as defined in Section 2.b.
yy. Letter of Credit. "Letter of Credit" is used as defined in Section 3.
zz. Leverage. "Leverage" means the ratio of ADESA's Unsubordinated
Liabilities to its Tangible Capital Base, determined on a consolidated
basis exclusive of AFC.
aaa. LIBOR-based Applicable Spread. "LIBOR-based Applicable Spread" means
that Applicable Spread added to the London Interbank Offered Rate to
equal the LIBOR-based Rate, in accordance with the tables set forth
under the definitions of Applicable Spreads.
bbb. LIBOR-based Rate and London Interbank Offered Rate. "LIBOR-based Rate"
means that per annum rate of interest which is equal to the London
Interbank Offered Rate plus the Applicable Spread. "London Interbank
Offered Rate" means the per annum rate of interest, as determined by the
Agent, at which dollar deposits in immediately available funds are
offered to the principal banks in the London interbank market by other
principal banks in that market two Banking Days prior to the
commencement of an Interest Period for which ADESA shall have requested
a quotation of the rate in amounts equal to the amount for which ADESA
shall have requested a quotation of the rate, increased by an amount
equal to any increase, as reasonably determined by any Bank, in
7
the cost to such Bank of obtaining such deposits resulting from the
imposition of any additional reserves or from any increase in the amount
of reserves presently required by any United States or foreign
governmental authority including, but not limited to, any marginal or
extraordinary reserves imposed to give effect to monetary policy. Any
determination by any Bank of increased costs of maintaining deposits
made pursuant to the provisions of the preceding sentence shall be
final, absent manifest error; provided, however, that the determination
of the amount necessary to compensate any Bank for any increased costs
shall be made in a manner which is consistent with the manner in which
such Bank generally applies similar provisions to comparable borrowers.
ccc. Line of Credit. "Line of Credit" is used as defined in Section 2.b.
ddd. Line of Credit Commitment. "Line of Credit Commitment" means the
agreement of the Banks to extend the Line of Credit to ADESA in the
maximum principal amount set forth in Section 2.b(i).
eee. Line of Credit Notes. "Line of Credit Notes" is used as defined in
Section 2.b(ii).
fff. Loan. "Loan" means any of the ADESA Revolver, or the Line of Credit as
the context requires, and when used in the plural form, refers to both
of such Loans.
ggg. Maturity Date. "Maturity Date" means June 30, 1998, as to the ADESA
Revolver; June 30, 1996, as to the Line of Credit; and June 30, 1998 as
to the Letter of Credit; and hereafter any subsequent date to which any
of the Commitments may be extended by the Bank pursuant to the terms of
Sections 2.a. and 2.b. and 3.
hhh. Maximum Available Credit. "Maximum Available Credit" means, as of the
date of this Agreement, the sum of $22,847,762.50, and hereafter shall
mean the maximum amount available to be drawn by the Trustee under the
Letter of Credit for principal and interest due on account of the
Floating Rate Notes upon (i) mandatory or optional redemption of the
Floating Rate Notes, (ii) mandatory or optional tender of the Floating
Rate Notes, or (iii) on account of acceleration of the Floating Rate
Notes following the occurrence of an Event of Default.
iii. Mortgages. "Mortgages" as used in this Agreement refers collectively to
all of the mortgages and deeds of trust, including the leasehold
mortgage, referred to in Section 5.c. The term may also refer to any
combination of such mortgages and deeds of trust required by the
context, and when used in the singular form, refers to whichever of the
Mortgages the context requires.
jjj. Notes. "Notes" means any of the ADESA Revolving Notes, the Line of
Credit Notes or the Canadian dollar Notes, payable to the order of the
respective Banks and substantially in the form of Exhibits "B", "C" and
"D" to this Agreement.
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kkk. Obligations. "Obligations" means all obligations of ADESA in favor of
the Agent and the Banks of every type and description, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including but not limited to: (i) all of such
obligations on account of the ADESA Revolver and the Line of Credit,
including any Advances made pursuant to any extension of the Commitments
beyond their initial Maturity Dates, or pursuant to any other amendment
of this Agreement, (ii) ADESA's duty to reimburse Bank One with interest
as provided in this Agreement for all amounts paid by Bank One on
account of the Letter of Credit, (iii) ADESA's duty pursuant to the
terms of Section 10.d of this Agreement to pay to the Agent upon the
occurrence of an Event of Default, at the Required Banks' election, an
amount equal to the Maximum Available Credit, (iv) all of ADESA's
obligations under each Reimbursement Agreement, and (v) all other
obligations of ADESA arising under any Credit Document as amended from
time to time.
lll. Officer's Certificate. "Officer's Certificate" means a certificate in
the form included as a part of Exhibit "A" attached hereto signed by an
Authorized Officer of ADESA, confirming that all of the representations
and warranties contained in Section 4 of this Agreement are true and
correct as of the date of such certificate except as specified therein,
and with the further exceptions that the representation contained in
Section 4.d. shall be construed so as to refer to the latest financial
statements which have been furnished to the Banks as of the date of any
Officer's Certificate and that the representation contained in Section
4.m. shall be deemed to be amended to reflect the existence of any
Subsidiary hereafter formed or acquired by ADESA. The Certificate shall
further confirm that no Event of Default or Unmatured Event of Default
shall have occurred and be continuing as of the date of the Certificate
or shall describe any such event which shall have occurred and be then
continuing and the steps being taken by ADESA to correct it.
mmm. Original Agreement. "Original Agreement" means the Credit Agreement
among ADESA, Funding and Bank One dated March 26, 1992, as amended by a
"First Amendment to Credit Agreement" dated April 22, 1992; and as
amended and restated by the Amended and Restated Credit Agreement dated
November 5, 1992, as amended by an Amendment dated January 30, 1993, and
as further amended by a Second Amendment dated June 30, 1993; and as
amended and restated by a Second Amended and Restated Credit Agreement
dated August 16, 1993, as amended by a First Amendment dated January 6,
1994, and as amended and restated by a Third Amended and Restated Credit
Agreement dated June 30, 1994 and effective July 1, 1994 as amended by a
Letter of Amendment dated April 19, 1995.
nnn. Person. "Person" means any individual, corporation, estate, general or
limited partnership, limited liability company, joint venture,
association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or
political subdivision thereof.
9
ooo. Plan. "Plan" means an employee pension benefit plan as defined in ERISA.
ppp. Pledge Agreement. "Pledge Agreement" is used as defined in Section 5.h.
qqq. Pledged Notes. "Pledged Notes" is used as defined in Section 5.e.
rrr. Prepayment Premium. "Prepayment Premium" means the excess, if any, as
determined by the Agent of: (i) the present value at the time of
prepayment of the interest payments which would have been payable on
account of the amount prepaid from the date of prepayment until the end
of the period during which interest would have accrued at the
LIBOR-based Rate or the Interbank-based Rate but for prepayment over
(ii) the present value at the time of prepayment of interest payments
calculated at the rate (the "Reinvestment Rate") which each of the Banks
then reasonably estimates it would receive upon reinvesting the
principal amount of the prepayment in an obligation which presents a
credit risk substantially similar (as determined in accordance with the
commercial credit rating system then used by the Banks) to that which is
then presented by the ADESA Revolver for a period approximately equal to
the balance of the period during which interest would accrue on the
portion of the ADESA Revolver prepaid at the LIBOR-based Rate or
Interbank-based Rate, but for prepayment. The discount rate used by each
Bank in determining such present values shall be such Bank's
Reinvestment Rate.
sss. Prime-based Applicable Spread. "Prime-based Applicable Spread" is that
Applicable Spread added to the Prime Rate to equal the Prime-based Rate,
in accordance with the tables set forth under the definition of
Applicable Spreads.
ttt. Prime-based Rate. "Prime-based Rate" means that per annum rate of
interest which is equal to the Prime Rate plus the Applicable Spread.
uuu. Prime Rate. "Prime Rate" means a variable per annum interest rate equal
at all times to the rate of interest established and quoted by the Agent
as its Prime Rate, such rate to change contemporaneously with each
change in such established and quoted rate, provided that it is
understood that the Prime Rate shall not necessarily be representative
of the rate of interest actually charged by the Agent on any loan or
class of loans.
vvv. Principal Drawing. "Principal Drawing" is used as defined in the Letter
of Credit.
www. Qualified Investments. "Qualified Investments" means cash, United States
Government and United States Government Agency securities, commercial
paper rated A-1+ by Standard & Poor's Corporation or P-1 by Moody's
Investors Service, Inc., certificates of deposit of commercial banks
whose certificates of deposit are rated AA/A-1+ or higher by Standard &
Poor's Corporation or enjoy the equivalent rating by Moody's Investors
Service, Inc. or shares of investment companies or units of investment
in common trust funds the assets of which, in either case, consist
entirely of cash and high quality, money
10
market securities, provided that no specific security or certificate of
deposit shall be a qualified investment if it has a maturity more than
thirteen (13) months from the date of purchase.
xxx. Reimbursement Agreement. "Reimbursement Agreement" is used as defined in
Section 2.b(v).
yyy. Remarketing Agent. "Remarketing Agent" is used as defined in the Trust
Indenture.
zzz. Remarketing Drawing. "Remarketing Drawing" is used as defined in the
Letter of Credit.
aaaa. Required Banks. "Required Banks" means Banks in the aggregate having at
least 66-2/3% of the Commitments or, if the Commitments have been
terminated, Banks in the aggregate holding at least 66-2/3% of the
aggregate unpaid principal amount of the outstanding Advances and the
Maximum Available Credit under the Letter of Credit.
bbbb. Security Agreements. "Security Agreements" means all or any combination,
as the context requires, of those Security Agreements described in
Sections 5.a. and 5.d., and when used in the singular form, refers to
whichever of the Security Agreements the context requires.
cccc. Sinking Fund Reserve. "Sinking Fund Reserve" is used as defined in
Section 5.f.
dddd. Subordinated Debt. "Subordinated Debt" means the indebtedness owed by
ADESA to Minnesota Power & Light Co. ("MPL") or a wholly-owned
subsidiary thereof, in a principal amount not to exceed $20,000,000, and
any indebtedness of ADESA or a Subsidiary which is subordinated to all
of the Obligations on such terms that such indebtedness is, in the
judgment of the Required Banks, reasonably exercised and confirmed in
writing by the Agent to ADESA, the functional equivalent of equity in
relation to the Obligations.
eeee. Subordination Agreement. "Subordination Agreement" means that certain
agreement among ADESA, MPL, or a wholly-owned subsidiary thereof, and
the Agent regarding the subordination of advances from MPL, or a
wholly-owned subsidiary thereof to ADESA to the Obligations.
ffff. Subsidiary. "Subsidiary" means any corporation, general or limited
partnership, limited liability company, joint venture or other business
entity other than Funding over which ADESA exercises control, provided
that it shall be conclusively presumed that ADESA exercises control over
any such entity 51% or more of the equity interest in which is owned by
ADESA, directly or indirectly. When used in the plural form, the term
refers collectively to all of such Subsidiaries or such combination of
them as the context requires.
11
gggg. Subsidiary Pledge Agreements. The term "Subsidiary Pledge Agreements" is
used as defined in Section 5.d. and when used in the singular form, the
term refers to whichever of the Subsidiary Pledge Agreements the context
requires.
hhhh. Subsidiary Security Agreements. The term "Subsidiary Security
Agreements" means all or any combination, as the context requires, of
the security agreements described in Section 5.d, and when used in the
singular form, refers to whichever of the Subsidiary Security Agreements
the context requires.
iiii. Tangible Capital Base. "Tangible Capital Base", determined on a
consolidated basis exclusive of AFC, means the consolidated
shareholders' equity of ADESA plus Subordinated Debt less any allowance
for goodwill, patents, trademarks, trade secrets, non-competition
agreements, loans or advances to unrelated Persons (not constituting a
loan or advance made by ADESA in the ordinary course of business) and
any other assets which would be classified as intangible assets under
generally accepted accounting principles, and less any related party
receivables. As used in this definition, the phrase "related party
receivables" means all accounts, notes and other amounts due from any
party which, directly or indirectly, controls, is controlled by or is
under common control with ADESA, to the extent that such receivables are
not otherwise eliminated from the consolidated shareholders' equity of
ADESA in the process of consolidation, provided that the term "related
party receivables" shall not include any accounts arising on account of
services rendered or goods sold by ADESA or any Subsidiary in the
ordinary course of the business of ADESA and its Subsidiaries as now
conducted.
jjjj. Tender Date. "Tender Date" is used as defined in the Trust Indenture.
kkkk. Trust Indenture. "Trust Indenture" means the Trust Indenture between
Funding and the Trustee dated as of April 1, 1992, pursuant to which the
Floating Rate Notes were issued.
llll. Trustee. "Trustee" means CoreStates Bank, N.A. in its capacity as
Trustee under the Trust Indenture and any successor Trustee.
mmmm. Unmatured Event of Default. "Unmatured Event of Default" means any event
specified in Section 9, which is not initially an Event of Default, but
which would, if uncured, become an Event of Default with the giving of
notice or the passage of time or both.
nnnn. Unsubordinated Liabilities. "Unsubordinated Liabilities" means all of
ADESA's consolidated total liabilities and the outstanding balance of
all indebtedness of AHC (excluding liabilities of AFC) less the
Subordinated Debt less the balance in the Sinking Fund Reserve, and less
the restricted cash equivalents of AHC.
oooo. Unused Commitment Fee. "Unused Commitment Fee" means a per annum fee to
be paid to the Banks, calculated and paid quarterly in arrears, on the
difference between the ADESA Revolver Commitment, as reduced from time
to time for principal payments
12
required to be made by ADESA, and the amount of the average daily
outstanding principal balance under the ADESA Revolver, determined by
reference to the ratio of ADESA's Funded Debt, as of the end of the
immediately prior Determinative Quarter End, to its EBITDAL, for the
four quarters ending on such Determinative Quarter End, in accordance
with the following table:
Ratio of Funded Debt Per Annum
to EBITDAL Unused Fee
4.0:1.0 or Greater .375%
3.0 through 3.99:1.0 .25%
2.0 through 2.99:1.0 .1875%
0.0 through 1.99:1.0 .125%
Section 2. THE LOANS. Subject to all of the terms and conditions of this
Agreement, the Banks severally agree to make the loans described in this Section
to ADESA:
a. ADESA Revolver. The Banks severally will make a revolving loan available
to ADESA on the following terms and conditions:
(i) The ADESA Revolver Commitment. From the date hereof, and until
the Banking Day next preceding the Maturity Date, the Banks
will make Advances from time to time to ADESA of amounts not
exceeding, in the aggregate at any time outstanding, Fifty-Two
Million and No/100 Dollars ($52,000,000) as increased and
decreased from time to time as hereinafter set forth. All
Advances hereunder are collectively referred to as the "ADESA
Revolver" and the maximum principal amount that may be
outstanding under the ADESA Revolver as of any date such
amount is to be determined is referred to as the "ADESA
Revolver Commitment". The ADESA Revolver Commitment shall be
made available to ADESA as follows: Advances under Tranche A
shall be available up to an initial principal amount of
$12,000,000 from the date hereof until October 1, 1995 and
increasing to $25,000,000 from October 1, 1995 until January
1, 1996, and increasing to $32,000,000 from January 1, 1996
until the Maturity Date. Advances under Tranche B shall be
available up to an initial principal amount of $20,000,000
from the date hereof until October 1, 1995 on which date and
on each subsequent January 1, April 1, July 1 and October 1
thereafter until the Maturity Date, the amount available for
Advances under Tranche B shall decrease by $715,000. In the
event that Advances outstanding under Tranche B exceed the
amount available on each January 1, April 1, July 1 and
October 1 after giving effect to the required reduction set
forth above, ADESA shall on such dates and without demand,
immediately repay such excess to the Agent for the
13
ratable benefit of the Banks entitled thereto. All of the
Conditions of Lending set forth in Section 8 hereof,
applicable to the ADESA Revolver must have been and must
continue to be met at the time of each Advance, and provided,
further, that no Bank shall make Advances in excess of its
Commitment as set forth in Schedule A attached hereto. All
Advances under the ADESA Revolver shall first be funded under
Tranche B, except for Advances requested in Canadian dollars,
pursuant to Section 2.a.(vi) hereof. All prepayments of
principal shall first be applied to the outstanding principal
balance of Tranche A and no prepayment of Tranche B will be
permitted until the outstanding principal balance of Tranche A
is -0-. Proceeds of the ADESA Revolver may only be used to
restate and extend the outstanding indebtedness of ADESA to
Bank One under the Original Agreement, to finance acquisition
and/or development of auction locations owned or to be owned
by ADESA or a Subsidiary, and for expenditures for fixed
assets.
(ii) Method of Borrowing. The obligation of ADESA to repay the
ADESA Revolver shall be evidenced by the promissory notes (The
"Revolving Notes") of ADESA payable to each of the respective
Banks in the form of Exhibit "B". So long as no Event of
Default or Unmatured Event of Default shall have occurred and
be continuing and until the applicable Maturity Date, ADESA
may borrow, repay or reborrow under the ADESA Revolver on any
Banking Day, provided that no borrowing may cause the total
amount outstanding to exceed the ADESA Revolver Commitment as
in effect from time to time as set forth in Section 2.a(i), or
may result in an Event of Default or an Unmatured Event of
Default. Each Advance under the ADESA Revolver shall be
conditioned upon receipt by the Agent of an Application for
Advance and an Officer's Certificate, provided that the Agent
may, at its discretion, make a disbursement upon the oral
request of ADESA made by an Authorized Officer, or upon a
request transmitted to the Agent by telephone facsimile
("fax") machine, or by any other form of written electronic
communication (all such requests for Advances being hereafter
referred to as "informal requests"). In so doing, the Agent
may rely on any informal request which shall have been
received by it in good faith from a person resonably believed
to be an Authorized Officer. Each informal request shall be
promptly confirmed by a duly executed Application and
Officer's Certificate if the Agent so requires and shall in
and of itself constitute the representation of ADESA that no
Event of Default or Unmatured Event of Default has occurred
and is continuing or would result from the making of the
rquested Advance and that the making of the requested Advance
shall not cause the principal balance of the ADESA Revolver to
exceed the ADESA Revolver Commitment. All borrowings and
reborrowings and all repayments shall be in amounts of not
less than Two Hundred Fifty Thousand and No/100 Dollars
14
($250,000), except for repayment of the entire principal
balance of the ADESA Revolver. The principal of the ADESA
Revolver may be prepaid at any time, subject to the payment of
the Prepayment Premium, if applicable, pursuant to Section
2.c(iii). Upon receipt and approval of an Application, the
Agent shall make an Advance in the amount approved in
accordance with the instructions in the Application and shall
be made ratably from the Banks in proportion to their
respective Commitments in accordance with Section 2.d. hereof.
The Agent shall give prompt telephonic, telex or telecopy
notice to each of the Banks of any Advance request received
from ADESA and, if such notice requests the Banks to make a
LIBOR-based Rate Advance or an Interbank-based Rate Advance,
the Agent shall give notice to ADESA and each of the Banks by
any such means of the interest rate applicable thereto (but,
if such notice is given by telephone, the Agent shall confirm
such rate in writing) promptly after the Agent has made such
determination of the applicable rate. All Advances by the
Banks and payments by ADESA shall be recorded by the Banks on
their books and records, and the principal amount outstanding
from time to time, plus interest payable thereon, shall be
determined by reference to the books and records of the Banks.
The Banks' and Agent's books and records shall be presumed
prima facie to be correct as to such matters.
(iii) Interest on the ADESA Revolver. The principal amount of the
ADESA Revolver outstanding from time to time shall bear
interest until maturity of the ADESA Revolver at a rate per
annum equal to the Prime-based Rate, except that ADESA may
elect to have interest accrue at a LIBOR-based Rate in
accordance with Section 2.c. hereof. After maturity, whether
on the Maturity Date or on account of acceleration upon the
occurrence of an Event of Default, and until paid in full, the
ADESA Revolver shall bear interest at a per annum rate equal
to the Prime-based Rate plus two percent (2%), except that as
to any portion of the ADESA Revolver for which ADESA may have
elected a LIBOR-based Rate for an Interest Period that has not
expired at maturity, or after such determination, as
applicable, such portion shall, during the remainder of such
Interest Period, bear interest at the greater of the
Prime-based Rate plus two percent (2%) per annum or at the
LIBOR-based Rate, plus two percent (2%) per annum. Accrued
interest shall be due and payable quarterly on the first
Banking Day of each October, January, April and July and at
maturity, except that interest accruing at a LIBOR-based Rate
shall be payable as set forth in Section 2.c (ii) and interest
accruing at an Interbank-based Rate shall be payable as set
forth in Section 2.a(vi). After maturity, interest shall be
payable as accrued and without demand.
(iv) Extensions of Maturity Date. The Banks may, upon the request
of ADESA, but at the Banks' sole discretion, extend the
Maturity Date of the
15
ADESA Revolver from time to time to such date or dates as the
Banks may elect by notice in writing to ADESA, and upon any
such extension and upon execution and delivery by ADESA of new
ADESA Revolving Notes reflecting the extended maturity date,
the date to which the ADESA Revolver Commitment is then
extended will become the "Maturity Date" for purposes of this
Agreement.
(v) Closing Fee and Unused Commitment Fee. ADESA shall pay a
closing fee equal to .125% per annum on the total amount of
the ADESA Revolver Commitment ($52,000,000). ADESA shall
further pay to the Agent, for the pro rata benefit of the
Banks, the Unused Commitment Fee on the ADESA Revolver
Commitment as in effect from time to time as set forth in
Section 2.a(i), payable quarterly in arrears on each July 1,
October 1, January 1 and April 1, while the ADESA Revolver
Commitment is outstanding, commencing October 1, 1995. Such
fees may be debited by the Agent on or after thirty (30) days
of the date when due, if not earlier paid, to any demand
deposit account of ADESA carried with the Agent without
further authority. After any such debit, the Agent shall give
ADESA prompt notice of the debit and a statement of the
calculation of such fees, but any failure to give such notice
shall not affect the validity or enforceability thereof.
(vi) Sublimit for Canadian Dollar Loans. Up to U.S. Ten Million and
No/100 Dollars (U.S. $10,000,000) of Tranche A of the ADESA
Revolver may be funded in equivalent Canadian dollars, only in
accordance with this Section 2.a(vi) and provided that No
Event of Default or Unmatured Event of Default has occurred
and is continuing or may result therefrom.
(A) Upon three (3) Banking Days prior written notice to
the Agent, ADESA may request an advance in Canadian
dollars in a minimum principal amount of equivalent U.S.
Two Million Five Hundred Thousand Dollars (U.S.
$2,500,000) and integral multiples thereof, for an
applicable Interest Period. Each Advance shall be
evidenced by a Canadian dollar Note (the "Note") in the
form of Exhibit "D" attached hereto. ADESA may not select
an Interest Period which ends after the Maturity Date for
the ADESA Revolver. Interest on such Advance shall accrue
at the Interbank-based Rate per annum, from the date the
Advance is made, and shall be payable in Canadian dollars
on the date occurring every three months while the Advance
is outstanding and on the last day of the respective
Interest Period. The principal of each Advance must be
repaid in Canadian dollars on the last Banking Day of each
Interest Period. Any prepayment of the principal of each
Advance shall be subject to the Prepayment Premium. After
the
16
last day of each Interest Period, or on account of
acceleration upon the occurrence of an Event of Default,
each Advance shall bear interest at the Interbank-based
Rate plus two percent (2%) per annum until paid in full,
and shall be payable as accrued and without demand. The
Banks shall fund each Advance under this Section to the
Agent in Canadian dollars.
(B) At any time when any Advance is denominated in
offshore Canadian dollars, ADESA shall reimburse or
compensate the Banks upon demand for all costs incurred or
losses suffered by the Banks which are applied by the
Banks to such Advance by reason of any and all present or
future reserve, exchange controls, special deposit or
similar requirements against assets or liabilities of the
Banks, or restrictions on funding offshore assets with
onshore liabilities (including any requirements under
Regulation D of the Board of Governors of the Federal
Reserve System).
(C) In the event of any failure by ADESA to pay any amount
in offshore Canadian dollars when due, the Banks may, at
their option, purchase for the account of ADESA, as soon
as practicable after such failure, an amount in Canadian
dollars with interest accrued thereon on the spot market
with U.S. dollars in which case ADESA shall become liable
to the Banks for the amount in U.S. dollars so expended
with interest thereon at two percent (2%) over the
Interbank-based Rate. The Banks through the Agent, will
give the Borrower notice of any such exchange.
(D) If prior to the commencement of any Interest Period,
any Bank determines that offshore Canadian dollars will
not be available in the offshore interbank markets, or if
any applicable law, order or regulation or any
interpretation thereof by any governmental agency shall
make it unlawful or impracticable for such Bank to make,
maintain or fund, the relevant Advance, such Bank shall
promptly give notice thereof to ADESA and such Advance
shall be treated as an Advance under Section 2.a(i)
hereof.
(E) ADESA agrees to pay or cause to be paid directly to
the appropriate governmental authority, or to reimburse
the Banks, for the cost of any and all present and future
taxes, duties, fees and other charges of any nature
whatsoever (including any additional taxes or other
charges due as a consequence of such payment or
reimbursement) levied or imposed by any governmental
authority on or with regard to any aspect of the
transactions contemplated
17
herein, except such taxes as are imposed on or measured by
each Bank's net income by the jurisdiction or any
political subdivision thereof in which such Bank's
principal office is located.
(F) Whenever the equivalent amount in one currency (the
"First Currency") must be determined with respect to an
amount in another currency (the "Second Currency"), such
determination shall be based on the spot rate for the
purchase, on the relevant date, of the First Currency with
the Second Currency quoted by the Agent's Grand Cayman
Branch, at 10:00 A.M. Grand Cayman time two (2) days prior
to the relevant date on which such foreign exchange
transactions are conducted by the foreign exchange market.
b. The Line of Credit. The Banks severally agree to make a revolving line
of credit ("Line of Credit") available to ADESA on the following terms
and subject to the following conditions:
(i) The Commitment -- Use of Proceeds. From this date and until
the Maturity Date, the Banks agree to make Advances
(collectively, the "Line of Credit Commitment") under a
revolving line of credit from time to time to ADESA of amounts
not exceeding Eighteen Million and No/100 Dollars
($18,000,000) in the aggregate at any time outstanding,
provided that all of the Conditions of Lending stated in
Section 8 of this Agreement as being applicable to the Line of
Credit have been fulfilled at the time of each Advance and
provided, further, that no Bank will make Advances in excess
of its Commitment as set forth on Schedule A attached hereto.
Proceeds of the line of Credit shall be used by ADESA only to
fund its working capital requirements and to make working
capital loans to the Subsidiaries named in the following table
in maximum aggregate amounts outstanding at any time as to
each such Subsidiary not to exceed the amounts shown in the
table opposite the names of the respective Subsidiaries and
for no other purpose:
Subsidiary Maximum
---------- Amount of Loans
---------------
Greater Buffalo Auto Auction, Inc. $ 7,000,000
ADESA-Ohio, Inc. 10,000,000
Auto Dealers Exchange of Memphis, Inc. 7,000,000
A.D.E. of Birmingham, Inc. 7,000,000
A.D.E. of Lexington, Inc. 5,000,000
18
A.D.E. Management Company 7,000,000
A.D.E. of Jacksonville, Inc. 10,000,000
ADESA Indianapolis, Inc. 20,000,000
Auto Dealers Exchange of Concord, Inc. 15,000,000
A.D.E. of Knoxville, Inc. 5,000,000
ADESA Canada, Inc. 20,000,000
ADESA-Charlotte, Inc. 7,000,000
ADESA Austin, Inc. 5,000,000
ADESA Auto Transport, Inc. 6,000,000
ADESA-South Florida, LLC 7,000,000
ADESA New Jersey, Inc. 20,000,000
Auto Banc Corporation 3,000,000
Proceeds of an Advance under the Line of Credit may not be
used to make principal reductions on the ADESA Revolver.
(ii) Method of Borrowing. The obligation of ADESA to repay the Line
of Credit shall be evidenced by the promissory notes (the
"Line of Credit Notes") of ADESA payable to each of the
respective Banks in the form of Exhibit "C". So long as no
Event of Default or Unmatured Event of Default shall have
occurred and be continuing and until the Maturity Date. ADESA
may borrow, repay and reborrow under the Line of Credit on any
Banking Day, provided that no borrowing may cause the total
principal outstanding to exceed the Line of Credit Commitment
or may result in an Event of Default or an Unmatured Event of
Default. Each Advance under the Line of Credit shall be
conditioned upon receipt by the Agent from ADESA of an
Application for Loan Advance and an Officer's Certificate,
provided that the Agent may, at its discretion, make a
disbursement upon the oral request of ADESA made by an
Authorized Officer, or upon a request transmitted to the Agent
by telephone facsimile ("fax") machine, or by any other form
of written electronic communication (all such requests for
Advances being hereafter referred to as "informal requests").
In so doing, the Agent may rely on any informal request which
shall have been received by it in good faith from a person
reasonably believed to be an Authorized Officer. Each informal
request shall be promptly confirmed by a duly executed
Application and Officer's Certificate if the Agent so requires
and shall in and of itself constitute the representation of
ADESA that no Event of Default or Unmatured Event of Default
has occurred and is continuing or would result from the making
of the requested Advance and that the making of the requested
Advance shall not cause the principal balance of the Line of
Credit to exceed the
19
Line of Credit Commitment. All borrowings and reborrowings and
all repayments shall be in amounts of not less than Two
Hundred Fifty Thousand and No/100 Dollars ($250,000), except
for repayment of the entire principal balance of the Line of
Credit. Notwithstanding any other provision of this
subsection, the Banks shall not be required to make more than
two Advances in any week. Upon receipt of an Application, or
at the Agent's discretion upon receipt of an informal request
for an Advance and upon compliance with any other Conditions
of Lending stated in Section 8 of this Agreement applicable to
the Line of Credit, the Agent shall disburse the amount of the
requested Advance to ADESA, and shall be made ratably from the
Banks in proportion to their respective Commitments in
accordance with Section 2.d. hereof. The Agent shall give
prompt telephonic, telex or telecopy notice to each of the
Banks of any Advance request received. All Advances by the
Banks and payments by ADESA shall be recorded by the Banks on
their books and records, and the principal amount outstanding
from time to time, plus interest payable thereon, shall be
determined by reference to the books and records of the Banks.
The Banks' and Agent's books and records shall be presumed
prima facie to be correct as to such matters.
(iii) Interest on the Line of Credit. The principal amount of the
Line of Credit outstanding from time to time shall bear
interest until maturity of the Notes at a rate per annum equal
to the Prime-based Rate. After maturity, whether on the Line
of Credit Maturity Date or on account of acceleration upon the
occurrence of an Event of Default, and until paid in full, the
Line of Credit shall bear interest at a per annum rate equal
to the Prime-based Rate plus two percent (2%). Accrued
interest shall be due and payable monthly on the first Banking
Day of each month and at maturity. After maturity, interest
shall be payable as accrued and without demand.
(iv) Extensions of Maturity Date. The Banks may, upon the request
of ADESA, but at the Banks' sole discretion, extend the Line
of Credit Maturity Date from time to time to such date or
dates as the Banks may elect by notice in writing to ADESA,
and upon any such extension and upon execution and delivery by
ADESA of Line of Credit Notes reflecting the extended maturity
date, the date to which the Line of Credit Commitment is then
extended will become the Line of Credit "Maturity Date" for
purposes of this Agreement.
(v) Standby Letters of Credit. At any time that ADESA is entitled
to an Advance under the Line of Credit, the Agent shall, upon
the application of ADESA, issue for the account of ADESA, a
standby letter of credit (any such letter of credit being
referred to in this Agreement as an "L/C") in an amount not in
excess of the maximum Advance that ADESA would then
20
be entitled to obtain under the Line of Credit, provided that
(i) the total amount of L/C's which are outstanding at any
time shall not exceed $2,000,000, (ii) the issuance of any L/C
with a maturity date beyond the Maturity Date shall be
entirely at the discretion of the Banks, (iii) the purpose of
each L/C shall be to secure to a customer of ADESA or a
Subsidiary, payment for or return of vehicles and certificates
of title or certificates of origin to vehicles delivered to
ADESA or a Subsidiary for sale at auction in the ordinary
course of business of ADESA and its Subsidiaries, (iv) the
form of the requested L/C shall be satisfactory to the Agent
in the reasonable exercise of the Agent's discretion, and (v)
ADESA shall have executed an application and reimbursement
agreement for the L/C (a "Reimbursement Agreement") in the
Agent's standard form, a copy of the current version of which
is attached as Exhibit "E". Each Bank shall purchase a risk
participation in each L/C issued equal to its pro rata portion
of the face amount of the L/C and agrees to remit to the
Agent, in funds available for immediate use by the Agent in
Indianapolis, Indiana, its pro rata portion of each payment
made by the Agent on an L/C, promptly upon receipt of notice
from the Agent of such payment. The Agent shall promptly remit
to each Bank it pro rata portion of all applicable fees and
reimbursements received by the Agent from ADESA. ADESA will
pay the Agent a commission for each standby L/C issued,
calculated at the L/C Commission Rate then in effect on the
maximum amount available to be drawn under the standby L/C,
which commission shall be shared pro rata with the Banks less
a .125% Agent fee. ADESA shall pay the Agent's standard
transaction fees with respect to any transactions occurring in
respect of any L/C's. Transaction fees shall belong solely to
the Agent. Commissions shall be payable when the related L/C's
are issued and transaction fees shall be payable upon
completion of the transaction as to which they are charged.
All such commissions and fees may be debited by the Agent to
any deposit account of ADESA carried with the Agent without
further authority, and in any event, shall be paid by ADESA
within ten (10) days following billing.
(vi) Mandatory Monthly Paydown. Notwithstanding any other provision
of this Section 2.b., ADESA shall make such payments on
account of the principal balance of the Line of Credit as may
be necessary so that on not less than two (2) non-consecutive
Banking Days in each calendar month the outstanding principal
balance of the Line of Credit does not exceed Seven Million
Two Hundred Thousand and No/100 Dollars ($7,200,000). For
purposes of this subsection, any Banking Days which are
separated only by days which are not Banking Days shall be
considered to be consecutive.
21
c. Procedures for Electing LIBOR-based Rates -- Certain Effects of
Election. A LIBOR-based Rate may be elected by ADESA only in accordance
with the following procedures, shall be subject to the following
conditions and the election of a LIBOR-based Rate shall have the
following consequences in addition to other consequences stated in this
Agreement:
(i) No LIBOR-based Rate may be elected at any time an Event of
Default or an Unmatured Event of Default shall have occurred
and is continuing. Further, no LIBOR-based Rate may be
selected for an Interest Period beyond the Maturity Date for
the ADESA Revolver.
(ii) A LIBOR-based Rate may only be elected on the entire principal
balance of the ADESA Revolver or as to any portion thereof as
to which no previous LIBOR-based Rate election remains in
effect, or new Advance thereunder, in a minimum amount of One
Million and No/100 Dollars ($1,000,000) or integral multiple
thereof, for an applicable Interest Period. Interest accruing
at a LIBOR-based Rate shall be payable in arrears (a) with
respect to Interest Periods of three months or less, on the
last day of the Interest Period and (b) with respect to
Interest Periods longer than three months, on the date(s)
occurring every three months and on the last day of the
Interest Period.
(iii) Voluntary prepayment prior to scheduled maturity of all or any
portion of the ADESA Revolver on which interest is accruing at
a LIBOR-based Rate shall be subject to contemporaneous payment
of the Prepayment Premium if, at the time of prepayment, the
Reinvestment Rate is less than the LIBOR-based Rate at which
interest accrues on the ADESA Revolver. A Prepayment Premium
shall also be due and payable on prepayment of all or any
portion of the ADESA Revolver prior to scheduled maturity
because of acceleration of maturity on account of an Event of
Default if, at the time of acceleration of maturity, the
Reinvestment Rate is less than the LIBOR-based Rate at which
interest is accruing on the ADESA Revolver. If at the time of
any voluntary or mandatory prepayment of any portion of the
principal of the ADESA Revolver, interest accrues at both a
LIBOR-based Rate and at a Prime-based Rate on portions of the
ADESA Revolver, then any prepayment of principal will be
applied first to the portion of the ADESA Revolver on which
interest accrues at the Prime-based Rate and next to the
portion or portions at which interest accrues at a LIBOR-based
Rate or Rates, and if interest accrues on the ADESA Revolver
at more than one LIBOR-based Rate, first to that portion or
those portions on which interest accrues at a Rate or Rates
which results in no Prepayment Premium or the lowest
Prepayment Premium or Premiums.
22
(iv) Upon three (3) Banking Days notice, ADESA may request an
Advance at a LIBOR-based Rate for an appropriate Interest
Period, from the Agent. As soon as possible, and in any event
before the close of business on the next following Banking
Day, the Agent shall determine such LIBOR-based Rate and shall
immediately notify the Banks of the request and the
LIBOR-based Rate determined. A request for a LIBOR-based Rate
by ADESA is irrevocable once made. The Interest Period for
which any LIBOR-based Rate is effective shall begin on the
third Banking Day following the day on which the quotation is
requested.
(v) An election of a LIBOR-based Rate and applicable Interest
Period may be communicated to the Agent on behalf of ADESA
only by an Authorized Officer. Such election may be
communicated by telephone, or by telephone facsimile (fax)
machine or any other form of written electronic communication,
or by a writing delivered to the Agent. At the request of the
Agent, ADESA shall confirm any election in writing and such
written confirmation shall be signed by an Authorized Officer.
The Agent shall be entitled to rely on an oral or written
electronic communication of an election of a LIBOR-based Rate
and Interest Period which is received by an appropriate Agent
employee from anyone reasonably believed in good faith by such
employee to be an Authorized Officer.
(vi) Notwithstanding any other provision of this Agreement, the
Agent may elect not to quote a LIBOR-based Rate on any day on
which the Agent has determined that it is not practical to
quote such rate because of the unavailability of sufficient
funds to the Banks for appropriate terms at rates
approximating the relevant London Interbank Offered Rate or
because of legal or regulatory changes which make it
impractical or burdensome for the Banks to lend money at a
LIBOR-based Rate.
d. Provisions Applicable to All of the Loans. The following provisions are
applicable to all of the Loans:
(i) Calculation of Interest. Interest on the Loans shall be
calculated on the basis that an entire year's interest is
earned in 360 days, comprised of twelve (12) thirty (30)-day
months.
(ii) Manner of Payment - Application. All payments of principal and
interest on the Loans shall be payable at such office as the
Agent shall specify or at the principal office of the Agent in
Indianapolis, Indiana, in funds
23
available for the Agent's immediate use in that city and no
payment will be considered to have been made until received in
such funds, except for payments in Canadian dollars required
under Section 2.a(vi)(A). The Agent may debit any depository
account of ADESA for the payment of principal, interest, and
fees when due and payable. All payments received on account of
any of the Loans will be applied first to the satisfaction of
any interest which is then due and payable, and to principal
only after all interest which is due and payable has been
satisfied. The Agent shall promptly disburse to the Banks all
payments received from ADESA.
(iii) Disbursement of Advances and Agent Reliance on Bank Funding.
Not later than 1:00 p.m. (Indianapolis time) on the date of
any Advance under the Loans, each Bank shall make available
its pro rata portion of the Advance in accordance with its
Commitment in funds immediately available in Indianapolis,
Indiana at the principal office of the Agent, or at such other
office as the Agent shall specify, except to the extent such
Advance is a reborrowing, in whole or in part, of the
principal amount of a maturing Advance, in which case each
Bank shall record the Advance made by it as a part of such
reborrowing on its books and records or on a schedule to its
respective Notes, and shall effect the repayment, in whole or
in part, as appropriate, of its maturing Advance through the
proceeds of such new Advance. The Agent shall make the
proceeds of each new Advance available to ADESA at the Agent's
principal office in Indianapolis, Indiana, or at such other
office as the Agent shall specify not later than the close of
business on such date. Unless the Agent shall have been
notified by a Bank prior to (or, in the case of an Advance at
a Prime-based Rate, by 11:00 a.m., Indianapolis time, on) the
date on which such Bank is scheduled to make payment to the
Agent of the proceeds of an Advance (which notice shall be
effective upon receipt) that such Bank does not intend to make
such payment, the Agent may assume that such Bank has made
such payment when due and the Agent may in reliance upon such
assumption (but shall not be required to) make available to
ADESA the proceeds of the requested Advance to be made by such
Bank and, if any Bank has not in fact made such payment to the
Agent, such Bank shall, on demand, pay to the Agent the amount
made available to ADESA attributable to such Bank together
with interest thereon in respect to each day during the
period commencing on the date such amount was made available
to ADESA and ending on (but excluding) the date, such Bank
pays such amount to the Agent at a rate per annum equal to
the Prime-based Rate. If such amount is not received from
such Bank by the Agent immediately upon demand, ADESA will,
on demand, repay to the Agent the proceeds of the Advance
attributable to such Bank with interest thereon at a
rate per annum equal to the interest rate applicable to
the relevant Advance, but without such payment being
considered a
24
prepayment so that ADESA will have no liability for any
Prepayment Premium with respect to such payment. Neither the
Agent or any other Bank shall have any liability or obligation
to fund any other Bank's pro-rata portion of any Advance.
(iv) Agent Fee. In addition to all other fees or charges payable
hereunder, an agent fee shall be due and payable by ADESA to
the Agent on the date of this Agreement in the amount of .075%
of $93,000,000. Such agent fee shall belong solely to the
Agent as compensation for its services as Agent for the Banks.
Section 3. THE LETTER OF CREDIT. On April 22, 1992, Bank One issued its
Letter of Credit No. S-4269-G (the "Letter of Credit") in the original amount of
$35,787,500.00 in favor of the Trustee and for the account of ADESA with an
original expiration date of May 6, 1995. A copy of the Letter of Credit is
attached as part of Exhibit "F". Bank One hereby agree to extend the expiration
date of the Letter of Credit to June 30, 1998, in accordance with a Letter of
Extension in the form attached as part of Exhibit "F". The Letter of Credit
secures payment of the Floating Rate Notes and is subject to the terms stated
therein. The Letter of Credit was issued pursuant to the terms of the Original
Agreement and after the date of this Agreement shall be subject to the following
terms and conditions, and all other terms and conditions of this Agreement
concerning ADESA's Obligations with respect to the Letter of Credit:
a. Reimbursement. So long as the Letter of Credit is outstanding, ADESA
will maintain a demand deposit account with Bank One (the "Blocked
Account") through which the transactions described in this subsection
will regularly be accomplished. All amounts deposited into the Blocked
Account shall be held by Bank One as cash collateral for all of the
Obligations. The Blocked Account shall be used by ADESA only for the
purposes provided for in this Agreement, and the terms of the Blocked
Account shall be such that it shall be a "blocked" account, so that
transfers of funds from the Blocked Account may be made only by Bank One
or by ADESA with the concurrence of the Required Banks. On the Business
Day of each calendar month that is two (2) Business Days prior to each
Floating Rate Note Interest Payment Date, ADESA will deposit into the
Blocked Account such amount as may be necessary, after giving effect to
the transfer to the Blocked Account from the Sinking Fund Reserve
scheduled to occur on the same date under the terms of Section 5.f, to
cause the balance of the Blocked Account to be not less than the
anticipated amount of principal and interest that will be due on account
of the Floating Rate Notes at the next Floating Rate Note Interest
Payment Date, plus the amount of the transaction fee (provided for in
Section 3.b) which will be due upon Bank One's Payment of the related
Drawing or Drawings under the Letter of Credit. After and only after
honoring a Drawing for the anticipated payment, Bank One shall be
entitled, without further authorization from ADESA, to charge the amount
of such Drawing and the related transaction fee to the Blocked Account
or any other deposit account maintained by ADESA with Bank One. Should
ADESA's deposit balances with Bank One be insufficient to reimburse Bank
One for any Drawing under the Letter of Credit,
25
together with the related transaction fee, then ADESA shall pay to the
Agent immediately and unconditionally upon demand, an amount equal to
the unreimbursed portion of such Drawing and the related transaction
fee, together with interest on such amount at the Prime Rate plus three
and one-half percent (3-1/2%) per annum from the date of payment of such
Drawing until the amount thereof is reimbursed to Bank One. In the case
of any Remarketing Drawing, ADESA shall unconditionally pay to Bank One
on the ninetieth (90th) day following payment by Bank One of such
drawing, or if such ninetieth day is not a Business Day, then on the
next following Business Day, any balance of the amount of such Drawing
which shall not then have been reimbursed to Bank One by the payment of
remarketing proceeds to Bank One or otherwise, together with interest on
such portions of such Remarketing Drawing as shall not, from time to
time, have been reimbursed to Bank One, accrued at the Prime-based Rate
for Line of Credit Advances, and with interest after such 90 day period
accrued at the Prime-based Rate for Line of Credit Advances plus two
percent (2%) per annum. Upon being reimbursed in full with interest as
provided in this Agreement for any Remarketing Drawing, Bank One shall
deliver any Pledged Notes that were purchased by the Trustee with the
proceeds of such Remarketing Drawing, and which shall not have
previously been delivered by Bank One upon sale by the Remarketing
Agent, to the Trustee for cancellation pursuant to the terms of the
Trust Indenture. As used in this paragraph, the term "remarketing
proceeds" means proceeds from the resale of Pledged Notes by the
Remarketing Agent, which Pledged Notes shall have been tendered or
deemed tendered to the Trustee for repurchase pursuant to the terms of
the Trust Indenture. The term "Floating Rate Note Interest Payment Date"
is used in this subsection as the term "Interest Payment Date" is
defined in the Letter of Credit. For the avoidance of doubt, it is noted
that notwithstanding any other provision of this Agreement including,
without limitation, any provision requiring ADESA to give collateral
security for ADESA'S obligation to reimburse Bank One for amounts paid
on account of the Letter of Credit in advance of any payment, no
reimbursement obligation on the part of ADESA shall exist with respect
to any payment by Bank One on account of the Letter of Credit until such
payment shall have been made. Regardless of whether or not any cash
collateral is voluntarily pledged by ADESA or any of its affiliates,
Bank One shall not use any of such cash collateral to honor draws under
the Letter of Credit.
b. Risk Participation. Each Bank shall purchase from Bank One a risk
participation in the Letter of Credit equal to its pro rata portion of
the Maximum Available Credit, as set forth in Schedule A hereto. Each
Bank agrees to remit to Bank One, in funds available for immediate use
by Bank One in Indianapolis, Indiana, its pro rata portion of each
payment made by Bank One for a drawing under the Letter of Credit,
promptly upon receipt of notice from Bank One of such payment. Bank One
agrees to promptly remit to each Bank, its pro rata portion of all
applicable fees and reimbursements received by Bank One from and on
behalf of ADESA, but only when and if received by Bank One. Bank One
shall be entitled to exercise its absolute discretion in administering
the Letter of Credit and in enforcing, refraining from enforcing and
determining the manner in which it may enforce any of its rights under
the Letter of Credit, the Trust Indenture, the
26
other Floating Rate Documents and this Agreement and in any collateral
furnished pursuant to the terms of this Agreement. Bank One shall not be
required to consult with the Banks as to any such matters or to take any
direction from any of the Banks with regard thereto. Bank One shall not
incur any liability to the Banks with respect to any action taken or
omitted by bank One, including any action taken or omitted pursuant to
the terms of the Trust Indenture, provided only that Bank One shall have
acted in good faith and with reasonable care. Without limiting the
generality of the foregoing, Bank One shall be entitled to rely and act
upon any document or communication which Bank One in good faith believes
to be genuine and to have been authorized by the person on whose behalf
it is presented or given and which (in the case of any document) is
regular on its face. The Banks specifically excuse Bank One from any
duty Bank One might otherwise have to make further inquiry into the
genuineness or due authorization of any such document or notice.
c. Commission and Transaction Fees. On October 1, 1995, and on the first
Banking Day of each calendar quarter thereafter (each of which days is
hereafter referred to as a "Commission Due Date"). ADESA shall pay to
Bank One for the benefit of the Banks a commission for issuing and
maintaining the Letter of Credit for the calendar quarter in which such
Commission Due Date occurs, computed at a per annum rate equal to the
Applicable Letter of Credit Commission Rate then in effect on the
Maximum Available Credit which commission shall be shared pro rata with
the Banks less a .125% Agent fee, and ADESA shall also pay to Bank One
solely an administration fee in the amount of one-eighth percent (1/8%)
per annum of the Maximum Available Credit, in each case as the Maximum
Available Credit is scheduled to increase and decrease during the period
beginning on the Commission Due Date and ending on the last day of the
calendar quarter in which the Commission Due Date occurs by reason of
anticipated draws for scheduled payments of principal and interest on
the Floating Rate Notes, and assuming the reinstatement of the
availability of all Interest Drawings to the extent provided for in the
Letter of Credit; provided that for purposes of computing each
commission and administration fee, the amount of an Interest Drawing
which is subject to automatic reinstatement will be considered to be
reinstated as of the date of such Drawing. There shall be no reduction
in the amount of commission or administration fee due and payable on any
Commission Due Date, nor shall any refund of commission or
administration fee be due ADESA on account of full or partial prepayment
of the Floating Rate Notes or because of the cancellation of the Pledged
Notes purchased with the proceeds of a Remarketing Drawing during the
quarter following the Commission Due Date as of which the amount of such
commission or administration fee is established or on account of the
election of Bank One not to restore the availability of any Interest
Drawing. The amount of the commission and administration fee due and
payable as of any Commission Due Date shall not be reduced, nor shall
any refund of the commission or administration fee be due because of
cancellation or termination of the Letter of Credit for whatever reason,
with the exception only that if the Letter of Credit is replaced with an
"Alternate Letter of Credit" (as provided for in the Trust Indenture)
within six (6) months following an increase of twenty percent (20%) or
more in the amount of the Letter of Credit
27
commission, which increase is imposed by Bank One pursuant to the
provisions of Section 3.d, then Bank One shall make a pro rata refund to
ADESA of any Letter of Credit commission which shall have been paid for
a period which shall not have expired on the date the Letter of Credit
is replaced. A transaction fee shall be payable by ADESA to Bank One for
each Drawing under the Letter of Credit in the amount of one-eighth of
one percent (1/8%) of the amount of the Drawing or Sixty Dollars
($60.00), whichever is greater. Transaction fees on account of Drawings
shall be due on the day when the Drawing is paid by Bank One. All
commissions and fees payable under the terms of this Section 3.c shall
be payable with interest at the Prime Rate plus two and three-quarters
percent (2-3/4%) per annum from the date due until paid. If the Letter
of Credit is transferred to a new beneficiary pursuant to the terms
thereof, then ADESA promises to pay to Bank One promptly upon its demand
a transfer fee in the amount then customarily assessed by Bank One for
transfers of letters of credit of the same type and amount as the Letter
of Credit. The administration fee, transaction fees and transfer fee are
payable solely to Bank One and will not be shared with the Banks.
d. Additional Amounts Payable. If any change in or the enactment,
adoption or judicial or administrative interpretation of any law,
regulation, treaty, guideline or directive (including, without
limitation, Regulation D of the Board of Governors of the Federal
Reserve System) either (i) subjects Bank One or the Banks to any
additional tax, duty, charge, deduction or withholding with respect to
the Letter of Credit or any amount paid by Bank One or the Banks
thereunder or received by Bank One or the Banks under this Agreement
(other than a tax measured by the net or gross income or revenues of
Bank One or the Banks), or (ii) imposes or increases any reserve,
special deposit, or similar requirement on account of the Letter of
Credit, or (iii) imposes increased minimum capital requirements on Bank
One or the Banks on account of their issuing or sharing in the risk of
the Letter of Credit, and if any of the foregoing (w) results in an
increase to Bank One or the Banks in the cost of maintaining the Letter
of Credit or making any payment on account of the Letter of Credit, (x)
reduces the amount of any payment receivable by Bank One or the Banks
under this Agreement, (y) requires Bank One or the Banks to make any
payment calculated by reference to the gross amount of any sum received
or paid by Bank One or the Banks pursuant to the Letter of Credit or
this Agreement (other than a tax measured by Bank One's or the Banks'
gross or net income or revenues) or (z) reduces the rate of return on
Bank One or the Banks' capital, ADESA shall pay to Bank One and the
Banks, as additional commission for the Letter of Credit, such amount as
will compensate Bank One and the Banks for such increased cost, payment
or reduction. Any such payment shall be made to Bank One and the Banks
within 15 days of demand and presentation of a certificate to ADESA
containing a statement of the cause of such increased cost, payment or
reduction and a calculation of the amount thereof, which statement and
calculation shall be deemed prima facie to be correct. For the avoidance
of doubt, it is noted that any additional commission payable under the
terms of this subsection shall be computed on the basis of the quarterly
commission payable on account of the Letter of Credit, notwithstanding
the sale of
28
participations in the risk and funding requirements of the Letter of
Credit permissible under the terms of this Agreement.
e. Place and Application of Payments -- Calculation of Interest. All
payments required to be made under this Section 3 shall be made to Bank
One at its principal office in Indianapolis, Indiana, in funds available
for Bank One's immediate use at that city and no such payment will be
considered to have been made until received in such funds. All interest
due under any provision of this Section 3 shall be calculated on the
basis of a year of 360 days, and on the actual number of days elapsed.
f. Presentment and Collection. The Trustee and its successors as users of
the Letter of Credit shall be deemed for purposes of this Agreement to
be the agents of ADESA and ADESA assumes all risks of their acts,
omissions or misrepresentations. Neither the Agent, the Banks, Bank One
nor any of their affiliates or correspondents shall be responsible for
the validity, sufficiency, truthfulness or genuineness of any document
required to draw under the Letter of Credit even if such document should
in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged, provided only that the document appears on its
face to be in accordance with the terms of the Letter of Credit, or for
failure of any draft to bear reference or adequate reference to the
Letter of Credit or failure of any person to note the amount of any
draft on the Letter of Credit or to surrender or take up the Letter of
Credit, each of which provisions may be waived by Bank One, or for
errors, omissions, interruptions, or delays in transmission or delivery
of any messages or documents. Without limiting the generality of the
foregoing, any action taken by the Agent, the Banks, Bank One or any of
their correspondents under or in connection with the Letter of Credit,
if taken in good faith and with reasonable care, shall be binding upon
ADESA and shall not put the Agent, the Banks, Bank One or any such
correspondent under any resulting liability to ADESA and ADESA makes
like agreement as to any omission unless in breach of good faith. Bank
One is expressly authorized to honor any request for payment which is
made under and in compliance with the terms of the Letter of Credit
without regard to and without any duty on its part to inquire into the
existence of any disputes or controversies between ADESA and the
beneficiaries of the Letter of Credit or any other person, firm or
corporation or into the respective rights, duties or liabilities of any
of them or whether any facts or occurrences represented in any of the
documents presented under the Letter of Credit are true and correct.
g. Proceeds of the Floating Rate Notes. The entire proceeds of the Floating
Rate Notes were advanced by Funding to ADESA and, ADESA represents, have
been used by ADESA as provided in the Original Agreement and for no
other purposes.
h. Cancellation Fee. ADESA shall pay to the Banks a fee in the amount of
one-half percent (1/2%) of the Maximum Available Credit if the Floating
Rate Notes are prepaid by ADESA prior to expiration of the Letter of
Credit or if ADESA replaces the Letter of Credit with an "Alternate
Letter of Credit" as provided for in the Trust Indenture, provided that,
in either case, such cancellation fee shall be payable only if the
rating of
29
Bank One's long-term debt by Standard & Poor's Corporation is A- or
higher at the time the Floating Rate Notes are prepaid or the Letter of
Credit is replaced. Notwithstanding any other provision of this
subsection, no fee will be payable on account of prepayment of the
Floating Rate Notes or on account of replacement of the Letter of Credit
with an Alternate Letter of Credit if such event occurs within six (6)
months following an increase of twenty percent (20%) or more in the
amount of the Letter of Credit commission, which increase is imposed by
the Banks pursuant to the provisions of Section 3.d
Section 4. REPRESENTATIONS AND WARRANTIES. To induce the Banks to make
the Loans, as provided for in this Agreement, ADESA, and Funding represent and
warrant to the Banks that:
a. Organization of ADESA and Funding. ADESA and Funding are corporations
organized and in existence under the laws of the State of Indiana.
Funding is a wholly-owned subsidiary of ADESA. Each of the Subsidiaries
is a corporation organized and in existence under the laws of the
respective states or province of incorporation set forth in Schedule
4.m. Funding has no Subsidiaries. ADESA has no class of stock
outstanding other than its common stock.
b. Authorization: No Conflict. The execution and delivery of this Agreement
by ADESA and Funding, the execution and delivery by ADESA, Funding and
each Subsidiary of each of the other Credit Documents and the Floating
Rate Note Documents to which they are respectively parties, and the
performance by ADESA, Funding and each Subsidiary of their respective
obligations under this Agreement and all of the other Credit Documents
and the Floating Rate Note Documents to which they are respectively
parties are within ADESA's, Funding's and the Subsidiaries' corporate
powers, have been duly authorized by all necessary corporate action,
have received any required governmental or regulatory agency approvals
and do not and will not contravene or conflict with any provision of law
or of the articles of incorporation or bylaws of any of ADESA, Funding
or the respective Subsidiaries or of any agreement binding upon any of
ADESA, Funding or their properties or upon the respective Subsidiaries
or their properties.
c. Validity and Binding Nature. This Agreement and all of the other Credit
Documents and the Floating Rate Note Documents to which ADESA, Funding
and the respective Subsidiaries are parties are the legal, valid and
binding obligations of ADESA, Funding and the respective Subsidiaries,
enforceable against them in accordance with their respective terms,
except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
enacted for the relief of debtors generally and other similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles which may affect the availability of specific performance and
other equitable remedies.
30
d. Financial Statements. ADESA has delivered to the Agent its audited
financial statement as of December 31, 1994, and its unaudited interim
financial statements as of June 30, 1995, and for the fiscal quarter and
partial fiscal year then ended. Such statements have been prepared in
accordance with generally accepted accounting principles consistently
applied except, as to the June 30, 1995 statements, for the absence of
footnotes and adjustments normally made at year end which are not
material in amount. Such statements present fairly the financial
position of ADESA as of the dates thereof and the results of its
operations and cash flows for the periods covered and since the date of
such statements there has been no material adverse change in the
financial position of ADESA or in the results of its operations or
operating cash flows.
e. Litigation and Contingent Liabilities. No litigation, arbitration
proceedings or governmental proceedings are pending or, to ADESA's best
knowledge, are threatened against ADESA, Funding or any of the
Subsidiaries which would, if adversely determined, materially and
adversely affect the financial position or continued operations of
ADESA, Funding or any of the Subsidiaries. None of ADESA, Funding nor
any Subsidiary has any material contingent liabilities not provided for
or disclosed in the financial statements referred to in Section 4.d or
in the "Schedule of Exceptions" attached as Schedule 4.e.
f. Liens. None of the assets of ADESA, Funding or any Subsidiary are
subject to any mortgage, pledge, title retention lien or other lien,
encumbrance or security interest except for liens and security interests
described in the exceptions enumerated in Section 7.b
g. Employee Benefit Plans. Each Plan maintained by ADESA or by any of the
Subsidiaries is in material compliance with ERISA, the Code, and all
applicable rules and regulations adopted by regulatory authorities
pursuant thereto, and ADESA and all of the Subsidiaries have filed all
reports and returns required to be filed by ERISA, the Code and such
rules and regulations, except for such omissions, the consequences of
which would be inconsequential. No Plan maintained by ADESA or by any of
the Subsidiaries and no trust created under any such Plan has incurred
any "accumulated funding deficiency" as defined in Section 302 of ERISA,
and the present value of all benefits vested under each Plan did not
exceed, as of the last annual valuation date, the value of the assets of
the respective Plans allocable to such vested benefits. Neither ADESA
nor any Subsidiary has any knowledge that any "reportable event" as
defined in ERISA has occurred with respect to any Plan.
h. Payment of Taxes. ADESA, Funding and all of the Subsidiaries have filed
all federal, state and local tax returns and tax related reports which
any of them is required to file by any statute or regulation and all
taxes and any tax related interest payments and penalties that are due
and payable have been paid, except for taxes which are being contested
in good faith and by appropriate proceedings and for the payment of
which appropriate reserves have been provided. Adequate provision has
been made for the payment when due of all tax liabilities which have
been incurred, but are not as yet due and payable.
31
i. Investment Company Act. None of ADESA, Funding nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
j. Regulation U. None of ADESA, Funding nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock
within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System. Not more than twenty-five percent (25%) of the
consolidated assets of ADESA, Funding or of any of the Subsidiaries
consists of margin stock.
k. Hazardous Substances. Except as disclosed on the "Schedule of
Exceptions" attached as Schedule 4.e, to the best knowledge of ADESA
after due inquiry and investigation, there are no underground storage
tanks of any kind on any premises owned or occupied by or under lease to
ADESA or any Subsidiary and there are no tanks, drums or other
containers of any kind on premises owned or occupied by or under lease
to ADESA or any Subsidiary, the contents of which are unknown to ADESA
or the Subsidiaries. Except as disclosed on the "Schedule of Exceptions"
attached as Schedule 4.e., to the best knowledge of ADESA after due
inquiry and investigation, no premises owned or occupied by or under
lease to ADESA or any Subsidiary have ever been used, and as of the date
of this Agreement, no such premises are being used for any activities
involving the use, treatment, transportation, generation, storage or
disposal of any Hazardous Substances in reportable quantities and no
Hazardous Substances in reportable quantities have been released on any
such premises nor is there any threat of release of any Hazardous
Substances in reportable quantities on any such premises.
l. Other Representations. ADESA, Funding and each Subsidiary is qualified
to do business in every jurisdiction in which: (i) the nature of the
business conducted or the character or location of properties owned or
leased by ADESA and Subsidiaries, or the residences or activities of
employees of ADESA and the Subsidiaries make such qualification
necessary, and (ii) failure so to qualify could reasonably be
anticipated to impair the title of ADESA and Subsidiaries to material
properties or the right of ADESA or any Subsidiary to enforce material
contracts or result in exposure of ADESA and Subsidiaries to liability
for material penalties in such jurisdiction. No jurisdiction in which
ADESA or any Subsidiary is not qualified to do business has asserted
that ADESA or any Subsidiary is required to be qualified therein. The
principal office of ADESA is located at 1919 South Post Road,
Indianapolis, Indiana. ADESA does not conduct any material operations or
keep any material amounts of property at any other location. Funding was
incorporated on February 6, 1992, and since its incorporation it has
conducted no operations and has engaged in no transactions other than
those necessarily involved in the issuance of the Floating Rate Notes.
The principal office of Funding is located at 1919 South Post Road,
Indianapolis, Indiana. Funding does not conduct any material operations
or keep any material amounts of property at any other location.
32
m. The Subsidiaries. Except as disclosed on the "Schedule of Exceptions"
attached as Schedule 4.e., Schedule 4.m. attached hereto lists all of
the direct and indirect Subsidiaries of ADESA. Such Schedule 4.m.
indicates the date of acquisition or formation, the state or province of
incorporation and the total number of shares outstanding for each
Subsidiary.
n. Corporate Names. ADESA does not now, nor has ADESA during the past five
years done business under any other name except "Auto Service Exchange,
Inc." Funding does not now, nor has Funding ever done business under any
name other than "ADESA Funding Corporation". None of the Subsidiaries
has done business under any name other than the name indicated in
Schedule 4.m. during the past five (5) years, except that ADESA Auto
Transport, Inc. was named "A.D.E. Auctioneers and Appraisers, Inc."
prior to August 17, 1992; A.D.E. of Knoxville, Inc. was formed in June,
1993, and acquired the assets of Knoxville Auto Auction, Inc. and
H.H.H., Inc. d/b/a Lenoir City Auto Auction, Inc. ADESA Canada, Inc.
(formerly known as ADESA, (Montreal), Inc.) was formed July 20, 1993, to
acquire the assets and rights of Montreal Auto Auction; ADESA
Indianapolis, Inc. was formed in 1993 and is the surviving corporation
in a merger with Indianapolis Auto Auction, Inc., and ADESA-Ohio, Inc.
was formerly known as Auto Dealers Exchange of Cincinnati-Dayton, Inc,
and ADESA-Ottawa, Inc. was formerly known as Ottawa Auto Dealers
Exchange, Inc.
Section 5. COLLATERAL FOR THE OBLIGATIONS. The Obligations will be
secured as provided in this Section.
a. The ADESA Security Agreement. The Obligations are and will continue to
be secured by a security interest in all equipment, inventory, accounts
receivable and general intangibles of ADESA now owned or hereafter
acquired and in the proceeds thereof, which security interest was
created and will continue to exist by virtue of the Security Agreement
dated April 22, 1992, executed by ADESA in favor of the Agent pursuant
to the requirements of the Original Agreement (the "ADESA Security
Agreement"). ADESA shall execute the Amendment to Collateral Documents
in the form of Exhibit "G" attached hereto to add all of the Banks as
secured parties under the ADESA Security Agreement. The Security
Agreement provides a security interest in the collateral described
therein subject only to liens and security interests described in the
exceptions enumerated in Section 7.b. The Agent acknowledges that as an
incident to the execution of the Original Agreement, ADESA provided to
the Agent appraisal reports with respect to the forced liquidation value
of substantially all of the equipment then owned by ADESA and the
Subsidiaries. ADESA shall provide to the Banks at ADESA's expense
appraisal reports, addressed to the Banks, of the forced liquidation
value of any equipment subsequently or hereafter acquired by ADESA or
any of the Subsidiaries, which acquisitions individually or in the
aggregate are material to the consolidated financial statements of
ADESA. Upon the Banks' request, ADESA shall furnish to the Banks at
ADESA's expense currently dated appraisal reports with respect to the
forced liquidation value of all of the equipment shown in the
consolidated financial statements of ADESA from time to time as the
Banks may reasonably require, but not more than once in any two (2)
consecutive fiscal years of ADESA.
33
b. Guaranties. The Obligations will further be supported by unconditional
guaranties of prompt payment of Funding, and each of the Subsidiaries
excluding AFC, which guaranties are evidenced by the Guaranty Agreements
executed by Funding and such Subsidiaries pursuant to the requirements
of the Original Agreement. Funding and each Subsidiary shall execute the
Amendment to Collateral Documents, in the form of Exhibit "G" to add the
Banks as guaranty holders. In the case of any other subsidiary hereafter
formed or acquired by ADESA, including but not limited to ADESA New
Jersey, Inc., Auto Banc Corporation and ADESA Remarketing Service, Inc.,
such guaranty shall be evidenced by a Subsidiary Guaranty Agreement in
the form of Exhibit "H", or equivalent document under Canadian law.
c. The Mortgages. The Guaranties of the respective Subsidiaries named in
the following table are and will continue to be secured by mortgage
liens and security interests created, in the case of each such
Subsidiary, by a mortgage, leasehold mortgage, deed of trust or trust
deed executed and delivered pursuant to the requirements of the Original
Agreement. Each of the respective Subsidiaries shall execute an
Amendment to their mortgage, leasehold mortgage, deed of trust, or trust
deed to add the Banks as parties thereto. The common address of the
property or properties of the respective Subsidiaries which are subject
to the mortgage, leasehold mortgage, deed of trust or trust deed
executed and delivered by each of such Subsidiaries follow the name of
the Subsidiaries in the table:
A.D.E. of Birmingham, Inc. Auto Dealers Exchange
804 Sollie Drive of Memphis, Inc.
Moody, Alabama 5400 Getwell at Holmes Road
Memphis, Tennessee; and
ADESA-Ohio, Inc. (formerly 2650 Mt. Moriah Road
known as "Auto Dealers Exchange Memphis, Tennessee
Cincinnati-Dayton, Inc.")
4400 William C. Good Blvd.
Franklin, Ohio
ADESA Indianapolis, Inc.
A.D.E. of Lexington, Inc. 4000 Office Plaza Blvd.,
672 Blue Sky Parkway 4040 Office Plaza Blvd.,
Lexington, Kentucky 5050 West 38th Street, and
3905 Gemco Lane,
Auto Dealers Exchange Indianapolis, Indiana
of Concord
77 Hosmer Street
Acton, Massachusetts
34
Greater Buffalo Auto
Auction, Inc. 3095-0539 Quebec, Inc.
12220 Main Street 300 Albert-Mondou Boulevard
Newstead, New York Saint-Eustache, Quebec, Canada
ADESA agrees that upon purchase of a new facility in Indianapolis,
Indiana, ADESA or its applicable Subsidiary shall grant a mortgage lien
on such property to the Agent, for the benefit of the Banks, as
collateral security for all of the Obligations. The Banks agree that
upon sale by ADESA Indianapolis, Inc. of its present auction location in
Indianapolis, the Banks shall release the mortgage lien on such property
provided that the new Mortgage in favor of the Banks on the new facility
has been executed, that the net proceeds from the sale of the present
property exceed $4,500,000, that such proceeds are applied to the
Obligations and provided that no Event of Default or Unmatured Event of
Default exists.
d. Subsidiary Security Agreements -- Subsidiary Pledge Agreements. The
obligations of Funding, and each of the Subsidiaries, excluding AFC,
under their respective Guaranty Agreements shall be secured by a
security interest in all of the equipment, inventory, accounts
receivable and general intangibles of Funding and each of the
Subsidiaries, now owned or hereafter acquired, and the proceeds thereof,
which security interests were created and will continue by virtue of the
Security Agreements executed by Funding and such Subsidiaries pursuant
to the requirements of the Original Agreement (the "Subsidiary Security
Agreements"). Funding and each Subsidiary shall execute the Amendment to
Collateral Documents in the form of Exhibit "G" to add the Banks as
Secured Parties. In the case of any other subsidiary hereafter formed or
acquired by ADESA, including but no limited to ADESA New Jersey, Inc.,
Auto Banc Corporations and ADESA Remarketing Services, Inc., such
security interest will be created by a Security Agreement substantially
in the form of Exhibit "I". The Subsidiary Security Agreements will
provide a security interest in the collateral described therein, subject
only to liens and security interests described in the exceptions
enumerated in Section 7.b. The obligations of A.D.E. Management Company
under its Guaranty Agreement are and shall continue to be secured by a
pledge of 100 shares of the common stock of A.D.E. of Jacksonville, Inc.
The Obligations of ADESA Indianapolis, Inc. under its Guaranty Agreement
are and shall continue to be secured by pledge of 5 shares of the common
stock of ADESA Auto Transport, Inc. Such pledges are evidenced by Pledge
Agreements (the "Subsidiary Pledge Agreements") each dated April 22,
1992, which Subsidiary Pledge Agreements were executed and delivered
pursuant to the requirements of the Original Agreement. Such
Subsidiaries shall execute the Amendment to Collateral Agreement
attached as Exhibit "G" to add the Banks as parties thereto. The
obligations of ADESA Canada, Inc., under its Guaranty shall be secured
by a pledge of all shares of the common stock of 3095-0539 Quebec, Inc.,
101 shares of common stock of Greater Halifax Auto Exchange, Inc. and
5544 shares of Class A common stock and 4456 shares of Class B common
stock of ADESA-Ottawa, Inc. which pledge was created by a Pledge
Agreement dated August 16, 1993, as amended and restated by an Amended
and Restated
35
Pledge Agreement dated June 30, 1994. ADESA-Ottawa, Inc. shall secure
its Guaranty by a pledge of all of the shares of common stock of ADESA
Remarketing Services, Inc. pursuant to a Pledge Agreement in the form of
Exhibit "O" attached hereto.
e. Pledged Notes. In addition to all other collateral for the Obligations,
the Obligation are and shall continue to be further secured by a pledge
of and a security interest in any Floating Rate Notes purchased with the
proceeds of any Remarketing Drawing (the "Pledged Notes"), which pledge
and security interest Funding hereby grants to the Banks. As soon as
possible following any Remarketing Drawing, and in any event within ten
(10) days of the date of such Drawing, Funding will cause the Trustee to
deliver the Pledged Notes related to that Drawing to the Agent, for the
benefit of the Banks, which Pledged Notes shall be registered in the
name of the Agent, for the benefit of the Banks, or in the name of
Funding and accompanied by appropriate endorsements or assignments
executed on behalf of Funding in blank, with the signatures guaranteed.
If any of the Pledged Notes are in the custody of or are registered to a
Clearing Corporation or other Financial Intermediary, then this
Agreement will in and of itself constitute an Instruction to the
Clearing Corporation or other Financial Intermediary to transfer the
Pledged Notes from the account of Funding to the account of the Agent on
the books of the Clearing Corporation or other Financial Intermediary.
During the period in which any Floating Rate Notes are Pledged Notes,
the Banks shall be entitled to receive and retain all payments of
principal and interest on account of the Pledged Notes and such payments
shall be applied by the Banks to satisfaction of Obligations in the
order provided below. If Funding should receive any payment of principal
or interest on account of any Pledged Notes, Funding shall receive such
amounts in trust for the Banks and subject to the Banks' security
interest, and shall immediately forward any such payment to the Agent,
for the benefit of the Banks in the form in which received by Funding,
adding only such assignments or endorsements as may be necessary to
perfect the Agent's title thereto. Funding appoints and constitutes the
Agent as its agent and any officer of the Agent as Funding's
attorney-in-fact for purposes of: (i) executing instruments of
assignment or endorsement of any Pledged Notes; (ii) issuing any
Instruction or taking any other action necessary to cause any Pledged
Notes to be transferred on the books of any Clearing Corporation or
other Financial Intermediary from the account of Funding to the Agent's
account or to cause the Pledged Notes to be registered in the Agent's
name on the books and records of any Registrar for the Floating Rate
Notes, and (iii) taking any other action necessary to cause the Banks'
security interest to be perfected or to facilitate any transfer of the
Pledged Notes deemed necessary or desirable by the Required Banks. Such
appointment and such power are irrevocable so long as the Letter of
Credit is outstanding or any Obligations remain unsatisfied. Should any
Pledged Notes be sold by the Remarketing Agent pursuant to the terms of
the Trust Indenture, the Agent will deliver such Pledged Notes together
with appropriate instruments of assignment to or in accordance with the
instructions of the Remarketing Agent against payment of the proceeds of
such sale, which proceeds shall then be applied by the Agent to the
satisfaction of Obligations in the order provided below. Should any
Pledged Notes not be sold by the Remarketing Agent on or before the
ninetieth day following the related
36
Remarketing Drawing, or on or before the next following Business Day if
such ninetieth day is not a Business Day, then the Agent shall deliver
the Pledged Notes to the Trustee for cancellation. Any payments of
principal or interest on account of Pledged Notes and any proceeds of
Pledged Notes sold by the Remarketing Agent received by the Agent shall
be applied by the Agent first to satisfy ADESA's reimbursement
obligation with respect to the Remarketing Drawing the proceeds of which
were used to purchase the related Pledged Notes, next to the transaction
fee related to such Remarketing Drawing, and then to such other of the
Obligations as may then be outstanding, as the Required Banks in their
discretion shall choose. If no Obligations are then due and payable and
if no Event of Default or Unmatured Event of Default has occurred and is
continuing, the Agent shall pay any remaining portion of such funds to
ADESA. ADESA may use such funds for any purpose permissible under the
terms of this Agreement. As used in this paragraph, the terms "Clearing
Corporation," "Instruction" and "Financial Intermediary" are used as
defined in the Uniform Commercial Code as enacted in Indiana.
f. Sinking Fund Reserve. In addition to the Investment Account B
established by ADESA with the Trust Group of the Agent pursuant to the
requirements of Section 6.i, ADESA has established with the Trust Group
of the Agent, an investment agency account ("Investment Account A")
under the Agent's usual and customary form of agreement for such
accounts. ADESA shall pay the Agent's usual and customary charges for
services rendered by the Agent's Trust Group in connection with such
account for the Agent's sole benefit. All of the assets of Investment
Account A are and shall continue to be pledged to the Banks to secure
the Obligations on the terms expressed in the pledge agreement dated
April 22, 1992, (the "Pledge Agreement") executed by ADESA in favor of
the Agent pursuant to the terms of the Original Agreement, and shall
constitute a fund (the "Sinking Fund Reserve") in order to assure timely
reimbursement to the Agent of all principal drawings under the Letter of
Credit. ADESA shall execute Amendment to Collateral Documents in the
form of Exhibit "G" to add the Banks as secured parties under the Pledge
Agreement. Investments of Investment Account A shall be limited to
Qualified Investments, provided that no certificate of deposit purchased
as an asset of Investment Account A shall have a maturity date beyond
the nearer of the first Business Day of March or September next
following and no specific security purchased as an asset of Investment
Account A shall have a maturity more than six months from the date of
purchase. So long as any of the Floating Rate Notes are outstanding,
ADESA shall make such deposits to the Sinking Fund Reserve as may be
necessary to cause the balance of the Sinking Fund Reserve on the first
Business Day of each May, June, July, August and September of each year
to be not less than 1/6, 1/3, 1/2, 2/3 and 5/6, respectively, of the
amount of the mandatory Sinking Fund redemption of Floating Rate Notes
required to be made on the following October 1 under the terms of
Section 3.02 of the Trust Indenture. So long as any of the Floating Rate
Notes are outstanding, ADESA shall make such deposits to the Sinking
Fund Reserve as may be necessary to cause the balance of the Sinking
Fund Reserve on the first Business Day of each November, December,
January, February and March of each year to be not less than 1/6, 1/3,
1/2, 2/3 and 5/6, respectively, of the amount of the mandatory Sinking
Fund redemption of Floating Rate
37
Notes required to be made on the following April 1 under the terms of
Section 3.02 of the Trust Indenture. The Agent shall give continuing
instructions to its Trust Group to transfer the entire net realizable
cash value of the Account of the Sinking Fund Reserve to the Blocked
Account on the Business Day which is two Business Days prior to the
first Business Day of each March and September. As used in the preceding
sentence, the phrase "net realizable cash value of the Account" means
the amount of the Account which then consists of or can be reduced to
cash, less charges of the Agent's Trust Group due and payable under the
terms of Investment Account A. Such instructions shall remain in effect
until an Event of Default shall have occurred and is continuing, at
which time the Banks may deal with the Sinking Fund Reserve as with any
other collateral for the Obligations.
g. Pledge of Investment Account B. The Obligations are and shall continue
to be further secured by a pledge of and a security interest in all of
the cash and securities held in Investment Account B (established
pursuant to the requirements of Section 6.i) and the proceeds thereof
which pledge and security interest shall be on the terms expressed in
the Pledge Agreement. Notwithstanding the pledge of Investment Account
B, ADESA shall be free to withdraw assets from Investment Account B and
use them for any proper corporate purpose consistent with the provisions
of this Agreement until such time as an Event of Default or an Unmatured
Event of Default has occurred and is continuing and the Required Banks,
during the continuance of such Event of Default or Unmatured Event of
Default, shall have notified the Agent's Trust Group that (i) no further
withdrawal of assets from Investment Account B nor changes in the assets
held in Investment Account B may be made without the consent of the
Required Banks and (ii) the Agent shall thereafter otherwise exercise
control over Investment Account B as provided in the Pledge Agreement.
After the Required Banks through the Agent shall have given notice to
the Agent's Trust Group as provided in the preceding sentence, the Agent
shall continue to exercise control over Investment Account B for so long
as the Required Banks in their discretion deems it prudent to do so,
notwithstanding the fact that all Events of Default and Unmatured Events
of Default which existed at the time such notice was given or which
occurred thereafter shall have been cured. Investment Account B shall be
a segregated account, separate from the investment agency account
established by ADESA with the Trust Group of the Agent pursuant to the
requirements of Section 5.f.
h. Pledge of Stock of Funding and the Subsidiaries. The Obligations are and
shall continue to be further secured by a pledge, evidenced by and on
the terms and conditions expressed in the Pledge Agreement, of all of
the shares of each class of equity securities of Funding and each of the
Subsidiaries owned by ADESA. ADESA shall execute the Amendment to
Collateral Documents in the form of Exhibit "G" to add the Banks as
parties thereto. ADESA shall further execute and deliver to the Agent a
new Schedule to Pledge Agreement in the form of Exhibit "J", listing all
Subsidiaries owned by ADESA as of the date of this Agreement. ADESA
shall deliver or shall have delivered to the Agent the certificates
representing all of the shares of, or ownership interest in, any
38
Subsidiary created or acquired after the date of this Agreement,
together with an amendment to the Schedule to Pledge Agreement.
i. Pledge of Inter-Company Notes, Inter-Company Security Agreements and
Inter-Company Mortgages. The obligations of each of the Subsidiaries to
ADESA on account of any loans or advances made at any time by ADESA to
the Subsidiary shall be evidenced by a promissory note executed by the
Subsidiary in favor of ADESA in the form of Exhibit "K" (each an
"Inter-Company Note"). All of the obligations of each Subsidiary to
ADESA represented by an Inter-Company Note executed by a Subsidiary
which is the owner of one of the Parcels subject to a Mortgage (each of
which Subsidiary is hereafter referred to in this Subsection as a
"Mortgagor Subsidiary") shall be secured by mortgage liens and security
interests created by mortgages or deeds of trust (each a "Inter-Company
Mortgage" and collectively, the "Inter-Company Mortgages"). In the case
of the Parcels owned by each of the Mortgagor Subsidiaries, such
mortgage liens and security interests were created and shall continue to
exist by virtue of the mortgages and deeds of trust executed by the
Mortgagor Subsidiaries pursuant to the requirements of the Original
Agreement. Each of the Inter-Company Mortgages was collaterally assigned
by ADESA to the Agent, for the benefit of the Banks, to secure the
Obligations by Collateral Assignments executed pursuant to the
requirements of the Original Agreement. ADESA shall execute amendments
to the Collateral Assignments to add the Banks as parties thereto. All
of the obligations of each Subsidiary to ADESA represented by an
Inter-Company Note shall be further secured by a security interest in
all of the equipment, inventory, accounts receivable and general
intangibles of the Subsidiary, now owned or hereafter acquired, and the
proceeds thereof, which security interest shall be created by a security
agreement (each an "Inter-Company Security Agreement" and, collectively,
the "Inter-Company Security Agreements"). In the case of each of the
Subsidiaries, such security interests were created and shall continue to
exist by virtue of the Inter-Company Security Agreements, executed by
the respective Subsidiaries pursuant to the requirements of the Original
Agreement. In the case of any other Subsidiary hereafter formed or
acquired by ADESA, including but not limited to ADESA New Jersey, Inc.,
Auto Banc Corporation and ADESA Remarketing Services, Inc., such
security interest shall be created by a security agreement substantially
in the Form of Exhibit "L". The Inter-Company Security Agreements will
provide a security interest in the collateral described therein which is
second and inferior to the security interests created by the Subsidiary
Security Agreements, but otherwise, subject only to those other liens
and security interests described in the exceptions enumerated in Section
7.b. All of the Obligations are and shall continue to be further secured
by a pledge and collateral assignment of each of the Inter-Company Notes
and each of the Inter-Company Security Agreements, which pledge and
collateral assignment shall be evidenced by and shall be on the terms
and conditions expressed in the Pledge Agreement. The obligations of
A.D.E. Management Company ("Management") under its Inter-Company Note
are and shall continue to be further secured by a pledge of 100 shares
of the common stock of A.D.E. of Jacksonville, Inc., which pledge shall
provide a security interest in such stock which is second and inferior
to the security interest of the Banks created by the
39
Subsidiary Pledge Agreement executed by Management. The pledge in favor
of ADESA to secure Management's Inter-Company Note is and shall continue
to be evidenced by the Inter-Company Security Agreement executed by
Management and is and shall continue to be perfected by the Agent's
holding the Note as collateral agent for ADESA as provided in
Management's Subsidiary Pledge Agreement. The obligations of ADESA
Indianapolis, Inc. under its Inter-Company Note is and shall continue to
be further secured by a pledge of 5 shares of the common stock of ADESA
Auto Transport, Inc., which pledge shall provide a security interest in
such stock which is second and inferior to the security interest of the
Banks created by the Subsidiary Pledge Agreement executed by ADESA
Indianapolis, Inc. The pledge in favor of ADESA to secure ADESA
Indianapolis, Inc.'s Inter-Company Note is and shall continue to be
evidenced by the Inter-Company Security Agreement executed by ADESA
Indianapolis, Inc. and is and shall continue to be perfected by the
Agent's holding the Note as collateral agent for ADESA as provided in
ADESA Indianapolis, Inc.'s Subsidiary Pledge Agreement. The Subsidiaries
shall execute the Amendment to Collateral Documents in the form of
Exhibit "G" to add the Banks as parties thereto.
j. Agent as Collateral Agent for Banks. All collateral from time to time
securing the Obligations shall exist for the ratable benefit of the
Banks. The interest of each Bank in the collateral from time to time
existing shall be pro rata according to the proportion that its
Commitment bears to all Commitments of the Banks, but the interest of
each Bank in the collateral shall rank equally in priority with the
interest of each other Bank. Notwithstanding the time, order or method
of attachment or perfection of any security interest or lien, and
notwithstanding anything contained in any filing or agreement to which
any of the Banks is a party, any lien or security interest in favor of
any of the Banks in any of the collateral described in the Credit
Documents which arises out of any prior or subsequent transaction shall
be subordinate to the security interest or lien in such collateral in
favor of the Banks under the Credit Documents. The Banks acknowledge and
agree that the Agent shall serve as collateral agent for all of the
Banks and that any filing, mortgage, security agreement or other
instrument perfecting or evidencing a lien or security interest in the
collateral in the name of the Agent shall be deemed to be for the
benefit of all of the Banks in accordance with this Agreement. Subject
to the further provisions of this Agreement, and subject to the advice
of its counsel, the Agent shall act with respect to the collateral
securing the Obligations under the Credit Documents as instructed by the
Required Banks. No Bank will take any action to enforce its rights,
pursue any remedy or foreclose any liens against ADESA, Funding or any
Subsidiary (other than by way of set-off), except through the Agent.
k. Adjustments to Collateral. If any Bank (a "Benefited Bank") shall at any
time receive any payment of all or any part of the Obligations
hereunder, or interest thereon, or receive any collateral in respect
thereof (whether by set-off or otherwise) in a greater proportion than
its ratable portion, such Benefited Bank shall purchase for cash from
the other Banks such portion of the other Banks' Notes, or shall provide
such other Banks with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to
40
cause the Benefited Bank to share the excess payment or benefits of such
collateral or proceeds ratably with the other Banks; provided, however,
that if all or any portion of such excess payment or benefits is
thereafter recovered from the Benefited Bank, such purchase shall be
rescinded, and the purchase price and benefits returned to the extent of
such recovery, but without interest. ADESA and Funding agree that each
Bank so purchasing a portion of another Bank's Notes may exercise all
rights of payment (including, without limitation, rights of set-off)
with respect to such portion as fully as if such Bank were the direct
holder of such portion. If during any period of an Unmatured Event of
Default or Event of Default, a Benefited Bank receives payment or other
proceeds in connection with any other credit facility with ADESA or any
Subsidiary, excluding AFC, such payment or proceeds shall be applied
exclusively for the pro rata benefit of the Banks in connection with the
Obligations hereunder prior to any application to such other credit
facility.
Section 6. AFFIRMATIVE COVENANTS. Until all Obligations of ADESA or
Funding terminate or are paid and satisfied in full, and so long as any
Commitment or the Letter of Credit is outstanding, ADESA and Funding agree that
each will strictly observe each of the following covenants applicable to it, and
ADESA agrees that it will cause Funding to observe each of the following
covenants applicable to Funding, unless at any time the Required Banks shall
otherwise expressly consent in writing, which consent shall not be unreasonably
withheld or delayed:
a. Corporate Existence. ADESA and Funding shall preserve their respective
corporate existences and ADESA shall preserve the corporate existence of
each Subsidiary.
b. Reports, Certificates and Other Information. ADESA shall furnish to the
Agent copies of the following financial statements, certificates and
other information:
(i) Annual Statements. As soon as available and in any event
within one hundred twenty (120) days after the close of each
fiscal year, audited consolidated financial statements and
supplemental consolidating information of ADESA for such
fiscal year, which financial statements shall be prepared and
presented in accordance with generally accepted accounting
principles, in each case setting forth in comparative form
corresponding figures for the preceding fiscal year, together
with the audit report, unqualified as to scope, of Ernst &
Young. Each such set of financial statements shall be
accompanied by the written representation of the chief
financial officer of ADESA that such financial statements have
been prepared in accordance with generally accepted accounting
principles and that the consolidated and supplemental
consolidating information present fairly the consolidated and
consolidating financial position of ADESA and the results of
its operations as of the date thereof and for the fiscal year
then ended.
41
(ii) Monthly Statements of ADESA. As soon as available and in any
event within forty-five (45) days after the end of each month,
a copy of the interim financial statements of ADESA and the
Subsidiaries, consisting at a minimum of:
A. the consolidated and consolidating balance sheets of
ADESA and the Subsidiaries as of the end of the month,
B. consolidated and consolidating statements of income of
ADESA and the Subsidiaries for the month and for the
partial or full fiscal year ended as of the end of the
month, and
Such statements as of each month end which is also the end of
a fiscal quarter of ADESA shall be accompanied by consolidated
statements of cash flows for the year to date as of the end of
such fiscal quarter. All of the statements required under the
terms of this subsection shall be presented in reasonable
detail, setting forth corresponding figures for the preceding
fiscal year, and accompanied by the written representation of
the chief financial officer of ADESA that such financial
statements have been prepared in accordance with generally
accepted accounting principles (except that they need not
include footnotes and need not reflect adjustments normally
made at year end, if such adjustments are not material in
amount), consistently applied, (except for changes in which
the independent accountants of ADESA concur) and present
fairly the financial position of ADESA and the Subsidiaries
and the results of their respective operations as of the dates
of such statements and for the fiscal periods then ended. The
interim statements required under the terms of this subsection
shall include a comparison of results to the budget required
under the terms of Section 6.b(viii) and income statement line
items shall be broken down to provide such detail as the Agent
may reasonably require. Such detail shall be presented for
ADESA and each Subsidiary, and on a consolidated basis.
(iii) Certificates. Contemporaneously with the furnishing of each
set of financial statements provided for in Sections 6.b(i)
and 6.b(ii), an Officer's Certificate, together with the
supplemental certificate of the chief financial officer or the
treasurer of ADESA demonstrating, in such detail as the Agent
may reasonably require, compliance with the covenants stated
at Section 6.g.
(iv) Orders. Prompt notice of any orders in any material
proceedings to which ADESA, Funding or any Subsidiary is a
party, issued by any court or regulatory agency, federal or
state, and if any Bank should so request, a copy of any such
order.
42
(v) Notice of Default or Litigation. Immediately upon learning of
the occurrence of an Event of Default or an Unmatured Event of
Default, or the institution of or any adverse determination in
any litigation, arbitration proceeding or governmental
proceeding which is material to ADESA, Funding or any
significant Subsidiary, or the occurrence of any event which
could have a material adverse effect upon ADESA, Funding or
any significant Subsidiary, written notice thereof describing
the same and the steps being taken with respect thereto. As
used in this subsection, the term "significant Subsidiary"
means any Subsidiary whose earnings before interest,
depreciation, amortization and income tax expense for the
fiscal year ended immediately prior to the date as of which
its status as a significant Subsidiary is to be determined was
greater than $2,500,000.
(vi) Other Information. From time to time such other information
concerning ADESA, Funding or any Subsidiary as any Bank may
reasonably request.
(vii) Budget. At least ten (10) days prior to the beginning of each
fiscal year of ADESA, a quarter-by-quarter budget of income
and expenses for that year, and a projected consolidated
balance sheet on a quarterly basis, prepared in such detail as
the Agent shall reasonably require.
c. Books, Records and Inspections. ADESA and Funding shall maintain and
ADESA shall cause each Subsidiary to maintain complete and accurate
books and records and permit access thereto by the Banks for purposes of
inspection, copying and audit, and ADESA and Funding shall permit the
Banks to inspect their properties and operations and those of the
Subsidiaries at all reasonable times.
d. Insurance. In addition to any insurance required by the Security
Agreements, ADESA and Funding shall maintain and ADESA shall cause each
Subsidiary to maintain such insurance as may be required by law and such
other insurance, to such extend and against such hazards and
liabilities, as is customarily maintained by companies similarly
situated. All insurance polices providing coverage for loss of or damage
to fixed assets shall be endorsed so as to provide replacement cost
coverage. ADESA and Funding agree to name and ADESA agrees to cause each
Subsidiary to name the Agent, for the benefit of the Banks, as a loss
payee on any such insurance policy under a standard lender's loss
payable clause and to provide a copy of each such policy to the Agent.
e. Taxes and Liabilities. ADESA and Funding shall pay and ADESA shall cause
each Subsidiary to pay when due all taxes, license fees, assessments and
other liabilities except such as are being contested in good faith and
by appropriate proceedings and for which appropriate reserves have been
established.
f. Compliance with Legal and Regulatory Requirements. ADESA and Funding
shall maintain and ADESA shall cause each Subsidiary to maintain
material compliance with
43
the applicable provisions of all federal, state, Canadian, Canadian
provincial and local statues, ordinances and regulations and any court
orders or orders of regulatory authorities issued thereunder.
g. Financial Covenants. ADESA shall observe the following financial
covenants on a consolidated basis excluding AFC:
(i) Tangible Capital Base. ADESA shall maintain its Tangible
Capital Base at levels not less than those shown in the
following table for the periods indicated:
Period Tangible Capital Base
------ ---------------------
from the date of this Agreement
until fiscal year end 1995 $50,000,000
at fiscal year end 1995 and until
fiscal year end 1996 $55,000,000
at fiscal year end 1996 and until
fiscal year end 1997 $60,000,000
at fiscal year end 1997 and at all
times thereafter $65,000,000
(ii) Leverage. ADESA shall maintain its Leverage at not greater
than 3.50 to 1.00 until December 30, 1996 and at not greater
than 3.0 to 1.0 on December 31, 1996 and at all times
thereafter.
(iii) Coverage. For each period of four consecutive fiscal quarters,
ADESA shall maintain Coverage of not less than 1.20 to 1.0.
(iv) Funded Debt. For each period of four consecutive fiscal
quarters ending during the periods designated below, ADESA
shall maintain its ratio of Funded Debt to EBITDAL at levels
not greater than those shown in the following table:
Period Funded Debt/EBITDAL
------ -------------------
From the date of this Agreement
through March 30, 1996 4.5 to 1.0
At March 31, 1996 through September
29, 1996 4.25 to 1.0
At September 30, 1996 through
December 30, 1996 4.0 to 1.0
At December 31, 1996 and at all
times thereafter 3.75 to 1.0
44
h. Primary Banking Relationship. Except for the deposit relationships with
First Tennessee Bank National Association, PNC Bank, Kentucky, Inc.,
Society National Bank, Indiana, Harris Trust and Savings Bank and The
First National Bank of Boston, presently maintained or opened hereafter
by ADESA, and the deposit relationship maintained by ADESA Canada, Inc.
with Bank of Montreal and Canadian Imperial Bank of Commerce, ADESA
shall maintain its primary demand deposit accounts with the Agent.
i. Investment Agency Account. ADESA shall maintain all cash in excess of a
reasonable reserve for immediate operating needs, and other than amounts
required to be maintained in the Sinking Fund Reserve, in a custodial
agency account ("Investment Account B") carried with the Trust Group of
the Agent, which account shall be established under the Agent's usual
and customary form of agreement for such accounts. The reserve for
immediate operating needs referred to in the preceding sentence shall,
except for payroll accounts, be maintained in demand deposit accounts at
the Agent, First Tennessee Bank National Association, PNC Bank,
Kentucky, Inc., The First National Bank of Boston, Society National
Bank, Indiana, Harris Trust and Savings Bank, Canadian Imperial Bank of
Commerce and Bank of Montreal, provided that deposits in each of the
latter seven banks shall not exceed $5,000,000.00 in each bank. Further,
the deposits maintained in Bank of Montreal and Canadian Imperial Bank
of Commerce shall not exceed in the aggregate U.S. $5,000,000 on and
after July 1, 1995. ADESA shall pay the Agent's usual and customary
charges for services rendered by the Agent's Trust Group in connection
with such account. Investments of Investment Account B shall be limited
to debt securities of a quality not less than that commonly referred to
as "investment grade" or shares of investment companies or units of
investment in common trust funds the assets of which, in either case,
consist entirely of cash and investment grade securities. No specific
security or certificate of deposit purchased as an investment for
Investment Account B shall have a maturity more than thirteen (13)
months from the date purchased.
j. Employee Benefit Plans. ADESA and Funding shall maintain and ADESA shall
cause each Subsidiary to maintain any Plan in material compliance with
ERISA, the Code, and all rules and regulations of regulatory authorities
issued pursuant thereto and ADESA and Funding shall file and ADESA shall
cause each Subsidiary to file all reports required to be field pursuant
to ERISA, the Code, and such rules and regulations.
k. Hazardous Substances. If ADESA, Funding or any Subsidiary should
commence the use, treatment, transportation, generation, storage or
disposal of any Hazardous Substance in reportable quantities in its
operations in addition to those noted in the "Schedule of Exceptions"
attached as Schedule 4.e., ADESA shall immediately notify the Agent of
the commencement of such activity with respect to each such Hazardous
Substance. ADESA shall cause any Hazardous Substances which are now or
may hereafter be used or generated in the operations of ADESA, Funding
or any Subsidiary in reportable quantities to be accounted for and
disposed of in compliance with all applicable federal,
45
state, Canadian, Canadian provincial and local laws and regulations.
ADESA shall notify the Agent immediately upon obtaining knowledge that:
(i) any premises which have at any time been owned and occupied by
or have been under lease to ADESA, Funding or any Subsidiary
are the subject of an environmental investigation by any
federal, state, Canadian, Canadian provincial or local
governmental agency having jurisdiction over the regulation of
any Hazardous Substances, the purpose of which investigation
is to quantify the levels of the Hazardous Substances located
on such premises, or
(ii) ADESA, Funding or any Subsidiary has been named or is
threatened to be named as a party responsible for the possible
contamination of any real property or ground water with
Hazardous Substances, including, but not limited to the
contamination of past and present waste disposal sites.
If ADESA, Funding or any Subsidiary is notified of any event described
at items (i) or (ii) above, ADESA shall immediately engage or cause such
Subsidiary to engage a firm or firms of engineers or environmental
consultants appropriately qualified to determine as quickly as practical
the extent of contamination and the potential financial liability of
ADESA, Funding or any Subsidiary with respect thereto, and the Agent
shall be provided with a copy of any report prepared by such firm or by
any governmental agency as to such matters as soon as any such report
becomes available to ADESA. The selection of any engineers or
environmental consultants engaged pursuant to the requirements of this
Section shall be subject to the approval of the Agent, which approval
shall not be unreasonably withheld. Notwithstanding any other provision
of this subsection, if ADESA, Funding or any Subsidiary is notified of
any event described at items (i) or (ii) above, and if ADESA determines
that the course of action outlined above should not be required in view
of the manifest magnitude of the problem, or would not be a prudent
course of action for ADESA to pursue in view of all the circumstances,
ADESA shall immediately notify the Agent of that fact and of the
alternate course of action which ADESA proposes to pursue and the
Required Banks shall not unreasonably withhold their approval of such
alternate course of action.
l. Sinking Fund Reserve Payments. ADESA shall make deposits to the Sinking
Fund Reserve in a timely manner as required under the terms of Section
5.f.
m. Obligations Under the Floating Rate Note Documents. ADESA and Funding
will pay and perform in a timely manner all of their respective
obligations under those Floating Rate Note Documents to which they are
respectively parties.
Section 7. NEGATIVE COVENANTS OF ADESA. Until all Obligations of ADESA
or Funding terminate or are paid and satisfied in full, and so long as either
the Commitment or the Letter of Credit is outstanding, ADESA and Funding agree
that each will strictly observe each of
46
the following covenants applicable to it, and ADESA agrees that it will cause
Funding to observe each of the following covenants applicable to Funding, unless
at any time the Required Banks shall otherwise expressly consent in writing,
which consent shall not be unreasonably withheld or delayed:
a. Restricted Payments. ADESA shall not purchase or redeem any shares of
the capital stock of ADESA or declare or pay any dividends thereon
except for dividends payable entirely in capital stock.
b. Liens. ADESA and Funding shall not create or permit to exist, and ADESA
shall not allow any Subsidiary to create or permit to exist any
mortgage, pledge, title retention lien or other lien, encumbrance or
security interest (all of which are hereafter referred to in this
subsection as a "lien" or "liens") with respect to any property or
assets now owned or hereafter acquired except:
(i) liens in favor of the Banks or in favor of ADESA and assigned
to the Banks, which liens shall have been created pursuant to
the requirements of this Agreement or otherwise;
(ii) liens by AFC pursuant to the AFC Agreement;
(iii) any lien or deposit with any governmental agency required or
permitted to qualify ADESA, Funding or a Subsidiary to conduct
business or exercise any privilege, franchise or license, or
to maintain self-insurance or to obtain the benefits of or
secure obligations under any law pertaining to workmen's
compensation, unemployment insurance, old age pensions, social
security or similar matters, or to obtain any stay or
discharge in any legal or administrative proceedings, or any
similar lien or deposit arising in the ordinary course of
business;
(iv) any mechanic's, workmen's, repairmen's, carrier's,
warehousemen's or other like liens arising in the ordinary
course of business for amounts not yet due and for the payment
of which adequate reserves have been established, or deposits
made to obtain the release of such liens;
(v) easements, licenses, minor irregularities in title or minor
encumbrances on or over any real property which do not, in the
judgment of the Agent, materially detract from the value of
such property or its marketability or its usefulness in the
business of ADESA, Funding or any Subsidiary;
(vi) liens for taxes and governmental charges which are not yet due
or which are being contested in good faith and by appropriate
proceedings and for which appropriate reserves have been
established;
47
(vii) liens created by or resulting from any litigation or legal
proceeding which is being contested in good faith and by
appropriate proceedings and for which appropriate reserves
have been established.
(viii) liens securing the unpaid portion of the purchase price of, or
purchase money financing for any fixed asset hereafter
acquired, provided that the acquisition of such asset is
permissible under the limitation on indebtedness incurred to
persons other than the Banks expressed in Section 7.k;
(ix) those specific liens now existing described on the "Schedule
of Exceptions" attached as Schedule 4.e.
c. Restriction on Granting Negative Pledges. ADESA and Funding shall not,
and ADESA shall not allow any Subsidiary, excluding AFC, to enter into
any agreement with any Person (other than the Banks pursuant to this
Agreement) which restricts the right of ADESA, Funding or any Subsidiary
to create, assume or suffer any liens (as defined in Section 7.b above)
on any property or assets now owned or hereafter acquired.
d. Guaranties, Loans or Advances. ADESA shall not be a guarantor or surety
of, or otherwise be responsible in any manner with respect to any
undertaking of any other person or entity, whether by guaranty agreement
or by agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or services,
or otherwise, other than with respect to (i) a Subsidiary which is
wholly owned directly or indirectly by ADESA, excluding AFC, (ii)
ADESA Canada, Inc.; (iii) ADESA's obligations pursuant to the AFC
Agreement to repurchase, or contribute equity to AFC in an amount equal
to AFC's dealer receivables which are determined to be uncollectible (as
defined in the AFC Agreement), provided that the repurchase or equity
obligation will not exceed $1,500,000 annually; (iv) ADESA's obligations
pursuant to the AFC Agreement to guarantee AFC's dealer receivables
resulting from the purchase of vehicles at float-sale auctions, provided
that such guarantee does not exceed $15,000,000 at any time and,
provided further, that ADESA shall establish and maintain reserves equal
to three (3) times the trailing twelve (12) month bad debt expense
resulting from these receivables with a minimum reserve of $600,000; and
(v) ADESA's obligation to guarantee AFC's indemnification obligations
under the AFC Agreement. Funding shall not be and ADESA shall not permit
any Subsidiary, excluding AFC, to be a guarantor or surety of, or
otherwise be responsible in any manner with respect to any undertaking
of any other person or entity, whether by guaranty agreement or by
agreement to purchase any obligations, stock, assets, goods or services,
or to supply or advance any funds, assets, good or services, or
otherwise, except for the guaranty obligations taken pursuant to the
Guaranty Agreements. ADESA and Funding shall not make or permit to exist
and ADESA shall not permit any Subsidiary, excluding AFC, to make or
permit to exist any loans or advances to any other person or entity,
except for (i) the specific existing items listed in the "Schedule of
48
Exceptions" attached as Schedule 4.e., (ii) extensions of credit or
credit accommodations to customers or vendors made in the ordinary
course of its business as now conducted, (iii) reasonable salary
advances to employees, and other advances to agents and employees for
anticipated expenses to be incurred on behalf of ADESA, Funding or any
Subsidiary in the course of discharging their assigned duties, (iv)
loans and advances made by ADESA to Subsidiaries which are wholly owned
directly or indirectly by ADESA or ADESA Canada, Inc., excluding AFC,
(v) advances of accrued bonuses to employees in an aggregate amount
outstanding not exceeding $500,000.00, less the amount of loans
described at item (vi) immediately following which are outstanding from
time to time, (vi) loans to any other persons which do not exceed in
aggregate amount outstanding at any time $5,000,000 including loans to
AFC, and (vii) the advance to ADESA of the proceeds of the Floating Rate
Notes by Funding and the advance to ADESA of the proceeds of the sale of
any Pledged Notes released by the Agent to Funding.
e. Mergers, Consolidations, Sales, Acquisition or Formation of
Subsidiaries. Neither ADESA nor Funding shall be a party, and ADESA
shall not permit any Subsidiary to be a party to any consolidation or to
any merger, excluding ADESA's merger with a subsidiary of Minnesota
Power & Light Co., provided that ADESA is the surviving entity in such
merger. Neither ADESA nor Funding shall purchase, and ADESA shall not
permit any Subsidiary to purchase the capital stock of or otherwise
acquire any equity interest in any other business entity. Neither ADESA
nor Funding shall acquire, and ADESA shall not permit any Subsidiary to
acquire any material part of the assets of any other business entity
other than in the ordinary course of business. Neither ADESA nor Funding
shall sell, transfer, convey or lease, and ADESA shall not permit any
Subsidiary to sell, transfer, convey or lease all or any material part
of its assets, except inventory in the ordinary course of business, or
sell or assign with or without recourse any receivables. ADESA shall not
cause to be created or otherwise acquire any additional Subsidiaries,
except for the creation of Subsidiaries for purposes of reorganizing the
business being conducted by ADESA and the Subsidiaries prior to the time
such new Subsidiary is created. Notwithstanding any other provision of
this Section, ADESA may, without the prior written consent of any Bank,
effect a start-up or acquire directly or indirectly through a
Subsidiary, all of the capital stock or other equity interest in a
corporation or other business entity, or acquire all or substantially
all of the business assets of any such entity, either by purchase or by
merger, provided that either ADESA or a Subsidiary is the surviving
corporation in the case of any merger, and provided further that in the
case of any such acquisition or start-up all of the following conditions
are fulfilled: (i) the cost to ADESA, considered on a consolidated basis
(excluding AFC), of any one start-up or acquisition consummated in a
fiscal year does not exceed Five Million Dollars ($5,000,000) (excluding
costs of the Jacksonville, Florida and Manville, New Jersey auctions
presently being developed), (ii) the cost to ADESA, considered on a
consolidated basis (excluding AFC), of all such start-ups and
acquisitions consummated in any fiscal year does not exceed Twelve
Million Dollars ($12,000,000.00) (excluding costs of the Jacksonville,
Florida and Manville, New Jersey auctions presently being
49
developed); and (iii) no Event of Default or Unmatured Event of Default
exists at the time of any such start-up or acquisition or occurs as a
result thereof. The cost of any acquisition or start-up shall include
the present value of future lease payments. As used in this paragraph,
the term "start-up" means the acquisition of assets and the payment of
other initial expenses necessary to commence operation of an auto
auction at a location other than a location at which such an operation
is conducted by ADESA or any Subsidiary prior to such acquisition.
f. Margin Stock. Neither ADESA nor Funding shall use, nor shall ADESA
permit any Subsidiary to use or cause or permit the proceeds of the
Loans or the Floating Rate Notes to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate,
of purchasing or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as
amended from time to time. ADESA shall not permit more than twenty-five
percent (25%) of its consolidated assets to consist at any time of
margin stock, within the contemplation of Regulation U, as amended form
time to time.
g. Other Agreements. Neither ADESA nor Funding shall enter into any
agreement, and ADESA shall not permit any Subsidiary, excluding AFC, to
enter into any agreement containing any provision which would be
violated or breached in material respect by the performance of their
respective Obligations under this Agreement or under any instrument or
document delivered or to be delivered by ADESA, Funding or any of the
Subsidiaries under this Agreement or in connection herewith.
h. Judgments. Neither ADESA nor Funding shall permit, and ADESA shall not
permit any Subsidiary to permit any uninsured judgment or monetary
penalty rendered against it in any judicial or administrative proceeding
to remain unsatisfied for period in excess of forty-five (45) days
unless such judgment or penalty is being contested in good faith by
appropriate proceedings and execution upon such judgment has been
stayed, and unless an appropriate reserve has been established with
respect thereto.
i. Principal Office. Neither ADESA nor Funding shall change, and ADESA
shall not permit any Subsidiary to change the location of its principal
office unless it gives not less than ten (10) days prior written notice
of such a change to the Agent.
j. Hazardous Substances. Neither ADESA nor Funding shall allow or permit to
continue, and ADESA shall not permit any Subsidiary to allow permit to
continue the release or threatened release of any Hazardous Substances
in reportable quantities on any premises owned or occupied by or under
lease to ADESA, Funding or any Subsidiary.
k. Debt. Neither ADESA nor Funding shall incur or permit to exist, and
ADESA shall not permit any Subsidiary (excluding AFC) to incur nor
permit to exist any indebtedness for borrowed money except (i)
indebtedness to the Banks, (ii) the indebtedness of Funding with respect
to the Floating Rate Notes, (iii) subordinated indebtedness of up to
50
$20,000,000 to ADESA from Minnesota Power & Light Co., or its
wholly-owned subsidiary provided that the Subordination Agreement is
entered into among the Agent, ADESA and Minnesota Power & Light Co., or
its wholly-owned subsidiary; (iv) those existing obligations disclosed
on the "Schedule of Exceptions" attached as Schedule 4.e., and (v) other
indebtedness which does not exceed $10,000,000 in aggregate principal
amount outstanding at any time for ADESA, Funding, and the Subsidiaries
on a consolidated basis, excluding AFC. For purposes of this covenant,
the phrase "indebtedness for borrowed money," shall be construed to
include equipment lease obligations under capital and operating leases.
l. Limitation on Activities of Funding. Funding shall not engage in any
business other than lending the proceeds of the Floating Rate Notes to
ADESA on such terms that timely payment by ADESA of the principal and
interest on such loan from Funding shall provide Funding with funds
required to make all payments due on account of the Floating Rate Notes
in a timely manner. Funding shall not incur any material obligations
other than the obligation represented by the Floating Rate Notes nor
shall it acquire any material amount of assets, other than the
indebtedness of ADESA to Funding arising by reason of the loan to ADESA
of the proceeds of the Floating Rate Notes.
Section 8. CONDITIONS OF LENDING. The several obligations of the Banks
to make the Loans and any Advance, to maintain the Letter of Credit and to issue
any L/C shall be subject to fulfillment of each of the following conditions
precedent:
a. No Default. No Event of Default or Unmatured Event of Default shall have
occurred and be continuing, and the representations and warranties of
ADESA and Funding contained in Section 4 shall be true and correct in
all material respects as of the date of this Agreement and as of the
date of each Advance, except that after the date of this Agreement (i)
the representations contained in Section 4.d will be construed so as to
refer to the latest financial statements furnished to the Banks by ADESA
pursuant to the requirements of this Agreement, (ii) the representation
contained in Section 4.a will be construed so as to include any
Subsidiary which may hereafter be formed or acquired by ADESA, and (iii)
other representations contained in Section 4 shall be construed to have
been modified in accordance with any change of which ADESA shall have
notified the Banks in writing.
b. Documents to be Furnished at Closing. The Agent shall have received,
contemporaneously with the execution of this Agreement and in any case
prior to the making of any Advance under the ADESA Revolver or the Line
of Credit the following, each duly executed, currently dated and in form
and substance satisfactory to the Agent and in sufficient numbers for
each Bank.
(i) The ADESA Revolving Notes, and the Line of Credit Notes, each
made payable to the respective Banks.
51
(ii) A Subordination Agreement among Minnesota Power & Light
Company or a wholly-owned subsidiary thereof, ADESA and the
Agent in the form of "Exhibit "N" to this Agreement.
(iii) Subsidiary Security Agreements, Subsidiary Guaranty
Agreements, Inter-company Demand Notes and Inter-company
Security Agreements from each of ADESA New Jersey, Auto Banc
Corporation and ADESA Remarketing Services, Inc., together
with UCC-1s and equivalent Canadian filings.
(iv) Certified copies of Resolutions of the respective Boards of
Directors of ADESA, Funding, ADESA New Jersey, Inc., Auto Banc
Corporation and ADESA Remarketing Services, Inc., authorizing
the execution, delivery and performance of the Credit
Documents to which such corporations are, respectively,
parties.
(v) Certificates of the respective Secretaries of ADESA, Funding,
ADESA New Jersey, Inc., Auto Banc Corporation and ADESA
Remarketing Services, Inc., certifying the names of the
officer or officers authorized to sign the Credit Documents to
which each such corporation is a party, together with a sample
of the true signature of each such officer.
(vi) Solvency Certificates from each Subsidiary.
(vii) The opinion of counsel for ADESA and Funding addressed to the
Bank substantially in the form of Exhibit "M."
(viii) A supplemental "Schedule to Pledge Agreement" identifying all
Subsidiaries of ADESA and delivery of all certificates
representing all shares of capital stock of or ownership
interest in such subsidiaries as "Pledged Securities" for
purposes of the Pledge Agreement and appropriate stock powers
for each certificate delivered herewith.
(ix) Amendment to Collateral Documents executed by ADESA, Funding
and all Subsidiaries (excluding AFC) in the form of Exhibit
"G."
(x) Amendments to all Mortgages, Deeds of Trust or Trust Deeds and
Collateral Assignments of such documents.
(xi) Amended UCC-1s and equivalent Canadian filings to add the
Banks as secured parties.
(xii) Such other documents as the Agent or any Bank may reasonably
require.
52
c. Documents to be Furnished at Time of Each Advance under the ADESA
Revolver and the Line of Credit. The Agent shall have received the
following prior to making any Advance, each duly executed and currently
dated, unless waived at the Required Banks' discretion as provided in
Section 2.a. or b.;
(i) An Application for the Advance.
(ii) An Officer's Certificate.
(iii) Such other documents as the Agent or any Bank may reasonably
require.
Section 9. EVENTS OF DEFAULT. Each of the following shall constitute an
Event of Default under this Agreement:
a. Nonpayment of the Loans. Default in the payment within five (5) days of
the date when due of any amount payable under the terms of any of the
Notes or under any Reimbursement Agreement.
b. Nonpayment of Monetary Obligations. Failure by ADESA to pay to Bank One
within five (5) days of the date when due any amount due to Bank One on
account of the obligation of ADESA to reimburse Bank One on account of
Drawings under the Letter of Credit pursuant to the terms of Section 3.a
of this Agreement, or on account of any transaction fee or commission
payable under the terms of Sections 3.a or 3.c or any amounts payable
under Section 3.d.
c. Nonpayment of Other Indebtedness for Borrowed Money. Default by ADESA,
Funding, AFC or any Subsidiary in the payment when due, whether by
acceleration or otherwise, of any other indebtedness for borrowed money
in an aggregate amount of $1,000,000, or default in the performance or
observance of any obligation or condition with respect to any such other
indebtedness if the effect of such default is to accelerate the maturity
of such other indebtedness or to permit the holder or holders thereof,
or any trustee or agent for such holders, to cause such indebtedness to
become due and payable prior to its scheduled maturity, unless the
defaulting party is contesting the existence of such default in good
faith and by appropriate proceedings and that appropriate reserves have
been established with respect thereto.
d. Other Material Obligations. Subject to the expiration of any applicable
grace period, default by ADESA, Funding or any Subsidiary in the payment
when due, or in the performance or observance of any obligation of, or
condition agreed to by ADESA, Funding or any Subsidiary with respect to
any purchase or lease of real property goods, securities or services in
an aggregate amount of $500,000 except only to the extent that the
existence of any such default is being contested in good faith and by
appropriate proceedings and that appropriate reserves have been
established with respect thereto.
53
e. Bankruptcy, Insolvency, etc. ADESA, Funding or any Subsidiary admitting
in writing its inability to pay its debts as they mature or a judicial
order or determination of insolvency being entered against ADESA,
Funding or any Subsidiary; or an administrative order of dissolution
being entered against ADESA, Funding or a "Significant Subsidiary" (as
defined in Section 6.b(v).) or ADESA, Funding or any Subsidiary applying
for, consenting to, or acquiescing in the appointment of a trustee or
receiver for ADESA, Funding or any Subsidiary or any property thereof,
or ADESA, Funding or any Subsidiary making a general assignment for the
benefit of creditors; or, in the absence of such application, consent or
acquiescence, a trustee or receiver being appointed for ADESA, Funding
or any Subsidiary or for a substantial part of its property and not
being discharged within sixty (60) days; or any bankruptcy,
reorganization, debt arrangement, or other proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation
proceeding being instituted by or against ADESA, Funding or any
Subsidiary and, if involuntary, being consented or acquiesced in by
ADESA, Funding or any Subsidiary or remaining for sixty (60) days
undismissed.
f. Warranties and Representations. Any warranty or representation made by
ADESA or Funding in this Agreement proving to have been false or
misleading in any material respect when made, or any schedule,
certificate, financial statement, report, notice, or other writing
furnished by ADESA, Funding or any Subsidiary to the Banks proving to
have been false or misleading in any material respect when made or
delivered.
g. Violations of Affirmative and Negative Covenants and Floating Rate Note
Document Obligations. Failure by ADESA or Funding to comply with or
perform any covenant applicable to it that is stated in Sections 6.c, or
6.g or Section 7 of this Agreement.
h. Failure to Make Sinking Fund Reserve Payments. Failure by ADESA to make
any payment into the Sinking Fund Reserve within five (5) days of the
date when due as required under the terms of Section 6.1.
i. Failure to Make Mandatory Loan Reductions. Failure by ADESA to make any
payment required under the terms of Sections 2.a(i) or 2.b.(vi) within
five (5) days after demand.
j. Noncompliance With Other Provisions of this Agreement. Failure of ADESA,
Funding or any of the Subsidiaries to comply with or perform any
covenant or other provision of this Agreement applicable to it, or to
perform any other Obligation (which failure does not constitute an Event
of Default under any of the preceding provisions of this Section 9) and
continuance of such failure for thirty (30) days after notice thereof to
ADESA from the Agent.
k. Noncompliance with the AFC Agreement and the AHC Loan Agreement. Failure
of ADESA or AFC to comply with or perform any covenant or other
provision of the AFC Agreement, applicable to it, or the failure of
ADESA or AFC to comply with or perform any covenant or other provision
of the AHC Loan Agreement (which failure does not
54
constitute an Event of Default under any of the preceding provisions of
this Section 9) and continuance of such failure for thirty (30) days
after notice thereof to ADESA from the Agent.
Section 10. EFFECT OF EVENT OF DEFAULT. When any Event of Default has
occurred and is continuing, the Required Banks, acting on behalf of all of the
Banks, may take any or all of the following actions:
a. Acceleration of the Loans. If any Event of Default described in Section
9.e shall occur, the maturity of the Loans shall immediately be
accelerated and the Notes and the Loans evidenced thereby, and all other
indebtedness and any other payment Obligations of ADESA and all
obligations of Funding and the Subsidiaries to the Banks shall become
immediately due and payable, and the Commitments shall immediately
terminate, all without notice of any kind. When any other Event of
Default has occurred and is continuing, the Agent, at the direction of
the Required Banks may accelerate payment of the Loans and declare the
Notes and all other payment Obligations due and payable, whereupon
maturity of the Loans shall be accelerated and the Notes and the Loans
evidenced thereby, and all other payment Obligations shall become
immediately due and payable and the Commitments shall immediately
terminate, all without notice of any kind. The Agent on behalf of the
Banks shall promptly advise ADESA of any such declaration, but failure
to do so shall not impair the effect of such declaration.
b. Refusal to Reinstate an Interest Drawing. The Required Banks may direct
Bank One to refuse to reinstate any Interest Drawing under the Letter of
Credit by giving notice to the Trustee of such refusal in the manner
provided in Section 8.02(m) of the Trust Indenture and in the form and
within the time provided under the terms of the Letter of Credit and the
Required Banks may direct Bank One to direct the Trustee to accelerate
the maturity of the Floating Rate Notes as provided under the terms of
the Trust Indenture.
c. Floating Rate Note Document Remedies. The Required Banks may direct Bank
One to notify the Trustee of the Event of Default with the result that
the Trustee will, as required by the Trust Indenture, declare the
principal of all the Floating Rate Notes and the interest accrued
thereon to be immediately due and payable and the Required Banks may
direct Bank One to exercise any other remedy available to Bank One under
any of the Floating Rate Note Documents.
d. Deposit to Secure Payment of the Reimbursement Obligation. The Required
Banks may demand that ADESA immediately pay to the Agent for the benefit
of the Banks, an amount equal to the Maximum Available Credit. Such
amount shall be due and payable to the Agent for the benefit of the
Banks immediately upon demand. ADESA grants to the Banks a pledge of and
security interest in any and all funds (hereafter referred to in this
subsection as a "Special Collateral Account") paid by ADESA to the Agent
or in transit to any deposit account or fund, pursuant to the demand of
the Banks made pursuant to this subsection. Such pledge and security
interest shall secure to the Banks
55
all of the Obligations relating to the Letter of Credit. ADESA
acknowledges that the Banks would not have an adequate remedy at law for
failure of ADESA to honor any demand made pursuant to this subsection
and, therefore, the Required Banks shall have the right to require ADESA
specifically to perform such undertaking whether or not any amounts are
then due and payable by ADESA to the Banks on account of its
reimbursement obligation with respect to Drawings made under the Letter
of Credit. In the event the Agent makes a demand pursuant to this
Section 10.d and ADESA pays the funds demanded, the Agent will hold
funds in a Special Collateral Account without liability for interest
thereon, provided that the Agent will, at the direction of ADESA and for
the account and risk of ADESA, invest the funds in the Special
Collateral Account in U. S. Treasury Bills with 30 days or less
remaining until maturity. Any earnings from such investment may, at the
discretion of the Required Banks, be released to ADESA. After the Letter
of Credit has expired and all of the Obligations have been satisfied,
the Required Banks shall direct the Agent to return to ADESA any balance
remaining in the Special Collateral Account established pursuant to the
requirements of this subsection.
e. Other Remedies. The Agent at the direction of the Required Banks may
pursue any other remedies available to them under any Credit Document or
any Floating Note Document. The Required Banks may bring any other
action available at law or in equity to enforce payment and performance
or otherwise to collect the Obligations.
The remedies enumerated in this Section 10 are not intended to be exclusive, but
shall be in addition to any other statutory, equitable or contractual remedies
available to the Banks.
Section 11. CHANGE OF CIRCUMSTANCES.
a. Change in Law. Notwithstanding any other provisions of this Agreement or
any Note, if at any time any change in applicable law or regulation or
in the interpretation thereof makes it unlawful for any Bank to make or
continue to maintain LIBOR-based Rate Advances or Interbank-based Rate
Advances or to give effect to its obligations are contemplated hereby,
such Bank shall promptly give notice thereof to ADESA, and such Bank's
obligations to make or maintain LIBOR-based Rate Advances or
Interbank-based Rate Advances under this Agreement shall terminate until
it is no longer unlawful for such bank to make or maintain LIBOR-based
Rate Advances or Interbank-based Rate Advances. ADESA shall prepay on
demand the outstanding principal amount of any such affected LIBOR-based
Rate Advances or Interbank-based Rate Advances, together with all
interest accrued thereon and all other amounts then due and payable to
such Bank under this Agreement; provided, however, subject to all of the
terms and conditions of this Agreement, ADESA may then elect to borrow
the principal amount of the affected LIBOR-based Rate Advances or
Interbank-based Rate Advances from such Bank by means of Prime-based
Rate Advances from such Bank that shall not be made ratably by the Banks
but only from such affected Bank.
56
b. Unavailability of Deposits or Inability to Ascertain, or Inadequacy Of,
LIBOR or Interbank Rate. If on or prior to the first day of any Interest
Period for any Advance of LIBOR-based Rate Advances or Interbank-based
Rate Advances (i) the Agent determines that deposits in United States
Dollars (in the applicable amounts) are not being offered in the
relevant market for such Interest Period, or (ii) the Required Banks
advise the Agent that LIBOR or the Interbank Rate, as applicable, as
determined by the Agent will not adequately and fairly reflect the cost
to such Banks of funding their LIBOR-based Rate Advances or
Interbank-based Rate Advances, as applicable, for such Interest Period,
then the Agent shall forthwith give notice thereof to ADESA and the
Banks, whereupon until the Agent notifies ADESA that the circumstances
giving rise to such suspension no longer exist, the obligations of the
Banks to make LIBOR-based Rate Advances or Interbank-based Rate
Advances, as applicable, shall be suspended.
c. Increased Cost and Reduced Return. (i) If, on or after the date hereof,
the adoption of any applicable law, rule or regulation, 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, or compliance by any
Bank (or its Lending Office as defined in Section 11.d) with any request
or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency:
(a) shall subject any Bank (or its Lending Office) to any tax,
duty or other charge with respect to its LIBOR-based Rate Advances or
Interbank-based Rate Advances, its Notes, or its obligation to make
LIBOR-based Rate Advances or Interbank-based Rate Advances, or shall
change the basis of taxation of payments to any Bank (or its Lending
Office) of the principal of or interest on its LIBOR-based Rate
Advances or Interbank-based Rate Advances or any other amounts due
under this Agreement in respect of its LIBOR-based Rate Advances or
Interbank-based Rate Advances (except for changes in the rate of tax
on the overall net income of such Bank or its Lending Office imposed
by the jurisdiction in which such Bank's principal executive office
or Lending Office is located); or
(b) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any
such requirement imposed by the Board of Governors of the Federal
Reserve System) against assets of, deposits with or for the account
of, or credit extended by, any Bank (or its Lending Office) or on the
interbank market or any other condition affecting its LIBOR-based
Rate Advances or Interbank-based Rate Advances, its Notes, or its
obligation to make LIBOR-based Rate Advances or Interbank-based Rate
Advances; and the result of any of the foregoing is to increase the
cost to such Bank (or its Lending Office) of making or maintaining
any LIBOR-based Rate Advances or Interbank-based Rate Advances or to
reduce the amount of any sum received or receivable by such Bank (or
its Lending Office) under this Agreement or under its Notes with
respect thereto, by an amount deemed by such
57
Bank to be material, then, within fifteen (15) days after demand by
such Bank (with a copy to the Agent), ADESA shall be obligated to pay
to such Bank such additional amount or amounts as will compensate
such Bank for such increased cost or reduction.
(ii) If, any the date hereof, any Bank or the Agent shall have
determined that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein (including, without
limitation, any revision in the Final Risk-Based Capital Guidelines of
the Board of Governors of the Federal Reserve System (12 CFR Part 208,
Appendix A; 12 CFR Part 225, Appendix A) or of the Office of the
Comptroller of the Currency (12 CFR Part 3, Appendix A), or in any other
applicable capital rules heretofore adopted and issued by any
governmental authority), 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, or compliance by any Bank (or its Lending Office) 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, has or would have the effect of reducing the rate of return on
such Bank's capital, or on the capital of any corporation controlling
such Bank, as a consequence of its obligations hereunder to a level
below that which such Bank could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's policies
with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within fifteen (15) days after demand
by such Bank (with a copy to the Agent) ADESA shall pay to such Bank
such additional amount or amounts as will compensate such Bank for such
reduction.
(iii) Each Bank that determines to seek compensation under
this Section 11.c. shall notify ADESA and the Agent of the circumstances
that entitle such Bank to such compensation pursuant to this Section
11.c. A certificate of any Bank claiming compensation under this Section
11.c. and setting forth the additional amount or amounts to be paid to
it hereunder shall be conclusive in the absence of errors in
calculation. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
d. Lending Offices. Each Bank may, at its option, elect to make its
Advances hereunder at the branch, office or affiliate specified on
Schedule A hereof (each a "Lending Office") for each type of Advance
available hereunder or at such other of its branches, offices or
affiliates as it may from time to time elect and designate in a written
notice to ADESA and the Agent.
e. Discretion of Bank as to Manner of Funding. Notwithstanding any other
provision of this Agreement, each Bank shall be entitled to fund and
maintain its funding of all or any part of its Commitment in any manner
it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if each Bank had
actually funded and maintained each LIBOR-based Rate Advance or
Interbank-
58
based Rate Advance through the purchase of deposits in the eurodollar
interbank market having a maturity corresponding to such Advance's
Interest Period and bearing an interest rate equal to LIBOR-based Rate
or Interbank-based Rate, as applicable, for such Interest Period.
Section 12. THE AGENT.
a. Appointment. Each Bank hereby appoints Bank One, Indianapolis, N.A. as
the Agent under the Credit Documents, and hereby authorizes the Agent to
act as the agent on its behalf and to exercise such powers under the
Credit Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto.
b. Agent and its Affiliates. The Agent shall have the same rights and
powers under this Agreement and the other Credit Documents as any other
Bank and may exercise or refrain from exercising the same as though it
were not the Agent, and the Agent and its affiliates may (without having
to account therefor to any Bank) accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business
with ADESA or any Subsidiary of ADESA as if it were not the Agent under
the Credit Documents and may accept fees and other consideration from
ADESA for services in connection with this Agreement or otherwise
without having to account for the same to the Banks except as specified
herein. The term "Bank" or "Banks" as used herein and in all other
Credit Documents, unless the context otherwise clearly requires,
includes the Agent in its individual capacity as a Bank.
c. Action by Agent. In the event that the Agent receives from ADESA a
written notice of an Event of Default, the Agent shall promptly give
each of the Banks written notice thereof. The obligations of the Agent
under the Credit Documents are only those expressly set forth therein.
Without limiting the generality of the foregoing, the Agent shall not be
required to take any action hereunder with respect to any Unmatured
Event of Default or Event of Default, except as expressly provided in
Section 10. Upon the occurrence of an Event of Default, the Agent shall
take such action with respect to the enforcement of its liens on the
collateral and the preservation and protection thereof as it shall be
directed to take by the Required Banks, but unless and until the
Required Banks have given such direction the Agent shall take or refrain
from taking such actions as it deems appropriate and in the best
interest of all the Banks. In no event, however, shall the Agent be
required to take any action in violation of applicable law or of any
provision of any Credit Document, and the Agent shall in all cases be
fully justified in failing or refusing to act hereunder or under any
other Credit Document unless it shall be first indemnified to its
reasonable satisfaction by the Banks against any and all costs, expense,
and liability which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall be entitled to
assume that no Unmatured Event of Default or Event of Default exists
unless notified to the contrary by a Bank or ADESA or unless the Agent
has actual knowledge. In all cases in which this Agreement and the other
59
Credit Documents do not require the Agent to take certain actions, the
Agent shall be fully justified in using its discretion in failing to
take or in taking any action hereunder and thereunder.
d. Consultation with Experts. The Agent may consult with legal counsel,
independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
e. Liability of Agent; Credit Decision. Neither the Agent nor any of its
directors, officers, agents, or employees shall be liable for any action
taken or not taken by it in connection with the Credit Documents (i)
with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct, and any
action taken or failure to act pursuant thereto shall be binding on all
of the Banks. Neither the Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement or any other
Credit Document, (ii) the performance or observance of any of the
covenants or agreements of ADESA, Funding or the Subsidiaries contained
herein or in any other Credit Document; (iii) the satisfaction of any
condition specified in Section 8 hereof except receipt of items required
to be delivered to the Agent; or (iv) the validity, effectiveness,
genuineness, enforceability, perfection, value, worth or collectibility
hereof or of any other Credit Document or of the liens provided for by
Section 5 hereof or of any other documents or writings furnished in
connection with any Credit Document or of the collateral; and the Agent
makes no representation of any kind or character with respect to any
such matter mentioned in this sentence. The Agent may execute any of its
duties under any of the Credit Documents by or through employees,
agents, and attorneys-in-fact and shall not be answerable to the Banks,
ADESA or any other Person for the default or misconduct of any such
agents or attorneys-in-fact selected with reasonable care, except for
willful misconduct or gross negligence. The Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
other document or statement (whether written or oral) believed by it to
be genuine or to be sent by the proper party or parties. In particular
and without limiting any of the foregoing, the Agent shall have no
responsibility for confirming the existence or worth of any collateral,
compliance certificate or other document or instrument received by it
under the Credit Documents. The Agent may treat the owner of any Note as
the holder thereof until written notice of transfer shall have been
filed with the Agent signed by such owner in form satisfactory to the
Agent. Each Bank acknowledges that it has independently and without
reliance on the Agent or any other Bank, and based upon such
information, investigations and inquiries as it deems appropriate, made
its own credit analysis and decision to extend credit to ADESA, Funding
and the Subsidiaries in the manner set forth in the Credit Documents. It
shall be the responsibility of each Bank to keep itself informed as to
the creditworthiness of ADESA, Funding and the Subsidiaries and the
Agent shall have no liability to any Bank with respect thereto. The
Agent shall not be required to keep itself informed as to the
60
performance or observance by ADESA of this Agreement or the Credit
Documents, or to inspect the properties or books of ADESA unless an
inspection of the properties or books is requested in writing by the
Required Banks, or to access or keep under review on its behalf the
financial condition, creditworthiness, condition, affairs, status or
nature of ADESA. Each Bank acknowledges that a copy of this Agreement
and a copy of Exhibits hereto have been made available to it and to its
individual legal counsel for review and each Bank acknowledges that it
is satisfied with the form and substance of this Agreement and the
Exhibits hereto.
f. Costs and Expenses. Each Bank agrees to reimburse the Agent for all
out-of-pocket expenses (including allocated costs of Agent's in-house
counsel) suffered or incurred by the Agent in performing its duties
hereunder and under the other Credit Documents or in the exercise of any
right or power imposed or conferred upon the Agent hereby or thereby
(except to the extent that such costs and expenses arise out of the
Agent's gross negligence or willful misconduct), to the extent that the
Agent is not promptly reimbursed for the same by ADESA, or out of the
collateral, all such costs and expenses to be borne by the Banks ratably
in accordance with their respective shares of the aggregate amount of
the Commitments hereunder.
g. Indemnity. Each Bank shall ratably, in accordance with their respective
shares of the aggregate amount of the Commitments hereunder, indemnify
and hold the Agent, and its directors, officers, employees, agents and
representatives harmless from and against any liabilities, losses,
damages, penalties, actions, judgments, suits, costs or expenses
suffered or incurred by it under any Credit Document or in connection
with the transactions contemplated thereby, regardless of when asserted
or arising, except to the extent they are promptly reimbursed for the
same by ADESA or out of the proceeds of the collateral and except to the
extent that any event giving rise to a claim was caused by the
negligence or willful misconduct of the party seeking to be indemnified.
The obligations of the Banks under this Section 12.g. and under Section
12.f. above shall survive termination of this Agreement.
h. Resignation of Agent and Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Banks and ADESA. Upon any
such resignation of the Agent, the Required Banks shall have the right
to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Banks and shall have accepted such
appointment, within thirty (30) days after the retiring Agent's giving
of notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be any Bank hereunder or
any commercial bank organized under the laws of the United States of
America or of any state thereof and having a combined capital and
surplus of at least $100,000,000. Upon the acceptance of its appointment
as the Agent hereunder, such successor Agent shall thereupon succeed to
and become vested with all the rights and duties of the retiring Agent
under the Credit Documents, and the retiring Agent shall be discharged
from its duties and obligations thereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of
61
this Section 12 and all protective provisions of the Credit Agreement
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent.
i. Reliance by ADESA. ADESA shall have the right to rely upon the authority
of the Agent to act hereunder unless it has received actual notice of
the resignation of the Agent. In the event of any conflicts or
inconsistencies between any notices or similar action taken by the Agent
compared to that of the Banks or the Required Banks, as the case may be,
ADESA shall be entitled to rely upon the notice or information provided
by the Agent until ADESA has received actual notice of the resignation
of the Agent, in which event ADESA shall be entitled to act upon the
most recent documents provided by the Agent until such documents are
rescinded by the Banks, or the Required Banks, as the case may be, or by
the successor Agent.
Section 13. MISCELLANEOUS
a. Waiver. No delay on the part of the Agent or the Banks or any holder of
the Notes in the exercise of any right, power or remedy shall operate as
a waiver thereof, nor as an acquiescence in any default, nor shall any
single or partial exercise by any of them of any right, power or remedy
preclude any other or further exercise thereof, or the exercise of any
other right, power or remedy, and the rights and remedies hereunder of
the Agent, the Banks and the holder of any Note are cumulative to, and
not exclusive of any rights or remedies which any of them would
otherwise have.
b. Payments Free of Withholding. Except as otherwise required by law, each
payment by ADESA under this Agreement or the other Credit Documents
shall be made with withholding for or on account of any present or
future taxes (other than overall net income taxes measured or based upon
the overall net income of the recipient) imposed by or within the
jurisdiction in which ADESA is domiciled, any jurisdiction from which
ADESA makes any payment or (in each case) any political subdivision or
taxing authority thereof or therein by reason of the participation by
the Banks in the transactions contemplated by this Agreement. If any
such withholding is so required, ADESA shall make the withholding, pay
the amount withheld to the appropriate governmental authority before
penalties attach thereto or interest accrues thereon and forthwith pay
such additional amount as may be necessary to ensure that the net amount
actually received by each Bank and the Agent free and clear of such
taxes (including such taxes on such additional amount) is equal to the
amount which that Bank or the Agent (as the case may be) would have
received had such withholding not been made. If the Agent or any Bank
pays any amount in respect of any such withheld taxes, penalties or
interest, ADESA shall reimburse the Agent or that Bank for that payment
on demand in the currency in which such payment was made. If ADESA pays
any such taxes, penalties or interest, it shall deliver official tax
receipts evidencing that payment or certified copies thereof to the
Banks or Agent on whose account such withholding was made (with a copy
to the Agent if not the recipient of the original) on or before the
thirtieth day after payment. If any Bank or the Agent determines it has
received or been granted a credit
62
against or relief or remission for, or repayment of, any taxes paid or
payable by it because of any taxes, penalties or interest paid by ADESA
and evidenced by such a tax receipt, such Bank or Agent shall, to the
extent it can do so without prejudice to the retention of the amount of
such credit, relief, remission or repayment, pay to ADESA such amount as
such Bank or Agent determines is attributable to such deduction or
withholding and which will leave such Bank or Agent (after such payment)
in no better or worse position than it would have been in if ADESA had
not been required to make such deduction or withholding. Nothing in this
Agreement shall interfere with the right of each Bank and the Agent to
arrange its tax affairs in whatever manner it thinks fit nor oblige any
Bank or the Agent to disclose any information relating to its tax
affairs or any computations in connection with such taxes.
c. Notices. Any notice given under or with respect to this Agreement or any
other Credit Document to ADESA, Funding, any Subsidiary, the Agent or
the Banks shall be in writing and, if delivered by hand, shall be deemed
to have been given when delivered and, if mailed, shall be deemed to
have been given five (5) days after the date when sent by registered or
certified mail, postage prepaid, and addressed to ADESA, Funding, such
Subsidiary, the Agent or the Banks at its address shown below or on
Schedule A hereto, or at such other address as any such party may, by
written notice to the other parties to this Agreement, have designated
as its address for such purpose. The addresses referred to are as
follows:
As to ADESA, Funding ADESA CORPORATION
and all Subsidiaries: 1919 S. Post Road
Indianapolis, Indiana 46239
Attention: Chief Financial Officer,
ADESA Corporation
As to the Agent: Bank One, Indianapolis, NA
Bank One Center/Tower - Suite 1911
111 Monument Circle
P.O. Box 7700
Indianapolis, Indiana 46277-0119
Attention: Manager, Metropolitan
Department B
As to the Banks: The Addresses set forth on
Schedule A hereto.
d. Costs, Expenses and Taxes. ADESA shall pay or reimburse the Agent and
the Banks on demand for all losses, claims, damages, penalties,
judgments, liabilities and expenses of the Agent and the Banks
(including, without limitation, reasonable attorneys' fees and legal
expenses) incurred by them in connection with or arising out of the
enforcement of this Agreement, the Letter of Credit or any other Credit
Document or any of the transactions contemplated thereby. In the event
that ADESA, Funding, or a Subsidiary
63
shall be the prevailing party in any action to enforce its rights under
this Agreement against the Agent or any Bank, then ADESA, Funding or
such Subsidiary shall be entitled to recover its reasonable attorneys'
fees and legal expenses in such action or proceeding. ADESA shall also
reimburse the Agent and the Banks for expenses incurred by the Agent and
the banks in connection with any audit of the books and records or
physical assets of ADESA and each of the Subsidiaries conducted pursuant
to any right granted to the Banks under the terms of this Agreement or
any other Credit Document. Such reimbursement shall include, without
limitation, reimbursement of the Agent and the Banks for their overhead
expenses reasonably allocated to such audits. In addition, ADESA shall
pay or reimburse the Agent and the Banks for all expenses incurred by
the Agent and the Banks in connection with the perfection of any
security interests granted to the Agent and the Banks by ADESA, Funding,
and each of the Subsidiaries and for any stamp or similar documentary or
transaction taxes which may be payable in connection with the execution
or delivery of this Agreement or any other Credit Document or in
connection with any other instruments or documents provided for herein
or delivered or required in connection herewith including, without
limitation, expenses incident to any lien or title search or title
insurance commitment or policy. All obligations provided for in this
Section shall survive termination of this Agreement. In addition to all
other fees payable under the terms of this Agreement, ADESA shall pay to
the Agent contemporaneously with the execution of this Agreement or
immediately upon demand therefor, all legal fees and expenses incurred
by the Agent for the preparation or execution of the Credit Documents,
and any amendments, waiver or consent related hereto, whether or not the
transactions contemplated herein are consummated.
e. Non-Business Day. Except as otherwise provided in this Agreement, if any
payment of principal of or interest on any Loan or of any other
Obligation shall fall due on a day which is not a Business Day, interest
or fees (as applicable) at the rate, if any, such Loan or other
Obligation bears for the period prior to maturity shall continue to
accrue on such Obligation from the stated due date thereof to and
including the next succeeding Business Day, on which the same shall be
payable.
f. Survival of Representations. All representations and warranties made
herein or in certificates given pursuant hereto shall survive the
execution and delivery of this Agreement and the other Credit Documents,
and shall continue in full force and effect with respect to the date as
of which they were made as long as any Obligations are due and payable
or any credit is in use or available hereunder.
g. Successors and Assigns. This Agreement and the other Credit Documents
shall be binding upon and shall inure to the benefit of ADESA, Funding,
the Agent and the Banks and their respective successors and assigns,
provided that the rights of ADESA and Funding under this Agreement shall
not be assignable without the prior written consent of the Agent and the
Banks and the Agent and the Banks may not assign their rights without
ADESA's consent.
64
h. Participants and Note Assignees. Each Bank shall have the right, with
the prior written consent of ADESA, at its own cost to grant
participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made and/or Commitments held
by such Bank and its participation in the Letter of Credit and any L/C
at any time and from time to time, and to assign its rights under such
Loans, or the Notes evidencing such Loans, and under the other Credit
Documents, to one or more other Persons; provided that no such
participation or assignment shall relieve any Bank of any of its
obligations under this Agreement, and, provided, further that no such
assignee or participant shall have any rights under this Agreement
except as provided in this Section 13.h., and the Agent shall have no
obligation or responsibility to such participant or assignee. Any
agreement pursuant to which such participation or assignment of a Note
or the rights thereunder is granted shall provide that the granting Bank
shall retain the sole right and responsibility to enforce the
obligations of ADESA under this Agreement and the other Credit Documents
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of the Credit Documents. Any
Bank assigning any Note hereunder shall give prompt notice thereof to
ADESA and the Agent, who shall in each case only be required to treat
such assignee of a Note as the holder thereof after receipt of such
notice. ADESA, Funding and the Subsidiaries authorize each Bank to
disclose to any purchaser or prospective purchaser of an interest in its
Loans or its Commitments under this Section 13.h. any financial or other
information pertaining to ADESA, Funding and Subsidiaries. ADESA and
Funding shall not be in privity with any participant of any Bank and no
such participant shall have any right to enforce any of the Credit
Documents against ADESA and Funding other than through the granting
Bank. In addition, no such participant shall be entitled to receive
payment hereunder of any amount greater than the amount that would have
been payable had the applicable Bank not granted such participation.
i. Assignment of Commitments by Banks. Each Bank shall have the right, at
any time with the prior written consent of ADESA and Funding and the
Agent which shall not be unreasonably withheld to sell, assign, transfer
or negotiate all or any part of its Commitment (including the same
percentage of its Note and outstanding Loans and its participation in
the Letter of Credit and any L/C's) to one or more Persons, provided
that such assignment shall be of a fixed percentage (and not by its
terms a varying percentage) of the assigning Bank's Commitment. Any such
assignee shall become a Bank for all purposes hereunder to the extent of
the Commitment it assumes and the assigning Bank shall be released from
its obligations, and will have released its rights under the Credit
Documents to the extent of such assignment. ADESA, Funding and the
Subsidiaries authorize each Bank and the Agent to disclose to any
purchaser or prospective purchaser of an interest in its Loans or
Commitment under Section 13.h. or 13.i. hereof any financial or other
information pertaining to ADESA, Funding and the Subsidiaries.
j. Amendments. Any provision of the Credit Documents may be amended or
waived if, but only if, such amendment or waiver is in writing and is
signed by (a) ADESA and
65
Funding, (b) the Required Banks, and (c) if the rights or duties of the
Agent are affected thereby, the Agent; provided that no amendment or
waiver pursuant to this Section shall (i) increase any Commitment of any
Bank without the consent of such Bank, (ii) increase the aggregate
amount of all Commitments, (iii) reduce the amount of or postpone any
fixed date for payment of any principal of or interest on any Loan or of
any fee payable hereunder without the consent of each Bank, (iv) release
the security interests or liens on any collateral, (v) permit ADESA or
Funding to assign its rights hereunder, (vi) change the provisions of
this Section, (vii) change the definition of Required Banks or otherwise
change the percentage of Banks required to take any action hereunder or
under any of the other Credit Documents, or (viii) decrease the
Commitments other than on a ratable basis, in each case, except for (i)
above, without the consent of all the Banks.
k. Set-Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Bank and each subsequent holder
of any Note, subject to Section 5.k. hereof, is hereby authorized by
ADESA and Funding at any time or from time to time, without notice to
ADESA or Funding or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or
unmatured, but not including trust accounts, and in whatever currency
denominated) and any other indebtedness at any time held or owing by
that Bank or that subsequent holder to or for the credit or the
account of ADESA or Funding, whether or not matured, against and on
account of the obligations and liabilities of ADESA or Funding to
that Bank or that subsequent holder under the Credit Documents,
including, but not limited to, all claims of any nature or description
arising out of or connected with the Credit Documents, irrespective of
whether or not (i) that Bank or that subsequent holder shall have made
any demand hereunder or (ii) the principal of or the interest on the
Loans or Notes and other amounts due hereunder shall have become due
and payable pursuant to Section 10 hereof and although said
obligations and liabilities, or any of them, may be contingent or
unmatured.
l. Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties on different counterparts,
each of which when executed shall be deemed an original but all such
counterparts taken together shall constitute one and the same
instrument.
m. Severability. If any provision of this Agreement or any other Credit
Document is determined to be illegal or unenforceable, such provision
shall be deemed to be severable from the balance of the provisions of
this Agreement or such Credit Document and the remaining provisions
shall be enforceable in accordance with their terms.
n. Captions. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
66
o. Governing Law - Jurisdiction. This Agreement and the other Credit
Documents are made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that
Indiana conflicts of law rules might otherwise require the substantive
rules of law of another jurisdiction to apply. ADESA, Funding and each
Subsidiary consents to the jurisdiction of any state or federal court
located within Marion County, Indiana. All service of process may be
made by messenger, by certified mail, return receipt requested, or by
registered mail directed to ADESA or Funding at the address stated in
Section 13.c. ADESA and Funding each waives any objection which it may
have to any proceeding commenced in a federal or state court located
within Marion County, Indiana, based upon improper venue or forum non
conveniens. Nothing contained in this Section shall affect the right of
the Agent, for the benefit of the Banks, to serve legal process in any
other manner permitted by law or to bring any action or proceeding
against ADESA or Funding or their respective property in the courts of
any other jurisdiction.
p. Prior Agreements, Etc. This Agreement supersedes all previous agreements
and commitments made by the Banks, Bank One and ADESA or any of the
Subsidiaries with respect to the Loans, the Letter of Credit and all
other subjects of this Agreement, including, without limitation, any
oral or written proposals or commitments made or issued by the Banks or
by Bank One.
Executed and delivered at Indianapolis, Indiana as of the 28th day of
July, 1995.
ADESA CORPORATION
By: Jerry Williams
-----------------------------------
Jerry Williams, Secretary
-----------------------------------
(Printed Name and Title)
ADESA FUNDING CORPORATION
By: Jerry Williams
-----------------------------------
Jerry Williams, Secretary
-----------------------------------
(Printed Name and Title)
BANK ONE, INDIANAPOLIS,
National Association
By: Jeffrey D. Widholm
-----------------------------------
Jeffrey D. Widholm, Vice President
67
PNC BANK, KENTUCKY, INC.
By: Ralph A. Phillips
-----------------------------------
Ralph A. Phillips, Vice President
-----------------------------------
(Printed Name and Title)
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By: William J. Harter
-----------------------------------
William J. Harter, Vice President
-----------------------------------
(Printed Name and Title)
THE FIRST NATIONAL BANK OF BOSTON
By: Richard D. Briggs, Jr.
-----------------------------------
Richard D. Briggs, Jr., Director
-----------------------------------
(Printed Name and Title)
HARRIS TRUST AND SAVINGS BANK
By: Peter Krawchuk
-----------------------------------
Peter Krawchuk
Vice President
-----------------------------------
(Printed Name and Title)
SOCIETY NATIONAL BANK, INDIANA
By: Joseph H. Rohs
-----------------------------------
Joseph H. Rohs V.P.
-----------------------------------
(Printed Name and Title)
69
EXHIBITS
A - Application for Loan Advance and Officer's Certificate - ADESA
B - Revolving Loan Notes
C - Line of Credit Notes
D - Form of Canadian Dollar Note
E - Reimbursement Agreement
F - Copy of Letter of Credit No. S-4269-G and Extension Letter
G - Amendment to Collateral Documents
H - Subsidiary Guaranty Agreement
I - Subsidiary Security Agreement
J - Amended Schedule to Pledge Agreement
K - Inter-Company Note
L - Inter-Company Security Agreement
M - Opinion of Counsel for ADESA
N - Subordination agreement between ADESA, Minnesota Power &
Light Co., or a wholly-owned subsidiary thereof and the
Banks
O - Subsidiary Pledge Agreement
SCHEDULES
---------
A - List of Bank Parties Hereto
4.e. Schedule of Exceptions
4.m. Schedule of Subsidiaries
SCHEDULE A TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
LIST OF BANKS PARTIES THERETO AND
SCHEDULE OF COMMITMENT AMOUNTS
- --------------------------------------------------------------------------------
COMMITMENT AMOUNTS
------------------
DIRECT PAY
LINE OF REVOLVING LETTER
CREDIT LOAN OF CREDIT
------- --------- ----------
BANK NAME AND ADDRESS
Bank One Indianapolis, NA $ 6,000,000 $17,333,333 $ 7,615,922
111 Monument Circle, Suite 1921
Indianapolis, Indiana 46227-0119
Attn: Metropolitan Department B
PNC Bank, Kentucky, Inc. 2,516,129 7,268,818 $ 3,193,773
500 West Jefferson
Louisville, Kentucky 40202
Attn: Ralph A. Phillips
First Tennessee Bank National 3,387,097 9,784,946 4,299,310
Association
165 Madison Avenue
Memphis, Tennessee 38103
Attn: William J. Harter
The First National Bank of Boston 3,000,000 8,666,667 3,807,960
100 Federal Street
Mail Stop 01-20-09
Boston, Massachusetts 02110
Attn: Rick Briggs, Jr
Harris Trust and Savings Bank 1,548,387 4,473,118 1,965,399
111 West Monroe Street
P.O. Box 755
Chicago, Illinois 60690
Attn: Peter Krawcuk
Society National Bank, Indiana 1,548,387 4,473,118 1,965,399
800 Market Tower
10 West Market Street
Indianapolis, Indiana 46204-2962
Attn: Joe Rohs
----------- ----------- -----------
Total: $18,000,000 $52,000,000 $22,847,763