1
EXHIBIT 10.53
================================================================================
REVOLVING CREDIT AGREEMENT
DATED AS OF
DECEMBER 31, 1997
AMONG
GROUP 1 AUTOMOTIVE, INC.,
ITS SUBSIDIARY BORROWERS LISTED HEREIN
THE BANKS LISTED HEREIN,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AS ADMINISTRATIVE AGENT
COMERICA BANK
AS FLOOR PLAN AGENT,
NATIONSBANK OF TEXAS, N.A.
AS DOCUMENTATION AGENT
AND
U. S. BANK
AS CO-AGENT
================================================================================
2
REVOLVING CREDIT AGREEMENT dated as of December 31, 1997, among GROUP
1 AUTOMOTIVE, INC., a Delaware corporation (the "Company"), each of the
Subsidiaries of the Company listed on the signature pages hereof and such other
Subsidiaries of the Company which hereafter shall become parties to this
Agreement (the Company and the Subsidiaries are sometimes referred to herein
as, individually, a "Borrower," and collectively, the "Borrowers"), the Banks
listed on the signature pages hereof (the "Banks"), TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, a national banking association, as Administrative Agent
for the Banks (in such capacity together with any successor in such capacity
pursuant to Section 12.6, the "Agent"), COMERICA BANK, a Michigan banking
association, as Floor Plan Agent for the Banks (in such capacity together with
any successor in such capacity pursuant to Section 12.13, the "Floor Plan
Agent").
ARTICLE I
CERTAIN DEFINED TERMS, ACCOUNTING TERMS AND
CONSTRUCTION
SECTION 1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"ABR Borrowing" means a Borrowing comprised of Alternate Base Rate
Loans.
"Accounts" means any and all rights of the Company or any of its
Subsidiaries to payment for goods and services sold or leased, including any
such right evidenced by chattel paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates.
"Acquisition" means the acquisition by any Borrower of (i) not less
than one hundred percent (100%) of the capital stock or other evidence of
equity ownership of an Auto Dealer, or (ii) all or substantially all of the
assets of an Auto Dealer.
"Acquisition Loan" has the meaning specified in Section 3.1.
"Acquisition Loan Advance Limit" means as of any Borrowing Date of an
Acquisition Loan, for the Company and its Subsidiaries on a consolidated basis,
calculated as of the last day of the most recently ended fiscal quarter or year
for which financial statements have been delivered under either Section 7.5 or
9.5, an amount equal to the lesser of (i) 2.75 times the difference between
Pro Forma EBITDA of the Floor Plan Subsidiaries minus Pro Forma Interest
Expense of the Floor Plan Subsidiaries, or (ii) an amount equal to the greater
of (y) 1.50 times the difference between Consolidated Pro Forma EBITDA minus
Pro Forma Floor Plan Interest Expense or (z) 2.0 times the difference between
Pro Forma EBITDA of the Floor Plan Subsidiaries minus Pro Forma Interest
Expense of the Floor Plan Subsidiaries. If the purpose of any Borrowing of an
Acquisition Loan is to make a Permitted Acquisition, then the foregoing amounts
shall be calculated to give effect to such Permitted Acquisition as if such
Acquisition had been consummated on or before the last day of the fiscal
quarter immediately preceding such Borrowing Date.
3
"Acquisition Loan Commitment" means for each Bank, its obligation to
make Acquisition Loans to the Borrowers up to the amount set forth opposite
such Bank's name on Schedule I under the caption "Acquisition Loan Commitments"
(as the same may be permanently terminated or reduced from time to time
pursuant to Section 2.3(g)(iii), 3.5, 5.5, or 11.1 and as such amount may be
increased or decreased from time to time by assignment or assumption pursuant
to Section 13.3(b)).
"Addendum" means the Addendum to Revolving Credit Agreement and Note
substantially in the form attached hereto as Exhibit A.
"Adjusted Indebtedness" means as of any date of determination, for the
Company and its Subsidiaries, on a consolidated basis, the difference between
(i) Indebtedness minus (ii) the sum of (x) Floor Plan Loans outstanding, (y)
Retail Loan Guaranties, and (z) Subordinated Indebtedness.
"Adjustment Period" means the period of time commencing on a Floor
Plan Adjustment Date and ending on the next succeeding Floor Plan Adjustment
Date.
"Administrative Questionnaire" means an Administrative Questionnaire
in the form of Exhibit B hereto, which each Bank shall complete and provide to
the Agent.
"Affiliate" means any Person (including any member of the immediate
family of any such natural person) who directly or indirectly beneficially owns
or controls five percent (5%) or more of the total voting power of shares of
capital stock of the Company having the right to vote for directors under
ordinary circumstances, any Person controlling, controlled by or under common
control with any such Person (within the meaning of Rule 405 under the
Securities Act of 1933) and any director or executive officer of such Person.
"Agency Fee" has the meaning specified in Section 5.4(b).
"Agent" has the meaning specified in the introduction to this
Agreement.
"Agent's Letter" has the meaning specified in Section 5.4(b).
"Agreement" means this Revolving Credit Agreement.
"Alternate Base Rate" means, for any day, a fluctuating rate per annum
(rounded upwards to the next highest one-eighth (1/8) of one percent (1%) if
not already an integral multiple of one-eighth (1/8) of one percent (1%)) equal
to the greater of (a) the Prime Rate in effect on such day, or (b) the Federal
Funds Effective Rate in effect on such day plus one-half ( 1/2) of one percent
(1%). "Prime Rate" shall mean, as of a particular date, the prime rate most
recently announced by TCB and thereafter entered in the minutes of TCB's Loan
and Discount Committee, automatically fluctuating upward and downward with and
at the time specified in each such announcement without notice to any Borrower
or any other Person, which prime rate may not necessarily represent the lowest
or best rate actually charged to a customer. "Federal Funds Effective Rate"
shall mean, for any day, an interest rate per annum equal to the weighted
average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as
2
4
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by the Agent from
three federal funds brokers of recognized standing selected by it. Any change
in the Alternate Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective on the effective date of such change in
the Prime Rate, or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loan" means any Loan with respect to which the
Company shall have selected an interest rate based on the Alternate Base Rate
in accordance with the provisions of this Agreement.
"Applicable Interest Rate" means the LIBO Rate, the Alternate Base
Rate, or the Comerica Prime-based Rate, as selected by the Company from time to
time subject to the terms and conditions of this Agreement.
"Applicable Margin" means, on any date, with respect to Eurodollar
Loans which are Acquisition Loans or to Alternate Base Rate Loans, as the case
may be, the applicable percentages set forth below based upon the Leverage
Ratio as in effect as of such date.
Leverage Eurodollar Alternate Base
Ratio Margin Rate Margin
--------- ------ -----------
Category 1
x > 1.75 2.75% 1.25%
Category 2
1.25 < x > 1.75 2.25% .75%
-
Category 3
1.00 < x > 1.25 1.75% .25%
-
Category 4
x < 1.00 1.50% .0%
-
Each change in the Applicable Margin shall apply to all Eurodollar
Loans that are outstanding at any time during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change.
"Applicable Lending Office" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of a Comerica Prime Rate Loan and
such Bank's Eurodollar Lending Office in the case of a Eurodollar Loan.
3
5
"Assignment and Acceptance" has the meaning specified in Section
13.3(b).
"Auto Dealer" means a Person engaged in the sale of new and/or Used
Motor Vehicles pursuant to a franchise or licensing agreement with a
Manufacturer and related operations.
"Banks" has the meaning specified in the introduction to this
Agreement, and Bank(s) shall include the Swing Line Bank unless the context
otherwise requires.
"Board" means the Board of Governors of the Federal Reserve System of
the United States.
"Book Value" means the wholesale value set forth in the most recent
edition of the National Automotive Dealers Association ("N.A.D.A.") Official
Used Car Guide Retail Edition.
"Borrower" or "Borrowers" has the meaning specified in the
introduction to this Agreement.
"Borrowing" means a Loan or a group of Loans of a single Type made by
the Banks on a single date and as to which a single Interest Period is in
effect.
"Borrowing Date" means, with respect to each Borrowing, the Business
Day upon which the proceeds of such Borrowing are made available to any
Borrower.
"Business Day" means a day when the Agent and each Bank are open for
business, and if the applicable Business Day relates to any Eurodollar Loan, a
day on which dealings are carried on in the London interbank market and
commercial banks are open for domestic or international business in London,
England, in New York City, New York, Detroit, Michigan and in Houston, Texas.
"Capital Lease" means any lease required to be accounted for as a
capital lease under generally accepted accounting principles.
"Cash Collateral Account" has the meaning specified in Section 6.8(a).
"Cash Receipted" means, in connection with the sale of a Motor
Vehicle, that cash has been received upon the sale thereof.
"Closing Date" means the earliest date upon which all of the following
shall have occurred: counterparts of this Agreement and all of the Loan
Documents shall have been executed by each Borrower, each Bank, the Agent and
the Floor Plan Agent and the Agent shall have received counterparts hereof
which taken together, bear the signature of all such signatories and all of the
other conditions to the initial Borrowing or the issuance of any Letters of
Credit set forth in Section 8.1 hereof shall have been satisfied.
"Code" means the Internal Revenue Code of 1986 and any successor
statute of similar import, together with the regulations thereunder, in each
case as in effect from time to time. References to sections of the Code shall
be construed to also refer to any successor sections.
4
6
"Collateral" means the collateral described in each of the Loan
Documents including the Security Documents and shall include (a) all of the
capital stock and any other equity interests of all Subsidiaries of the Company
or other Borrowers, now or hereafter existing (except such capital stock and
equity interests which the Company or other applicable Borrower is prohibited
by a Manufacturer from pledging), and (b) with respect each of the Borrowers,
(i) all inventory, including without limitation, Motor Vehicles, (ii) all
Accounts, (iii) all equipment, machinery, furniture and fixtures, and (iv) all
real estate owned or leased by any Borrower.
"Comerica Alternate Base Rate" shall mean, for any day, an interest
rate per annum equal to the Federal Funds Effective Rate in effect on such day,
plus one percent (1%).
"Comerica Prime-based Rate" shall mean, for any day, that rate of
interest which is equal to (a) the greater of (i) the Comerica Prime Rate and
(ii) the Comerica Alternate Base Rate minus (b) 0.50%.
"Comerica Prime Rate" shall mean the per annum rate of interest
announced by the Floor Plan Agent, at its main office from time to time as its
"prime rate" (it being acknowledged that such announced rate may not
necessarily be the lowest rate charged by the Floor Plan Agent to any of its
customers), which rate shall change simultaneously with any change in such
announced rate.
"Comerica Prime Rate Loan" or "Comerica Prime Rate Borrowing" means
any Loan with respect to which the Company shall have selected an interest rate
based on the Comerica Prime-based Rate in accordance with the provisions of
this Agreement.
"Commitment" means (a) for each Bank (or, as to any Person who becomes
a Bank after the Closing Date), its obligation to make Loans to the Borrowers
up to the amounts of its Pro Rata Share of the Acquisition Loan Commitment and
Floor Plan Loan Commitment, respectively, but in any event not to exceed the
amount set forth opposite such Bank's name on Schedule I under the caption
"Total Commitments," as the same may be permanently terminated or reduced from
time to time pursuant to Section 5.5 or 11.1 and as such amount may be
increased or decreased from time to time by assignment or assumption pursuant
to Section 13.3(b); and (b) for the Swing Line Bank, its obligation to make
Swing Line Loans to the Floor Plan Borrowers up to the amount of the Swing Line
Commitment as the same may be increased pursuant to the provisions of Section
2.3(g)(iii) or decreased pursuant to the provisions of Section 5.5.
"Commitment Fee" has the meaning specified in Section 5.4(a).
"Communications" has the meaning specified in Section 13.1.
"Company" has the meaning specified in the introduction to this
Agreement.
"Confidential Information Memorandum" means the Confidential
Information Memorandum dated October 29, 1997 furnished by Chase Securities
Inc., as Arranger on behalf of the Agent, the Floor Plan Agent and the Banks,
relating to the credit facilities evidenced by this Agreement.
5
7
"Consolidated EBITDA" means, for any period for which the amount
thereof is to be determined, Consolidated Net Income for such period, plus, to
the extent deducted in the determination of Consolidated Net Income and without
duplication with items included in the adjustments under generally accepted
accounting principles to net income in the determination of Consolidated Net
Income, (a) provisions for income taxes, (b) Interest Expense, (c) depreciation
and amortization expense, and (d) other non-cash income or charges.
"Consolidated Net Income" means for any period for which the amount
thereof is to be determined, the Net Income of the Company in accordance with
generally accepted accounting principles.
"Consolidated Pro Forma EBITDA" means, Pro Forma EBITDA of the Company
and its Subsidiaries, determined on a consolidated basis.
"Consolidated Tangible Net Worth" means, with respect to the Company,
at any time, the total Stockholders' Equity less the total amount of any
intangible assets, with all such amounts being calculated for the Company and
its Subsidiaries on a consolidated basis in accordance with generally accepted
accounting principles applied on a consistent basis. Intangible assets shall
include unamortized debt discount and expense, unamortized deferred charges and
goodwill.
"Current Ratio" means, as of any date of determination, for the
Company and its Subsidiaries on a consolidated basis, the quotient of (a)
current assets as of such date divided by (b) the sum of (without duplication)
current liabilities and the outstanding balance of all Floor Plan Indebtedness
as of such date.
"Curtailment Date" means (a) with respect to new Motor Vehicles, one
year after the date they are Deemed Floored, (b) with respect to Fleet Motor
Vehicles, thirty (30) days from the date they are Deemed Floored, (c) with
respect to Demonstrators, two hundred ten (210) days from the date they are
Deemed Floored, (d) with respect to Used Motor Vehicles, one hundred twenty
(120) days from the date they are Deemed Floored and (v) with respect to
Program Cars, one hundred eighty (180) days from the date they are Deemed
Floored.
"Dealer Franchise Agreement" has the meaning specified in Section
7.20.
"Deemed Floored" means with respect to a Motor Vehicle, the earlier of
(a) the date a Floor Plan Loan Borrowing is deemed by the Floor Plan Agent in
its sole discretion to be advanced by the Floor Plan Agent; or (b) thirty (30)
days after an advance is made on a Floor Plan Loan with respect to such Motor
Vehicle.
"Default" means any event or condition which, with the lapse of time
or giving of notice or both, would constitute an Event of Default.
"Demonstrator" means a new Motor Vehicle with mileage resulting from
customer test drives or use of such Motor Vehicle by dealership personnel.
"Disposition" means the sale, lease, conveyance or other disposition
of property.
6
8
"Dollars" and the symbol "$" mean the lawful currency of the United
States of America.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" on such Bank's
signature page to this Agreement or, as to any Person who becomes a Bank after
the Closing Date, on the signature page of the Assignment and Acceptance
executed by such Person or such other office of such Bank as such Bank may
hereafter designate from time to time as its "Domestic Lending Office" by
notice to the Company and the Agent.
"Draft" means a draft on a Floor Plan Borrower's account at the Floor
Plan Agent made by a Manufacturer in accordance with the terms of a Drafting
Agreement by and among the Floor Plan Agent, the Manufacturer and/or any of the
Borrowers.
"Drafting Agreement" means an agreement (whether or not issued in the
form of a letter of credit) by and between the Floor Plan Agent and a
Manufacturer, entered into for the account of a Floor Plan Borrower (and in
some cases acknowledged or countersigned by a Floor Plan Borrower) under which
a Manufacturer is entitled to submit Drafts to the Floor Plan Agent (via ACH
electronic transfer or otherwise) for payment of invoices identifying Motor
Vehicles delivered or shipped to the applicable Floor Plan Borrower, such
agreements to be substantially in the form of the existing Drafting Agreements
identified in Schedule II hereto or otherwise on terms and conditions
consistent with the usual customs and practices in effect from time to time for
the floor plan industry.
"EBITDA" means, for any Person, for any period for which the amount
thereof is to be determined, Net Income for such period, plus, to the extent
deducted in the determination of Net Income and without duplication with items
included in the adjustments under generally accepted accounting principles to
Net Income in the determination of net income, (a) provisions for income taxes,
(b) Interest Expense, (c) depreciation and amortization expense and (d) other
non-cash income or charges.
"Earnings Available for Fixed Charges" means, for any period for which
the amount thereof is to be determined, Consolidated EBITDA plus (a) lease
expense of the Company and its Subsidiaries on a consolidated basis minus (b)
the cash income taxes of the Company and its Subsidiaries, determined on a
consolidated basis as reported in the annual audited and the quarterly
unaudited financial statements.
"Eligible Assignee" means (a) any Bank or any Affiliate of any Bank
(b) a commercial bank organized under the laws of the United States, or any
state there of, and having total assets in excess of One Billion Dollars
($1,000,000,000) or its equivalent in any other currency and having deposits
that rated in either of the two highest generic letter rating categories
(without regard to subcategories) from either S&P or Moody's or a comparable
nationally recognized national or international rating agency; (c) a commercial
bank organized under the laws of any other country which is a member of the
OECD, or a political subdivision of any such country, and having total assets
in excess of One Billion Dollars ($1,000,000,000) or its equivalent in any
other currency, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is
also a member of the OECD; (d) the central bank of any country which is a
member of the
7
9
OECD; or (e) any other financial institution approved by the Agent and the
Company, (if such consent is required pursuant to Section 13.3) whose consent
shall not be unreasonably withheld.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to
sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" means any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in sections 414(b) and
414(c), respectively, of the Code or section 4001 of ERISA.
"Eurodollar Borrowing" means a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Lending Office" means, with respect to each Bank, the
branches or Affiliates of such Bank which such Bank has designated as its
"Eurodollar Lending Office" on such Bank's signature page to this Agreement or,
as to any Person who becomes a Bank after the Closing Date, on the signature
page of the Assignment and Acceptance executed by such Person or such other
office of such Bank as such Bank may hereafter designate from time to time as
its "Eurodollar Lending Office" by notice to the Company and the Agent.
"Eurodollar Loan" means any Loan with respect to which the Company
shall have selected an interest rate based on the LIBO Rate in accordance with
the provisions of this Agreement.
"Event of Default" has the meaning specified in Section 11.1.
"Excess/Payments in Process" means as of any date of determination the
funds transferred from any Floor Plan Borrower to the Floor Plan Agent in
payment of Floor Plan Loans which have at such time not yet been applied on a
VIN specific basis.
"Federal Funds Effective Rate" has the meaning specified in the
definition of "Alternate Base Rate."
"Fixed Charges" means, for any period for which the amount thereof is
to be determined, the sum of Interest Expense, lease expense, principal
payments, cash dividends, and capital expenditures, in each case, for the
Company and its Subsidiaries, determined on a consolidated basis.
"Fixed Charge Coverage Ratio" means the quotient of (a) Earnings
Available for Fixed Charges divided by (b) Fixed Charges.
"Fleet Motor Vehicle" means one of a large group of new Motor Vehicles
sold to a purchaser (e.g., a rental car agency) which purchases vehicles for
short term use.
"Floor Plan Adjustment Date" means (a) the last Business Day of each
calendar month, or (b) any Business Day designated by the Swing Line Bank upon
at least two (2) Business Days prior written notice to the Agent requesting
therein a Floor Plan Adjustment Date.
8
10
"Floor Plan Advance Limit" means (a) with respect to new Motor
Vehicles and Demonstrators, the wholesale purchase price charged by a
Manufacturer as reflected in the invoice to the Company or any other Floor Plan
Borrower for such Motor Vehicles, and (b) with respect to Used Motor Vehicles
and Program Cars, the cost of such Motor Vehicles to the Company or any other
Floor Plan Borrower; provided, however, with respect to Demonstrators, Used
Motor Vehicles and Program Cars, (x) the aggregate amount of Floor Plan Loans
outstanding at any time in connection with Used Motor Vehicles may not exceed
an amount equal to fifty-five percent (55%) of the aggregate Book Value of all
Used Motor Vehicles of the Floor Plan Borrowers, as reflected in their current
Manufacturer/Dealer Statement, (y) the aggregate amount of Floor Plan Loans
outstanding at any time in connection with Used Motor Vehicles and Program Cars
may not exceed Fourteen Million Five Hundred Thousand Dollars ($14,500,000),
and (z) the aggregate amount of Floor Plan Loans outstanding at any time in
connection with Demonstrators may not exceed Nine Million Five Hundred Thousand
Dollars ($9,500,000).
"Floor Plan Agency Fee" has the meaning specified in Section 5.4(c).
"Floor Plan Borrowers" shall mean the Company and/or any Floor Plan
Subsidiaries.
"Floor Plan Indebtedness" means (without duplication) all Indebtedness
of the Borrowers secured by Motor Vehicles.
"Floor Plan Interest Expense" means that component of the Company's
aggregate Interest Expense, determined on a consolidated basis, attributable to
Floor Plan Indebtedness.
"Floor Plan Loan" has the meaning specified in Section 2.1.
"Floor Plan Loan Commitment" means for each Bank, its obligation to
make Floor Plan Loans to the Floor Plan Borrowers up to the amount set forth
opposite such Bank's name on Schedule I under the caption "Floor Plan Loan
Commitments" (as the same may be increased pursuant to the provisions of
2.3(g)(iii) or permanently terminated or reduced from time to time pursuant to
Section 5.5 or 11.1 and as such amount may be increased or decreased from time
to time by assignment or assumption pursuant to Section 13.3(b)).
"Floor Plan Subsidiary" means any Subsidiary of the Company which has
granted a general Lien to the Agent for the benefit of the Banks on
substantially all of its assets in the manner required by the Loan Documents
and which does not have any Third Party Floor Plan Financing.
"Fronting Fees" has the meaning specified in Section 6.7(b).
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
9
11
"Guaranties" by any Person means all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including all
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor,
(b) to advance or supply funds (a) for the purchase
or payment of such Indebtedness or obligation, (b) to maintain working capital
or other balance sheet condition or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation,
(c) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of such Indebtedness or perform such obligation, or
(d) otherwise to assure the owner of the Indebtedness
or the obligation of the primary obligor against loss in respect thereof.
For the purposes of all computations made under this Agreement, a Guaranty in
respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness
equal to the maximum aggregate amount of such obligation, liability or
dividend.
"Highest Lawful Rate" means, as to any Bank, the maximum nonusurious
rate of interest, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the aggregate principal
amount of all Loans under the laws of the United States of America and/or the
laws of the State of Texas as may be applicable thereto that are presently in
effect or, to the extent allowed under such applicable law, which may hereafter
be in effect and which allow a higher maximum non-usurious interest rate than
applicable law now allows. To the extent, if any, that the maximum
non-usurious rate is determined with reference to the laws of the State of
Texas, the Highest Lawful Rate shall be the "weekly" rate ceiling as defined in
Chapter 1D of Subtitle 1 of Title 79, Texas Revised Civil Statutes (as amended)
(the "Act"), calculated on the basis of a 365/366 day year; provided, however,
that to the extent permitted by the Act, the Agent may at its election or at
the request of the Required Banks substitute for the "weekly" rate ceiling the
"annual" or "quarterly" ceiling, as those terms are defined in the Act, upon
the giving of notices provided for by the Act and effective upon the giving of
such notices.
"Honor Date" has the meaning specified in Section 6.3(b).
"Indebtedness" of any Person means, without duplication:
10
12
(a) any obligation of such Person for borrowed money,
including any obligation of such Person evidenced by bonds, debentures, notes
or other similar debt instruments, and
(b) any obligation of such Person on account of
deposits or advances,
(c) all obligations of such Person under conditional
sale or other title retention agreements relating to property purchased by such
Person,
(d) any obligation of such Person for the deferred
purchase price of any property or services, except accounts payable arising in
the ordinary course of such Person's business,
(e) rentals in respect of Capital Leases of such
Person,
(f) Guaranties by such Person to the extent required
pursuant to the definition thereof,
(g) any Indebtedness of another Person secured by a
Lien on any asset of such first Person, whether or not such Indebtedness is
assumed by such first Person, and
(h) any Indirect Indebtedness of such Person.
"Indemnitee" has the meaning specified in Section 13.4(b).
"Indirect Indebtedness" means preferred stock of a Person having a
mandatory redemption prior to the Maturity Date.
"Insolvency Proceeding" means (a) any case, action or proceeding
relating to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general assignment for
the benefit of creditors, composition, marshalling of assets for creditors, or
other, similar arrangements in respect of its creditors generally or any
substantial portion of a Person's creditors, undertaken under federal.
"Interest Coverage Ratio" means for any period the quotient of (a)
Consolidated EBITDA for such period divided by (b) Interest Expense of the
Company for such period.
"Interest Expense" means, for any Person, determined on a consolidated
basis, the sum of all interest on Indebtedness paid or payable (including the
portion of rents payable under Capital Leases allocable to interest, but
excluding interest allowances from Manufacturers).
"Interest Payment Date" means, (a) with respect to Floor Plan Loans
(other than Swing Line Loans and Swing Line Overdraft Loans), the last day of
the Interest Period applicable to each such Loan (and, in addition, in the case
of any Interest Period more than 30 days' duration, the day that would have
been the Interest Payment Date of such Interest Period if such Interest Period
had been of one month or 30 days' duration), (b) with respect to Acquisition
Loans which are Eurodollar
11
13
Loans, the last day of the Interest Period applicable to each such Loan (and in
addition, in the case of any Interest Period of six months or 180 days'
duration, the day that would have been the Interest Payment Date of such
Interest Period if such Interest Period had been of three months' or 90 days'
duration), (c) with respect to Alternate Base Rate Loans, on the first Business
Day of each January, April, July and October of each year, commencing January
1, 1998 and with respect to Swing Line Loans, Swing Line Overdraft Loans and
Comerica Prime Rate Loans, on the fifth (5th) Business Day of each month.
"Interest Period" means: with respect to:
(a) Floor Plan Loans and Swing Line Loans (i) as to any Eurodollar
Loan, the period commencing on the date of such Eurodollar Loan and
ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month
that is fourteen (14) days or one month thereafter, as the Company may
elect, and (ii) as to any Comerica Prime Rate Loan, the period
commencing on the date of such Comerica Prime Rate Loan and ending on
the date such Loan is repaid; or converted into a Eurodollar Loan in
accordance with the terms of Section 5.15(b); provided, however, that
(A) if any Interest Period would end on a day that shall not be a
Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, with respect to Eurodollar Loans only,
such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next
preceding Business Day, (B) no Interest Period shall end later than
the Maturity Date and (C) interest shall accrue from and including the
first day of an Interest Period to but excluding the last day of such
Interest Period; and
(b) Acquisition Loans (i) as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the
numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is one,
two, three or six months thereafter, as the Company may elect and (ii)
as to any Alternate Base Rate Loan, a period commencing on the date of
such Loan and ending on the date such Loan is repaid or converted into
a Eurodollar Loan in accordance with the terms of Section 5.15(a);
provided, however, that (A) if any Interest Period would end on a day
that shall not be a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, with respect to
Eurodollar Loans only, such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day, (B) no Interest Period shall end
later than the Maturity Date and (C) interest shall accrue from and
including the first day of an Interest Period to but excluding the
last day of such Interest Period.
"Inventory Detail Report" means a report delivered pursuant to Section
9.5(f) by the Company and the other Floor Plan Borrowers (on an individual and
consolidated basis) which breaks out in detail the new Motor Vehicles, Used
Motor Vehicles, Demonstrators, and Program Vehicles held by such Floor Plan
Borrower as reflected in its Manufacturer/Dealer Statements.
"Investment" means, as to any Person, any investment so classified
under generally accepted accounting principles made by stock purchase, capital
contribution, loan or advance or by purchase
12
14
of property or otherwise, but in any event shall include as an investment in
any other Person the amount of all Indebtedness owed by such other Person and
all Accounts from such other Person which are not current assets or did not
arise from services rendered or sales to such other Person in the ordinary
course of business.
"IPO" means the initial public offering of stock of the Company.
"Issue" means, with respect to any Letter of Credit, to issue or to
extend the expiration date of, or to renew or increase the amount of, such
Letter of Credit; and the terms "Issued," "Issuing" and "Issuance" have
corresponding meanings.
"Issuing Bank" means Texas Commerce Bank National Association in its
capacity as issuer of one or more Letters of Credit hereunder, together with
any successor letter of credit issuer and any replacement letter of credit
issuer.
"Leasehold Mortgage" has the meaning specified in Section 8.1(c)(iv).
"Letter of Credit" means any letter of credit issued by the Issuing
Bank pursuant to Article VI.
"Letter of Credit Advance" means each Bank's participation in any
Letter of Credit Borrowing in accordance with its Pro Rata Share.
"Letter of Credit Application" and "Letter of Credit Amendment
Application" means an application form for Issuance of, and for amendment of,
Letters of Credit as shall at any time be in use at the Issuing Bank, as the
Issuing Bank shall request.
"Letter of Credit Borrowing" means an extension of credit resulting
from a drawing under any Letter of Credit which shall not have been reimbursed
on the date when made from proceeds of a Borrowing of Acquisition Loans under
Section 6.3(b).
"Letter of Credit Commitment" means the commitment of the Issuing Bank
to Issue, and the commitment of the Banks severally to participate in, Letters
of Credit from time to time Issued or outstanding under Article VI in an
aggregate amount not to exceed on any date the amount of Five Million Dollars
($5,000,000); provided that the Letter of Credit Commitment is a part of the
combined Acquisition Loan Commitment, rather than a separate, independent
commitment.
"Letter of Credit Fees" has the meaning specified in Section 6.7(a).
"Letter of Credit Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding, plus (b)
the amount of all unreimbursed drawings under all Letters of Credit, including
all outstanding Letter of Credit Borrowings.
"Letter of Credit-Related Documents" means the Letters of Credit, the
Letter of Credit Applications, the Letter of Credit Amendment Applications and
any other document relating to any
13
15
Letter of Credit, including any of the Issuing Bank's standard for documents
for Letter of Credit Issuances.
"Letter of Credit Termination Date" has the meaning provided in
Section 6.1(a).
"Leverage Ratio" means as of any date of determination, for the
Company, the quotient of (a) Adjusted Indebtedness as of such date divided by
(b) (y) Consolidated Pro Form EBITDA as of such date, minus (z) Pro Forma Floor
Plan Interest Expense of the Company and its Subsidiaries, determined on a
consolidated basis and after having given effect to any proposed Acquisition,
as of such date.
"LIBO Rate" means with respect to a Borrowing the rate (rounded to
the nearest one-eighth (1/8) of one percent (1%) or, if there is no nearest
one-eighth (1/8) of one percent (1%), the next higher one-eighth (1/8) of one
percent (1%) at which dollar deposits approximately equal in principal amount
of such Borrowing and for a maturity equal to the applicable Interest Period
are offered in immediately available funds to the principal office of the Agent
in London, England (or if the Agent does not at the time any such determination
is made, maintain an office in London, England, the principal office of any
Affiliate of the Agent in London, England) by leading banks in the London
interbank market for Eurodollars at approximately 11:00 A.M., LONDON, ENGLAND
TIME, two Business Days prior to the commencement of such Interest Period.
"Lien" means any mortgage, pledge, hypothecation, judgment lien or
similar legal process, title retention lien, or other lien or security
interest, including the interest of a vendor under any conditional sale or
other title retention agreement and the interest of a lessor under any Capital
Lease.
"Loan" means an Alternate Base Rate Loan, a Comerica Prime Rate Loan,
a Eurodollar Loan, an Acquisition Loan, a Floor Plan Loan, a Swing Line Loan,
or a Swing Line Overdraft Loan; and "Loans" means all such Loans made pursuant
to this Agreement
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Agent's Letter and all other documents and instruments executed
by the Borrowers or any other Person in connection with this Agreement and the
Loans.
"Manufacturer" means the manufacturer of a Motor Vehicle.
"Manufacturer/Dealer Statement" means a financial statement prepared
by a Floor Plan Borrower for a Manufacturer and delivered to the Manufacturer
on a monthly basis.
"Manufacturer's Certificate" means any Manufacturer's Statement of
Origin, Manufacturer's Certificate, MSO, Certificate of Origin or any other
document evidencing the ownership or transfer of ownership of a new Motor
Vehicle from a Manufacturer to any Borrower.
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding),
14
16
(i) a material adverse effect on the financial condition, business, operations,
assets or prospects of the Company and its Subsidiaries, on a consolidated
basis, (ii) a material impairment of the ability of the Company and its
Subsidiaries on a consolidated basis or the Floor Plan Subsidiaries as a group,
to perform their Obligations under the Loan Documents or (iii) a material
impairment of the validity or enforceability of the Loan Documents.
"Maturity Date" means December 31, 2000, or the earlier termination of
the Commitments under Sections 5.5 and 11.1.
"Maximum Permissible Rate" has the meaning specified in Section 13.8.
"Mortgage" means a mortgage or deed of trust substantially in the form
of Exhibit D covering each parcel of real estate owned by any Borrower (other
than real estate securing Non-Recourse Real Estate Debt that cannot be
subordinately mortgaged), executed by the respective Borrower in favor of the
Agent for the benefit of the Banks.
"Motor Vehicle" means an automobile, truck, van or any other motor
vehicle, including, without limitation, new Motor Vehicles, Used Motor
Vehicles, Program Cars, Fleet Motor Vehicles, and Demonstrators.
"Net Income" means for any Person for any period for which the amount
thereof is to be determined the net income (or net losses) of such Person and
its Subsidiaries on a consolidated basis as determined in accordance with
generally accepted accounting principles after deducting, to the extent
included in computing said net income and without duplication, (i) the income
(or deficit) of any Person (other than a Subsidiary) in which such Person or
any of its Subsidiaries has any ownership interest, except to the extent that
any such income has been actually received by such Person or such Subsidiary in
the form of cash dividends or similar cash distribution, (ii) any income (or
deficit) of any other Person accrued prior to the date it becomes a Subsidiary
of such Person or merges into or consolidates with such entity, (iii) the gain
or loss (net of any tax effect) resulting from the sale of any capital assets,
(iv) any gains or losses or other income which is non-recurring, extraordinary
or attributable to discontinued operations, (v) income resulting from the
write-up of any assets, and (vi) any portion of the net income of any
Subsidiaries which is not available for distribution.
"Non-Recourse Real Estate Debt" means Indebtedness of a Subsidiary of
the Company existing as of the Closing Date and described in Schedule XII or
incurred in connection with an Acquisition, provided that such Indebtedness is
non-recourse to such Borrower and secured solely by real estate of such
Borrower used in the day-to-day operations of its business.
"Note" and "Notes" mean each of the Promissory Notes substantially in
the form of Exhibit C-1 duly executed by all of the Borrowers each payable and
delivered to each of the respective Banks in the principal face amount of the
respective Bank's Commitment.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by any Borrower to
any Bank, the Agent, the Floor Plan Agent,
15
17
the Swing Line Bank, or the Issuing Bank, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due,
now existing or hereafter arising.
"OECD" means the Organization for Economic Cooperation and
Development.
"Other Activities" has the meaning specified in Section 12.3.
"Other Financings" has the meaning specified in Section 12.3.
"Other Taxes" has the meaning specified in Section 5.14(b).
"Out of Balance" means (i) with respect to a Motor Vehicle, the
outstanding balance of the Floor Plan Loan pursuant to which such Motor Vehicle
was purchased exceeds the Floor Plan Advance Limit and (ii) with respect to a
Floor Plan Loan, the outstanding balance thereof has not been paid in
accordance with the terms of this Agreement; provided, however, that so long as
the outstanding balance of (y) Cash Receipted Motor Vehicles shall have been
received within five (5) days of the sale thereof and (z) Sale Dated Motor
Vehicles shall have been received within ten (10) days of the sale thereof,
such Loans shall not be considered Out of Balance.
"Out of Balance Amount" has the meaning specified in Section 9.12(b).
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Performance Letter of Credit" has the meaning specified in Section
6.2.
"Permitted Acquisition" means (a) in connection with an Acquisition by
the Company pursuant to which (i) the total consideration (exclusive of stock
or other equity consideration) is less than or equal to Ten Million Dollars
($10,000,000), (ii) when combined with the total consideration (exclusive of
stock or other equity consideration) paid or payable in connection with all
other Acquisitions completed within the immediately preceding twelve (12)
calendar months is less than or equal to Twenty-five Million Dollars
($25,000,000) and (iii) not less than one hundred percent (100%) of the capital
stock or other evidence of equity ownership of the target entity is acquired,
and that satisfies all the requirements for a Permitted Acquisition set forth
in Section 9.16(a)(i)(ii)(v)(vi)(viii)(ix) and Section 9.16(b); and (b) in
connection with an Acquisition by the Company pursuant to which (i) the total
consideration (exclusive of stock or other equity consideration) is greater
than Ten Million Dollars ($10,000,000), (ii) when combined with the total
consideration (exclusive of stock or other equity consideration) paid or
payable in connection with all other Acquisitions completed within the
immediately preceding twelve (12) calendar months is greater than Twenty-five
Million Dollars ($25,000,000) and (iii) not less than one hundred percent
(100%) of the capital stock or other evidence of equity ownership of the target
entity is acquired, and that satisfies all the requirements for a Permitted
Acquisition set forth in Section 9.16(a) and Section 9.16(b).
"Permitted Acquisition Notice" has the meaning specified in Section
9.16(a)(ii).
16
18
"Permitted Liens" means those Liens described in Section 10.2.
"Person" means any natural person, corporation, business trust,
association, company, limited liability company, joint venture, partnership or
government or any agency or political subdivision thereof.
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any of its Subsidiaries or any
ERISA Affiliate or as to which the Company or any of its Subsidiaries or any
ERISA Affiliate contributes or is a member or otherwise may have any liability.
"Pledge Agreement" means a Pledge Agreement substantially in the form
of Exhibit E attached hereto, executed by the Company and certain other
Borrowers in favor of the Agent for the benefit of the Banks covering all of
the capital stock and other equity interests of the Company's direct and
indirect Subsidiaries.
"Prime Rate" has the meaning specified in the definition of the term
"Alternate Base Rate."
"Pro Forma EBITDA" means, for any Person, as of any date of
determination, based upon the immediately preceding four fiscal quarters, for
any period for which the amount thereof is to be determined, EBITDA of such
Person plus (or minus), without duplication, the EBITDA for such four quarter
period of any Person acquired during such period.
"Pro Forma Floor Plan Interest Expense" means, for any Person, as of
any date of determination, based upon the immediately preceding four fiscal
quarters of such Person, Floor Plan Interest Expense of such Person plus (or
minus), without duplication, the Floor Plan Interest Expense for such period of
any Person acquired during such period.
"Pro Forma Interest Expense" means Pro Forma Floor Plan Interest
Expense plus pro forma Interest Expense of other permitted Indebtedness of the
Borrowers.
"Program Car" means a Motor Vehicle in the current or immediately
preceding model year in readily saleable condition, previously used by a car
rental company as a part of its rental fleet or previously driven by an
executive of a Manufacturer before being offered for sale to the Company or any
other Floor Plan Borrower at a Manufacturer sponsored auction.
"Pro Rata Share" shall mean, at any time, with respect to any Bank,
the percentage corresponding to the fraction the numerator of which shall be
the amount of the Commitment of such Bank and the denominator of which shall be
the aggregate amount of the Commitments of all of the Banks.
"Quoted Rate" shall mean the lesser of (i) rate of interest per annum
offered by Swing Line Bank in its sole discretion with respect to a Swing Line
Loan or a Swing Line Overdraft Loan, such rate to be derived from the LIBO Rate
(or other cost of funds, as selected by Swing Line Bank) on the applicable date
of determination, plus 1.5% and (ii) the Highest Lawful Rate.
"Refunded Swing Line Loans" has the meaning specified in Section
4.5(a).
"Register" has the meaning specified in Section 13.3(d).
17
19
"Retail Loan Guarantees" means any Guaranty by the Company or any of
its Subsidiaries in favor of any Person of retail installment contracts or
other retail payment obligations in respect of Motor Vehicles sold to a
customer.
"Sale Dated" means, in connection with the sale of a Motor Vehicle,
that closing of the sale of such Motor Vehicle is pending financing or other
contingencies.
"Security Agreement" means a Security Agreement substantially in the
form of Exhibit G attached hereto, executed by each of the Borrowers in favor
of the Agent for the benefit of the Banks covering all assets of the Borrowers
described therein.
"Security Documents" means this Agreement, the Pledge Agreement, the
Security Agreements, the agreements or instruments described or referred to in
Section 8.1(c) and any and all other agreements or instruments now or hereafter
executed and delivered by any Borrower or any other Person in connection with,
or as security for, the payments or performance of any of the Obligations.
"Stockholders' Equity" means the consolidated stockholders' equity of
the Company and its Subsidiaries after eliminating all intercompany items and
after deducting from stockholders' equity such portion thereof as is properly
attributable to minority interests in such Subsidiaries.
"Subordinated Indebtedness" means Indebtedness of any Borrower having
maturities and terms, and which is subordinated to payment of the Notes in a
manner, approved in writing by the Agent and the Required Banks and which in
the aggregate, is less than Ten Million Dollars ($10,000,000).
"Subsidiary" means any Person of which or in which any other Person
(the "Parent") and the other Subsidiaries of the Parent own directly or
indirectly fifty percent (50%) or more of:
(a) the combined voting power of all classes of stock
having general voting power under ordinary circumstances to elect a majority of
the board of directors of such Person, if it is a corporation;
(b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar entity; or
(c) the beneficial interest of such Person, if it is
a trust, association or other unincorporated organization.
The term Subsidiary (or Subsidiaries), as used in the introduction to
this Agreement, means a Subsidiary (or the Subsidiaries) of the Company.
"Swing Line Bank" means Comerica Bank and its successors and assignees
as provided in this Agreement.
19
20
"Swing Line Commitment" means, for the Swing Line Bank, its obligation
to make Swing Line Loans to the Floor Plan Borrowers up to the amount equal to
the Floor Plan Loan Commitment, as in effect from time to time; provided that,
subject to the provisions of Article IV, the Swing Line Commitment is a part of
the Floor Plan Loan Commitment rather than a separate, independent commitment.
"Swing Line Loan" has the meaning specified in Section 4.1.
"Swing Line Minimum Amount" means the amount of Swing Line Loans
which in the mutual determination of the Borrowers and the Floor Plan Agent
shall remain outstanding as of each Floor Plan Adjustment Date, which amount
may change from time to time as the Borrowers and the Floor Plan Agent shall
mutually agree; provided, however, the Swing Line Minimum Amount shall in any
event not be in excess of Ten Million Dollars ($10,000,000).
"Swing Line Note" means the Swing Line Note substantially in the form
of Exhibit C-2, duly executed by all of the Floor Plan Borrowers and payable to
and delivered to the Swing Line Bank, in the principal face amount of the Swing
Line Commitment.
"Swing Line Overdraft Borrowing Request" has the meaning specified in
Section 2.3(g)(iii).
"Swing Line Overdraft Loan" has the meaning specified in Section
2.3(g)(iii).
"Taxes" has the meaning specified in Section 5.14(a).
"TCB" means Texas Commerce Bank National Association and its
successors and assigns as permitted in this Agreement.
"Third Party Floor Plan Financing" means a floor plan credit facility
by and among certain of the Borrowers that are not Floor Plan Borrowers and
third party lenders, which facilities are in existence on the date hereof and
are set forth in Schedule III or which are hereafter in effect with respect to
a Subsidiary acquired in connection with a Permitted Acquisition.
"Total Commitment" means, at any time, the aggregate amount of the
Commitments, as in effect at such time.
"Transferee" has the meaning specified in Section 5.14(a).
"Type" means any type of Loan determined with respect to the interest
option applicable thereto, i.e., a Eurodollar Loan, an Alternate Base Rate Loan
or Comerica Prime Rate Loan.
"UCC" means the Uniform Commercial Code as adopted and in effect in
the State of Texas from time to time.
"Used Motor Vehicle" means a Motor Vehicle in the current or any of
the four preceding model years which is in readily saleable condition.
20
21
"Wholly-Owned Subsidiary" means any Person of which the Company or its
other Wholly-Owned Subsidiaries own directly or indirectly one hundred percent
(100%) of:
(a) the issued and outstanding shares of stock
(except shares required as directors' qualifying shares and shares constituting
less than two percent (2%) of the issued and outstanding shares);
(b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar entity; or
(c) the beneficial interest of such Person, if it is
a trust, association or other unincorporated organization.
SECTION 1.2 Accounting Terms. Except as otherwise herein
specifically provided, each accounting term used herein shall have the meaning
given it under generally accepted accounting principles as in effect, as of the
applicable date of determination thereof, from time to time as set forth in the
opinions, statements and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board and applied on a consistent basis.
SECTION 1.3 Interpretation.
(a) In this Agreement, unless a clear contrary
intention appears:
(i) the singular number includes the plural
number and vice versa;
(ii) reference to any gender includes each
other gender;
(iii) the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Article,
Section or other subdivision;
(iv) reference to any Person includes
such Person's successors and assigns but, if applicable, only
if such successors and assigns are permitted by this
Agreement, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually,
provided that nothing in this clause (iv) is intended to
authorize any assignment not otherwise permitted by this
Agreement;
(v) reference to any agreement
(including this Agreement), document or instrument means such
agreement, document or instrument as amended, supplemented or
modified and in effect from time to time in accordance with
the terms thereof and, if applicable, the terms hereof, and
reference to any Note includes any note issued pursuant hereto
in extension or renewal thereof and in substitution or
replacement therefor;
21
22
(vi) unless the context indicates
otherwise, reference to any Article, Section, Schedule or
Exhibit means such Article or Section hereof or such Schedule
or Exhibit hereto;
(vii) the word "including" (and with
correlative meaning "include") means including, without
limiting the generality of any description preceding such
term;
(viii) with respect to the determination of
any period of time, the word "from" means "from and including"
and the word "to" means "to but excluding"; and
(ix) reference to any law means such law
as amended, modified, codified or reenacted, in whole or in
part, and in effect from time to time.
(b) The Article and Section headings herein and the
Table of Contents are for convenience only and shall not affect the
construction hereof.
(c) No provision of this Agreement shall be
interpreted or construed against any Person solely because that Person or its
legal representative drafted such provision.
ARTICLE II
THE FLOOR PLAN LOANS
SECTION 2.1 Floor Plan Loan Commitments. Subject to the
terms and conditions and relying upon the representations and warranties of the
Borrowers herein set forth, each Bank severally and not jointly agrees, on the
terms and conditions set forth herein, to make revolving credit loans (each
such loan, a "Floor Plan Loan") to any Floor Plan Borrower from time to time on
any Business Day during the period from the Closing Date to the Maturity Date
in an aggregate amount not to exceed at any time outstanding such Bank's Floor
Plan Loan Commitment; provided, however, that after giving effect to all Floor
Plan Loans and Swing Line Loans requested on any date, the aggregate principal
amount of all outstanding Floor Plan Loans, all outstanding Swing Line Loans,
all outstanding Acquisition Loans, and all outstanding Letter of Credit
Obligations shall not at any time exceed the Total Commitment within the limits
of each Bank's Commitment and subject to the other terms and conditions hereof,
any Floor Plan Borrower may borrow, prepay and reborrow Floor Plan Loans under
this Section 2.1.
SECTION 2.2 Floor Plan Loans.
(a) Each Floor Plan Loan Borrowing made to any of the
Floor Plan Borrowers by the Banks on the Closing Date or on any Floor Plan
Adjustment Date shall be in the minimum aggregate principal amount of One
Million Dollars ($1,000,000) and in integral multiples of One Million Dollars
($1,000,000; provided that a Comerica Prime Rate Loan or a Floor Plan Loan
resulting from a Draft may be in any amount) and shall consist of Floor Plan
Loans of the same Type made ratably by the Banks in accordance with their
respective Floor Plan Loan Commitments;
22
23
provided, however, that the failure of any Bank to make any Floor Plan Loan
shall not relieve any other Bank of its obligation to lend hereunder.
(b) Each Floor Plan Loan Borrowing shall be a
Comerica Prime Rate Borrowing or a Eurodollar Borrowing as any of the Floor
Plan Borrowers may request pursuant to Section 2.3. Each Bank may fulfill its
obligation to make Floor Plan Loans with respect to any Eurodollar Loan by
causing, at its option, any domestic or foreign branch or Affiliate of such
Bank to make such Loan, provided that the exercise of such option shall not
affect the obligation of the applicable Floor Plan Borrower to repay such Loan
in accordance with the terms of the applicable Note.
(c) Not later than 10:00 A.M., HOUSTON, TEXAS TIME on
the Closing Date any one or more of the Floor Plan Borrowers shall deliver a
Request for Borrowing to the Floor Plan Agent. Not later than 11:00 A.M.
HOUSTON, TEXAS TIME of the same day, the Floor Plan Agent shall notify the
Agent of the Type of Borrowing requested and the aggregate amount of Floor Plan
Loans being requested by the Floor Plan Borrowers as of the Closing Date, less
an amount equal to the initial Swing Line Loan Minimum Amount. Upon receipt of
such notice, the Agent shall notify each Bank of the contents thereof and of
such Bank's Pro Rata Share of such Borrowing.
(d) Each Bank shall, upon request from the Agent,
from time to time as herein provided, make its Pro Rata Share of the amount of
such Floor Plan Loan Borrowing to the Agent by paying the amount required to
the Agent in U.S. Dollars and in immediately available funds on the same day
not later than 3:00 P.M., HOUSTON, TEXAS TIME, and, subject to satisfaction of
the conditions set forth in Article VIII, and the terms, provisions and
conditions set forth in Section 2.3 and Section 4.3, the Agent shall promptly
and in any event on the same day, credit the amounts so received to the account
of the Floor Plan Agent, or, if a Floor Plan Loan Borrowing shall not occur on
such date because any condition precedent herein specified shall not have been
met, return the amounts so received to the respective Banks. Upon receipt of
such funds the Floor Plan Agent shall promptly and in any event on the same
day, credit the amount so received to the account of the applicable Borrower.
(e) Unless the Agent shall have received notice from
a Bank prior to the date of any such Floor Plan Loan Borrowing that such Bank
will not make available to the Agent such Bank's portion of such Borrowing, the
Agent may assume that such Bank has made such portion available to the Agent on
the date of such Floor Plan Loan Borrowing in accordance with this Section
2.2(e) and the Agent may, in reliance upon such assumption, make available to
the Floor Plan Agent on such date a corresponding amount. If, and to the
extent that such Bank shall not have made such portion available to the Agent,
such Bank and the applicable Floor Plan Borrowers severally agree to repay to
the Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the Floor
Plan Agent until the date such amount is repaid to the Agent (i) in the case of
the Floor Plan Borrowers, at the Applicable Interest Rate at the time to the
Loans comprising such Borrowing and (ii) in the case of such Bank, at the
Federal Funds Effective Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount shall constitute such Bank's Loan as part of
such Borrowing for purposes of this Agreement.
23
24
(f) A Floor Plan Subsidiary shall not be entitled to
request a Floor Plan Borrowing hereunder until it (i) has executed and
delivered to the Banks, as aforesaid, the Notes, and to the Swing Line Bank, a
Swing Line Note, (ii) has become a party to this Agreement by execution and
delivery of an Addendum, and (iii) has become a party to the Security
Documents, accompanied in each case by authority documents, legal opinions and
other supporting documents as required by Agent, Floor Plan Agent and the
Required Banks hereunder and has otherwise complied with the provisions of
Section 9.15.
SECTION 2.3 Floor Plan Borrowing Procedure. Any Floor
Plan Borrower may request a Floor Plan Loan, (i) subject to Sections 2.8
through 2.12, inclusive, in the case of a Draft by a Manufacturer, if such
Draft is delivered in accordance with the express terms of a Drafting Agreement
and (ii) in the case of Floor Plan Loans requested directly by a Floor Plan
Borrower, only after delivery to the Floor Plan Agent of a written Request for
Borrowing executed by a Person authorized by such Floor Plan Borrower to make
such requests on behalf of such Floor Plan Borrower. Floor Plan Loan
Borrowings are subject to the following and to the remaining provisions hereof:
(a) each such Request for Borrowing shall set forth
the following information:
(i) the proposed date of such Borrowing,
which must be a Business Day;
(ii) the aggregate amount of such requested
Borrowing;
(iii) whether such Floor Plan Borrowing is to be
a Comerica Prime Rate Loan or a Eurodollar Loan, or in the
case of a Swing Line Loan, a Loan at the Quoted Rate
(provided, however, that all Drafts shall be deemed to be
requested at the Quoted Rate) and, except in the case of a
Eurodollar Loan, the Interest Period applicable thereto;
(iv) a description of the Motor Vehicle(s)
purchased or to be purchased with the proceeds of such
Borrowing, including for each Motor Vehicle, its vehicle
identification number, make, model and purchase price, and
whether such Motor Vehicle is a new Motor Vehicle, Used Motor
Vehicle, Program Car or Demonstrator; and
(v) if requested by the Floor Plan Agent, in the
case of a Request for Borrowing requested directly by a Floor
Plan Borrower to fund the purchase of Used Motor Vehicles,
such Borrower shall deliver a current Manufacturer/Dealer
Statement with appropriate inventory breakout as required by
the Floor Plan Agent with the first such Request for Borrowing
in any month.
(b) each such Request for Borrowing shall be
delivered to the Floor Plan Agent (i) in the case of a Draft by a Manufacturer,
by 11:00 A.M., HOUSTON, TEXAS TIME one (1) Business Day prior to the Borrowing
Date of a proposed Borrowing, (ii) in the case of a Eurodollar Borrowing, not
later than 10:00 A.M., HOUSTON, TEXAS TIME, three (3) Days prior to the
Borrowing
24
25
Date of a proposed Borrowing, and (iii) in the case of a Comerica Prime Rate
Borrowing, not later than 11:00 A.M., HOUSTON, TEXAS TIME on the Borrowing Date
of a proposed Borrowing.
(c) the aggregate principal amount of such Borrowing
shall not exceed the aggregate Floor Plan Advance Limit for the Motor Vehicles
described in such Request for Borrowing;
(d) subject to Section 2.3(g) hereof, the aggregate
principal amount of such requested Borrowing, plus the principal amount of all
Floor Plan Loans then outstanding plus the aggregate principal amount of all
Swing Line Loans then outstanding shall not exceed the Floor Plan Loan
Commitment;
(e) the aggregate principal amount of such requested
Borrowing, plus the principal amount of all Floor Plan Loans then outstanding
hereunder plus the aggregate principal amount of all Swing Line Loans (but
minus the amount of any Swing Line Advances to be refunded with the proceeds of
such Borrowing) then outstanding plus the aggregate principal amount of all
Acquisition Loans then outstanding plus all outstanding Letter of Credit
Obligations shall not exceed the Total Commitment;
(f) each Request for Borrowing shall be irrevocable
and shall constitute a certification as to itself by the applicable Floor Plan
Borrower as of the date thereof that:
(i) both before and after such
Borrowing, the obligations of the Company and its Subsidiaries
under this Agreement and the other Loan Documents to which it
is a party, as applicable, are valid, binding, and enforceable
obligations of such Person;
(ii) to the best knowledge of the Company
and the applicable Borrower, all conditions to such Borrowing
have been satisfied;
(iii) there is no Default or Event of Default
in existence, and none will exist upon the making of such
Floor Plan Loan;
(iv) the representations and warranties
contained in this Agreement and the other Loan Documents are
true and correct in all material respects and shall be true
and correct in all material aspects as of and immediately
after the making of such Floor Plan Loan; and
(v) such Borrowing will not violate the
material terms and conditions of any material contract,
agreement or other Borrowing of the Company and such
applicable Borrower, or any of its Subsidiaries.
(g) Notwithstanding the foregoing,
(i) if the Floor Plan Agent has, at the
request of the Required Banks or acting in its discretion
according to the terms hereof, taken action to suspend or
25
26
terminate Drafts pursuant to one or more Drafting Agreements
and such Drafting Agreements have in fact been suspended or
terminated in accordance with their respective terms, then
subject to the terms of any such Drafting Agreements, the
Floor Plan Agent shall not fund the amount of such Draft; and
(ii) if on any day the requirements set
forth in Section 2.3(f) have been satisfied and the aggregate
principal amount of a Request for Borrowing of a Floor Plan
Loan, plus (A) the aggregate principal amount of all other
Floor Plan Loans then outstanding plus (B) the aggregate
principal amount of all Swing Line Loans (but minus the amount
of any Swing Line Loans to be refunded with the proceeds of
such Borrowing) then outstanding exceeds the aggregate
principal amount of such Loans outstanding as of the
immediately preceding Floor Plan Adjustment Date and is less
than the Swing Line Commitment, then such Request for
Borrowing shall be deemed for all purposes a Request for
Borrowing of a Swing Line Loan and the Borrowing to be
disbursed in connection therewith shall constitute a Swing
Line Loan, and shall be disbursed in accordance with the
provisions of Article IV hereof; and
(iii) if on any day the requirements set forth
in Section 2.3(f) have been satisfied and the aggregate
principal amount of a Request for Borrowing of a Floor Plan
Loan consists of a Draft, the payment of which would cause (A)
the aggregate principal amount of all Floor Plan Loans then
outstanding, plus (B) the aggregate principal amount of all
Swing Line Loans then outstanding, plus (C) the aggregate
principal amount of all Requests for Borrowings of Floor Plan
Loans outstanding as of such day to exceed the Floor Plan Loan
Commitment, as of such day, and the Company fails to either
immediately reduce any pending Request for a Borrowing of a
Floor Plan Loan which does not consist of a Draft or make a
payment of principal on Floor Plan Loans and/or Swing Line
Loans in an amount which would prevent the aggregate amounts
described in (A), (B) and (C) above from exceeding such Floor
Plan Loan Commitment, then, in such event:
(1) to the extent that the Company has
availability under the Acquisition Loan
Commitment and is able to comply with all
conditions to funding an Acquisition Loan,
the Company may deliver a Request for
Borrowing of an Acquisition Loan, the
proceeds of which shall be used to fund such
Draft; or
(2) pursuant to Section 5.5(b), the
Company may request an increase in the Floor
Plan Loan Commitment and such Request for
Borrowing shall be funded to the extent of
the increased Floor Plan Loan Commitment (if
any), or
(3) if the Company does not elect to act
under clause (1) or (2) above and if pursuant
to Section 3.4 there is a Reserve Commitment
available, then the Floor Plan Loan
Commitment shall be deemed to be irrevocably
increased by the amount of such Reserve
Commitment, and the Request for Borrowings of
Floor Plan Loans
26
27
shall be funded to the extent of the Floor
Plan Loan Commitment as increased by the
Reserve Commitment, or
(4) if there is no Reserve Commitment
available, such Request for Borrowing shall
be deemed for all purposes a Swing Line
Overdraft Loan Borrowing Request (each a
"Swing Line Overdraft Borrowing Request") and
such Borrowing shall constitute a Swing Line
Overdraft Loan (each, a "Swing Line Overdraft
Loan") to be disbursed and subject to the
provisions of Section 4.6.
(h) The Floor Plan Agent, acting on behalf of the
Banks, may, at its option make Loans under this Article II upon the irrevocable
telephone request of a duly authorized officer of any Floor Plan Borrower and,
in the event the Floor Plan Agent, acting on behalf of the Banks, makes any
such Loan upon a telephone request, the requesting officer of such Floor Plan
Borrower shall, if so requested by the Floor Plan Agent, deliver (including via
fax) to the Floor Plan Agent, on the same day as such telephone request, a
written Request for Borrowing. Each of the Floor Plan Borrowers hereby
authorizes the Floor Plan Agent to disburse Floor Plan Loans under this Section
2.3 pursuant to the telephone instructions of any Person purporting to be a
Person identified by name on a written list of Persons authorized by each such
Floor Plan Borrower to make a Request for Borrowing for Floor Plan Loans on
behalf of such Borrower(s). Notwithstanding the foregoing, each of the Floor
Plan Borrowers acknowledges and agrees that the applicable Floor Plan Borrower
shall bear all risk of loss resulting from disbursements made upon any
telephone request. Each Request for Floor Plan Loan Borrowing made via
telephone as hereunder provided shall constitute a certification of the matters
set forth in Section 2.3(f) of this Agreement.
(i) If at any time during an Adjustment Period the
payment of all of a Swing Line Loan would cause the outstanding balance of all
Swing Line Loans to be fully repaid, the Company may elect to cause such funds
to be invested in overnight funds or other securities held by Comerica
Securities, Inc. and acceptable to the Floor Plan Agent and the Banks, which
investments shall be subject to the first priority security interest of the
Floor Plan Agent to secure the outstanding balance of Swing Line Loans and
Swing Line Overdraft Loans. The Floor Plan Agent and any of the Floor Plan
Borrowers may enter into an agreement from time to time to facilitate the
investment of such funds.
SECTION 2.4 Notice of Types of Floor Plan Loans and Interest
Periods.
(a) On or before 10:00 A.M. HOUSTON, TEXAS TIME,
three (3) Business Days prior to each Floor Plan Adjustment Date, the Company
shall provide written (including via fax) Request for Borrowing to the Floor
Plan Agent designating the Type of Floor Plan Loans which will be outstanding
commencing on the Floor Plan Adjustment Date immediately following such notice
until the next succeeding Floor Plan Adjustment Date. If, for any reason, the
Company does not deliver the Request for Borrowing as herein provided,
including, without limitation providing for three (3) Business Days' notice,
the Company shall be deemed to have delivered the Request for Borrowing and
requested that on the Floor Plan Adjustment Date all Floor Plan Loans be
Comerica Prime Rate Borrowings.
27
28
(b) On or before 11:00 A.M. HOUSTON, TEXAS TIME on
each Floor Plan Adjustment Date, the Floor Plan Agent shall provide written
(including via fax) notice to the Agent of the amount of (i) Floor Plan Loans
outstanding, plus (ii) Swing Line Loans (plus Swing Line Overdraft Loans, if
any) outstanding in excess of the Swing Line Minimum Amount (if any), plus
(iii) the amount of Floor Plan Loans being requested pursuant to any Request
for Borrowing of Floor Plan Loans, as of 10:00 A.M., HOUSTON, TEXAS TIME on
such date. Upon receipt of such notice, the Agent shall provide written
(including via fax) notice to the Banks advising them (A) that the amount of
Floor Plan Loans required pursuant to (i), (ii) and (iii) above is greater than
the amount required as of the immediately preceding Floor Plan Adjustment Date
and, with respect to each Bank, the amount of additional Floor Plan Loans to be
advanced by such Bank, (B) that the amount of Floor Plan Loans has decreased
since the immediately preceding Floor Plan Adjustment Date and, with respect to
each Bank, the amount of such repayment to be made to such Bank, or (C) that
the Floor Plan Loans outstanding as of such date are not greater than the
amount as on the immediately preceding Floor Plan Adjustment Date. Such notice
shall also advise the Banks of the Type of Floor Plan Loans the Floor Plan
Borrowers have selected for the period of time from the next Floor Plan
Adjustment to the next succeeding Floor Plan Adjustment Date.
(c) On each Floor Plan Adjustment Date (i) if Swing
Line Loans (plus Swing Line Overdraft Loans, if any) outstanding are greater
than the Swing Line Minimum Amount, the Swing Line Overdraft Loans shall be
repaid and the Swing Line Loans shall be reduced to the Swing Line Minimum
Amount with proceeds advanced by the Banks pursuant to notices from the Floor
Plan Agent given to the Agent as provided in Section 2.2(e) hereof; in such
event the Agent shall remit the proceeds of such Floor Plan Loans to the Floor
Plan Agent for application to the Swing Line Loans (and to the Swing Line
Overdraft Loans, if any) outstanding in excess of the Swing Line Minimum
Amount, or (ii) if Swing Line Loans are less than the Swing Line Minimum
Amount, the Swing Line Bank shall make a Swing Line Loan to the Floor Plan
Borrowers in an amount required to cause the total amount of Swing Line Loans
outstanding to equal the Swing Line Minimum Amount; in such event the Floor
Plan Agent shall remit the proceeds of such Swing Line Loan to the Agent, and
the Agent shall remit such proceeds to the Banks.
SECTION 2.5 Payments.
(a) Subject to the provisions of Section 2.3(i), each
Floor Plan Borrower shall, on the Curtailment Date of a Motor Vehicle, pay in
full the Floor Plan Advance Limit with respect to such Motor Vehicle.
(b) Subject to the provisions of Section 2.3(i), upon
the sale of any Motor Vehicle by a Floor Plan Borrower, such Floor Plan
Borrower shall pay in full the Floor Plan Advance Limit with respect to such
Motor Vehicle (i) with respect to Cash Receipted Motor Vehicles, immediately
upon receipt of payment, (ii) with respect to Sale Dated Motor Vehicles, within
ten (10) days of the date of such Motor Vehicle was sold and (iii) with respect
to Fleet Motor Vehicles, within thirty (30) days of the date of sale.
(c) Subject to the provisions of Section 2.3(i) and
Section 4.6(c), payments required to be made by any Floor Plan Borrower as set
forth in Sections 2.5(a) and 2.5(b) shall be applied first to the outstanding
principal balance of Swing Line Overdraft Loans, next to the
28
29
outstanding principal balance of Swing Line Loans and then, only if no Swing
Line Overdraft Loans or Swing Line Loans are then outstanding, to the
outstanding principal balance of Floor Plan Loans.
(d) Each Floor Plan Borrower shall cause all proceeds
from the sale of Motor Vehicles to be deposited directly into an account of the
applicable Borrower with its local financial institution which proceeds shall
be transferred to the Excess/Payments in Process for payment of the Loans as
provided in Section 2.5(b).
SECTION 2.6 Title Documents. All original Manufacturer's
invoices and title documents evidencing the Floor Plan Borrowers' ownership of
all of their Motor Vehicles, including, without limitation, the Manufacturer's
Certificate, shall be maintained in safekeeping by the Floor Plan Borrowers in
a manner acceptable to the Floor Plan Agent, unless and until an Event of
Default has occurred and is continuing, within three (3) Business Days of the
request by the Floor Plan Agent, the Floor Plan Borrowers shall deliver or
cause to be delivered all such original Manufacturer's invoices and title
documents whether at the time of such request or thereafter, to the Floor Plan
Agent and the Floor Plan Agent shall retain or hold all such original
Manufacturer's invoices and title documents received by the Floor Plan Agent
after such request. Thereafter, for so long as such Event of Default shall be
continuing, all original Manufacturer's Certificates and title documents shall
remain in the Floor Plan Agent's possession until the Floor Plan Loan Borrowing
in connection therewith or such ratable portion thereof in respect of a Motor
Vehicle sold by any Floor Plan Borrower in the ordinary course of business has
been paid and performed in full; provided that, upon the happening of an Event
of Default and during the continuance thereof, the Floor Plan Agent may
transfer, as applicable, title documents delivered to it pursuant to this
Section 2.6 in connection with the sale of Motor Vehicles in accordance with
its rights provided for in this Agreement or the other Loan Documents.
SECTION 2.7 Power of Attorney. For the purpose of expediting
the financing of Motor Vehicles under the terms of this Agreement and for other
purposes relating to such financing transaction, each of the Floor Plan
Borrowers irrevocably constitutes and appoints the Floor Plan Agent and any of
its officers, and each of them, severally, as its true and lawful
attorneys-in-fact or attorney-in-fact with full authority to act on behalf of,
and in the name of, place, and stead of, each such Floor Plan Borrower,
regardless of whether or not an Event of Default shall have occurred hereunder,
to prepare, execute, and deliver any and all instruments, documents, and
agreements required to be executed and delivered by each such Floor Plan
Borrower necessary to evidence Floor Plan Loan Borrowings (and if outstanding,
Swing Line Overdraft Loans) hereunder and/or after the occurrence and during
the continuance of an Event of Default, to evidence, perfect, or realize upon
the security interest granted by this Agreement, and/or any of the Loan
Documents, including, without limitation, the Notes, requests for advances,
security agreements, financing statements, other instruments for the payment of
money, receipts, manufacturer's certificates of origin, certificates of origin,
certificates of title, applications for certificates of title, other basic
evidences of ownership, dealer reassignments of any of the foregoing,
affidavits, and acknowledgments. The foregoing power of attorney shall be
coupled with an interest, and shall be irrevocable so long as this Agreement
remains in effect, any Drafting Agreement remains in effect or any Obligations
(including Letter of Credit Obligations and Swing Line Overdraft Loans) remain
outstanding under this Agreement or any of the Notes. Each of said
attorneys-in-fact shall have the power to act hereunder with or without the
other. The Floor Plan Agent may, but shall not be obligated to, notify the
Floor
29
30
Plan Borrowers of any such instruments or documents the Floor Plan Agent has
executed on any Borrower's behalf prior to such execution.
SECTION 2.8 Issuance of Drafting Agreements. Subject to the
terms and conditions of this Agreement, Floor Plan Agent shall, at any time and
from time to time from and after the Closing Date until thirty (30) Business
Days prior to the Maturity Date, upon the written request of the Company or the
applicable Floor Plan Borrower, countersigned by the Company, accompanied by
applications, letter of credit agreements and/or such other documentation
related thereto as the Floor Plan Agent may require, issue Drafting Agreements
for the account of the applicable Floor Plan Borrower.
SECTION 2.9 Conditions to Issuance. The Floor Plan Agent
shall not be obligated to enter into or issue a Drafting Agreement unless, as
of the date of issuance of such Drafting Agreement:
(a) the Company or the applicable Floor Plan Borrower
requesting the Drafting Agreement shall have delivered to the Floor Plan Agent
not less than ten (10) Business Days prior to the requested date for issuance
(or such shorter time as the Floor Plan Agent in its sole discretion may
permit), a written application and such other documentation (including without
limitation a letter of credit agreement if the Drafting Agreement is to be
issued in the form of a letter of credit) and the terms of such documents and
of the proposed Drafting Agreement shall satisfy the terms hereof and otherwise
be satisfactory to Floor Plan Agent;
(b) the obligations of the Company and its
Subsidiaries set forth in this Agreement and the other Loan Documents to which
each is a party are valid, binding and enforceable obligations of such parties
and the valid, binding and enforceable nature of this Agreement and the other
Loan Documents has not been disputed by any of the Company or any of its
Subsidiaries;
(c) the representations and warranties contained in
this Agreement or any other Loan Documents are true in all material respects as
if made on such date (unless limited to an earlier date), and both immediately
before and immediately after issuance of the Drafting Agreement so requested,
no Default or Event of Default has occurred and is continuing;
(d) No order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the
Floor Plan Agent from entering into or issuing such Drafting Agreement; no
Requirement of Law applicable to the Floor Plan Agent and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Floor Plan Agent shall prohibit the Floor
Plan Agent, or request that the Floor Plan Agent refrain, from issuing or
entering into Drafting Agreements generally or such Drafting Agreement in
particular or shall impose upon the Floor Plan Agent with respect to such
Drafting Agreement any restriction, reserve or capital requirement (for which
the Floor Plan Agent is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the Floor Plan Agent any unreimbursed
loss, cost or expense which was not applicable on the Closing Date and which
the Floor Plan Agent in good faith deems material to it (relating to Drafts and
Drafting Agreements); and
30
31
(e) The Floor Plan Agent does not receive written
notice from any Bank, the Agent or any Floor Plan Borrower, on or prior to the
Business Day prior to the requested date of issuance or entry into such
Drafting Agreement that one or more of the applicable conditions contained in
Article VIII (or in this Section 2.9) has not been satisfied or that a Default
or Event of Default has occurred and is continuing.
Each application for a Drafting Agreement issued by a Borrower hereunder shall
constitute certification by each of the Company of the matters set forth in
subparagraphs (a) through (d) hereof, and Floor Plan Agent shall be entitled to
rely on such certification without any duty of inquiry. Immediately upon the
issuance or entering into by the Floor Plan Agent of each Drafting Agreement
(except in respect of any Drafting Agreement issued or entered into by the
Floor Plan Agent after it has obtained actual knowledge that an Event of
Default has occurred and is continuing), each Bank shall be deemed to, and
subject to Section 4.6 (relating to a Swing Line Overdraft Loan) hereby
irrevocably and unconditionally agrees to purchase from the Floor Plan Agent a
participation in such Drafting Agreement and each Draft thereunder in an amount
equal to the product of (i) the Pro Rata Share of such Bank and (ii) the amount
of each Draft presented by a Manufacturer.
Notwithstanding the foregoing, the Floor Plan Agent shall take such action as
necessary to terminate and suspend all Drafting Agreements effective ten days
prior to the Maturity Date then in effect.
SECTION 2.10 Notice of Issuance of or entering into
Manufacturers Drafting Letters. The Floor Plan Agent shall give notice,
substantially in the form attached to this Agreement as Exhibit H, to each Bank
of the issuance of or entering into each Drafting Agreement not later than five
(5) Business Days after issuance of or entering into each such Drafting
Agreement, attaching a copy of such Drafting Agreement, as issued or entered
into.
SECTION 2.11 Drafts Under Manufacturers Drafting Letters.
(a) In accordance with Sections 2.3, 4.3 and 4.6
hereof, each Draft submitted by a Manufacturer pursuant to a Drafting Agreement
shall constitute a Request for Borrowing of a Floor Plan Loan, a Swing Line
Loan, or a Swing Line Overdraft Loan, as the case may be, and upon the funding
of each Draft presented by a Manufacturer under a Drafting Agreement, the Floor
Plan Agent shall be deemed to have disbursed or on behalf of the applicable
Floor Plan Borrower and the applicable Floor Plan Borrower shall be deemed to
have elected to substitute for its respective reimbursement obligations in
respect of such Draft, an advance of a Floor Plan Loan, a Swing Line Loan, or a
Swing Line Overdraft Loan, as the case may be, bearing interest at the
Applicable Interest Rate. Each of the Floor Plan Borrowers shall be
irrevocably obligated to reimburse Floor Plan Agent on demand for the amount of
any Draft presented by a Manufacturer under the terms of any Drafting
Agreement; provided however that such reimbursement obligation shall be deemed
satisfied by the funding of a Loan in respect thereto.
(b) Notwithstanding the obligation (if any) of the
Floor Plan Agent to fund a Draft drawn under a Drafting Agreement, (i) if at
any time any of the Floor Plan Borrowers has failed to satisfy the conditions
precedent for the Floor Plan Agent to make a Floor Plan Loan, or the Swing Line
Bank to make a Swing Line Loan or a Swing Line Overdraft Loan, (ii) if at any
time the amount of such Draft would cause the aggregate amount of Floor Plan
Loans to exceed the Floor
31
32
Plan Loan Commitment, or (iii) after a Default or an Event of Default has
occurred and is continuing, then in any such event, the funding of such Draft
shall not constitute a waiver of any such condition, commitment, Default or
Event of Default or otherwise any manner whatsoever affect the rights, and
remedies available to the Floor Plan Agent, the Agent, the Swing Line Bank or
any of the Banks hereunder. In any such event, the Floor Plan Borrowers shall
remain obligated to pay the amount of any Swing Line Overdraft Loan forthwith
as set forth herein and shall have all other duties and obligations applicable
to the Floor Plan Borrowers under this Agreement. Notwithstanding anything to
the contrary contained herein, each of the Floor Plan Borrowers shall bear all
risk of loss resulting from the payment of any Draft, or any resulting
disbursements of the Floor Plan Loans, Swing Line Loans or Swing Line
Overdraft Loans, as the case may be, whether or not due to the gross
negligence, willful misconduct or fraud of any Manufacturer.
(c) Subject to Section 4.6 hereof, each Bank shall be
obligated to fund Floor Plan Loans resulting from the presentation of Drafts by
Manufacturers under the Drafting Agreements, by making available their
respective Pro Rata Shares of the amounts so advanced, all in accordance with
Section 2.2 hereof; provided, however, that if for any reason the Floor Plan
Agent is prohibited from making a Floor Plan Loan in respect of any such Draft,
each such Bank shall be deemed to and unconditionally agrees to purchase from
the Floor Plan Agent a participation interest in the amount of such Draft (in
the amount of its Pro Rata Share), subject only to Section 4.6 hereof. Not
withstanding the amount of the Floor Plan Loan Commitment in effect from time
to time, except with respect to the notices terminating or suspending drafting
privileges to be given pursuant Section 4.6(d) or Section 11.1 hereof or any
other notices given by the Floor Plan Agent in response to the written
direction of the Required Banks, the Floor Plan Agent shall not be obligated to
terminate or suspend the drafting privileges of any Manufacturer under the
Drafting Agreements even though the aggregate amount of Drafts which may be
presented by Manufacturers under the Drafting Agreements may exceed the amount
of the Floor Plan Loan Commitment in effect from time to time. Furthermore,
(i) any limitations contained in any of the Drafting Agreements (whether in
respect of daily Drafts to be presented or otherwise) are for informational
purposes only and Floor Plan Agent shall not be obligated to monitor or limit
the amount of Drafts presented or honored on the basis of any such limitations
and (ii) any right of the Floor Plan Agent, acting in its discretion and not at
the direction or with the concurrence of the Required Banks, to terminate or
suspend drafting privileges of any Manufacturer or otherwise exercise any right
or remedy shall be for the sole benefit and protection of the Floor Plan Agent,
and Floor Plan Agent shall not owe any duty to any of the other Banks with
respect to such rights or remedies or be required to exercise such rights or
remedies to protect any of the other Banks.
SECTION 2.12 Obligations Absolute. The Obligations of the
Floor Plan Borrowers under this Agreement and any of the other Loan Documents
to reimburse the Floor Plan Agent for Drafts presented by a Manufacturer under
a Drafting Agreement, and to repay any Swing Line Loans, the Floor Plan Loans
or the Swing Line Overdraft Loans, as the case may be, funded to pay a Draft
shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and each such other Loan Document
under all circumstances, including the following: (a) any lack of validity or
enforceability of this Agreement or any of the other Loan Documents; (b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations of any Borrower in respect of any Draft or any
Drafting Agreement or any other amendment or waiver of or any consent to
departure from all or any of the applicable/related Loan
32
33
Documents; (c) the existence of any claim, set-off, defense or other right that
any Floor Plan Borrower may have at any time against any Manufacturer or any
other beneficiary or transferee of any Drafting Agreement (or any Person for
whom any such beneficiary or such transferee may be acting), the Floor Plan
Agent or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the related Loan Documents or any
unrelated transaction other than the defense of payment or claims arising out
of the gross negligence, bad faith or willful misconduct of the Floor Plan
Agent or the Swing Line Bank; (d) any Draft, demand, certificate or other
document presented under a Drafting Agreement proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a Draft under any Drafting
Agreement; (e) any payment by the Floor Plan Agent under any Drafting Agreement
against presentation of a draft or certificate that does not strictly comply
with the terms of any Drafting Agreement; or any payment made by the Floor Plan
Agent under any Drafting Agreement to any trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, liquidator, receiver or
other representative of a successor to any beneficiary or any transferee of any
Drafting Agreement, including any arising in connection with any Insolvency
Proceeding; (f) any exchange, release or non-perfection of any Collateral, or
any release or amendment or waiver of or consent to departure from all or any
of the Obligations of any Borrower in respect of any Drafting Agreement; or (g)
any other circumstance that might otherwise constitute a defense available to,
or discharge of, any Borrower other than the defense of payment or claims
arising out of the gross negligence, bad faith or willful misconduct of the
Floor Plan Agent or the Swing Line Bank.
ARTICLE III
ACQUISITION LOANS
SECTION 3.1 Subject to the terms and conditions and relying
upon the representations and warranties of the Company herein set forth, each
Bank severally and not jointly agrees on the terms and conditions set forth
herein to make revolving credit loans to Company, (each such loan, an
"Acquisition Loan") from time to time on any Business Day during the period
from the Closing Date to the Maturity Date in an aggregate amount not to exceed
at any time outstanding such Bank's Pro Rata Share the lesser of (a) the
Acquisition Loan Advance Limit, or (b) the aggregate amount of the Acquisition
Loan Commitments of all the Banks; provided, however, that, after giving effect
to any Acquisition Loan Borrowing, the aggregate amount of all outstanding
Acquisition Loans, all outstanding Floor Plan Loans, all outstanding Swing Line
Loans and all outstanding Letter of Credit Obligations, shall not at any time
exceed the Total Commitment within the limits of each Bank's Commitment and
subject to the other terms and conditions hereof, the Company may borrow,
prepay and reborrow Acquisition Loans under this Section 3.1.
SECTION 3.2 Acquisition Loans.
(a) Each Acquisition Loan Borrowing made by the Banks
to a Borrower on any Borrowing Date shall be in the minimum aggregate principal
amount of One Million Dollars ($1,000,000) (or the amount of a Letter of Credit
Borrowing or the remaining balance of the aggregate Acquisition Loan
Commitments, if less) and an integral multiple of One Million Dollars
($1,000,000) and shall consist of Acquisition Loans of the same Type made
ratably by the Banks in
33
34
accordance with their respective Commitments; provided, however, that the
failure of any Bank to make any Acquisition Loan shall not relieve any other
Bank of its obligation to lend hereunder.
(b) Each Acquisition Loan Borrowing shall be an ABR
Borrowing or a Eurodollar Borrowing as the Company may request in a Request for
Borrowing delivered to the Agent in accordance with Section 3.3. Each Bank may
fulfill its Commitment with respect to any Eurodollar Loan by causing, at its
option, any domestic or foreign branch or Affiliate of such Bank to make such
Loan, provided that the exercise of such option shall not affect the obligation
of the Company to repay such Loan in accordance with the terms hereof.
Subject to the provisions of Section 3.3 and Section 5.9, Acquisition Loan
Borrowings of more than one Type may be outstanding at the same time.
(c) Each Bank shall make its Pro Rata Share of the
amount of each Acquisition Loan Borrowing to the Company hereunder on the
proposed Borrowing Date thereof by paying the amount required to the Agent in
Houston, Texas in U.S. Dollars and in immediately available funds not later
than 1:00 P.M., HOUSTON, TEXAS TIME, and, subject to satisfaction of the
conditions set forth in Article VIII, the Agent shall promptly and in any event
on the same day, credit the amounts so received to the general deposit account
of the Company, with the Agent, or such other depository account as shall be
designated by the Company or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have been met,
return the amounts so received to the respective Banks. Unless the Agent shall
have received notice from a Bank prior to the date of any Acquisition Loan
Borrowing that such Bank will not make available to the Agent such Bank's
portion of such Acquisition Loan Borrowing, the Agent may assume that such
Bank has made such portion available to the Agent on the date of such
Acquisition Borrowing in accordance with this Section 3.2 and the Agent may, in
reliance upon such assumption, make available to the Company on such date a
corresponding amount. If, and to the extent that such Bank shall not have made
such portion available to the Agent, such Bank and the Company jointly and
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to the Company until the date such amount is repaid to the
Agent (i) in the case of the Company at the interest rate applicable at the
time to the Loans comprising such Borrowing and (ii) in the case of such Bank,
at the Federal Funds Effective Rate. If such Bank shall repay to the Agent
such corresponding amount, such amount shall constitute such Banks' Pro Rata
Share of the Acquisition Loan as part of such Acquisition Loan Borrowing for
purposes of this Agreement.
SECTION 3.3 Notice of Acquisition Loan Borrowings.
(a) In order to obtain an Acquisition Loan, the
Company shall make an irrevocable written request therefor (or irrevocable
telephone notice thereof, confirmed as soon as practicable by written request)
to the Agent, in the form of a Request for Borrowing (i) in the case of an
ABR Borrowing, not later than 11:00 A.M., HOUSTON, TEXAS TIME, one (1) Business
Day before the Borrowing Date of a proposed Acquisition Loan Borrowing, and
(ii) in the case of a Eurodollar Borrowing, not later than 11:00 A.M., HOUSTON,
TEXAS TIME, three (3) Business Days before the Borrowing Date of a proposed
Acquisition Loan Borrowing. Each Request for Loan Borrowing shall be
irrevocable and shall in each case refer to this Agreement and specify (1)
whether the Request for Borrowing then being requested is to be an ABR
Borrowing or a Eurodollar Borrowing,
34
35
(2) the Borrowing Date of such Acquisition Loan Borrowing (which shall be a
Business Day) and (3) the aggregate amount thereof (which shall not be less
than One Million Dollars ($1,000,000) or an integral multiple of One Million
Dollars ($1,000,000) in excess thereof), and (4) the Interest Period or
Interest Periods with respect thereto. If no election as to the Type of
Acquisition Loan Borrowing is specified in any such Request for Borrowing by
the Company, such Acquisition Loan Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Borrowing is specified in any such Request
for Borrowing, the Company shall be deemed to have selected an Interest Period
of one (1) month's duration. The Agent shall promptly advise the Banks of any
Request for Borrowing given by the Company pursuant to this Section 3.3 and of
each Bank's portion of the requested Acquisition Loan Borrowing.
(b) No more than five (5) Acquisition Loans may be
outstanding at any time. For purposes of the foregoing, Borrowings comprised
of Acquisition Loans having different Interest Periods, regardless of whether
they commence on the same date, shall be considered separate Borrowings.
SECTION 3.4 Reserve Commitment; Suspension of Acquisition
Loans. Notwithstanding the foregoing provisions of this Article III, in the
event that on any day the aggregate outstanding principal amount of all (a)
Floor Plan Loans, plus (b) Swing Line Loans, plus (c) Requests for Floor Plan
Loan Borrowings exceeds ninety-five percent (95%) of the Floor Plan Loan
Commitment as of such date, then (i) a portion of the Acquisition Loan
Commitment (the "Reserve Commitment") in an amount equal to the lesser of (ii)
Five Million Dollars ($5,000,000) and (iii) the entire remaining unused portion
of the Acquisition Loan Commitment as of such date shall be reserved and shall
no longer be available for funding Acquisition Loans, and (d) no further
Acquisition Loan Borrowings (after giving effect to the Reserve Commitment in
clause (a) hereof) shall be available to the Borrowers until the next Business
Day on which such condition no longer exists.
ARTICLE IV
SWING LINE LOANS
SECTION 4.1 Swing Line Commitments. The Swing Line Bank
shall, on the terms and subject to the conditions hereinafter set forth
(including Section 4.3), make one or more advances (each such advance being a
"Swing Line Loan") to any Floor Plan Borrower from time to time on any
Business Day during the period from the Closing Date to the Maturity Date in an
aggregate principal amount not to exceed at any time (not including Swing Line
Overdraft Loans) the aggregate amount of the Floor Plan Loan Commitments of all
the Banks; provided, however, that after giving effect to all Borrowings of
Swing Line Loans and all Floor Plan Loans requested on any date, the sum of the
aggregate principal amount of all outstanding Floor Plan Loans and Swing Line
Loans (but excluding Swing Line Overdraft Loans) shall not exceed the aggregate
amount of the then applicable aggregate Floor Plan Loan Commitments. All Swing
Line Loans (including the Swing Line Overdraft Loans) shall be evidenced by the
Swing Line Note, under which advances, repayments and readvances may be made,
subject to the terms and conditions of this Agreement. Each Swing Line Loan
shall mature and the principal amount thereof shall be due and payable by the
applicable Floor Plan Borrower, as the case may be, on the last day of the
Interest Period applicable thereto. In no event whatsoever shall any
outstanding Swing Line Loan be deemed to
35
36
reduce, modify or affect any Bank's commitment to make Floor Plan Loans based
upon its Pro Rata Share of the Floor Plan Loan Commitment.
SECTION 4.2 Accrual of Interest; Margin Adjustments. Each
Swing Line Loan shall, from time to time after the date of such Loan, bear
interest at its Applicable Interest Rate. The amount and date of each Swing
Line Loan, its Applicable Interest Rate, its Interest Period, and the amount
and date of any repayment shall be noted on the Swing Line Bank's records,
which records will be conclusive evidence thereof, absent manifest error;
provided, however, that any failure by the Swing Line Bank to record any such
information shall not affect the obligations of the applicable Floor Plan
Borrower with respect thereto in accordance with the terms of this Agreement
and the Loan Documents.
SECTION 4.3 Requests for Swing Line Loans.
(a) On the Closing Date, subject to the terms and
conditions hereunder set forth, the Swing Line Bank shall make a Swing Line
Loan to one or more of the Floor Plan Borrowers pursuant to a Request for
Borrowing given by such Floor Plan Borrowers in the manner specified in Section
4.3(b) and at the Applicable Interest Rate in the aggregate amount of the Swing
Line Minimum Amount.
(b) On any day that a Request for Borrowing
constitutes a Request for Borrowing of a Swing Line Loan pursuant to Section
2.3(g)(ii), the applicable Floor Plan Borrower shall be deemed to have
delivered to Swing Line Bank a Request for Borrowing in connection therewith,
subject to the following and to the remaining provisions of this Section 4.3:
(i) the aggregate principal amount of such
requested Swing Line Loan Borrowing, plus the aggregate
principal amount of all other Swing Line Loans then
outstanding shall not exceed the Swing Line Commitment;
(ii) each such Request for Borrowing of a
Swing Line Loan once delivered to the Swing Line Bank, shall
not be revocable by the applicable Floor Plan Borrower, as the
case may be, and shall constitute and include a certification
to the extent applicable, by the Company of the provisions of
Section 2.3(f); and
(iii) the Swing Line Bank may, at its option,
make Swing Line Loans under this Section 4.3 upon the
irrevocable telephone request of a duly authorized officer of
any Floor Plan Borrower and, in the event the Swing Line Bank
makes any such Swing Line Loan upon a telephone request, the
requesting officer of such Floor Plan Borrower shall, if so
requested by the Swing Line Bank, deliver (including via fax)
to the Swing Line Bank on the same day as such telephone
request, a written Request for Borrowing of a Swing Line Loan.
Each of the Floor Plan Borrowers hereby authorizes the Swing
Line Bank to disburse Swing Line Loans pursuant to the
telephone instructions of any Person purporting to be a Person
identified by name on a written list of Persons authorized by
each such Floor Plan Borrower to make Requests for Borrowings
of Swing Line Loans on behalf of such Floor Plan Borrowers.
Notwithstanding the foregoing, each of the Floor Plan
Borrowers
36
37
acknowledges and agrees that such Floor Plan Borrower shall
bear all risk of loss resulting from disbursements made upon
any telephone request. Each telephone request for a Swing
Line Loan Borrowing shall constitute a certification of the
matters set forth in Section 2.3(f) of this Agreement.
SECTION 4.4 Disbursement of Swing Line Loans. Subject to
receipt by the Swing Line Bank of a Request for Borrowing of a Swing Line Loan
by any Floor Plan Borrower without exceptions noted in the compliance
certifications in connection therewith, and to the other terms and conditions
of this Agreement, the Swing Line Bank shall make available to any Floor Plan
Borrower the amount so requested, in same day funds, not later than 1:00 P.M.,
HOUSTON, TEXAS TIME on the Borrowing Date of such Swing Line Loan, by credit to
an account of the applicable Floor Plan Borrower maintained with the Swing Line
Bank or to such other account or third party as such Floor Plan Borrower may
reasonably direct. The Swing Line Bank shall promptly notify the Floor Plan
Agent of any Swing Line Loan by telephone or telecopier.
SECTION 4.5 Refunding of or Participation Interest in Swing
Line Loans.
(a) On any Floor Plan Adjustment Date or upon the
occurrence and continuance of an Event of Default, the Swing Line Bank in its
sole and absolute discretion, may on behalf of any Floor Plan Borrower (each of
whom hereby irrevocably directs the Swing Line Bank to act on its behalf) make
a written (including via fax) request to the Floor Plan Agent, requesting each
Bank (including the Swing Line Bank in its capacity as a Bank) to make a Floor
Plan Loan in an amount equal to such Bank's Pro Rata Share of the outstanding
principal amount of the Swing Line Loans (including, only if an Event of
Default shall have occurred and is continuing, the portion thereof which
constitutes the Swing Line Minimum Amount and excluding Swing Line Overdraft
Loans, to the extent that, after giving effect to such request, such Bank's Pro
Rata Share of the outstanding principal amount of all Floor Plan Loans plus all
Swing Line Loans would exceed such Bank's Floor Plan Loan Commitment) (the
"Refunded Swing Line Loans") on the date such request is made; provided
however, unless an Event of Default has occurred and is continuing, Refunded
Swing Line Loans shall not be subject to the indemnification provisions of
Section 5.10, and no losses, costs or expenses may be assessed by the Swing
Line Bank against the applicable Floor Plan Borrower or the other Banks as a
consequence thereof. Unless an Event of Default described in Section 11.1(f)
or 11.1(g) shall have occurred (in which event the procedures of paragraph (b)
of this Section 4.5 shall apply) and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Floor Plan Loan are
then satisfied, each Bank shall upon request by the Agent in the manner
specified in Section 2.4 thereof make the proceeds of its Floor Plan Loan
available to the Floor Plan Agent for the benefit of the Swing Line Bank.
(b) If, prior to the Banks' making of Floor Plan
Loans pursuant to the provisions in paragraph (a) of this Section 4.5, an
Event of Default described in Section 11.1(f) or 11.1(g) shall have occurred,
each Bank shall, in the manner provided in Section 2.4 (b), on the date such
Floor Plan Loan was to have been made, purchase from the Swing Line Bank a
participation interest in the Refunded Swing Line Loan in an amount equal to
its Pro Rata Share of such Refunded Swing Line Loan.
37
38
(c) Each Bank's obligation to make Floor Plan Loans
and to purchase participation interests in accordance with Section 4.5(a) and
Section 4.5(b) shall be absolute and unconditional and shall not be affected by
any circumstance, including, without limitation, (i) any setoff counterclaim,
recoupment, defense or other right which such Bank may have against the Swing
Line Bank, any Floor Plan Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of any Default or Event of
Default; (iii) any adverse change in the condition (financial or otherwise) of
any Floor Plan Borrower or any other Person; (iv) any breach of this Agreement
by any Floor Plan Borrower or any other Person; (v) any inability of any Floor
Plan Borrower to satisfy the conditions precedent to a Borrowing set forth in
this Agreement on the date upon which such participating interest is to be
purchased; or (vi) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. If any Bank does not make
available to the Floor Plan Agent the amount required pursuant to Section
4.5(a) or Section 4.5(b), as the case may be, the Swing Line Bank shall be
entitled to recover such amount on demand from such Bank, together with
interest thereon for each day from the date of non-payment until such amount is
paid in full at the Federal Funds Effective Rate.
SECTION 4.6 Swing Line Overdraft Loans.
(a) On any day that a Request for Borrowing of a
Floor Plan Loan constitutes a Swing Line Overdraft Borrowing Request pursuant
to Section 2.3(g)(iii), the applicable Floor Plan Borrower shall be deemed to
have delivered to the Swing Line Bank a Swing Line Overdraft Borrowing Request,
and each such Swing Line Overdraft Borrowing Request shall not be revocable by
the applicable Floor Plan Borrower, as the case may be, and shall constitute
and include a certification as to itself and its Subsidiaries, to the extent
applicable, by such Floor Plan Borrower of the provisions of Section 2.3(f).
(b) Each Swing Line Overdraft Loan shall bear
interest at the Applicable Interest Rate. The amount and date of each Swing
Line Overdraft Loan, the Applicable Interest Rate, the Interest Period, and the
amounts and dates of any repayment shall be noted on the Swing Line Bank's
records, which records will be conclusive evidence thereof, absent manifest
error; provided however, that any failure by the Swing Line Bank to record any
such information shall not affect the applicable Floor Plan Borrower's
obligation under the terms of this Agreement and the Loan Documents.
(c) Swing Line Overdraft Loans shall be made only by
the Swing Line Bank, solely for its own account and shall not be subject to the
provisions of Section 4.5; provided, however, at any time a Swing Line
Overdraft Loan is outstanding, the payment of principal and interest with
respect to all Loans shall be subordinated in right of payment and priority to
the prior payment in full of the Swing Line Overdraft Loans and the Floor Plan
Agent, the Agent and the Banks, as the case may be, shall remit to the Swing
Line Bank, and the Swing Line Bank shall have the right to receive, all
payments of principal and interest made by any Borrower in respect of any Loan
and all other proceeds of Collateral securing the Loans for application and
reduction of the aggregate principal amount of outstanding Swing Line Overdraft
Loans.
(d) If at any time the aggregate outstanding
principal amount of all (i) Floor Plan Loans, plus (ii) Swing Line Loans, plus
(iii) Swing Line Overdraft Loans, plus (iv) Requests
38
39
for Borrowings of Floor Plan Loans exceeds (A) one hundred ten percent (110%)
of the aggregate Floor Plan Loan Commitments as of such date and such condition
exists for two (2) consecutive Business Days or (B) the aggregate Floor Plan
Loan Commitments by any amount for any fifteen (15) days out of any thirty (30)
day period, then, in such event, the Floor Plan Agent acting in its sole
discretion may, and upon the election of the Required Banks shall (y) take any
and all actions reasonably necessary to suspend and/or terminate Drafts
pursuant to the Drafting Agreements and (z) elect by written notice to the
Company to terminate the Commitments and to deem such occurrence as
constituting an Event of Default.
ARTICLE V
ALL LOANS
SECTION 5.1 Notes: Repayment of Loans.
(a) All Loans made hereunder shall be evidenced by
the Notes or the Swing Line Note, as the case may be, shall be payable as
therein provided, dated the Closing Date, and shall be in a principal amount
equal to the Commitments on such date. All Borrowers agree, jointly and
severally, to pay the outstanding principal balance of such Loans and all
interest thereon and all the obligations, as evidenced by the Notes, in
accordance with the terms and provisions of this Agreement and on the Maturity
Date. Each Note shall bear interest from its date on the outstanding principal
balance thereof as provided in Section 5.2.
(b) Each Bank, the Agent or the Floor Plan Agent and
the Swing Line Bank, on its behalf, and the Swing Line Bank shall, and is
hereby authorized by each Borrower to, endorse on the schedule attached to the
Notes delivered to each Bank (or a continuation of such schedule attached to
such Notes and made a part thereof), or otherwise record in such Bank's
internal records, an appropriate notation evidencing the date and amount of
each Loan, as well as the date and amount of each payment and prepayment with
respect thereto; provided, however, that the failure of any Bank, Agent or the
Floor Plan Agent, or the Swing Line Bank to make such a notation or any error
in such a notation shall not affect the obligations of all Borrowers hereunder
or under the Notes or the Swing Line Note.
SECTION 5.2 Interest on Loans.
(a) Subject to the provisions of Section 5.3, each
Alternate Base Rate Loan shall bear interest at a rate per annum, equal to the
lesser of (i) the Alternate Base Rate plus the Applicable Margin for ABR Loans
and (ii) the Highest Lawful Rate (if the Alternate Base Rate is based on the
Prime Rate, computed on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as the case may be; or if the Alternate Base Rate is
based on the Federal Funds Effective Rate, computed on the basis of the actual
number of days elapsed over a year of 360 days).
(b) Subject to the provisions of Section 5.3, each
Comerica Prime Rate Loan shall bear interest at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 360 days) equal
to the lesser of (i) the Comerica Prime-based Rate for the Interest Period in
effect for such Loan and (ii) the Highest Lawful Rate.
39
40
(c) Subject to the provisions of Section 5.3, (i)
each Eurodollar Loan which is an Acquisition Loan shall bear interest at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the lesser of (1) the LIBO Rate for the Interest
Period in effect for such Loan plus the Applicable Margin for Eurodollar
Acquisition Loans and (2) the Highest Lawful Rate; and (ii) each Eurodollar
Loan which is a Floor Plan Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the lesser of (1) the LIBO Rate for the Interest Period in
effect for such Loan plus 1.50% and (2) the Highest Lawful Rate.
(d) Interest on each Acquisition Loan and each Floor
Plan Loan shall be payable in arrears on each Interest Payment Date applicable
to such Loan except as otherwise provided in this Agreement. Interest on each
Swing Line Loan and Swing Line Overdraft Loan shall be payable in arrears on
each Interest Payment Date applicable to such Loan except as otherwise provided
in this Agreement. The applicable LIBO Rate, and the Alternate Base Rate shall
be determined by the Agent, and the Comerica Prime Rate shall be determined by
the Floor Plan Agent, and such determination shall be conclusive absent
demonstrable error. The Agent shall promptly advise the Borrowers and each
Bank of each such determination.
SECTION 5.3 Interest on Overdue Amounts. If any Borrower
shall default in the payment of the principal of or interest on any Loan or any
other amount due hereunder, by acceleration or otherwise, such Borrower shall
on demand from time to time pay interest, to the extent permitted by law, on
such defaulted amount up to (but not including) the date of actual payment
(after as well as before judgment) at a rate per annum (computed on the basis
of the actual number of days elapsed over a period of 360 days) equal to the
lesser of (a) the Highest Lawful Rate and (b) the Alternate Base Rate plus two
percent (2%) per annum.
SECTION 5.4 Fees.
(a) The Company shall pay each Bank, through the
Agent, on the last day of each March, June, September and December, and on the
Maturity Date, in immediately available funds, a commitment fee (such Bank's
"Commitment Fee") equal to twenty-five-one-hundredths of one percent (0.25%)
per annum times the average unused amount of the Commitment of such Bank,
during the immediately preceding fiscal quarter (or shorter portion thereof)
just ended. All Commitment Fees under this Section 5.4(a) shall be computed on
the basis of the actual number of days elapsed in a year of 365 or 366 days, as
the case may be. The Commitment Fee due to each Bank shall commence on the
Closing Date cease to accrue on the earlier of the Maturity Date or the
termination of the Commitment of such Bank pursuant to Section 5.5 or 13.3 (b).
(b) The Company shall pay the Agent and Chase
Securities Inc. the fees (the "Agency Fees") in such amount and on such dates
as may be agreed between the Company, the Agent and Chase Securities Inc.
pursuant to that certain letter agreement dated September 22, 1997, herewith
among the Company, the Agent, and Chase Securities Inc. (the "Agent's Letter").
(c) The Company shall pay the Floor Plan Agent a
Floor Plan Agency Fee ("Floor Plan Agency Fee") in such amount on such dates as
may be agreed between the Company
40
41
and the Floor Plan Agent pursuant to that certain letter agreement of even date
herewith between the Company and the Floor Plan Agent (the "Floor Plan Agent's
Letter").
(d) The Company shall pay the Agent for the benefit
of the Banks, according to their Pro Rata Share, a fee in the amount of $750.00
for each day any Swing Line Overdraft Loan is outstanding; and such amount (if
any) shall be payable on the last Business Day of each month.
SECTION 5.5 Termination and Reduction of Commitments. The
Commitment of a Bank shall be deemed "unused" to the extent and in the amount
such Bank is obligated to fund future Loans or Letter of Credit Obligations of
any Borrower.
(a) Subject to Section 3.5, upon at least ten (10)
Business Days' prior written notice to the Agent, the Company may at any time
in whole permanently terminate, or from time to time permanently reduce, the
Total Commitment, ratably among the Banks in accordance with their respective
Commitments; provided, however, that any partial reduction of the Total
Commitment shall be in minimum increments of Five Million Dollars ($5,000,000)
and the Total Commitment may not be reduced to less than Fifty Million Dollars
($50,000,000) unless the Commitment is terminated in whole; and (ii) no
reduction shall reduce the amount of the Acquisition Loan Commitment to an
amount which is less than the Letter of Credit Obligations outstanding at such
time; provided however that the Floor Plan Agent in its sole discretion may, or
at the direction of the Required Banks, shall suspend and/or terminate all or
any portion of the then outstanding Drafting Agreements.
(b) At any time there exists any unused portion of
the Acquisition Loan Commitment, the Company may irrevocably request the Agent
to convert such unused portion of the Acquisition Loan Commitment to the Floor
Plan Loan Commitment and thereafter each Bank's Pro Rata Share of the
Acquisition Loan Commitment shall be in an aggregate amount equal to (i) the
sum of all Acquisition Loans then outstanding, plus (ii) all Letter of Credit
Obligations then outstanding, plus (iii) the remaining unused portion of the
Acquisition Loan Commitment after subtracting the amount thereof converted to
the Floor Plan Loan Commitment; in such event, the Floor Plan Loan Commitment
shall, upon such request, be irrevocably increased by the amount so requested
by the Company, such amount together with the Acquisition Loan Commitment not
to exceed the Total Commitment.
(c) At the time the Commitments of any Bank are
terminated or reduced pursuant to Section 5.5, the Floor Plan Company shall pay
to the Agent for the account of each such Bank, the Commitment Fees on the
amount of the Commitments so terminated or reduced owed through the date of
such termination or reduction.
(d) Each of the Commitments shall automatically and
permanently terminate on the Maturity Date.
SECTION 5.6 Alternate Rate of Interest. In the event, and
on each occasion, that on the day two (2) Business Days prior to the
commencement of any Interest Period for a Eurodollar Borrowing, the Agent shall
have determined (which determination shall be conclusive and binding upon the
Borrowers) that: (a) dollar deposits in the amount set forth in such request
for Borrowing
41
42
are not generally available in the London interbank market, or that the rate at
which dollar deposits are being offered will not adequately and fairly reflect
the cost to any Bank or the Swing Line Bank of making or maintaining the
principal amount of its Eurodollar Loan comprising such Borrowing during such
Interest Period, or (b) reasonable means do not exist for ascertaining the LIBO
Rate, then the Agent shall as soon as practicable thereafter give written
notice of such determination to the Company, the Banks and/or the Swing Line
Bank; and any request by a Borrower for the making of a Eurodollar Borrowing
shall, until the circumstances giving rise to such notice no longer exist, be
deemed to be a request for a Borrowing to be comprised of (i) if such Borrowing
is a Floor Plan Loan Borrowing, Comerica Prime Rate Loans, and (ii) if such
Borrowing is an Acquisition Loan Borrowing, Alternate Base Rate Loans. Each
determination of the Agent hereunder shall be conclusive absent demonstrable
error.
SECTION 5.7 Prepayment of Loans; Mandatory Reduction of
Indebtedness.
(a) So long as no Swing Line Overdraft Loans are
outstanding, each Acquisition Loan Borrowing and each Floor Plan Loan Borrowing
may be prepaid at any time and from time to time, in whole or in part, subject
to the requirements of Section 5.10, but otherwise without premium or penalty,
upon at least thee (3) Business Days' prior written or telex notice to the
Agent.
(b) On the date of any termination or reduction of
the Total Commitment pursuant to Section 5.5(a), each shall prepay so much of
its Loans (up to the amount by which the Commitment is so terminated or
reduced) as shall be necessary in order that the aggregate principal amount of
the Loans and Letter of Credit Obligations outstanding will not exceed the
Total Commitment following such termination or reduction. All prepayments
under this paragraph shall be subject to Section 5.10.
(c) Each notice of prepayment shall specify the
prepayment date and the principal amount of each Loan (or portion thereof) to
be prepaid, which notice shall be irrevocable and shall commit the Borrower
making such notice to prepay such Loan by the amount stated therein on the date
stated therein. All prepayments shall be accompanied by accrued interest on
the principal amount being prepaid to the date of prepayment.
(d) Subject to the provisions of Section
2.3(g)(iii), at any time and for any reason:
(i) the aggregate principal amount of all (y)
Floor Plan Loans outstanding, plus (z) Swing Line Loans
outstanding shall exceed the amount of Floor Plan Loan
Commitment at such time, or
(ii) the aggregate principal amount of
all (y) Acquisition Loans, plus (z) Letter of Credit
Obligation's shall exceed the amount of the Acquisition Loan
Commitment, or
(iii) the aggregate principal amount of all (w)
Floor Plan Loans outstanding, (x) Swing Line Loans
outstanding, plus (y) Acquisition Loans
42
43
outstanding, plus (z) Letter of Credit Obligations outstanding
shall exceed the Total Commitment,
the Borrowers shall immediately pay to the Agent (for application in the manner
directed by the Company) an amount of such Obligations equal to such excess,
provided, however, that Borrowers shall have the right to direct such repayment
first to prepay such portion of the Indebtedness not subject to the
indemnification provisions of this Agreement in Section 5.10.
SECTION 5.8 Reserve Requirements; Change in Circumstances.
(a) It is understood that the cost to each Bank of
making or maintaining any of the Eurodollar Loans may fluctuate as a result of
the applicability of reserve requirements imposed by the Board at the ratios
provided for in Regulation D on the date hereof. The Borrowers agree to pay to
each of the Banks from time to time such amounts as shall be necessary to
compensate such Bank for the portion of the cost of making or maintaining
Eurodollar Loans resulting from any increase in such reserve requirements
provided for in Regulation D from those as in effect on the date hereof, it
being understood that the rates of interest applicable to Eurodollar Loans have
been determined on the assumption that no such reserve requirements exist or
will exist and that such rates do not reflect costs imposed on the Banks in
connection with such reserve requirements.
(b) Notwithstanding any other provision herein, if
after the date of this Agreement any change in applicable law or regulation or
in the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof (whether or not
having the force of law) shall change the basis of taxation of payments to any
Bank of the principal of or interest on any Eurodollar Loan made by such Bank
or any other fees or amounts payable hereunder (other than taxes imposed on the
overall net income of such Bank by the jurisdiction in which such Bank has its
principal office or is located or by any political subdivision or taxing
authority therein), or shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, such Bank or shall impose on such Bank
or the London interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Bank and the result of any of the foregoing shall
be to increase the cost to such Bank of making or maintaining any Eurodollar
Loan or to reduce the amount of any sum received or receivable by such Bank
hereunder (whether of principal, interest or otherwise) in respect thereof, by
an amount deemed by such Bank in its sole discretion to be material, then the
Borrowers shall pay as required in Section 5.8(d) such additional amount or
amounts as will compensate such Bank for such additional costs or reduction
will be paid to such Bank with respect to the Eurodollar Loans.
(c) If any Bank shall have determined that the
applicability of any law, rule, regulation or guideline adopted pursuant to or
arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards," or the adoption after the date
hereof of any other law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any lending office of such Bank) or any
Bank's holding company with
43
44
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 such Bank's holding company, if any, as a consequence of this
Agreement or the Loans made by such Bank pursuant hereto to a level below that
which such Bank or such Bank's holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's policies
and the policies of such Bank's holding company with respect to capital
adequacy) by an amount deemed by such Bank to be material, then the Borrowers
shall pay as required to Section 5.8(d) to such Bank such additional amount or
amounts as will compensate such Bank or such Bank's holding company for any
such reduction suffered.
(d) A certificate of each Bank setting forth in
reasonable detail calculations (together with the basis and assumptions
therefor) to establish such amount or amounts as shall be necessary to
compensate such Bank (or participating banks or other entities pursuant to
Article XIII) as specified in paragraph (a), (b) or (c) above shall be
delivered to the Agent which shall promptly deliver the same to the Company and
such certificate shall be rebuttably presumptive evidence of the amount or
amounts which such Bank is entitled to receive. The Borrowers shall pay such
Bank the amount shown as due on any such certificate within ten (10) days after
its receipt of the same.
(e) Any demand for compensation pursuant to this
Section 5.8 must be made on or before one (1) year after the Bank incurs the
expense, cost or economic loss referred to or such Bank shall be deemed to have
waived the right to such compensation. The protection of this Section 5.8 shall
be available to each Bank regardless of any possible contention of the
invalidity or inapplicability of any law, regulation or other condition which
shall give rise to any demand by such Bank for compensation.
(f) Nothing in this Section 5.8 shall entitle any
Bank to receive interest at a rate per annum in excess of the Highest Lawful
Rate.
(g) The term "Bank" or "Banks" as used in this
Section 5.8 shall include the Swing Line Bank and the provisions hereof, when
applicable, shall apply to the Swing Line Bank.
SECTION 5.9 Change in Legality.
(a) Notwithstanding anything to the contrary herein
contained, if any change in any law or regulation or in the interpretation
thereof by any Governmental Authority charged with the administration or
interpretation thereof shall make it unlawful for any Bank to make or maintain
any Eurodollar Loan or to give effect to its obligations in respect of any
Eurodollar Borrowing contemplated hereby, then, by written notice to the Agent,
such Bank may:
(i) declare that Eurodollar Loans will not
thereafter be made by such Bank hereunder, whereupon any
request by any Borrower for a Eurodollar Borrowing shall, as
to such Bank only, be deemed a request for an Alternate Base
or the Comerica Prime Rate, as applicable, Rate Loan unless
such declaration shall be subsequently withdrawn; and
44
45
(ii) require that all outstanding
Eurodollar Loans made by it be converted to Alternate Base
Rate Loans, in which event all such Eurodollar Loans shall be
automatically converted to Alternate Base Rate Loans if
Acquisition Loans and to Comerica Prime Rate Loans if Floor
Plan Loans, as of the effective date of such notice as
provided in paragraph (b) below.
In the event any Bank shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied
to repay the Eurodollar Loans that would have been made by such Bank or the
converted Eurodollar Loans of such Bank shall instead be applied to repay the
Alternate Base Rate Loans if Acquisition Loans and to Comerica Prime Rate Loans
if Floor Plan Loans, made by such Bank in lieu of, or resulting from the
conversion of, such Eurodollar Loans; provided, however, the Alternate Base
Rate Loans or Comerica Prime Rate Loans resulting from the conversion of such
Eurodollar Loans shall be prepayable only at the times the converted Eurodollar
Loans would have been prepayable, notwithstanding the provisions of Section
5.7(a).
(b) For purposes of Section 5.9(a), a notice to the
Agent by any Bank shall be effective as to each Eurodollar Loan, if lawful, on
the last day of the then-current Interest Period or, if there are then two (2)
or more current Interest Periods, on the last day of each such Interest Period,
respectively; otherwise, such notice shall be effective on the date of receipt
by the Agent.
(c) The term "Bank" or "Banks" as used in this
Section 5.9 shall include the Swing Line Bank and the provisions hereof, when
applicable, shall apply to the Swing Line Bank.
SECTION 5.10 Indemnity.
(a) The Borrowers shall indemnify each Bank against
any loss or expense which such Bank may sustain or incur as a consequence of
(i) any failure by any Borrower to fulfill on the date of any Borrowing
hereunder the applicable conditions set forth in Article VIII, (ii) any failure
by any Borrower to borrow, convert or continue hereunder after delivery of a
Request for Borrowing or a notice of conversion or continuation has been given
pursuant to Sections 2.4, 3.3 and 5.15, (iii) any payment, prepayment or
conversion of a Eurodollar Loan required by any other provision of this
Agreement or otherwise made on a date other than the last day of the applicable
Interest Period, (iv) any default in payment or prepayment of the principal
amount of any Loan or any part thereof or interest accrued thereon, as and when
due and payable (at the due date thereof, by irrevocable notice of prepayment
or otherwise), or (v) the occurrence of any Event of Default, including, but
not limited to, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a Eurodollar
Loan. Such loss or reasonable expense shall include an amount equal to the
excess, if any, as reasonably determined by each Bank of (A) its cost of
obtaining the funds for the Loan being paid, prepaid or converted or not
borrowed (based on the LIBO Rate applicable thereto) for the period from the
date of such payment, prepayment or conversion or failure to borrow to the last
day of the Interest Period for such Loan (or, in the case of a failure to
borrow, the Interest Period for such Loan which would have commenced on the
date of such failure to borrow) over (B) the amount of interest (as reasonably
determined by such Bank) that could be realized by such Bank in reemploying
during such period the funds so paid, prepaid
45
46
or converted or not borrowed. A certificate of each Bank setting forth in
reasonable detail calculations (together with the basis and assumptions
therefore) to establish any amount or amounts which such Bank is entitled to
receive pursuant to this Section 5.10 shall be delivered to the Agent which
shall promptly deliver the same to the Company and such certificate shall be
rebuttably presumptive evidence of the amount or amounts which such Bank is
entitled to receive. Nothing in this Section 5.10 shall entitle any Bank to
receive interest at a rate per annum in excess of the Highest Lawful Rate.
(b) The provisions of this Section 5.10 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the invalidity or unenforceability of any
term or provision of this Agreement or any Note, or any investigation made by
or on behalf of any Bank; provided demand for compensation pursuant to Section
5.08 must be made on or before one (1) year after the Bank incurs the expense,
cost or economic loss referred to or such Bank shall be deemed to have waived
the right to such compensation. All amounts due under this Section 5.10 shall
be payable within ten (10) days after receipt of demand therefor.
(c) The term "Bank" or "Banks" as used in this
Section 5.10 shall include the Swing Line Bank and the provisions hereof, when
applicable, shall apply to the Swing Line Bank.
SECTION 5.11 Pro Rata Treatment. Subject to Section 4.6(c)
hereof, and except as permitted under Section 5.8, each Borrowing, each payment
or prepayment of principal of the Notes, each payment of interest on such
Notes, each other reduction of the principal or interest outstanding under such
Notes, however achieved, each payment of the Commitment Fees and each reduction
of the Commitments shall be made pro rata among the Banks in the proportions
that their respective Commitments bear to the Total Commitment.
SECTION 5.12 Payments.
(a) The Company and/or any of the Borrowers shall
make all payments of principal and interest on any Swing Line Loan and any
Swing Line Overdraft Loan, any curtailment payment, and payments of the
proceeds of the sale of any Motor Vehicle to the Floor Plan Agent on the date
when due in dollars to the Floor Plan Agent at its offices in Detroit Michigan,
and except as otherwise provided in this Agreement, the Company and/or any of
the Borrowers shall make all payments (including principal of or interest on
any Borrowing, Agency Fee, or any other fees or other amounts) payable
hereunder and under any other Loan Document not later than 1:00 P.M., HOUSTON,
TEXAS TIME, on the date when due in dollars to the Agent at its offices at 707
Travis Street, Houston, Texas 77002, in immediately available funds, without
setoff or counterclaim.
(b) Subject to the provisos contained in subclauses
(A) of the definition of "Interest Period", whenever any payment (including
principal of or interest on any Borrowing or any fees or other amounts)
hereunder or under any other Loan Document shall become due, or otherwise would
occur, on a day that is not a Business Day, such payment may be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, if applicable.
46
47
SECTION 5.13 Sharing of Setoffs. Except as otherwise provided
in Section 4.6(c) in connection with the payment of Swing Line Overdraft Loans,
each Bank agrees that if it shall, in any manner, including through the
exercise of a right of banker's lien, setoff or counterclaim against any
Borrower, or pursuant to a secured claim under Section 506 of Title 11 of the
United States Code or other security or interest arising from, or in lieu of,
such secured claim, received by such Bank under any Insolvency Proceeding or
otherwise, obtain payment (voluntary or involuntary) in respect of the Note
held by it as a result of which the unpaid principal portion of the Note held
by it shall be proportionately less than the unpaid principal portion of the
Note held by any other Bank, it shall be deemed to have simultaneously
purchased from such other Bank a participation in the Note held by such other
Bank, so that the aggregate unpaid principal amount of the Note and
participations in Notes held by each Bank shall be in the same proportion to
the aggregate unpaid principal amount of all Notes then outstanding as the
principal amount of the Note held by it prior to such exercise of banker's
lien, setoff or counterclaim was to the principal amount of all Notes
outstanding prior to such exercise of banker's lien, setoff or counterclaim;
provided, however, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 5.13 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrowers expressly consent to the
foregoing arrangements and agree that any Person holding a participation in a
Note under this Section 5.13 deemed to have been so purchased may exercise any
and all rights of banker's lien, setoff or counterclaim with respect to any and
all moneys owing by any such Borrower to such Bank as fully as if such Bank had
made a Loan directly to such Borrower in the amount of such participation.
SECTION 5.14 Payments Free of Taxes.
(a) Any and all payments by the Borrowers
hereunder shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on the
Agent's, the Floor Plan Agent's, the Swing Line Bank's or any Bank's or any
transferee's or assignee's, excluding a participation holder's (any such entity
a "Transferee") net income and franchise taxes imposed on the Agent, the Floor
Plan Agent, the Swing Line Bank or any Bank (or Transferee) by the United
States or any jurisdiction under the laws of which it is organized or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrowers shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to the Banks (or any
Transferee), the Agent, the Floor Plan Agent or the Swing Line Bank (i) the sum
payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 5.14) such Bank (or Transferee) or the Agent, the Floor Plan
Agent or the Swing Line Bank (as the case may be) shall receive an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrowers shall make such deductions and (iii) the Borrowers shall pay the full
amount deducted to the relevant taxing authority or other governmental
authority in accordance with applicable law.
(b) In addition, the Borrowers agree to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with
47
48
respect to, this Agreement or any other Loan Document which are not excluded
under Section 5.14(a) (hereinafter referred to as "Other Taxes").
(c) The Borrowers will indemnify each Bank (or
Transferee), the Swing Line Bank, the Agent and/or the Floor Plan Agent for the
full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 5.14) paid by
such Bank (or Transferee), the Swing Line Bank, the Agent and/or the Floor Plan
Agent, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant taxing
authority or other Governmental Authority. Such indemnification shall be made
within thirty (30) days after the date any such Person indemnified hereunder
makes written demand therefor, such demand to contain a certificate setting
forth the calculations (including all assumptions and the basis therefor) to
establish the amount for which indemnity is claimed. If a Bank (or
Transferee), the Agent, the Swing Line Bank, and/or the Floor Plan Agent shall
become aware that it is entitled to receive a refund in respect of Taxes or
Other Taxes, it shall promptly notify the Company of the availability of such
refund and shall, within thirty (30) days after receipt of a request by the
Borrowers, apply for such refund at the Company's expense. If any Bank (or
Transferee), the Swing Line Bank, the Agent and/or the Floor Plan Agent
receives a refund in respect of any Taxes or Other Taxes for which such Person
has received payment from any of the Borrowers, it shall promptly notify the
Company of such refund and shall, within thirty (30) days after receipt of a
request by any of the Borrowers (or promptly upon receipt, if any of the
Borrowers has requested application for such refund pursuant hereto), repay
such refund to the Company, net of all out-of-pocket expenses of such Person
and without interest; provided that the Borrowers, upon the request of such
Person, agree to return such refund (plus penalties, interest or other charges)
to such Person in the event such Person is required to repay such refund.
(d) Within thirty (30) days after the date of any
payment of Taxes or Other Taxes withheld by the Borrowers in respect of any
payment to any Bank (or Transferee) the Swing Line Bank, the Agent, and/or the
Floor Plan Agent, the Borrowers will furnish to such Person, at its address
referred to in Section 13.1, the original or a certified copy of a receipt
evidencing payment thereof to the extent available.
(e) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations contained in this
Section 5.14 shall survive the payment in full of the principal of and
interest on all Loans made hereunder.
(f) The Agent, the Floor Plan Agent, each Bank, the
Swing Line Bank and each Transferee each represents that is either (i) a
corporation organized under the laws of the United States of America or any
state thereof or (ii) it is entitled to complete exemption from United States
withholding tax imposed on or with respect to any payments, including fees, to
be made to it pursuant to this Agreement (y) under an applicable provision of a
tax convention to which the United States of America is a party or (z) because
it is acting through a branch, agency or office in the United States of America
and any payment to be received by it hereunder is effectively connected with a
trade or business in the United States of America. Each Bank (or Transferee)
which is organized outside the United States shall, on the date it becomes a
signatory hereto, deliver to the Company such certificates, documents or other
evidence, as required by the Code or Treasury
48
49
Regulations issued pursuant thereto, including Internal Revenue Service Form
1001 or Form 4224 and any other certificate or statement of exemption required
by Treasury Regulation Section 1.1441-1(a) or Section 1.1441-6(c) or any
subsequent version thereof, properly completed and duly executed by such Bank
(or Transferee) establishing such payments to it are (i) not subject to
withholding under the Code because such payment is effectively connected with
the conduct by such Bank (or Transferee) of a trade or business in the United
States or (ii) totally exempt from United States tax under a provision of an
applicable tax treaty. Unless the Company and the Agent have received forms or
other documents satisfactory to them indicating that payments hereunder or
under the Notes are not subject to United States withholding tax or are subject
to such tax at a rate reduced by an applicable tax treaty, the Borrowers, the
Agent, the Swing Line Bank and/or the Floor Plan Agent shall withhold taxes
from such payments at the applicable statutory rate in the case of payments to
or for any Bank (or Transferee) or assignee organized under the laws of a
jurisdiction outside the United States.
(g) The Borrowers shall not be required to pay any
additional amounts to any Bank (or Transferee) in respect of United States
withholding tax pursuant to paragraph (a) or (c) above if the obligation to pay
such additional amounts would not have arisen but for the failure of the
representation in Section 5.14(f) to be true or a failure by such Bank (or
Transferee) to comply with the provisions of paragraph (f) above unless such
failure results from (i) a change in applicable law, regulation or official
interpretation thereof or (ii) an amendment, modification or revocation of any
applicable tax treaty or a change in official position regarding the
application or interpretation thereof, in each case after the Closing Date
(and, in the case of a Transferee, after the date of assignment or transfer).
(h) Any Bank (or Transferee) claiming any additional
amounts payable pursuant to this Section 5.14 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by the Company or to change the jurisdiction of its
Applicable Lending Office if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the sole determination of such Bank, be
otherwise disadvantageous to such Bank (or Transferee).
(i) If any Bank (or Transferee) requests compensation
pursuant to this Section 5.14, the Company may give notice to such Bank (with
a copy to the Agent) that they wish to seek one or more Eligible Assignees
(which may be one or more of the Banks) to assume the Commitments of such Bank
and to purchase its outstanding Loans and Note. Each Bank (or Transferee)
requesting compensation pursuant to this Section 5.14 hereto agrees to sell all
of its Commitments, its Loans and its Note pursuant to Section 13.3 to any such
Eligible Assignee for an amount equal to the sum of the outstanding unpaid
principal of and accrued interest on such Loans and Note plus all Commitment
Fees and other fees and amounts due such Bank (or Transferee) hereunder
calculated, in each case, to the date such Commitment, Loans and Note are
purchased, whereupon such Bank (or Transferee) shall thereafter have no other
Commitments or other obligation to the Floor Plan Borrowers hereunder or under
any Note.
SECTION 5.15 Conversion and Continuation of Acquisition
Loan Borrowings and Floor Plan Borrowings.
49
50
(a) The Company shall have the right with respect to
Acquisition Loan Borrowings, on behalf of any Borrower, at any time upon prior
irrevocable notice to the Agent (a) not later than 10:00 A.M., HOUSTON, TEXAS
TIME, on the date of conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 11:00 A.M., HOUSTON, TEXAS TIME, three
Business Days prior to conversion or continuation, to convert all or any
portion of any ABR Borrowing into a Eurodollar Borrowing or to continue all or
any portion of any Eurodollar Borrowing of any Borrower as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 11:00 A.M.,
HOUSTON, TEXAS TIME, three Business Days prior to conversion, to convert all or
any portion of the Interest Period with respect to any Eurodollar Borrowing to
another permissible Interest Period subject in each case to the following:
(i) each conversion or continuation shall be made
pro rata among the Banks, in accordance with the respective principal
amounts of the Acquisition Loans comprising the converted or continued
Acquisition Loan Borrowing;
(ii) if less than all the outstanding principal
amount of any such Acquisition Loan Borrowing shall be converted or
continued, the aggregate principal amount of such Acquisition Loan
Borrowing converted or continued shall be an integral multiple of One
Million Dollars ($1,000,000) and not less than One Million Dollars
($1,000,000);
(iii) if any Eurodollar Borrowing is converted at a
time other than the end of the Interest Period applicable thereto, the
Company shall pay, upon demand, any amounts due, if any, to the Banks
under Section 5.10;
(iv) any portion of a Borrowing maturing or
required to be repaid in less than one month may not be converted into
or continued as a Eurodollar Borrowing;
(v) any portion of a Eurodollar Borrowing which
cannot be converted into or continued as a Eurodollar Borrowing by
reason of clause (iv) above shall be automatically converted at the
end of the Interest Period in effect for such Acquisition Loan
Borrowing into an ABR Borrowing;
(vi) no Interest Period may be selected for any
Eurodollar Borrowing that would end later than the Maturity Date; and
(vii) accrued interest on an Acquisition Loan (or
portion thereof) being converted or continued shall be paid by the
Company at the time of conversion or continuation.
Each notice pursuant to this Section 5.15(a) shall be irrevocable and
shall refer to this Agreement and specify (w) the identity and amount of the
Acquisition Loan Borrowing that the Company requests to be converted or
continued, (x) whether such Acquisition Loan Borrowing is to be converted to or
continued as a Eurodollar Borrowing or an ABR Borrowing, (y) if such notice
requests a conversion, the date of such conversion (which shall be a Business
Day) and (z) if such Acquisition Loan Borrowing is to be converted to or
continued as a Eurodollar Borrowing, the
50
51
Interest Period with respect thereto. If no Interest Period is specified in
any such notice with respect to any conversion to or continuation as a
Eurodollar Borrowing, the Company shall be deemed to have selected an Interest
Period of one (1) month's duration. The Agent shall promptly advise the other
Banks of any notice given pursuant to this Section 5.15(a) and of each Bank's
Pro Rata Share of any converted or continued Borrowing. If the Company shall
not have given written notice in accordance with this Section 5.15(a) to
continue any Eurodollar Borrowing into a subsequent Interest Period (and shall
not otherwise have given written notice in accordance with this Section 5.15(a)
to convert such Acquisition Loan Borrowing), such Acquisition Loan Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be converted into as an ABR
Borrowing.
(b) The Company shall have the right with respect to
Floor Plan Loan Borrowings, on behalf of any Floor Plan Borrower, at any time
upon prior irrevocable notice to the Agent (a) not later than 10:00 A.M.,
HOUSTON, TEXAS TIME, on the date of conversion, to convert any Eurodollar
Borrowing into a Comerica Prime Rate Borrowing, (b) not later than 11:00 A.M.,
HOUSTON, TEXAS TIME, three Business Days prior to conversion or continuation,
to convert all or any portion of any Comerica Prime Rate Borrowing into a
Eurodollar Borrowing or to continue all or any portion of any Eurodollar
Borrowing of any Floor Plan Borrower as a Eurodollar Borrowing for an
additional Interest Period, and (c) not later than 11:00 A.M., HOUSTON, TEXAS
TIME, three Business Days prior to conversion, to convert all or any portion of
the Interest Period with respect to any Eurodollar Borrowing to another
permissible Interest Period subject in each case to the following:
(i) each conversion or continuation shall be made
pro rata among the Banks, in accordance with the respective principal
amounts of the Floor Plan Loans comprising the converted or continued
Floor Plan Loan Borrowing;
(ii) if less than all the outstanding principal
amount of any such Floor Plan Loan Borrowing shall be converted or
continued, the aggregate principal amount of such Floor Plan Loan
Borrowing converted or continued shall be an integral multiple of One
Million Dollars ($1,000,000) and not less than One Million Dollars
($1,000,000);
(iii) if any Eurodollar Borrowing is converted at a
time other than the end of the Interest Period applicable thereto, the
Company shall pay, upon demand, any amounts due, if any, to the Banks
under Section 5.10;
(iv) any portion of a Borrowing maturing or
required to be repaid in less than one month may not be converted into
or continued as a Eurodollar Borrowing;
(v) any portion of a Eurodollar Borrowing which
cannot be converted into or continued as a Eurodollar Borrowing by
reason of clause (iv) above shall be automatically converted at the
end of the Interest Period in effect for such Floor Plan Loan
Borrowing into a Comerica Prime Rate Borrowing;
(vi) no Interest Period may be selected for any
Eurodollar Borrowing that would end later than the Maturity Date; and
51
52
(vii) accrued interest on an Floor Plan Loan (or
portion thereof) being converted or continued shall be paid by the
Company at the time of conversion or continuation.
Each notice pursuant to this Section 5.15(b) shall be irrevocable and
shall refer to this Agreement and specify (w) the identity and amount of the
Floor Plan Loan Borrowing that the Company requests to be converted or
continued, (x) whether such Floor Plan Loan Borrowing is to be converted to or
continued as a Eurodollar Borrowing or a Comerica Prime Rate Borrowing, (y) if
such notice requests a conversion, the date of such conversion (which shall be
a Business Day) and (z) if such Floor Plan Loan Borrowing is to be converted to
or continued as a Eurodollar Borrowing, the Interest Period with respect
thereto. If no Interest Period is specified in any such notice with respect to
any conversion to or continuation as a Eurodollar Borrowing, the Company shall
be deemed to have selected an Interest Period of one (1) month's duration. The
Agent shall promptly advise the other Banks of any notice given pursuant to
this Section 5.15(b) and of each Bank's Pro Rata Share of any converted or
continued Borrowing. If the Company shall not have given written notice in
accordance with this Section 5.15(b) to continue any Eurodollar Borrowing into
a subsequent Interest Period (and shall not otherwise have given written notice
in accordance with this Section 5.15(b) to convert such Floor Plan Loan
Borrowing), such Floor Plan Loan Borrowing shall, at the end of the Interest
Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be converted into a Comerica Prime Rate Borrowing.
SECTION 5.16 Extension of Maturity Date.
(a) Provided that no Default or Event of Default has
occurred and is continuing, the Company may, by written notice to Agent (with
sufficient copies for each Bank) (which notice shall be irrevocable and which
shall not be deemed effective unless actually received by Agent) prior to
November 1, but not before October 1, of each fiscal year, request that the
Banks extend the then applicable Maturity Date to a date that is one year later
than the Maturity Date, then in effect (each such request, a "Request"). Each
Bank shall, not later than November 30th of such fiscal year, give written
notice to the Agent stating whether such Bank is willing to extend the Maturity
Date as requested. If Agent has received the aforesaid written approvals of
such Request from each of the Banks, then, effective upon the date of Agent's
receipt of all such written approvals from the Banks, as aforesaid, the
Maturity Date shall be so extended for an additional one year period, the term
Maturity Date shall mean such extended date and Agent shall promptly notify the
Company that such extension has occurred.
(b) If (i) any Bank gives the Agent written notice
that it is unwilling to extend the Maturity Date as requested or (ii) any Bank
fails to provide written approval to Agent of such a Request on or before
November 30th of such fiscal year, the (w) the Banks shall be deemed to have
declined to extend the Maturity Date, (x) the then- current Maturity Date shall
remain in effect (with no further right on the part of the Company to request
extensions thereof under this Section 2.9), and (y) the commitments of the
Banks to make Floor Plan Loans or Acquisition Loans hereunder shall terminate
on the Maturity Date then in effect, the Floor Plan Agent shall take such
action as necessary to terminate and suspend all Drafting Agreements effective
ten (10) days prior to the Maturity Date then in effect, and Agent shall
promptly notify Company thereof.
52
53
ARTICLE VI
LETTERS OF CREDIT
SECTION 6.1
(a) On the terms and conditions set forth herein (i)
the Issuing Bank agrees from time to time on any Business Day during the period
from the Closing Date to the last Business Day thirty (30) days prior to the
Maturity Date (the "Letter of Credit Termination Date") to issue Letters of
Credit for the account of any Borrower, and to amend or renew Letters of Credit
previously issued by it, in accordance with Section 6.2; and (ii) the Banks
severally agree to participate in Letters of Credit Issued for the account of
the Borrowers; provided, that the Issuing Bank shall not be obligated to Issue,
and no Bank shall be obligated to participate in, any Letter of Credit if, as
of the date of request of such Letter of Credit, after giving effect to the
maximum amount payable under such Letter of Credit, (y) the aggregate
principal amount of all Letter of Credit Obligations outstanding shall at any
time exceed Five Million Dollars ($5,000,000) or (z) the aggregate principal
amount of Acquisition Loans outstanding plus the Letter of Credit Obligations
outstanding as of such day shall exceed the Acquisition Loan Commitment;
further, the aggregate principal amount of all Letter of Credit Obligations
outstanding, plus the aggregate principal amount of all Acquisition Loans
outstanding, plus the aggregate principal amount of all Swing Line Loans
outstanding plus the aggregate principal amount of all Floor Plan Loans
outstanding shall not at any time exceed the Total Commitment. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
ability of the Borrowers to obtain Letters of Credit shall be fully revolving,
and, accordingly, the Borrowers may, during the foregoing period, obtain
Letters of Credit to replace Letters of Credit which have expired or which have
been drawn upon and reimbursed.
(b) The Issuing Bank is under no obligation to Issue
any Letter of Credit if: (i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the
Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
the Issuing Bank shall prohibit Issuing Bank, or request that the Issuing Bank
refrain, from the Issuance of Letters of Credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
Issuing Bank is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost
or expense which was not applicable on the Closing Date and which the Issuing
Bank in good faith deems material to it; (ii) the Issuing Bank has received
written notice from any Bank, the Agent or any Borrower, on or prior to the
Business Day prior to the requested date of Issuance of such Letter of Credit,
that one or more of the applicable conditions contained in Article VIII is not
then satisfied; (iii) the expiration date of any requested Letter of Credit is
more than one (1) year from the date of Issuance thereof or after the Maturity
Date; (iv) any requested Letter of Credit does not provide for drafts, or is
not otherwise in form and substance acceptable to the Issuing Bank, or the
Issuance of a Letter of Credit shall violate any applicable policies of the
Issuing Bank, or the Issuance of a Letter of Credit is for an amount less than
One Hundred Thousand Dollars ($100,000) or to be denominated in a currency
other than U.S. Dollars.
53
54
SECTION 6.2 Issuance, Amendment and Renewal of Letters of
Credit.
(a) Each Letter of Credit shall be issued upon the
irrevocable written request of the Company received by the Issuing Bank (with a
copy sent by the Company to the Agent) at least three (3) days (or such shorter
time as the Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of Issuance. Each such request for
Issuance of a Letter of Credit shall be by facsimile, confirmed immediately in
an original writing, in the form of a Letter of Credit Application, and shall
specify in form and detail satisfactory to the Issuing Bank such matters as the
Issuing Bank may require. Each Letter of Credit (i) will be for the account of
such Borrower, (ii) will be a (A) nontransferable standby letter of credit to
support certain performance obligations of such Borrower, or (B)
non-transferable standby letter of credit to support certain payment
obligations of such Borrower that are not prohibited by this Agreement, (iii)
will be for purposes reasonably satisfactory to the Issuing Bank and (iv) will
contain such terms and provisions as may be customarily required by the Issuing
Bank.
(b) Prior to the Issuance of any Letter of Credit,
the Issuing Bank will confirm with the Agent (by telephone or in writing) that
the Agent has received a copy of the Letter of Credit Application or Letter of
Credit Amendment Application from any Borrower and, if not, the Issuing Bank
will provide the Agent with a copy thereof. Unless the Issuing Bank has
received notice prior to its Issuance of a requested Letter of Credit from the
Agent (i) directing the Issuing Bank not to Issue such Letter of Credit because
such Issuance is not then permitted under this Section 6.2, or (ii) that one or
more conditions specified in Article VIII are not then satisfied or waived;
then, subject to the terms and conditions hereof, the Issuing Bank shall, on
the requested date, Issue a Letter of Credit for the account of such Borrower
in accordance with the Issuing Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is
outstanding and prior to the Letter of Credit Termination Date, the Issuing
Bank will, upon the written request of any Borrower received by the Issuing
Bank (with a copy sent by the Borrower to the Agent) at least three (3) days
(or such shorter time as the Issuing Bank may agree in particular instance in
its sole discretion) prior to the proposed date of amendment or extension,
amend any Letter of Credit Issued by it or extend the expiry date. Each such
request for amendment or extension of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, made in such form as
the Issuing Bank shall require. The Issuing Bank shall be under no obligation
to amend or extend the expiry date any Letter of Credit if: (i) the Issuing
Bank would have no obligation at such time to Issue such Letter of Credit in
its amended form under the terms of this Agreement; or (ii) the beneficiary of
any such Letter of Credit does not accept the proposed amendment to the Letter
of Credit.
(d) Upon receipt of notice from the Issuing Bank, the
Agent will promptly notify the Banks of the Issuance of a Letter of Credit and
any amendment or extension thereto.
(e) If any outstanding Letter of Credit shall provide
that it shall be automatically renewed unless the beneficiary thereof receives
notice from the Issuing Bank that such Letter of Credit shall not be renewed,
the Issuing Bank shall be permitted to allow such Letter of Credit to renew,
and the Borrowers and the Banks hereby authorize such renewal. The Issuing
Bank
54
55
shall not be obligated to allow such Letter of Credit to renew if the Issuing
Bank would have no obligation at such time to Issue or amend such Letter of
Credit under the terms of this Agreement.
(f) The Issuing Bank may, at its election (or as
required by the Agent at the direction of the Required Banks), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the
expiration date of any Letter of Credit to be a date not later than the
Maturity Date.
(g) This Agreement shall control in the event of any
conflict with any Letter of Credit- Related Document.
(h) The Issuing Bank will also deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment or extension to a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit, amendment,
or extension to a Letter of Credit.
SECTION 6.3 Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of
Credit, each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank a participation in
such Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) the Pro Rata Share of such Bank, and (ii) the maximum amount
available to be drawn under such Letter of Credit and the amount of such
drawing respectively. Each Issuance of a Letter of Credit shall be deemed to
utilize the Acquisition Loan Commitment of each Bank by an amount equal to the
amount of such participation.
(b) In the event of any request for a drawing under a
Letter of Credit by the beneficiary or transferee thereof, the Issuing Bank
will promptly notify the Company. In the case of Letters of Credit under which
drawings are payable one or more Business Days after the drawing is made, the
Issuing Bank will give such notice to the Company at least one Business Day
prior to the Honor Date. The Company shall reimburse the Issuing Bank prior to
11:00 A.M., HOUSTON, TEXAS TIME, on each date that any amount is paid by the
Issuing Bank under any Letter of Credit (each such date, an "Honor Date") in an
amount equal to the amount so paid by the Issuing Bank. In the event the
Company fails to reimburse the Issuing Bank for the full amount of any drawing
under any Letter of Credit by 11:00 A.M., HOUSTON, TEXAS TIME, on the Honor
Date, the Issuing Bank will promptly notify the Agent and the Agent will
promptly notify each Bank thereof, and the Company shall be deemed to have
requested an Alternate Base Rate Loan be made by the Banks to be disbursed on
the Honor Date under such Letter of Credit, subject to the amount of the
unutilized portion of the Acquisition Loan Commitment and subject to the
conditions set forth in Article VIII. Any notice given by the Issuing Bank or
the Agent pursuant to this Section 6.3(b) may be oral if immediately confirmed
in writing (including by facsimile); provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.
(c) Each Bank shall upon any notice pursuant to
Section 6.3(b) make available to the Agent for the account of the Issuing Bank
an amount in Dollars and in immediately available
55
56
funds equal to its Pro Rata Share of the amount of the drawing, whereupon the
participating Banks shall each be deemed to have made an Acquisition Loan
consisting of an Alternate Base Rate Loan to the applicable Borrower in that
amount. If any Bank so notified fails to make available to the Agent for the
account of the Issuing Bank the amount of such Bank's Pro Rata Share of the
amount of the drawing by no later than 12:00 NOON, HOUSTON, TEXAS TIME, on the
Honor Date, then interest shall accrue on such Bank's obligation to make such
payment, from the Honor Date to the date such Bank makes such payment, at the
rate per annum equal to the Federal Funds Rate in effect from time to time
during such period. The Agent will promptly give notice to each Bank of the
occurrence of the Honor Date, but failure of the Agent to give any such notice
on the Honor Date or in sufficient time to enable any Bank to effect such
payment on such date shall not relieve such Bank from its obligations under
this Section 6.3.
(d) With respect to any unreimbursed drawing that is
not converted into an Alternate Base Rate Loan to the Company in whole or in
part, because of failure of the Company to satisfy the conditions set forth in
Article VIII or for any other reason, the Company shall be deemed to have
incurred from the Issuing Bank a Letter of Credit Borrowing in the amount of
such drawing, which Letter of Credit Borrowing shall be due and payable on
demand (together with interest) and shall bear interest at a rate per annum
equal to the Alternate Base Rate plus two percent (2%) per annum, and each
Bank's payment to the Issuing Bank pursuant to Section 6.3(b) shall be deemed
payment in respect of its participation in such Letter of Credit Borrowing and
shall constitute a Letter of Credit Advance from such Bank in satisfaction of
its participation obligation under this Section 6.3.
(e) Each Bank's obligation in accordance with this
Agreement to make Acquisition Loans or Letter of Credit Advances, as
contemplated by this Section 6.3, as a result of a drawing under the Letter of
Credit, shall be absolute and unconditional and without recourse to the Issuing
Bank and shall not be affected by any circumstance, including (i) any set-off,
counterclaim, recoupment, defense or other right which such Bank may have
against the Issuing Bank, any Borrower or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of a Default, an Event of
Default or a Material Adverse Effect; or (iii) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing;
provided, however, that each Bank's obligation to make Acquisition Loans under
this Section 6.3 is subject to the conditions set forth in Article VIII.
SECTION 6.4 Repayment of Participation.
(a) When the Agent receives (and only if the Agent
receives), for the account of the Issuing Bank, immediately available funds
from the Borrowers (i) in respect of which any Bank has paid the Agent for the
account of the Issuing Bank for such Bank's participation in the Letter of
Credit Advance pursuant to Section 6.3 or (ii) in payment of interest thereon,
the Agent will pay to each Bank, in the same funds as those received by the
Agent for the account of the Issuing Bank, the amount of such Bank's Pro Rata
Share of such funds and the Issuing Bank shall receive and retain the amount of
the Pro Rata Share of such funds of any Bank that did not so pay the Agent for
the account of the Issuing Bank.
56
57
(b) If the Agent or the Issuing Bank is required at
any time to return to the Borrowers or to a trustee, receiver, liquidator,
custodian, or any official in an Insolvency Proceeding, any portion of the
payments made by the Borrowers to the Agent for the account of the Issuing Bank
pursuant to Section 6.4(a) in reimbursement of a payment made under the Letter
of Credit Advance or interest thereon, each Bank shall, on demand of the Agent,
forthwith return to the Agent or the Issuing Bank the amount of its Pro Rata
Share of any amounts so returned by the Agent or the Issuing Bank plus interest
thereon from the date such demand is made to the date such amounts are returned
by such Bank to the Agent or the Issuing Bank, at a rate per annum equal to the
Federal Funds Rate in effect from time to time.
SECTION 6.5 Role of the Issuing Bank.
(a) Each Bank and each Borrower agree that, in paying
any drawing under a Letter of Credit, the Issuing Bank shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and other documents, if any, expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.
(b) Neither the Issuing Bank nor any of its
correspondents, participants or assignees shall be liable to any Bank for: (i)
any action taken or omitted in connection herewith at the request or with the
approval of the Banks (including the Required Banks, as applicable); (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any Letter of Credit-Related Document.
(c) The Borrowers hereby assume all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude any Borrower from pursuing such rights and remedies as
it may have against the beneficiary or transferee at law or under any other
agreement or assume risks or losses arising out of the gross negligence, bad
faith or wilful misconduct of the Issuing Bank. Neither the Issuing Bank, nor
any correspondents, participants or assignees of the Issuing Bank, shall be
liable or responsible for any of the matters described in clauses (i) through
(vii) of Section 6.6; provided, however, that any Borrower may have a claim
against the Issuing Bank, and the Issuing Bank may be liable to such Borrower,
to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered or incurred by such Borrower(s)
which are caused by the Issuing Bank's willful misconduct or gross negligence
(i) in failing to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft, certificate(s) and any other documents, if
any, strictly complying with the terms and conditions of such Letter of Credit,
(ii) in its paying under a Letter of Credit against presentation of a sight
draft, certificate(s) or other documents not complying with the terms of such
Letter of Credit or (iii) its failure to comply with the obligations imposed
upon it, as an issuing bank, under applicable state law; provided, however,
that (y) the Issuing Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and (z) the Issuing Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason, provided that any such
instrument appears on its face to be in order.
57
58
SECTION 6.6 Obligations Absolute. The Obligations of the
Borrowers under this Agreement and any Letter of Credit-Related Document to
reimburse the Issuing Bank for a drawing under a Letter of Credit, and to repay
any Letter of Credit Borrowing and any drawing under a Letter of Credit
converted into an Acquisition Loan, shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement and each
such other Letter of Credit-Related Document under all circumstances, including
the following: (i) any lack of validity or enforceability of this Agreement or
any Letter of Credit-Related Document; (ii) any change in the time, manner or
place of payment of, or in any other term of, all or any of the Obligations of
any Borrower in respect of any Letter of Credit, (iii) the existence of any
claim, set-off, defense or other right that any Borrower may have at any time
against any beneficiary or any such transferee of any Letter of Credit (or any
Person for whom any such beneficiary or any such transferee may be acting), the
Issuing Bank or any other Person, whether in connection with this Agreement,
the transactions contemplated hereby or by the Letter of Credit-Related
Documents or any unrelated transaction other than the defense of payment or
claims arising out of the gross negligence, bad faith or wilful misconduct of
the Floor Plan Agent or the Swing Line Bank; (iv) any draft, demand,
certificate or other document presented under any Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit; (v) any payment by the Issuing Bank under any
Letter of Credit against presentation of a draft or certificate that does not
strictly comply with the terms of any Letter of Credit; or any payment made by
the Issuing Bank under any Letter of Credit to any trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of a successor to any beneficiary or any
transferee of any Letter of Credit, including any arising in connection with
any Insolvency Proceeding; (vi) any exchange, release or non-perfection of any
Collateral, or any release or amendment or waiver of or consent to departure
from any other guarantee, for all or any of the Obligations of any Borrower in
respect of any Letter of Credit; or (vii) any other circumstance that might
otherwise constitute a defense available to, or discharge of, any Borrower.
SECTION 6.7 Letter of Credit Fees.
(a) Letter of Credit Fees. The Company shall pay to
the Agent for the account of each of the Banks a letter of credit fee (the
"Letter of Credit Fees") with respect to outstanding Letters of Credit equal to
the Applicable Margin for Eurodollar Loans which are Acquisition Loans by the
average daily maximum amount available to be drawn on such outstanding Letters
of Credit.
(b) Fronting Fees. The Company shall pay to the
Issuing Bank for its own account a letter of credit fronting fee (the "Fronting
Fees") for each Letter of Credit Issued by the Issuing Bank equal to one
hundred twenty-five-one-thousandths percent (0.125%) per annum multiplied by
the average daily maximum amount available to be drawn on such outstanding
Letters of Credit.
(c) Calculation of Fees. The Letter of Credit Fees
and the Fronting Fees each shall be computed on a quarterly basis in arrears on
the last Business Day of each calendar quarter based upon Letters of Credit
outstanding for that quarter as calculated by the Agent (computed on the basis
of the actual number of days elapsed over a year of 360 days). Such fees shall
be due and
58
59
payable quarterly in arrears on the last Business Day of each calendar quarter
during which Letters of Credit are outstanding, commencing on the first such
quarterly date to occur after the Closing Date, through the Maturity Date, with
the final payment to be made on the Maturity Date.
(d) Other. The Company shall pay to the Issuing Bank
from time to time on demand the normal issuance, presentation, amendment and
other processing fees, and other standard costs and charges of the Issuing Bank
relating to Letters of Credit as from time to time in effect.
SECTION 6.8 Cash Collateralization.
(a) If any Event of Default shall occur and be
continuing, or the Acquisition Loan Commitment is terminated or reduced to an
amount insufficient to fund the outstanding Letter of Credit Obligations, the
Company agrees that it shall on the Business Day it receives notice from the
Agent, acting upon instructions of the Required Banks, deposit in an account
(the "Cash Collateral Account") held by the Agent, for the benefits of the
Banks, an amount of cash equal to the Letter of Credit Obligations as of such
date. Such deposit shall be held by the Agent as Collateral for the payment
and performance of the Obligations. The Agent shall have exclusive dominion
and control, including exclusive right of withdrawal, over such account. Cash
Collateral shall be held in a blocked, interest- bearing account held by the
Agent upon such terms and in such type of account as customary at the
depository institution. The Company shall pay any fees charged by the Agent
which fees are of the type customarily charged by such institution with respect
to such accounts. Moneys in such account shall (i) be applied by the Agent to
the payment of Letter of Credit Borrowings and interest thereon, (ii) be held
for the satisfaction of the reimbursement Obligations of the Borrowers in
respect of Letters of Credit, and (iii) in the event the maturity of the Loans
has been accelerated, with the consent of the Required Banks, be applied to
satisfy the Obligations. If the Company shall provide Cash Collateral under
this Section 6.08(a) or shall prepay any Letter of Credit and thereafter either
(i) drafts or other demands for payment complying with the terms of such
Letters of Credit are not made prior to the respective expiration dates
thereof, or (ii) such Event of Default shall have been waived or cured, then
the Agent, the Floor Plan Agent, the Swing Line Bank and the Banks agree that
the Agent is hereby authorized, without further action by any other Person, to
release the Lien in such cash and will direct the Agent to remit to the Company
amounts for which the contingent obligations evidenced by such Letters of
Credit have ceased.
(b) As security for the payment of all Obligations,
each Borrower hereby grants, conveys, assigns, pledges, sets over and transfers
to the Agent, and creates in the Agent's favor a Lien on, and security interest
in, all money, instruments and securities at any time held in or acquired in
connection with the Cash Collateral Account, together with all proceeds
thereof. At any time and from time to time, upon the Agent's request, each
Borrower promptly shall execute and deliver any and all such further
instruments and documents as may be reasonably necessary, appropriate or
desirable in the Agent's judgment to obtain the full benefits (including
perfection and priority) of the security interest created or intended to be
created by this Section 6.8(b) and of the rights and powers herein granted.
59
60
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Company, as to itself and as to all of the other Borrowers and
each of the Borrowers other than the Company, as to itself and its Subsidiaries
only, represent and warrant to the Agent, the Floor Plan Agent, the Swing Line
Bank and the Banks as follows:
SECTION 7.1 Organization; Corporate Powers. The Company and
each of its Subsidiaries is duly organized, validly existing and in good
standing under the laws of the state of its respective incorporation or
organization, has the requisite power and authority, governmental licenses,
consents and approvals to own its property and assets and to carry on its
business as now conducted and is qualified to do business in every jurisdiction
where such qualification is required and is in compliance with all Requirements
of Law except where the failure to so qualify or comply could not reasonably be
expected to have a Material Adverse Effect. Each Borrower and each of their
Subsidiaries has the corporate power to execute, deliver and perform its
Obligations under this Agreement and the other Loan Documents to which it is a
party, to borrow hereunder and to execute and deliver the Notes and the Swing
Ling Note.
SECTION 7.2 Authorization. The execution, delivery and
performance of this Agreement and the Loan Documents, the Borrowings hereunder,
and the execution and delivery of the Notes and the Swing Line Note by the
Borrowers, the issuance of Letters of Credit and Drafting Agreements hereunder
and the use of the proceeds of the Borrowings (a) have been duly authorized by
all requisite corporate and, if required, stockholder action on the part of the
Company and each Subsidiary and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation or the certificate of incorporation or the
bylaws of the Company or any Subsidiary, (B) any order of any court, or any
rule, regulation or order of any other agency of government binding upon the
Company or any Subsidiary or (C) any provisions of any indenture, agreement or
other instrument to which the Company or any of its Subsidiaries is a party, or
by which the Company or any Subsidiary or any of their respective properties or
assets are or may be bound (other than with respect to the granting or filing
of Liens in favor of the Agent for the benefit of the Banks on Collateral owned
by SMC Luxury Cars, Inc. and Southwest Toyota Inc, respectively, in which
Toyota Motor Credit Corporation has a first priority Lien and has not consented
in writing to the granting or filing by the Agent of a Lien on such Collateral)
which violation could reasonably be expected to have a Material Adverse Effect,
(ii) be in conflict with, result in a breach of or constitute (alone or with
notice or lapse of time or both) a default under any indenture, agreement or
other instrument referred to in (b)(i)(C) above which violation could
reasonably be expected to have a Material Adverse Effect or (iii) result in the
creation or imposition of any Lien whatsoever upon any property or assets of
the Company or any of its Subsidiaries.
SECTION 7.3 Governmental Approval. No registration with, or
consent or approval of, or other action by, any federal, state or other
Governmental Authority is or will be required in connection with the execution,
delivery and performance of this Agreement, any other Loan Document, the
execution and delivery of the Notes and the Swing Line Note or repayment of the
Borrowings hereunder.
60
61
SECTION 7.4 Enforceability. This Agreement and each of the
Loan Documents have been duly executed and delivered by each of the Borrowers
and each of their Subsidiaries which is a party thereto and constitute legal,
valid and binding obligations of the Borrowers and such Subsidiaries, and the
Notes, and the Swing Line Note, when duly executed and delivered by each
applicable Borrower, will constitute legal, valid and binding Obligations of
such Borrower(s), in each case enforceable in accordance with their respective
terms (subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting creditors'
rights generally and general principles of equity).
SECTION 7.5 Financial Statements.
(a) The audited consolidated financial statements of
the Company and each of its Subsidiaries, as at December 31, 1996, copies of
which have been furnished to the Banks, have been prepared in conformity with
generally accepted accounting principles applied on a basis consistent with
that of the preceding fiscal year, and present fairly the financial condition
of the Company and each of its Subsidiaries, as at such date and the
consolidated results of the operations of the Company and each of its
Subsidiaries for the period then ended.
(b) The Form S-1 of the Company dated October 29,
1997, copies of which have been furnished to the Banks, have been prepared in
accordance with all applicable rules, regulations and guidelines of the
Securities and Exchange Commission and present fairly the financial condition
of the Company and each of its Subsidiaries, as at such dates and the results
of their operations for the periods then ended, subject to year-end audit
adjustments.
SECTION 7.6 No Material Adverse Change. There has been no
material adverse change in the businesses, assets, operations, prospects or
condition, financial or otherwise, as determined on a consolidated basis, of
the Company or any of its Subsidiaries, since December 31, 1996.
SECTION 7.7 Title to Properties; Security Documents.
(a) Each Borrower and each of their respective
Subsidiaries has good and marketable title to, or valid leasehold interests in,
all its properties and assets, including, without limitation, those properties
and assets which constitute real property as specified in Schedule IV (which
Schedule specifies the owner of, current leases (if any) of, and general
description of each individual property or asset listed therein), except for
(i) such properties as are no longer used or useful in the conduct of its
business or as have been disposed of in the ordinary course of business, (ii)
Liens permitted by Section 7.16 and Section 10.2, and (iii) minor defects in
title that do not interfere with the ability of such Borrower or such
Subsidiary to conduct its business as now conducted.
(b) The Security Documents contain descriptions of
the Collateral sufficient to grant to the Agent for the benefit of Banks,
perfected Liens therein pursuant to applicable law and the terms, provisions
and conditions of this Agreement.
61
62
SECTION 7.8 Litigation; Compliance with Laws; Etc.
(a) There are no actions, suits or proceedings,
except as specified in Schedule V, at law or in equity or by or before any
Governmental Authority now pending or, to the knowledge of any of the Borrowers
or any of their respective Subsidiaries, threatened against or affecting any of
the Borrowers or any of their respective Subsidiaries or the business, assets
or rights of any of the Borrowers or any of their respective Subsidiaries as to
which there is a reasonable possibility of an adverse determination and which,
if adversely determined, could, individually or in the aggregate, reasonably to
be expected to have a Material Adverse Effect.
(b) None of the Borrowers and none of their
respective Subsidiaries is (i) in violation of any law, the breach or
consequence of which could reasonably be expected to have a Material Adverse
Effect and to the best knowledge of the Company and its Subsidiaries after due
investigation, the Company and each of its Subsidiaries are in material
compliance with all statutes and governmental rules and regulations applicable
to them, or (ii) in default under any material order, writ, injunction, award
or decree of any Governmental Authority binding upon it or its assets or any
material indenture, mortgage, contract, agreement or other undertaking or
instrument to which it is a party or by which any of its properties may be
bound, (other than with respect to the granting or filing of Liens in favor of
the Agent for the benefit of the Banks on Collateral owned by SMC Luxury Cars,
Inc. and Southwest Toyota, Inc., respectively, in which Toyota Motor Credit
Corporation has a first priority Lien and has not consented in writing to the
granting or filing by the Agent of a Lien on such Collateral) which default
could reasonably be expected to have a Material Adverse Effect, and nothing has
occurred which would materially and adversely affect the ability of any
Borrower to carry on its business as now conducted or perform its obligations
under any such order, writ, injunction, award or decree or any such material
indenture, mortgage, contract, agreement or other undertaking or instrument.
SECTION 7.9 Agreements; No Default.
(a) None of the Borrowers and none of their
respective Subsidiaries is a party to any agreement or instrument or subject to
any corporate restriction reasonably to be expected to have a Material Adverse
Effect.
(b) No Event of Default has occurred and is
continuing.
SECTION 7.10 Federal Reserve Regulations.
(a) Neither the Company nor any of its Subsidiaries
is not engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock.
(b) No part of the proceeds of the Loans will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or carry Margin Stock or to extend credit to others
for the purpose of purchasing or carrying Margin Stock or to refund
62
63
indebtedness originally incurred for such purpose, or (ii) for any purpose
which entails a violation of, or which is inconsistent with, the provisions of
the Regulations of the Board, including Regulations G, T, U or X; provided,
however, the Company may acquire Margin Stock if, upon the acquisition of such
Margin Stock, twenty-five percent (25%) or less of the Company's total assets
subject to the restrictions set forth in Section 10.1 would then be composed of
Margin Stock, and the Company shall furnish to the Agent upon its request, a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U.
SECTION 7.11 Taxes. The Company and each of its Subsidiaries
has filed all tax returns which are required to have been filed and has paid,
or made adequate provisions for the payment of, all of its taxes which are due
and payable, except such taxes, if any, as are being contested in good faith
and by appropriate proceedings and as to which such reserves or other
appropriate provisions as may be required by generally accepted accounting
principles have been maintained. Neither the Company nor any of its
Subsidiaries is aware of any proposed assessment against it for additional
taxes (or any basis for any such assessment) which might be material to the
Company or such Subsidiary.
SECTION 7.12 Pension and Welfare Plans. Each Plan complies in
all respects with all applicable statutes and governmental rules and
regulations except where the failure to comply could not reasonably be expected
to have a Material Adverse Effect, and: (a) no Reportable Event has occurred
and is continuing with respect to any Plan, (b) since December 31, 1996,
neither the Company nor any ERISA Affiliate has withdrawn from any Plan or
instituted steps to do so, except as listed on Schedule VI and (c) since
December 31, 1996, no steps have been instituted to terminate any Plan, except
as listed on Schedule VI. No condition exists or event or transaction has
occurred in connection with any Plan which could result in the incurrence by
the Company or any ERISA Affiliate of any liability, fine or penalty which
could reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate is a member of, or contributes to, any multiple
employer Plan as described in Section 4064 of ERISA. None of the Borrowers has
any contingent liability with respect to any post-retirement "welfare benefit
plans," as such term is defined in ERISA.
SECTION 7.13 No Material Misstatements. Neither this
Agreement, the other Loan Documents, the Confidential Information Memorandum
nor any other document delivered by or on behalf of the Company or any
Subsidiary in connection with any Loan Document or included therein contained
or contains any material misstatement of fact or omitted or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 7.14 Investment Company Act; Public Utility Holding
Company Act. Neither the Company nor any of its Subsidiaries is an "investment
company" or company "controlled" by an investment company as defined in, or
subject to regulation under, the Investment Company Act of 1940. Neither the
Company nor any of its Subsidiaries is a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
63
64
SECTION 7.15 Maintenance of Insurance. The Company and each
of its Subsidiaries agree to maintain insurance to such extent and against such
hazards and liabilities as is commonly maintained by companies similarly
situated.
SECTION 7.16 Existing Liens. None of the assets of the
Company or any Subsidiary is subject to any Lien, except:
(a) Liens for current taxes not delinquent or taxes
being contested in good faith and by appropriate proceedings and as to which
such reserves or other appropriate provisions as may be required by generally
accepted accounting principles are being maintained;
(b) carriers', warehousemen's, mechanics',
materialmen's and other like statutory Liens arising in the ordinary course of
business securing obligations which are not overdue for a period of more than
ninety (90) days or which are being contested in good faith and by appropriate
proceedings and as to which such reserves or other appropriate provisions as
may be required by generally accepted accounting principles are being
maintained;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, and other obligations of a like
nature incurred in the ordinary course of business, and Liens securing
reimbursement obligations created by open letters of credit for the purchase of
inventory;
(e) Liens granted by a Subsidiary of the Company to
secure such Subsidiary's Indebtedness to the Company or to any other Subsidiary
of the Company;
(f) Liens, if any, disclosed in the financial
statements referred to in Section 7.5; and
(g) Liens listed on Schedule VII as permitted by
Section 10.2.
SECTION 7.17 Environmental Matters. Each Borrower has
complied in all respects with all applicable federal, state, local and other
statutes, ordinances, orders, judgments, rulings and regulations relating to
environmental pollution or to environmental regulation or control except where
the failure to comply could not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received
notice of any failure so to comply which alone or together with any other such
failure could reasonably be expected to have a Material Adverse Effect.
Neither the Company, any of its Subsidiaries nor any of its facilities manages
any hazardous wastes, hazardous substances, hazardous materials, toxic
substances or toxic pollutants, as those terms are used in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Clean Air Act or the Clean Water Act, in
violation of any regulations promulgated pursuant thereto or in any other
applicable law where such violation could
64
65
reasonably be expected to have, individually or together with other violations,
a Material Adverse Effect.
SECTION 7.18 Subsidiaries. As of the Closing Date, the
Company has no Subsidiaries, and no Subsidiary has a Subsidiary other than
those specifically disclosed in part (a) of Schedule VIII, and neither the
Company nor any Subsidiary has any equity investments in any other corporation
or entity other than those specifically disclosed in part (b) of Schedule VIII.
The state of incorporation, address, principal place of business and a list of
other business locations for each Subsidiary is specified in part (a) of
Schedule VIII. The Company and/or each of its Subsidiaries is the owner,
directly or indirectly, free and clear of all Liens (except for Liens in favor
of the Agent and the Banks and transfer restrictions contained in the Dealer
Franchise Agreements), of all of the issued and outstanding voting stock of
each Subsidiary disclosed on Schedule VIII (except where ownership of less than
one hundred percent (100%) is indicated on Schedule VIII). All shares of such
stock have been validly issued and are fully paid and nonassessable, and no
rights to subscribe to additional shares have been granted or exist.
SECTION 7.19 Engaged in Motor Vehicle Sales. The Floor Plan
Borrowers are engaged in the business of selling new and/or Used Motor
Vehicles; all such Motor Vehicles consist solely of goods held by the Borrowers
for sale; no sales or other transactions involving such Motor Vehicles are and
will not become subject to set-off, counterclaim, defense, allowance, or
adjustment (other than warranty claims, the aggregate amount of which shall not
be material); except as set forth in Schedule VII, as of the Closing Date,
there is no financing statement, or similar statement or instrument of
registration under the laws of any jurisdiction, covering or purporting to
cover any interest of any kind in all such Motor Vehicles or their proceeds on
file or registered in any public office other than a financing statement in
favor of the Agent for the benefit of the Banks covering all such Motor
Vehicles; except as set forth in Schedule VII, as of the Closing Date, there is
no other floor plan or other financing arrangement with any party other than
the Agent for the benefit of the Banks with respect to all such Motor Vehicles;
and except as set forth in Schedule VII, as of the Closing Date, none of the
Borrowers has made any other verbal or written contract or arrangement of any
kind, the performance of which by the other party thereto would give rise to a
Lien against any such Motor Vehicle, or the proceeds thereof; all such Motor
Vehicles are free from damage caused by fire or other casualty, unless covered
by insurance, subject to customary deductibles. The locations (and addresses)
set forth in Schedule IV are the locations at which the Company and its
Subsidiaries keep the Motor Vehicles held as inventory, except when such Motor
Vehicles may be in transit between locations, in transit for 'dealer swaps' or
being test driven by potential customers. The addresses set forth in Schedule
IV are each Floor Plan Borrower's place of business if such Person has only one
such place of business; or a Floor Plan Borrower's chief executive office if it
has more than one place of business. All of each Floor Plan Borrower's books
and records with regard to all Motor Vehicles are maintained and kept at the
address(es) of such Floor Plan Borrower set forth in Schedule IV.
SECTION 7.20 Dealer Franchise Agreements. As of the Closing
Date, none of the Borrowers is a party to any dealer franchise agreements
("Dealer Franchise Agreements") other than those specifically disclosed in
Schedule IX, which schedule shows the Manufacturer and the Borrower which is a
party to each such agreement, the date such agreement was entered into and the
expiration date (if any) of each such agreement. Each of the Dealer Franchise
Agreements is
65
66
currently in full force and effect, and no Borrower has received any notice of
termination with respect to any such agreements; and, except as disclosed on
Schedule IX, no Borrower is aware of any event which with notice, lapse of
time, or both would allow any Manufacturer which is a party to any of the
Dealer Franchise Agreements to terminate any such agreements. There exists no
actual or threatened termination, cancellation, or limitation of, or any
modification or change in, the business relationship between any Borrower and
any customer or any group of customers whose purchases individually or in the
aggregate are material to the business of such Borrower, or with any material
Manufacturer, and there exists no present condition or state of facts or
circumstances which could reasonably be expected to have a Material Adverse
Effect.
ARTICLE VIII
CONDITIONS OF LENDING
SECTION 8.1 Conditions Precedent to Closing Date. The
Closing Date shall be deemed to have occurred when the following conditions
precedent shall have occurred and the Agent shall have received on or before
such date the following, each dated (unless otherwise indicated) the Closing
Date and, with respect to all such documents referred to in Section 8.1(a),
Section 8.1(c), Section 8.1(d), Section 8.1(e), Section 8.1(f), Section 8.1(g),
Section 8.1(h) and Section 8.1(i) in sufficient copies for each Bank:
(a) A counterpart of this Agreement (to which all of
the Exhibits and Schedules have been attached) executed by the Borrowers, the
Agent, the Floor Plan Agent, the Swing Line Bank and the Banks.
(i) (1) Notes of the Borrowers dated the
Closing Date, properly executed by the Borrowers to the order of the Banks,
respectively.
(ii) The Swing Line Note, dated the Closing
Date, properly executed by the Floor Plan Borrowers to the order of the Swing
Line Bank.
(b) Counterparts of each of the following:
(i) a Security Agreement in the form set
forth in Exhibit G;
(ii) a Pledge Agreement in the form set
forth in Exhibit E;
(iii) Mortgages in the form set forth in
Exhibit D, with respect to each parcel or tract of real
property required by the Agent to be encumbered by a Lien in
favor of the Agent for the benefit of the Banks;
(iv) Leasehold Mortgage in the form set forth
in Exhibit I, covering the same property referenced in
8.1(c)(iii);
(v) Landlord Estoppel Agreements in the form
set forth in Exhibit J, with respect to all real property
leased by any of the Borrowers;
66
67
(vi) First Lienholder Estoppel Agreements in
the form set forth in Exhibit K, with respect to all real
property subject to Non-Recourse Real Estate Debt; and
(vii) Any other necessary Security Documents
in the form satisfactory to the Agent and its Counsel;
each of which, if required by this Agreement, shall be duly executed by the
parties thereto.
(c) The Banks shall have received from each Borrower,
a certificate dated as of the Closing Date (i) a copy of the certificate of
incorporation of the Company and each of its Subsidiaries, and a certificate as
to the good standing of and charter documents filed by the Company and each of
its Subsidiaries from such Secretary of State; (ii) a copy of the certificate
of authority to do business as a foreign corporation in each state in which the
Company or such Subsidiary maintains activities which require such
certification, certified by the Secretary of State of such state and a
certificate as to the good standing of the Company and/or each such Subsidiary
from the Comptroller or other official state official responsible for the
delivery of such certification; (iii) a certificate of the Secretary or an
Assistant Secretary of the Company and each of its Subsidiaries, dated the
Closing Date and certifying (A) that attached thereto is a true and complete
copy of its articles and bylaws as in effect on the date of such
certificate,(B) that attached thereto is a true and complete copy of
resolutions or unanimous consent duly adopted by its Board of Directors
authorizing the execution, delivery and performance of the Agreement, Notes,
the Swing Line Note and/or Loan Documents to which it is a party, and that
such resolutions have not been modified, rescinded or amended and are in full
force and effect, and (C) as to the incumbency and specimen signature of each
officer of each Borrower executing this Agreement, the Notes, the Swing Line
Note, any of the Loan Documents or any other document delivered in connection
herewith or therewith; (iii) a certificate of another officer of each Borrower,
which is a party to this Agreement, the Notes, the Swing Line Note and/or any
of the Loan Documents as to the incumbency and specimen signature of the
Secretary or such Assistant Secretary of such Person; and (iv) such other
documents as Jackson Walker L.L.P., special counsel for the Agent, may
reasonably request.
(d) A certificate of a Senior Vice President, an
Executive Vice President or a Vice President of each Borrower dated the Closing
Date certifying (i) the truth of the representations and warranties made by
such Borrower in this Agreement, and (ii) the absence of the occurrence and
continuance of any Default or Event of Default.
(e) The Agent shall have received the Agent's Letter
duly executed by the Company.
(f) The Floor Plan Agent shall have received the
Floor Plan Agent's Letter duly executed by the Company.
(g) The opinion of counsel to the Borrowers and any
Subsidiary which signs any of the Loan Documents, dated the initial Borrowing
Date, addressed to the Agent and the Banks and in the form of Exhibit L hereto.
67
68
(h) An Administrative Questionnaire completed by each
Bank and, if required, the tax forms set forth in Section 5.14.
(i) The fees and disbursements required to be paid by
Section 13.4 on the Closing Date shall have been paid.
(j) The Company shall have filed its S-1 in
substantial compliance with all rules and regulations of the Securities and
Exchange Commission.
SECTION 8.2 Conditions Precedent to Initial Borrowing.
(a) The date on which the obligation of each Bank to make
the initial Acquisition Loans, or of the Issuing Bank to issue any Letter of
Credit (the "Acquisition Funding Date")to the Company shall be deemed to have
occurred and is subject to the conditions precedent that:
(i) Each document (including, without limitation,
any UCC financing statement) required by the Security Documents or
under law or requested by Agent to be filed, registered or recorded in
order to create, in favor of Agent, for the benefit of Banks, a
perfected first Lien (subject to any Permitted Liens) on the Collateral
owned by the Company shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and the Agent, as
herein provided, shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or
recordation and satisfactory evidence of the payment of any necessary
fee, tax or expense relating thereto; and
(ii) Such other and further conditions
shall have been fulfilled as the Agent, or its counsel shall have
reasonably determined.
(b) The date on which the obligation of each Bank to make
the initial Floor Plan Loans or of the Swing Line Bank to make the initial
Swing Line Loan, or of the Floor Plan Agent to issue any Drafting Agreement
("each, a Floor Plan Funding Date") to any Floor Plan Borrower shall be deemed
to have occurred and is subject to the condition precedent that :
(i) Each document (including, without limitation,
any UCC financing statement) required by the Security Documents or
under law or requested by Agent or the Floor Plan Agent to be filed,
registered or recorded in order to create, in favor of Agent, for the
benefit of Banks, a perfected first Lien on the Collateral owned by
such Floor Plan Borrower shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and the Agent or Floor
Plan Agent, as herein provided, shall have received an acknowledgment
copy, or other evidence satisfactory to it, of each such filing,
registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto;
(ii) The Floor Plan Agent shall have
completed to its' satisfaction any and all audits of Motor Vehicles
owned by or in transit to each such Floor Plan Borrower; and
68
69
(iii) The Company shall have delivered to the Agent
copies of substantially all Dealer Franchise Agreements between
Manufacturers and its Subsidiaries, which Dealer Franchise Agreements
have been duly executed between a Manufacturer and such Subsidiary.
For purposes of this subsection, the term "substantially all" shall
mean that the Agent and the Floor Plan Agent shall be satisfied in
their sole determination that a sufficient amount of duly executed
Dealer Franchise Agreements have been delivered by the Company.
(c) Such other and further conditions shall have been
fulfilled as the Agent, the Floor Plan Agent or its counsel shall have
reasonably determined.
SECTION 8.3 Conditions Precedent to Each Borrowing. The
obligation of each Bank to make a Loan on the occasion of any Borrowing
(including the initial Acquisition Borrowing and the initial Floor Plan
Borrowing) and the obligation of the Issuing Bank to issue Letters of Credit
and the obligation of the Floor Plan Bank to issue Drafting Agreements shall be
subject to the further conditions precedent that on the Borrowing Date of such
Borrowing or Issuance the following statements shall be true (and the
acceptance by any Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Company that on the date of such Borrowing
such statements are true):
(a) The representations and warranties contained in
Article VII are correct on and as of the date of such Borrowing, before and
after giving effect to such Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date;
(b) No event has occurred and is continuing, or would
result from such Borrowing or from the application of the proceeds therefrom,
which constitutes either a Default or an Event of Default; and
(c) Following the making of such Borrowing or
Issuance of any Letter of Credit and all other Borrowings to be made on the
same day under this Agreement, except as may otherwise be permitted hereunder
(i) if such Borrowing is a Floor Plan Loan Borrowing, the aggregate principal
amount of all Floor Plan Loans outstanding plus all Swing Line Loans
outstanding shall not exceed the Floor Plan Loan Commitment, (ii) if such
Borrowing is an Acquisition Loan Borrowing, the aggregate principal amount of
all Acquisition Loans outstanding plus Letters of Credit Obligations
outstanding shall not exceed the Acquisition Loan Commitment, (iii) if such
Borrowing is a Swing Line Loan Borrowing, the aggregate principal amount of all
Swing Line Loans outstanding shall not exceed the Swing Line Commitment, (iv)
if a Letter of Credit is issued, the total amount of Letter of Credit
outstanding plus the aggregate principal amount of all Acquisition Loans
outstanding shall not exceed the Acquisition Loan Commitment, and (v) the
aggregate principal amount of all Loans and Letter of Credit Obligations then
outstanding shall not exceed the Total Commitment.
SECTION 8.4 Conditions Precedent to Conversions and
Continuations. The obligation of the Banks to convert any existing Borrowing
into a Eurodollar Borrowing or to continue any existing Borrowing as a
Eurodollar Borrowing is subject to the condition precedent that on the date of
such conversion or continuation no Default or Event of Default shall have
occurred and be continuing or would result from the making of such conversion
or continuation. The acceptance of
69
70
the benefits of each such conversion and continuation shall constitute a
representation and warranty by the Company to each of the Banks that no Default
or Event of Default shall have occurred and be continuing or would result from
the making of such conversion or continuation.
ARTICLE IX
AFFIRMATIVE COVENANTS
So long as this Agreement shall remain in effect or the principal of
or interest on any Note, the Swing Line Note, any Commitment Fee or any other
fee, expense or amount payable hereunder shall be unpaid and until the
Commitments of the Banks shall expire or terminate, until no Letter of Credit
Obligations are outstanding, and until all Drafting Agreements are terminated,
the Company, as to itself and as to all of the other Borrowers and each of the
Borrowers other than the Company, as to itself and its Subsidiaries only,
covenant and agree with the Agent, the Floor Plan Agent, the Swing Line Bank
and each Bank that:
SECTION 9.1 Existence. The Company will maintain and
preserve, and except as permitted by Section 10.3, will cause each Subsidiary
to maintain and preserve, its respective existence and good standing under the
laws of its state of jurisdiction, as a corporation or other form of business
organization, as the case may be, and all rights, privileges, licenses,
patents, patent rights, copyrights, trademarks, trade names, franchises and
other authority to the extent material and necessary for the conduct of their
respective businesses in the ordinary course as conducted from time to time.
SECTION 9.2 Repair. The Company will maintain, preserve and
keep, and will cause each of its Subsidiaries to maintain, preserve and keep,
all of its properties in good repair, working order and condition (ordinary
wear and tear excepted), and the Company will make, and will cause each of the
Subsidiaries to make, all necessary and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that at all times the
efficiency thereof shall be fully preserved and maintained; the Company will at
all times do or cause to be done all things necessary to preserve, renew and
keep in full force and effect, and will cause each Subsidiary to do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect, the rights, licenses, permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses; the
Company and each of its Subsidiaries will maintain and operate such businesses
in substantially the manner in which they are presently conducted and operated
(subject to changes in the ordinary course of business); the Company and each
of its Subsidiaries will comply with all laws and regulations applicable to the
operation of such businesses whether now in effect or hereafter enacted and
with all other applicable laws and regulations except where the failure to
comply could not reasonably be expected to have a Material Adverse Effect; and
the Company and each of its Subsidiaries will take all action which may be
required to obtain, preserve, renew and extend all licenses, permits and other
authorizations which may be material to the operation of such businesses.
SECTION 9.3 Insurance. The Company will maintain, on a
consolidated basis, insurance to such extent and against such hazards and
liabilities as is commonly maintained by companies similarly situated or as may
be required in the Security Documents including, without limitation with
70
71
respect to Motor Vehicles owned by Floor Plan Borrowers, naming the Agent, for
the benefit of the Banks, as Mortgagee (in connection with any real estate),
lender loss payee and additional loss payee.
WARNING
UNLESS EACH BORROWER PROVIDES THE AGENT WITH EVIDENCE OF THE INSURANCE COVERAGE
AS REQUIRED BY THE AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE AGENT (AT ITS
DISCRETION, OR ACTING AT THE REQUEST OF THE FLOOR PLAN AGENT) MAY PURCHASE
INSURANCE AT THE BORROWER'S EXPENSE TO PROTECT THE BANKS' INTEREST. THIS
INSURANCE MAY, BUT NEED NOT, ALSO PROTECT THE BORROWER'S INTEREST. IF THE
COLLATERAL BECOMES DAMAGED, THE COVERAGE THE AGENT PURCHASES MAY NOT PAY ANY
CLAIM ANY BORROWER MAKES OR ANY CLAIM MADE AGAINST THE BORROWER. EACH BORROWER
MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE THAT THE BORROWER HAS
OBTAINED PROPERTY COVERAGE ELSEWHERE.
EACH BORROWER IS RESPONSIBLE FOR THE COST OF ANY INSURANCE PURCHASED
BY THE AGENT. THE COST OF THIS INSURANCE MAY BE ADDED TO THE OBLIGATIONS. IF
THE COST IS ADDED TO THE OBLIGATIONS, THE INTEREST RATE PROVIDED IN SECTION 5.3
SHALL APPLY TO SUCH ADDED AMOUNT. THE EFFECTIVE DATE OF COVERAGE MAY BE THE
DATE ANY BORROWER'S PRIOR COVERAGE LAPSED OR THE DATE THE BORROWER FAILED TO
PROVIDE PROOF OF COVERAGE.
THE COVERAGE THE AGENT PURCHASES MAY BE CONSIDERABLY MORE EXPENSIVE
THAN INSURANCE ANY BORROWER CAN OBTAIN ON ITS OWN AND MAY NOT SATISFY ANY NEED
FOR PROPERTY DAMAGE COVERAGE OR ANY MANDATORY LIABILITY INSURANCE REQUIREMENTS
IMPOSED BY APPLICABLE LAW.
SECTION 9.4 Obligations and Taxes. The Company will pay and
discharge and will cause each of its Subsidiaries to pay and discharge, when
due, all taxes, assessments and governmental charges or levies imposed upon the
Company or such Subsidiary, as the case may be, as well as all lawful claims
for labor, materials and supplies or otherwise unless and only to the extent
that the Company or such Subsidiary, as the case may be, is contesting such
taxes, assessments and governmental charges, levies or claims in good faith and
by appropriate proceedings and the Company or such Subsidiary has set aside on
its books such reserves or other appropriate provisions therefor as may be
required by generally accepted accounting principles.
SECTION 9.5 Financial Statements; Reports. The Company will
furnish to the Agent and each Bank:
(a) Annual Audit Reports. Within 120 days after the
end of each fiscal year of the Company, a copy of the annual audit report of
the Company and its Subsidiaries prepared on a consolidated basis in conformity
with generally accepted accounting principles consistently applied
71
72
and certified by Arthur Andersen or another independent certified public
accountant of recognized national standing;
(b) Quarterly Financial Statements. Within 60 days
after the end of each quarter (except the last quarter) of each fiscal year of
the Company, a copy of the Form 10-Q of the Company, for such quarter, prepared
in accordance with the rules, regulations and guidelines of the Securities and
Exchange Commission, subject to normal year end audit adjustments;
(c) Officer's Certificate. Together with the
financial statements furnished by the Company under the preceding clauses (a)
and (b), a certificate of the Company's Chief Financial Officer or Vice
President and Treasurer dated the date of such annual audit report or such
quarterly financial statement, as the case may be, to the effect that no Event
of Default or Default, has occurred or is continuing, or if there is any such
event, describing it and the steps, if any, being taken to cure it;
(d) SEC and Other Reports. Copies of each filing and
report made by the Company or any of its Subsidiaries with or to any securities
exchange or the Securities and Exchange Commission and each communication from
the Company or any of its Subsidiaries to shareholders generally, promptly upon
the making thereof;
(e) Manufacturer/Dealer Statements. As soon as
available, but in any event within thirty (30) days after the end of each
month, copies of each Manufacturer/Dealer Statement of each Floor Plan Borrower
delivered during such month;
(f) Inventory Detail Report. Upon request of the
Floor Plan Agent, the Agent or any Bank, copies of the Inventory Detail Report
of each Floor Plan Borrower individually and on a consolidated basis; and
(g) Requested Information. Promptly, from time to
time, such other reports or information as the Agent, the Floor Plan Agent or
any Bank may reasonably request.
SECTION 9.6 Litigation and Other Notices. The Company will
notify the Agent and the Banks in writing of any of the following immediately
upon learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken by the Person(s) affected with respect
thereto:
(a) Judgment. The entry of any judgment or decree
against the Company and/or any of its other Subsidiaries if the aggregate
amount of such judgment or decree exceeds $500,000 (after deducting the amount
with respect to which the Company or such Subsidiary is insured and with
respect to which the insurer has assumed responsibility in writing);
(b) Suits and Proceedings. The filing or
commencement of any action, suit or proceeding, whether at law or in equity or
by or before any court or any Governmental Authority as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect;
72
73
(c) Default. The occurrence of any Event of Default
or Default;
(d) Material Adverse Change. The occurrence of any
event which could reasonably be expected to have a Material Adverse Effect.
(e) Pension and Welfare Plans. The occurrence of a
Reportable Event with respect to any Plan; the institution of any steps by the
Company, any of its Subsidiaries or any ERISA Affiliate, the PBGC or any other
Person to terminate any Plan; the institution of any steps by the Company, or
any of its Subsidiaries or any ERISA Affiliate to withdraw from any Plan; or
the incurrence of any material increase in the contingent liability of the
Company or any of its Subsidiaries with respect to any post-retirement welfare
benefits; and
(f) Other Events. The occurrence of such other
events as the Agent or the Required Banks may reasonably specify from time to
time.
SECTION 9.7 ERISA. Each Borrower will comply with the
applicable provisions of ERISA except where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
SECTION 9.8 Books, Records and Access. Each Borrower will
maintain complete and accurate books and records in which full and correct
entries in conformity with generally accepted accounting principles shall be
made of all dealings and transactions in relation to the business and
activities of such Borrowers. Each Borrower will permit reasonable access by
the Agent and each Bank, upon reasonable request, to the books and records
relating to such Borrower during normal business hours, to permit or cause to
be permitted, the Agent and each Bank to make extracts from such books and
records and permit, or cause to be permitted, upon reasonable request, any
authorized representative designated by any Bank to discuss the affairs,
finances and condition of such Borrower with such Person's principal financial
officers and principal accounting officers and such other officers as such
Borrower shall deem appropriate.
SECTION 9.9 Use of Proceeds. The Borrowers shall use the
proceeds of the Loans for only the following purposes:
(a) Floor Plan Loans. The proceeds of the Floor Plan
Loans may be used only to finance the purchase of Motor Vehicles for resale in
the ordinary course of business of the Floor Plan Borrowers.
(b) Acquisition Loans. The proceeds of the
Acquisition Loans may be used only for the following purposes: (i) for working
capital and general corporate purposes, including, without limitation, the
issuance of Letters of Credit and to pay outstanding Floor Plan Loans; and (ii)
to make Permitted Acquisitions.
(c) Swing Line Loans. The proceeds of the Swing Line
Loans may be used only to finance the purchase of Motor Vehicles for resale in
the ordinary course of business of the Borrowers.
73
74
(d) All Loans. No Loans shall be used for any
purpose which would be in contravention of any Requirement of Law.
SECTION 9.10 Nature of Business. The Borrowers will engage in
substantially the same field of business as they are engaged in on the date
hereof, and except as permitted in Section 10.5(k), will refrain from engaging
in, establishing or becoming in any way involved as a lender in the business of
automobile financing, sub-prime automobile financing or any other credit
transactions related to automobiles other than Retail Loan Guarantees.
SECTION 9.11 Compliance. The Borrowers will comply with all
statutes and governmental rules and regulations applicable to them including
all such statutes and government rules and regulations relating to
environmental pollution or to environmental regulation and control except where
the failure to comply could not reasonably be expected to have a Material
Adverse Effect.
SECTION 9.12 Audits
(a) Entry on Premises. Each Floor Plan Borrower
shall permit a duly authorized representative of the Floor Plan Agent to enter
upon such Borrower's premises during regular business hours to perform audits
of Motor Vehicles in a manner satisfactory to the Agent, provided that the
Floor Plan Agent or its representative shall not perform an audit of such Motor
Vehicles prior to the occurrence of an Event of Default without having given
the applicable Borrower reasonable prior notice; and provided, further,
however, the Floor Plan Agent shall not be required to make more than six (6)
such audits in any fiscal year of any Floor Plan Borrower. Each Floor Plan
Borrower shall assist the Floor Plan Agent, and its representatives, in
whatever way necessary to make the inspections and audits provided for herein.
(b) Excess/Payments in Process. The Borrowers shall
maintain at all times Excess/Payments in Process in an amount of not less than
Three Million Dollars ($3,000,000), which amount may be increased or decreased
from time to time in the sole reasonable determination of the Floor Plan Agent
(the "Out of Balance Amount"). If and to the extent audits performed from time
to time by the Floor Plan Agent as provided in Section 9.12(a) reveal that any
Motor Vehicles of the Floor Plan Borrowers are for any consecutive thirty (30)
day period Out of Balance in an aggregate amount equal to or greater than the
Out of Balance Amount, the Floor Plan Agent shall so notify the Company. The
Company shall, or shall cause the other applicable Floor Plan Borrowers to,
deliver by the next Business Day after receipt of such notice, sufficient funds
so as to cause the Borrowings with respect to any such Motor Vehicles and/or
Floor Plan Loans which are Out of Balance to be in compliance with the Floor
Plan Advance Limits. If the Company or such other Floor Plan Borrowers fail to
deliver such funds, or any of them notifies the Floor Plan Agent that such
funds will not be delivered, the Floor Plan Agent shall, and the Floor Plan
Borrowers hereby authorize the Floor Plan Agent to, apply sufficient funds from
such Excess/Payments in Process to cause the Borrowings with respect to any
such Motor Vehicles and/or Floor Plan Loans which are Out of Balance to be in
compliance with the Floor Plan Advance Limits. The Floor Plan Agent shall
provide written notice (including via fax) to the Company on each Business Day
Excess/Payments in Process are so applied and the Floor Plan Borrowers shall,
on or before the next following Business Day, deposit sufficient funds to
restore the balance thereof back to the Out of Balance Amount then in effect.
74
75
SECTION 9.13 Demonstration, Service Rental or Loaner Vehicles.
The Floor Plan Agent may from time to time limit the number of Motor Vehicles
which may be placed in service as Demonstrators, service rental or loaner
vehicles and establish other requirements for Demonstrators, service rental or
loaner vehicles as the Floor Plan Agent may reasonably determine. Each
Borrower shall maintain records at the premises where the Motor Vehicles are
kept evidencing which Motor Vehicles are being used as Demonstrators, service
rental or loaner vehicles.
SECTION 9.14 Disbursement Account. Subject to the terms and
conditions of this Agreement, including Sections 2.1 and 5.7 hereof, a Floor
Plan Borrower may prepay, in whole or in part, from time to time, outstanding
Floor Plan Loans, Swing Line Loans or Swing Line Overdraft Loans and may
reborrow Floor Plan Loans and Swing Line Loans.
Any or all of the Floor Plan Borrowers and the Floor Plan Agent, at
various times, may be parties to a corporate cash management service agreement
(the "Service Agreement") providing for a controlled disbursement account (the
"Disbursement Account") between such Floor Plan Borrower and the Floor Plan
Agent. Subject to the terms and conditions of this Agreement, each such Floor
Plan Borrower authorizes the Floor Plan Agent to fund the Disbursement Account,
on a daily basis if necessary, by advancing Loans under this Agreement to the
extent of availability under the aggregate Floor Plan Loan Commitments. Each
such Floor Plan Borrower acknowledges and agrees that any requests for funding
from the Disbursement Account will not be paid unless funds in an amount
sufficient to pay such requests are then available for reborrowing in
compliance with the terms and conditions of this Agreement, including Section
2.1 hereof to enable Floor Plan Agent to advance those funds to the
Disbursement Account. Floor Plan Agent agrees that any requests to be
submitted for payment through the Disbursement Account will not be made unless
sufficient funds are available and such request is made in compliance with the
terms and conditions of this Agreement to pay all such requests. Each Floor
Plan Borrower at all times is responsible for having sufficient available funds
in Excess/Payments in Process to pay all requests to be paid through the
Disbursement Account, whether these funds are advances under this Agreement or
otherwise. Each Floor Plan Borrower acknowledges and agrees that the Service
Agreement relating to the Disbursement Account may be canceled by the Floor
Plan Agent at any time upon written notice to the applicable Floor Plan
Borrower, notwithstanding anything to the contrary in the Service Agreement. A
copy of the form of Service Agreement may be attached to this Agreement by the
Floor Plan Agent at any time a Service Agreement is in effect between a Floor
Plan Borrower and the Floor Plan Agent, although the failure to attach it shall
not affect its validity or the effectiveness of this Agreement.
SECTION 9.15 Further Assurances.
(a) The Company shall and shall cause each of its
Subsidiaries to the extent applicable to execute, acknowledge, deliver, and
record or file such further instruments, including, without limitation, further
security agreements, financing statements, and continuation statements, and do
such further acts as may be reasonably necessary, desirable, or proper to carry
out more effectively the purposes of this Agreement, including, without
limitation, (i) causing any additions, substitutions, replacements, or
appurtenances to the Motor Vehicles to be covered by and subject to the Liens
created
75
76
in this Agreement or the Documents to which any Floor Plan Borrower is a party;
and (ii) with respect to any Motor Vehicles which are or are required to be
subject to Liens created in this Agreement or any other Loan Document to which
any Floor Plan Borrower is a party, execute, acknowledge, endorse, deliver,
procure, and record or file any document or instrument, including, without
limitation, any financing statement, certificate of title, manufacturer's
statement of origin, certificate of origin, and dealer reassignment of any of
the foregoing which are evidences of ownership of such Motor Vehicles, deemed
advisable by the Agent or the Floor Plan Agent to protect the Liens granted in
this Agreement or the Loan Documents to which any of them respectively is a
party and against the rights or interests of third persons, and will pay all
reasonable costs connected with any of the foregoing;
(b) The Company shall and shall cause each of its
Subsidiaries to pledge the capital stock or other evidence of ownership of any
Person which becomes a Subsidiary of the Company or any of its Subsidiaries.
The Company shall cause all of its Subsidiaries which become Subsidiaries after
the Closing Date to execute the Addendum to Credit Agreement and Notes, if
applicable, and to execute such other Security Documents as the Agent and/or
the Floor Plan Agent shall reasonably request to establish Liens on the assets
of such Subsidiary consistent with those in place on the Closing Date.
(c) SMC Luxury Cars, Inc. and Southwest Toyota, Inc.
shall each, on or before sixty (60) days after the Closing Date, obtain the
consent of Toyota Motor Credit Corporation to permit the Agent, for the benefit
of the Banks, to file and perfect a Lien (subject only to any Permitted Liens)
on the Collateral owned by each of them, respectively. Until the date such
Liens have been filed and perfected, the EBITDA of each of SMC Luxury Cars,
Inc. and Southwest Toyota, Inc., respectively, shall not be considered in
determining the Acquisition Loan Advance Limit.
SECTION 9.16 Permitted Acquisitions.
(a) Subject to the remaining provisions of this
Section 9.16 applicable thereto and the requirements contained in the
definition of Permitted Acquisition, the Company may, from time to time after
the Closing Date, effect Permitted Acquisitions, as long as with respect
thereto each of the following conditions are satisfied:
(i) no Default or Event of Default is in
existence at the time of the consummation of such proposed
Acquisition or would exist after giving effect thereto, all
representations and warrants contained herein and in the other
Loan Documents shall be true and correct in all material
respects with the same effect as though such representations
and warranties were made on and as of the date of such
proposed Acquisition (both before and after giving effect
thereto), and no other agreement, contract or instrument to
which any Borrower is a party restricts such proposed
Acquisition;
(ii) the Company shall have given the
Agent at least 30 days (or ten Business Days, in the case of
clause (B) below) prior written notice of any such
76
77
proposed Acquisition (each of such notices, a "Permitted
Acquisition Notice"), which notice shall (A) contain the
estimated date such proposed Acquisition is scheduled to be
consummated, (B) attach a true and correct copy of the draft
purchase agreement, letter of intent, description of material
terms or similar agreements executed by the parties thereto in
connection with such proposed Acquisition, (C) contain the
estimated aggregate purchase price of such proposed
Acquisition and the amount of related costs and expenses and
the intended method of financing thereof, (D) contain the
estimated amount of Acquisition Loans required to effect such
proposed Acquisition; and, (E) whether the target company will
be a Floor Plan Borrower;
(iii) the Company shall have provided the Banks
with all information related to the Auto Dealer being acquired
and the proposed Acquisition as the Agent shall reasonably
request, including, without limitation, delivery of the expert
reports (if any) prepared by accounting, environmental, and/or
other experts which the Company has obtained as the Agent
shall reasonably request;
(iv) (A) as soon as available but not less
than the earlier of three (3) days after the execution
thereof, a copy of the executed purchase agreement and all
related agreements, schedules and exhibits with respect to
such proposed Acquisition and (B) at the time of delivery of
the purchase agreement, certification from the Company as to
the purchase price for the acquisition (or a formula therefor)
and the estimated amount of all related costs, fees and
expenses and that, except as described, there are no other
amounts which will be payable in connection with the
respective proposed Acquisition;
(v) the Company shall have given the Agent,
at least ten (10) Business Days prior to the closing date of
the proposed Acquisition, a good faith estimate made by the
Company of its Consolidated Pro Forma EBITDA and Consolidated
Pro Forma Floor Plan Interest Expense, the calculations for
which, the Company shall have furnished to the Agent together
with audited statements from an auditor, satisfactory to the
Agent, supporting such calculations for Pro Forma Floor Plan
Interest Expense and such other information as the Agent may
have reasonably requested to determine the accuracy of such
calculation, calculated as of a date immediately after the
projected closing date of such proposed Acquisition, and the
amount of Consolidated Pro Forma EBITDA shall exceed zero for
the immediately preceding four (4) fiscal quarters of the
Company; provided, however, in the case of calculations based
on financial statements not audited by a nationally recognized
accounting firm reasonably acceptable to the Agent, the Agent
shall be satisfied that the consolidated EBITDA of the Auto
Dealer being acquired pursuant to the proposed Acquisition
exceeds zero for such period;
(vi) recalculations are made by the Company of
compliance with the covenants contained in Sections 10.14
through 10.17, inclusive, for the immediately preceding four
(4) fiscal quarters of the Company on a pro forma basis, and
such
77
78
recalculations shall show that during such period, on a pro
forma basis, the Company would have been in compliance
therewith;
(vii) the Company shall have delivered updated
Schedules of the Agreement to the Agent; and
(viii) prior to the consummation of the
respective proposed Acquisition, the Company shall furnish the
Agent an officer's certificate executed by the chief financial
officer of the Company, certifying as to compliance with the
requirements of the applicable preceding clauses (i) through
(vii) and containing the calculations required in this Section
9.16(a). The consummation of each Permitted Acquisition shall
be deemed to be a representation and warranty by the Company
that all conditions thereto have been satisfied and that same
is permitted in accordance with the terms of this Agreement,
which representation and warranty shall be deemed to be a
representation and warranty for all purposes hereunder.
(ix) For each Permitted Acquisition involving
the creation of a direct or indirect Subsidiary of the
Company, not less than 100% of the capital stock or other
equity interest of such Subsidiary shall be directly owned by
the Company or another Borrower, and all such stock or other
equity interest shall be pledged to the Agent for the benefit
of the Banks pursuant to the Pledge Agreement or pursuant to a
similar agreement satisfactory to the Agent to the extent such
pledge is not prohibited by any Dealer Franchise Agreement to
which such Subsidiary is a party.
(x) The Required Banks shall have consented
in writing to the proposed Acquisition prior to the closing
thereof; provided, however, such consent shall be deemed to
have been granted if the Required Banks shall not have given
written notice of consent or rejection of such consent to the
Agent within thirty (30) days after receipt by the Agent of
the Permitted Acquisition Notice.
(b) The Company shall cause each Subsidiary that is
created, or is otherwise acquired pursuant to a Permitted Acquisition to
execute and deliver, an Addendum, if applicable, and the other applicable Loan
Documents, with the documentation to be in form and substance reasonably
satisfactory to the Agent. Each such Subsidiary shall also grant to the Agent,
for the benefit of the Banks, first priority perfected security interests in
all property of such Subsidiary subject only to Liens permitted by Section 10.2
acquired in connection with the Permitted Acquisition, and such Subsidiary
shall take all actions requested by the Agent or the Required Banks (including,
without limitation, the obtaining of UCC-11's, the filing of UCC-1's in
connection with the granting of such security interests. All security
interests required to be granted pursuant to this Section 9.16(c) shall be
granted pursuant to such security documentation (which shall be substantially
similar to the analogous Security Documents already executed and satisfactory
in form and substance to the Agent) and shall (except as otherwise consented to
by the Agent and the Required Banks) constitute valid and enforceable perfected
security interests prior to the rights of all third Persons and subject to no
other Liens, except Liens permitted under Section 10.2 . The security
documents and other instruments related thereto shall be duly recorded or filed
in such manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens, in favor
78
79
of the Agent for the benefit of the Banks, required to be granted pursuant to
such additional Security Documents and all taxes, fees and other charges
payable in connection therewith shall be paid in full by the Company. At the
time of the execution and delivery of such additional Security Documents, the
Company and the applicable Borrower shall cause to be delivered to the Agent
such documents as may be reasonably requested by the Agent to assure that this
Section 9.16(c) has been complied with. All actions required to be taken by
Section 9.16(c) with respect to the additional Collateral shall be completed no
later than ten (10) Business Days after the date on which the Permitted
Acquisition is effected.
ARTICLE X
NEGATIVE COVENANTS
So long as this Agreement shall remain in effect or the principal of
or interest on any Note, the Swing Line Note, any Commitment Fee or any other
expense or amount payable hereunder shall be unpaid and until the Commitments
of the Banks shall expire or terminate, the Letter of Credit Obligations are
paid in full and all Drafting Agreements are terminated, the Company, as to
itself and as to all of the other Borrowers and each of the Borrowers other
than the Company, as to itself only covenants and agrees with the Agent, the
Floor Plan Agent, the Swing Line Bank and each Bank that:
SECTION 10.1 Indebtedness. No Borrower will incur, create,
assume or suffer to exist any Indebtedness, except:
(a) The Notes, the Swing Line Note, and Indebtedness
and Obligations under this Agreement and the other Loan Documents;
(b) Indebtedness of any Borrower existing at the
Closing Date which is reflected in Schedule X hereto and all renewals and
extensions thereof;
(c) Indebtedness created under leases which, in
accordance with generally accepted accounting principles, have been recorded
and/or should have been recorded on the books of the applicable Borrower as
Capital Leases which, when combined with Indebtedness described in Section
10.1(d), is less than Three Million Dollars ($3,000,000);
(d) Indebtedness which is permitted in connection
with the purchase of property, provided that the aggregate amount of such
Indebtedness shall not exceed $3,000,000;
(e) Subordinated Indebtedness as specified in
Schedule XI;
(f) accounts payable (for the deferred purchase price
of Property or services) from time to time incurred in the ordinary course of
business and which are not in excess of ninety (90) days past the invoice or
billing date;
(g) Non-Recourse Real Estate Debt and any Guaranties
by the Company of such Indebtedness;
79
80
(h) Indebtedness pursuant to Third Party Floor Plan
Financing;
(i) Indebtedness of any Subsidiary of the Company in
existence (but not incurred or created in connection with such acquisition) on
the date on which such Subsidiary is acquired by the Company and for which
Indebtedness neither the Company nor any of its other Subsidiaries has any
obligation and with respect to which Indebtedness none of the properties of the
Company or any of its other Subsidiaries is bound;
(j) Indebtedness secured by Liens upon any property
hereafter acquired by the Company or any of its Subsidiary to secure
Indebtedness in existence on the date of such acquisition (but not incurred or
created in connection with such acquisition), which Indebtedness is assumed by
such Person simultaneously with such acquisition, which Liens extend only to
such Property so acquired and with respect to which Indebtedness none of the
Company or any of its Subsidiaries (other than the acquiring Person) has any
obligation;
(k) Indebtedness owed by the Company or any of its
Subsidiaries to the Company or to any other Subsidiary;
(l) any Retail Loan Guaranties; provided that the
aggregate principal amount of such Retail Loan Guaranties shall not exceed
$12,000,000; and
(m) Indebtedness arising under any Service Agreement
as such term is defined in Section 9.14.
SECTION 10.2 Liens. No Borrower will incur, create, assume
or permit to exist any Lien on any of its property or assets, whether owned at
the date hereof or hereafter acquired, or assign or convey any rights to or
security interests in any future revenues, except:
(a) Liens securing payment of the Obligations;
(b) (i) Liens securing Indebtedness permitted by
Sections 10.1(c) or (d), but only on the property subject to such Capital Lease
or purchase-money arrangement, or (ii) securing Indebtedness permitted by
Sections 10.1(h), (i), (j) and (k);
(c) Liens referred to in Section 7.16;
(d) Liens securing Non-Recourse Real Estate Debt;
(e) extensions, renewals and replacements of Liens
referred to in paragraphs (a) through (d) of this Section 10.2 provided, that
any such extension, renewal or replacement Lien shall be limited to the
property or assets covered by the Lien extended, renewed or replaced and that
the Obligations secured by any such extension, renewal or replacement lien
shall be in an amount not greater than the amount of the Obligations secured by
the Lien extended, renewed or replaced; and
80
81
(f) rights of set off which any Manufacturer may have
on Investments permitted under Section 10.5(i).
SECTION 10.3 Consolidations and Mergers. No Borrower shall
merge, consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except:
(a) any of its Subsidiaries may merge with the
Company, provided that the Company shall be the continuing or surviving
corporation, or with any one or more such Subsidiaries, provided that if any
such transaction shall be between Subsidiaries, one hundred percent (100%) of
the capital stock of which is a Wholly Owned Subsidiary and one of its
Subsidiaries which is not a Wholly Owned Subsidiary, the Wholly Owned
Subsidiary shall be the continuing or surviving corporation;
(b) any Subsidiary of the Company may sell all or
substantially all of its assets (upon voluntary liquidation or otherwise) to
the Company or a Wholly-Owned Subsidiary); and
(c) any Subsidiary of the Company or the Company may
merge or consolidate with another Person; if (x) the Company or such Subsidiary
involved in the merger or the consolidation is the surviving corporation, and
(y) immediately prior to and after giving effect to such merger or
consolidation, there exists no Default or Event of Default.
SECTION 10.4 Disposition of Assets. Each Borrower agrees that
it shall not permit any Disposition (whether in one or a series of
transactions) of any property or assets (including Accounts, notes receivable,
and/or chattel paper, with or without recourse) or enter into any agreement so
to do, except:
(a) Dispositions of Motor Vehicles and dispositions
of other inventory in the ordinary course of business;
(b) Dispositions of assets, properties or businesses
by the Company or any of its Subsidiaries or Affiliates to any other Subsidiary
or to the Company;
(c) Dispositions of property in connection with any
consolidation or merger permitted by Schedule XIII hereof;
(d) Dispositions of the property described in
Schedule XIV attached hereto;
(e) Dispositions of equipment and other property
which is obsolete, worn out or no longer used or useful in such Person's
business, all in the ordinary course of business;
(f) Dispositions occurring as the result of a
casualty event, condemnation or expropriation; and
81
82
(g) Dispositions of any property, assets (including
capital stock of its Subsidiaries and Affiliates) or businesses of the Company
not otherwise permitted by clauses (a) through (g) of this Section 10.4;
provided, that the aggregate book value of all such property, assets or
businesses sold, leased or otherwise disposed of during the term of this
Agreement shall not at any time exceed the greater of (i) Five Million Dollars
($5,000,000) or (ii) ten percent (10%) of the total book value of the assets of
the Company and each of its Subsidiaries, (determined on a consolidated basis
in accordance with generally accepted accounting principles, as of the end of
the immediately preceding fiscal quarter), and provided, further, that for any
such property, assets or business other than capital stock that is sold, leased
or otherwise disposed of, for purposes of determining compliance with this
Section 10.4, the value of any such property, asset or business shall be equal
to the book value of such property, asset or business as of the date of such
Disposition; and provided, further, that for purposes of determining compliance
with this Section 10.4, the value of any capital stock sold or disposed of
shall be determined by multiplying the number of shares of such capital stock
sold by the net book value per share of such capital stock; and provided,
further, that this Section 10.4 does not authorize Disposition of any Accounts,
notes receivable and/or Chattel Paper with or without recourse.
SECTION 10.5 Investments. No Borrower will make or permit to
exist any Investment in any Person, except for:
(a) Permitted Acquisitions;
(b) extensions of credit in the nature of Accounts
receivable or notes receivable and/or chattel paper arising from the sale of
goods and services in the ordinary course of business;
(c) shares of stock, obligations or other securities
received in settlement of claims arising in the ordinary course of business;
(d) Investments in securities, maturing within two
(2) years and issued or fully guaranteed or insured by the United States of
America or any agency thereof;
(e) Investments in commercial paper, maturing in two
hundred seventy (270) days or less from the date of issuance, rated in the
highest or second highest grade by a nationally recognized credit rating
agency;
(f) Investments in United States Dollar denominated
and Eurodollar denominated time deposits, maturing within two (2) years from
the date of such Investment and issued by a bank or trust company having
capital, surplus and undivided profits aggregating at least Five Hundred
Million Dollars ($500,000,000);
(g) Investments outstanding on the date hereof in
Subsidiaries by the Company and its Subsidiaries;
(h) Investments in negotiable instruments held by
Comerica Securities, Inc. which are acceptable to the Floor Plan Agent;
82
83
(i) Investments with a Manufacturer's affiliated
finance company in Manufacturer floor plan offset accounts in an amount not to
exceed $25,000,000; provided however that Agent shall have a security interest
therein second only to a Lien of third party floor plan lender;
(j) Investments in capital assets, subject to the
limitations set forth in Section 10.11.
(k) Investments in seller financed notes in
connection with Motor Vehicles at Foyt Motors, Inc. not to exceed $2,000,000 in
the aggregate at anytime.
SECTION 10.6 Transactions with Affiliates. No Borrower will
enter into any transaction with any Affiliate except in the ordinary course of
business and upon fair and reasonable terms no less favorable than the
applicable Borrower could obtain or could become entitled to in an arm's-length
transaction with a Person which was not an Affiliate.
SECTION 10.7 Other Agreements. No Borrower will enter into
any agreement containing any provision which would be violated or breached by
such Borrower's performance of its Obligations hereunder or under any
instrument or document delivered or to be delivered by the Borrowers hereunder
or in connection herewith if the effect of such violation or breach could
reasonably be expected to have a Material Adverse Effect.
SECTION 10.8 Fiscal Year; Accounting. No Borrower will change
its fiscal year or method of accounting (other than immaterial changes and
methods and changes authorized by generally accepted accounting principles).
SECTION 10.9 Credit Standards. No Borrower will modify in any
way the credit standards and procedures, the collection policies or the loss
recognition procedures with respect to the creation or collection of Accounts,
notes received and/or chattel paper.
SECTION 10.10 Pension Plans. No Borrower will permit any
condition to exist in connection with any Plan which might constitute grounds
for the PBGC to institute proceedings to have such Plan terminated or a trustee
appointed to administer such Plan, or engage in, or permit to exist or occur
any other condition, event or transaction with respect to any Plan which could
reasonably be expected to have Material Adverse Effect.
SECTION 10.11 Capital Expenditures. The Borrowers will not
make expenditures for capital or fixed assets on improvements in any
consecutive twelve (12) month period in excess of Five Million Dollars
($5,000,000) in the aggregate.
SECTION 10.12 Net Worth of Company. The Company will not at
any time permit (a) its Consolidated Tangible Net Worth to be less than
twenty-five million dollars ($25,000,000), or (b) its Shareholders' Equity to
be less than an amount equal to the sum of (x) $85,000,000 plus (y)
seventy-five percent (75%) of Consolidated Net Income, computed on a cumulative
basis, for the period beginning on December 31, 1997 and ending on the date of
determination (provided that no negative adjustment will be made in the event
that Consolidated Net Income is a deficit figure for such period), plus (z) one
hundred percent (100%) of the net proceeds (cash or non-cash) realized
83
84
from the issuance of any equity securities by the Company (or other capital
contributions made to the Company) after December 31, 1997.
SECTION 10.13 Restricted Payments. Each Borrower agrees that
it shall not declare or make any Restricted Payment, except that any Borrower
may make the following Restricted Payments provided that immediately prior to
and after giving effect to the declaration of any dividend, and immediately
prior to and after giving effect to the payment of any Restricted Payment,
there exists no Default or Event of Default:
(a) any Borrower may declare and make dividend
payments or other distributions payable solely in its capital stock;
(b) any Subsidiaries of the Company may declare and
make Restricted Payments to the Company or to any other Subsidiaries of the
Company;
(c) any Borrower may declare and pay cash dividends
on its capital stock, provided (i) no Default or Event of Default has occurred,
is continuing or would be created thereby and (ii) that the aggregate cash
dividends paid by such Borrower shall not exceed an amount equal to
thirty-three and three-one-hundredths percent (33.3%) of the aggregate
Consolidated Net Income for the period commencing on December 31, 1997 and
ending on the date of determination taken as a single accounting period.
SECTION 10.14 Fixed Charge Coverage Ratio. The Company will
not permit (as of the end of any fiscal quarter) its Fixed Charge Coverage
Ratio to be less than 1.25 to 1, such ratio to be calculated as of the end of
each fiscal quarter of the Company based upon the four fiscal quarters
immediately preceding such date of determination.
SECTION 10.15 Interest Coverage Ratio. The Company will not
permit (as of the end of any fiscal quarter) its Interest Coverage Ratio to be
less than 2.50 to 1, such ratio to be calculated as of the end of each fiscal
quarter of the Company based upon the four fiscal quarters immediately
preceding such date of determination.
SECTION 10.16 Leverage Ratio. The Company shall not, at any
time, permit its Leverage Ratio to be greater than 2.0 to 1.
SECTION 10.17 Current Ratio. The Company shall not, at any
time, permit its Current Ratio to be less than 1.05 to 1.
ARTICLE XI
EVENTS OF DEFAULT
SECTION 11.1 Events of Default. In case of the happening of
any of the following events (herein called "Events of Default"):
84
85
(a) any representation or warranty made or deemed
made in or in connection with this Agreement, the Notes, the Swing Line Note,
any of the Loan Documents or any of the Borrowings hereunder or in any report,
certificate, financial statement or other instrument furnished in connection
with this Agreement or the execution and delivery of the Notes, the Swing Line
Note or any of the Loan Documents or the making of any of the Borrowings
hereunder shall prove to have been false or misleading in any material respect
when made or deemed made;
(b) Default shall be made in the payment of any
principal of any Loan when and as the same shall become due and payable
pursuant to the terms of this Agreement, whether at the due date thereof or at
a date fixed for prepayment thereof or by acceleration thereof or otherwise;
(c) Default shall be made in the payment of any
interest on any Loan or any Commitment Fee or any other amount due under this
Agreement, when and as the same shall become due and payable which shall remain
unremedied for a period of five (5) days;
(d) Default shall be made in the due observance or
performance of any covenant, condition or agreement contained in Sections 6.3
[Risk Participations, Drawings and Reimbursements], 9.1 [Existence], 9.3
[Insurance], 9.5[ Financial Statements; Reports], 9.6 [Litigation and Other
Notices], 9.8 [Books, Records and Access], 9.10 [Nature of Business], 9.13
[Demonstration, Service Rental or Loaner Vehicles] or in Article X [Negative
Covenants];
(e) except as provided in Sections 11.1(a) through
(d), inclusive, Default shall be made in the due observance or performance of
any other covenant, condition or agreement to be observed or performed pursuant
to this Agreement or any of the Loan Documents and such Default shall continue
unremedied for thirty (30) days after the earlier to occur of (i) any Borrower
obtaining knowledge thereof or (ii) written notice thereof having been given to
the Company;
(f) any Borrower shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code or any other federal or state bankruptcy, insolvency, liquidation
or similar law, (ii) consent to the institution of, or fail to contravene in a
timely and appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for such Borrower or for a
substantial part of such Borrower's property or assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any corporate or other action for the
purpose of effecting any of the foregoing;
(g) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of any Borrower, or of a substantial part of the
property or assets of any Borrower, under Title 11 of the United States Code or
any other federal or state bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator or similar
official for any Borrower or for a substantial part of the property of any
Borrower or (iii) the winding-up or liquidation of any Borrower; and such
proceeding or petition shall continue undismissed for sixty (60) days or an
order or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for sixty (60) days;
85
86
(h) default or defaults (other than defaults in the
payment of principal or interest) shall be made with respect to any
Indebtedness of any Borrower, if the total amount of such Indebtedness in
default exceeds in the aggregate, an amount equal to One Million Dollars
($1,000,000) and if the effect of any such default or defaults shall be to
accelerate, or to permit the holder or obligee of any such Indebtedness (or
any trustee on behalf of such holder or obligee) to accelerate (with or without
notice or lapse of time or both), the maturity of any such Indebtedness; or any
payment of principal or interest, regardless of amount, on any Indebtedness of
the Borrowers which exceeds in the aggregate, an amount equal to One Million
Dollars ($1,000,000) shall not be paid when due, whether at maturity, by
acceleration or otherwise (after giving effect to any period of grace as
specified in the instrument evidencing or governing such Indebtedness);
(i) a Reportable Event or Reportable Events shall
have occurred with respect to any Plan or Plans that reasonably could be
expected to result in a Material Adverse Effect.
(j) there shall be entered against the Company or any
of its Subsidiaries one or more judgments or decrees in excess of Five Million
Dollars ($5,000,000) in the aggregate at any one time outstanding for the
Company and all such Subsidiaries and all such judgments or decrees in the
amount of such excess shall not have been vacated, discharged, stayed or bonded
pending appeal within sixty (60) days from the entry thereof, excluding those
judgments or decrees for and to the extent which the Company or any such
Subsidiary is insured and with respect to which the insurer has assumed
responsibility in writing or for and to the extent which the Company or any
such Subsidiary is otherwise indemnified if the terms of such indemnification
are satisfactory to the Required Banks;
(k) there shall occur any material loss or change to
any Dealer Franchise Agreement between any Borrower and a Manufacturer, which
has a Material Adverse Effect;
(l) there occurs any Material Adverse Effect;
(m) any of the Loan Documents shall cease to be
legal, valid and binding agreements enforceable against the Person executing
the same in accordance with the respective terms thereof except as permitted by
the terms hereof or thereof shall in any way be terminated or become or be
declared ineffective or inoperative or shall in any way whatsoever cease to
give or provide the respective Liens, security interests, rights, titles,
interests, remedies, powers or privileges intended to be created thereby;
(n) an audit performed by the Floor Plan Agent
pursuant to the provisions of Section 9.12(a), reveals that Motor Vehicles
have, for a period of thirty consecutive (30) days been Out of Balance in an
amount equal to or greater than the Out of Balance Amount and none of the Floor
Plan Borrowers has delivered sufficient funds to restore Excess/Payments in
Process to an amount not less than the Out of Balance Amount; or
(o) an audit performed by the Floor Plan Agent
pursuant to the provisions of Section 9.12(a) identifies any specific motor
vehicle by vehicle identification number as an exception to the payment
requirements of Section 2.5, and the Loan advanced to fund such Motor Vehicle
has
86
87
not been repaid within thirty (30) days (except in the case of Fleet Motor
Vehicles, which shall be sixty (60) days) of such audit;
then, and in any such event (other than an event with respect to the Company
described in paragraph (f) or (g) above), and at any time thereafter during the
continuance of such event, (i) the Agent may, and at the request of the
Required Banks shall, by written or telegraphic notice to the Company, take any
of the following actions at the same or different times: (x) terminate
forthwith the Commitments of the Banks hereunder (if not theretofore
terminated) and any such termination shall automatically constitute a
termination of the Swing Line Commitment, (y) declare the Notes then
outstanding to be forthwith due and payable and any such declaration shall
automatically constitute a declaration that the Swing Line Note is due and
payable, whereupon the principal of the Notes, and the Swing Line Note,
together with accrued and unpaid interest thereon and any unpaid accrued
Commitment Fees and all other liabilities of the Borrowers accrued hereunder,
shall become forthwith due and payable both as to principal and interest,
without presentment, demand, protest, notice of protest, notice of intent to
accelerate, notice of acceleration or any other notice of any kind, all of
which are hereby expressly waived by the Borrowers, anything contained herein
or in any Note, the Swing Line Note or other Loan Document to the contrary
notwithstanding, or (z) pursue and enforce any of the rights and remedies of
the Agent on behalf of the Banks as provided in any of the Loan Documents or as
otherwise provided in the UCC or other applicable law and (ii) the Floor Plan
Agent in its sole discretion may, and at the request of the Required Banks
shall (and, to the extent the Commitments have been terminated, such request
shall be deemed to have been made), suspend and terminate all Drafting
Agreements; and in any event with respect to a Borrower described in paragraph
(f) or (g) above, the Commitments of the Banks shall automatically terminate
(if not theretofore terminated) and any such termination shall automatically
constitute a termination of the Swing Line Commitment, and the Notes and the
Swing Line Note shall automatically become due and payable, both as to
principal and interest, without presentment, demand, protest, notice of intent
to accelerate, notice of acceleration or other notice of any kind, all of which
are hereby expressly waived by the Borrowers, anything contained herein or in
any Note, the Swing Line Note or other Loan Document to the contrary
notwithstanding and the Company and the other Borrowers shall immediately
deliver cash collateral to the Agent in such amounts as are acceptable to the
Agent to be held by the Agent, for the benefit of the Swing Line Bank and the
Banks as Collateral for the payment and performance of Drafting Agreements
until all such Drafting Agreements are terminated according to their terms.
ARTICLE XII
THE AGENT AND FLOOR PLAN AGENT
SECTION 12.1 Authorization and Action of the Agent; Rights and
Duties Regarding Collateral.
(a) In order to expedite the various transactions
contemplated by this Agreement, each Bank, the Floor Plan Agent and the Swing
Line Bank hereby irrevocably appoints and authorizes TCB to act as Agent on its
behalf. Each of the Banks, the Floor Plan Agent and the Swing Line Bank and
each subsequent holder of any Note or the Swing Line Note by its acceptance
thereof, hereby irrevocably authorizes and directs the Agent to take such
action on its behalf and to exercise such powers hereunder as are specifically
delegated to or required of the Agent by the terms
87
88
and provisions hereof, together with such powers as are reasonably incidental
thereto. The Agent may perform any of its duties hereunder by or through its
agents and employees. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
or any other Loan Document a fiduciary relationship in respect of any Bank, the
Floor Plan Agent or the Swing Line Bank; and nothing in this Agreement or any
other Loan Document, expressed or implied, is intended to, or shall be so
construed as to, impose upon the Agent any obligations in respect of this
Agreement or any other Loan Document except as expressly set forth herein or
therein. The Agent is hereby expressly authorized on behalf of the Banks, the
Floor Plan Agent and the Swing Line Bank, without hereby limiting any implied
authority, (i) to receive on behalf of each of the Banks any payment of
principal of or interest on the Notes outstanding hereunder and all other
amounts accrued hereunder paid to the Agent, and promptly to distribute to each
Bank its proper share of all payments so received; (ii) to give notice within a
reasonable time on behalf of each of the Banks and the Swing Line Bank to the
Borrowers of any Default or Event of Default specified in this Agreement of
which the Agent has actual knowledge as provided in Section 12.7; (iii) to
distribute to each Bank and the Swing Line Bank copies of all notices,
agreements and other material as provided for in this Agreement as received by
the Agent; (iv) to distribute to the Borrowers any and all requests, demands
and approvals received by the Agent or from the Banks, and (v) to distribute
and receive all notices, agreements and other material as provided in this
Agreement with respect to Floor Plan Loans and to deal with the Floor Plan
Agent to the fullest extent required or contemplated by the terms of their
Agreement or any other Loan Document. As to any matters not expressly provided
for by this Agreement, the Notes, the Swing Line Note or the other Loan
Documents (including enforcement or collection of the Notes or the Swing Line
Note), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of the Required Banks, and such instructions shall be binding upon all Banks
and all holders of Notes, the Swing Line Note and the Loans, the Floor Plan
Agent and the Swing Line Bank; provided, however, that the Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or applicable law.
(b) The Agent shall hold all of the Collateral along
with all payments and proceeds arising therefrom, for the benefit of all Banks
and the Swing Line Bank as ratable security for the payment of all the
Obligations. Upon payment in full of all the Obligations, the Agent shall
release all of the Collateral to the Borrowers. Except as otherwise expressly
provided for in Section 13.5, the Agent, in its own name or in the name of the
Borrowers, may enforce any of the Security Documents or the security therefor
by any mode provided under the Loan Documents or by applicable law, and may
collect, receive and receipt for all proceeds receivable on account of the
Collateral.
(c) To the extent that the Collateral includes notes
or other instruments evidencing any monetary obligation to, or interest of any
Borrower, such Borrowers shall, if requested by the Agent, deliver to the Agent
letters, executed by such Borrower and approved by counsel for the Agent,
notifying the obligors to make payments directly to the Agent, such letters to
be held by the Agent and sent to such obligors at its discretion in accordance
with Section 12.1(d) below. All payments and proceeds of every kind from the
Collateral, when directly received by the Agent pursuant to Section 12.1(d)
(whether from payments on or with respect to the Collateral, from
88
89
foreclosure and sale to third parties, from sale of Collateral subsequent to a
foreclosure at which the Agent or another Bank was the purchaser, or otherwise)
shall be held by it as a part of the Collateral and, except as otherwise
expressly provided hereinafter, shall be applied to the Obligations in the
manner set forth in Section 12.1(d).
(d) Upon the occurrence of an Event of Default, and
pursuant to the procedures among the Banks set forth in Section 12.1(e), the
Agent, after giving written notice to the Borrowers and to all Banks and the
Swing Line Bank of the action(s) to be taken, may at any time or times
thereafter (i) deliver the various letters required by Section 12.1(c) hereof
and receive directly, for the pro rata benefit of the Banks and Swing Line Bank
and for reduction of the Obligations as provided hereafter in this Section
12.1(d), all payments and proceeds related to the Collateral and/or (ii) sell,
assign and deliver all of the Collateral or any part thereof, or any
substitution therefor or any additions thereto as provided hereafter. Any such
sale or assignment may be at any broker's board or at any public or private
sale, at the option of the Agent or of any officer or representative acting on
behalf of the Agent, without advertisement or any notice to the Borrowers or
any other Person except those required by applicable law (the Borrowers hereby
agreeing that ten (10) days' notice constitutes "reasonable notice"); and each
Bank (including the Agent), its officers and assigns, may bid and become
purchasers at any such sale, if public, or at any broker's board if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations. Sales
hereunder may be at such time or times, place or places, for cash or credit,
and upon such terms and conditions as the Agent may determine in its sole
discretion. Upon the completion of any sale, the Agent shall execute all
instruments of transfer necessary to vest in the purchaser(s) title to the
property sold, and shall deliver to such purchaser(s) any of the property so
sold which may be in the possession of the Agent.
In the case of any sale of Collateral, the purchase money
proceeds and avails, and all other proceeds which then may be held or recovered
by the Agent or the Floor Plan Agent for the benefit of the Banks and the Swing
Line Bank, shall be applied in the following order:
(w) First, to the payment of the reasonable costs
and expenses of such sale and of the collection or enforcement
of such Collateral, and of all reasonable expenses (including
attorneys fees) and liabilities incurred and advances made by
the Agent or Floor Plan Agent in connection therewith;
(x) Second, to the payment of any amounts due to
Swing Line Bank in the form of Swing Line Overdraft Loans;
(y) Third, to the payment ratably of the amounts
due to the Banks for principal of and interest on all
Obligations other than Swing Line Overdraft Loans then
outstanding, without preference or priority of such
indebtedness owing to one Bank over another, or of principal
over interest, or of interest over principal; and,
(z) Fourth, to the payment of the surplus, if
any, to the Borrowers, their successors or assigns, or to
whomsoever may be lawfully entitled to receive the same, or as
a court of competent jurisdiction may direct.
89
90
(e) After the occurrence and during the continuance
of a Default or an Event of Default, the Required Banks shall meet to establish
written procedures to be taken by the Agent for the protection, collection and
enforcement of the Collateral. The Agent shall not act with respect to the
Collateral except in accordance with the written procedures as established by
the Required Banks; however, if the Required Banks fail to agree upon and
establish such procedures, and the exigency of the circumstances requires, the
Agent, in its sole discretion and in good faith, may (but is not required to)
take whatever action it deems necessary to protect and enforce the Collateral
or the rights of the Banks and the Swing Line Bank under the Loan Documents.
The Borrowers shall acquire no rights or defenses under this Section 12.1(e).
(f) No Bank or the Swing Line Bank may enforce, or
demand enforcement of, any rights or Liens with respect to the Collateral
except upon the terms and conditions elsewhere stated in this Agreement.
SECTION 12.2 Agent's Reliance, Etc.
(a) Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with this Agreement, the
Notes, the Swing Line Note or any of the other Loan Documents (i) with the
consent or at the request of the Required Banks or (ii) in the absence of its
or their own gross negligence or willful misconduct (it being the express
intention of the parties hereto that the Agent and its directors, officers,
agents and employees shall have no liability for actions and omissions under
this Section 12.2 resulting from their sole ordinary or contributory
negligence).
(b) Without limitation of the generality of the
foregoing, the Agent: (i) may treat the payee of each Note, the Swing Line
Note and the Obligations of each Borrower hereunder and the Swing Line Bank,
respectively, as the holder thereof until the Agent receives written notice of
the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (ii) may consult with legal counsel (including
counsel for any Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Bank,
the Swing Line Bank, or the Floor Plan Agent and shall not be responsible to
any Bank, the Swing Line Bank, or the Floor Plan Agent for any statements,
warranties or representations made in or in connection with this Agreement, any
Note, the Swing Line Note or any other Loan Document; (iv) except as otherwise
expressly provided herein, shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of this Agreement, any Note, the Swing Line Note or any other Loan
Document or to inspect the property (including the books and records) of any
Borrower; (v) shall not be responsible to any Bank, the Swing Line Bank or the
Floor Plan Agent for the due execution, legality, validity, enforceability,
collectability, genuineness, sufficiency or value of this Agreement, any Note,
the Swing Line Note, any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; (vi) shall not be responsible to
any Bank, the Swing Line Bank or the Floor Plan Agent for the perfection or
priority of any Lien securing the Loans; and (vii) shall incur no liability
under or in respect of this Agreement, any Note, the Swing Line Note or any
other Loan Document by acting upon any notice, consent, certificate or other
instrument or
90
91
writing (which may be by telegram, telecopier, cable or telex) reasonably
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 12.3 Agent and Affiliates; TCB and Affiliates.
Without limiting the right of any other Bank or the Swing Line Bank to engage
in any business transactions with any Borrower or any of its Affiliates, with
respect to their Commitments, the Loans, if any, made by them, the Notes, and
the Swing Line Note, if any, issued to them, TCB shall have the same rights and
powers under this Agreement, any Note, the Swing Line Note or any of the other
Loan Documents as any other Bank and may exercise the same as though it were
not the Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly
indicated, include TCB in its individual capacity. TCB and its Affiliates may
be engaged in, or may hereafter engage in, one or more loan, letter of credit,
leasing or other financing activities not the subject of the Loan Documents
(collectively, the "Other Financings") with any of Borrowers or any of their
Affiliates, or may act as trustee on behalf of, or depositary for, or otherwise
engage in other business transactions with any of the Borrowers or any of their
Affiliates (all Other Financings and other such business transactions being
collectively, the "Other Activities") with no responsibility to account
therefor to the Banks or the Floor Plan Agent. Without limiting the rights and
remedies of the Banks, the Swing Line Bank, or the Floor Plan Agent
specifically set forth in the Loan Documents, no other Bank, the Swing Line
Bank, nor the Floor Plan Agent shall have any interest in (a) any Other
Activities, (b) any present or future guarantee by or for the account of any
Borrower not contemplated or included in the Loan Documents, (c) any present or
future offset exercised by the Agent in respect of any such Other Activities,
(d) any present or future property taken as security for any such Other
Activities or (e) any property now or hereafter in the possession or control of
the Agent which may be or become security for the Obligations of any Borrower
under the Loan Documents by reason of the general description of indebtedness
secured, or of property contained in any other agreements, documents or
instruments related to such Other Activities; provided, however, that if any
payment in respect of such guarantees or such property or the proceeds thereof
shall be applied to reduction of the Obligations evidenced hereunder and by the
Notes, then each Bank, the Swing Line Bank and the Floor Plan Agent shall be
entitled to share in such application according to its equitable portion of
such Obligations.
SECTION 12.4 Agent's Indemnity.
(a) The Agent shall not be required to take any
action hereunder or to prosecute or defend any suit in respect of this
Agreement, the Notes, the Swing Line Note or any other Loan Document unless
indemnified to the Agent's satisfaction by the Banks and the Swing Line Bank
against loss, cost, liability and expense. If any indemnity furnished to the
Agent shall become impaired, the Agent may call for additional indemnity and
cease to do the acts indemnified against until such additional indemnity is
given. In addition, the Banks and the Swing Line Bank agree to indemnify the
Agent (to the extent not reimbursed by the Borrowers), ratably according to the
respective aggregate principal amounts of the Notes and the Swing Line Note
then held by each of them (or if no Notes are at the time outstanding, ratably
according to the respective amounts of their Commitments, or if no Commitments
are outstanding, the respective amounts of the Commitments immediately prior to
the time the Commitments ceased to be outstanding), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Agent (or either of
them) in any way relating to or arising out of this
91
92
Agreement or any action taken or omitted by the Agent under this Agreement, the
Notes, the Swing Line Note and the other Loan Documents (including any action
taken or omitted under Article II of this Agreement). Without limitation of
the foregoing, each Bank and the Swing Line Bank agrees to reimburse the Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by the Agent in connection with
the preparation, execution, administration, or enforcement of, or legal advice
in respect of rights or responsibilities under, this Agreement, the Notes, the
Swing Line Note and the other Loan Documents to the extent that the Agent is
not reimbursed for such expenses by the Borrowers. The provisions of this
Section 12.4 shall survive the termination of this Agreement, the payment of
the Loans and/or the assignment of any of the Notes and the Swing Line Note.
(b) Notwithstanding the foregoing, no Bank or the
Swing Line Bank shall be liable under this Section 12.4 to the Agent for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements due to the Agent resulting
from the Agent's gross negligence or willful misconduct. Each Bank and the
Swing Line Bank agrees, however, that it expressly intends, under this Section
12.4, to indemnify the Agent ratably as aforesaid for all such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements arising out of or resulting from the Agent's sole
ordinary or contributory negligence.
SECTION 12.5 Bank Credit Decision. Each Bank and the Swing
Line Bank acknowledges that it has, independently and without reliance upon the
Agent, the Floor Plan Agent or any other Bank or the Swing Line Bank and based
on the financial statements most recently delivered under either referred to
in Section 7.5 or Section 9.5 and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Bank and the Swing Line Bank also acknowledges that it
will, independently and without reliance upon the Agent, the Floor Plan Agent
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, the other Loan Documents, any
related agreement or any document furnished hereunder.
SECTION 12.6 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided herein, the Agent may resign at any
time by giving written notice thereof to the Banks, the Swing Line Bank, the
Floor Plan Agent and the Company. Upon any such resignation, the Required
Banks shall have the right to appoint a successor Agent, subject to the
approval of the Company, which approval shall not be unreasonably withheld. If
no successor Agent shall have been so appointed by the Required Banks, approved
by the Company and shall have accepted such appointment, all within thirty (30)
calendar 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 a commercial bank organized or licensed under the laws of the
United States or of any state thereof and having a combined capital and surplus
of at least Five Hundred Million Dollars ($500,000,000). Upon the acceptance
of any appointment as Agent hereunder and under the Notes by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement
and the Notes. After any retiring Agent's resignation as the Agent hereunder
and under the Notes, the provisions of this Article XII
92
93
and Section 13.4 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement and the Notes.
SECTION 12.7 Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Agent shall have received notice from a Bank, the
Swing Line Bank, the Floor Plan Agent or the Borrowers referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default" or "notice of event of default," as applicable.
If the Agent receives such a notice, the Agent shall give notice thereof to the
Banks, the Swing Line Bank and the Floor Plan Agent and, if such notice is
received from a Bank, the Swing Line Bank or the Floor Plan Agent, the Agent
shall give notice thereof to the other Banks, the Swing Line Bank and the
Company. The Agent shall be entitled to take action or refrain from taking
action with respect to such Default or Event of Default as provided in Section
12.1 and Section 12.2.
SECTION 12.8 Authorization and Action of the Floor Plan Agent.
(a) In order to expedite the various transactions
contemplated by this Agreement, each Bank, the Swing Line Bank and the Agent
hereby irrevocably appoint and authorize Comerica Bank to act as Floor Plan
Agent on its behalf. Each of the Banks, the Swing Line Bank and the Agent, and
each subsequent holder of any Note or the Swing Line Note by its acceptance
thereof, hereby irrevocably authorizes and directs the Floor Plan Agent to take
such action and to exercise such powers hereunder as are specifically delegated
to or required of the Floor Plan Agent by the terms and provisions hereof,
together with such powers as are reasonably incidental thereto. The Floor Plan
Agent may perform any of its duties hereunder by or through its agents and
employees. The duties of the Floor Plan Agent shall be mechanical and
administrative in nature; the Floor Plan Agent shall not have by reason of this
Agreement or any other Loan Document a fiduciary relationship in respect of any
Bank, the Swing Line Bank or the Agent; and nothing in this Agreement or any
other Loan Document, expressed or implied, is intended to, or shall be so
construed as to, impose upon the Floor Plan Agent any obligations in respect of
this Agreement or any other Loan Document except as expressly set forth herein
or therein. The Floor Plan Agent is hereby expressly authorized on behalf of
the Banks to (i) receive and distribute funds, (ii) to receive and distribute
all notices and agreements and other material and (iii) to take all actions and
perform such duties and make such determinations, all as provided in this
Agreement. As to any matters not expressly provided for by this Agreement or
any Loan Document, the Floor Plan Agent shall not be required to exercise any
discretion or take any action, but shall not be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Banks, and such instructions
shall be binding upon all Banks, the Swing Line Bank, the Agent and all holders
of Notes and the Swing Line Note and the Loans and the Floor Plan Agent;
provided, however, that the Floor Plan Agent shall not be required to take any
action which exposes it to personal liability or which is contrary to this
Agreement or applicable law.
(b) To the extent that any proceeds of the Motor
Vehicles includes notes or other instruments evidencing any monetary obligation
to, or interest of, any Borrower, such Borrower shall deliver or cause to be
delivered to the Floor Plan Agent letters, executed by such Borrower and
approved by counsel for the Floor Plan Agent, notifying the obligors to make
payments directly to the Floor Plan Agent, such letters to be held by the Floor
Plan Agent and sent
93
94
to such obligors at its discretion. All payments and proceeds of every kind from
such Motor Vehicles, when directly received by the Floor Plan Agent (whether
from payments on or with respect to proceeds of Motor Vehicles, from foreclosure
and sale to third parties, from sale of Motor Vehicles subsequent to a
foreclosure at which the Floor Plan Agent or another Bank was the purchaser, or
otherwise) shall be, except as otherwise expressly provided hereinafter, applied
to the Obligations in the manner set forth in Section 12.1(d).
SECTION 12.9 Floor Plan Agent's Reliance, etc.
(a) Neither the Floor Plan Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement (i) with the
consent or at the request of the Required Banks acting by and through the Agent
or (ii) in the absence of its or their own gross negligence or willful
misconduct (it being the express intention of the parties hereto that the Floor
Plan Agent and its directors, officers, agents and employees shall have no
liability for actions and omissions under this Section 12.9 resulting from their
sole ordinary or contributory negligence).
(b) Without limitation of the generality of the foregoing,
the Floor Plan Agent: (i) may treat the Agent as Agent hereunder until the Floor
Plan Agent receives written notice of the appointment of a successor Agent as
provided in Section 12.6; (ii) may consult with legal counsel (including counsel
for the Borrowers), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Bank, the Swing Line
Bank or the Agent and shall not be responsible to any Bank, the Swing Line Bank
or the Agent for any statements, warranties or representations made in or in
connection with this Agreement; (iv) except as otherwise expressly provided
herein, shall not have any duty to ascertain or to inquire as to the performance
or observance of any of the terms, covenants or conditions of this Agreement, or
to inspect the property (including the books and records) of any Borrower; (v)
shall not be responsible to any Bank, the Swing Line Bank or the Agent for the
due execution, legality, validity, enforceability, collectability, genuineness,
sufficiency or value of this Agreement, or any other instrument or document
furnished pursuant hereto or thereto; (vi) except as otherwise expressly
provided herein shall not be responsible to any Bank, the Swing Line Bank or the
Agent for the perfection or priority of any Lien securing the Loans; and (vii)
shall incur no liability under or in respect of this Agreement, by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopier, cable or telex) reasonably believed by it to be genuine
and signed or sent by the proper party or parties.
SECTION 12.10 Floor Plan Agent and Affiliates; Comerica Bank and
Affiliates . Without limiting the right of any other Bank, the Swing Line Bank
or the Agent to engage in any business transactions with any Borrower or any of
its Affiliates, with respect to their Commitments, the Loans, if any, made by
them and the Notes, if any, issued to them, Comerica Bank shall have the same
rights and powers under this Agreement, any Note, the Swing Line Note or any of
the other Loan Documents as any other Bank and may exercise the same as though
it were not the Floor Plan Agent; and the term "Bank" or "Banks" shall, unless
otherwise expressly indicated, include Comerica Bank in its individual capacity.
Unless prohibited hereby, Comerica Bank and its Affiliates may be engaged in, or
may hereafter engage in, one or more Other Financings with the
94
95
Company, any other Borrower or any of their Affiliates, or may act as trustee on
behalf of, or depositary for, or otherwise engage in Other Activities with no
responsibility to account therefor to the Banks or the Agent. Without limiting
the rights and remedies of the Banks or the Agent specifically set forth in the
Loan Documents, no other Bank nor the Agent shall have any interest in (a) any
Other Activities, (b) any present or future guarantee by or for the account of
any of the Borrowers not contemplated or included in the Loan Documents, (c) any
present or future offset exercised by the Floor Plan Agent in respect of any
such Other Activities, (d) any present or future property taken as security for
any such Other Activities or (e) any property now or hereafter in the possession
or control of the Floor Plan Agent which may be or become security for the
Obligations of the Borrowers under the Loan Documents by reason of the general
description of indebtedness secured, or of property contained in any other
agreements, documents or instruments related to such Other Activities; provided,
however, that if any payment in respect of such guarantees or such property or
the proceeds thereof shall be applied to reduction of the Obligations evidenced
hereunder and by the Notes or the Swing Line Note, then each Bank and the Swing
Line Bank shall be entitled to share in such application according to its
equitable portion of such Obligations.
SECTION 12.11 Floor Plan Agent's Indemnity .
(a) The Floor Plan Agent shall not be required to take any
action hereunder or to prosecute or defend any suit in respect of this
Agreement, the Notes, the Swing Line Note, or any other Loan Document unless
indemnified to the Floor Plan Agent's satisfaction by the Banks and the Swing
Line Bank, against loss, cost, liability and expense. If any indemnity furnished
to the Floor Plan Agent shall become impaired, it may call for additional
indemnity and cease to do the acts indemnified against until such additional
indemnity is given. In addition, the Banks and the Swing Line Bank agree to
indemnify the Floor Plan Agent (to the extent not reimbursed by the Borrowers),
ratably according to the respective aggregate principal amounts of the Notes
then held by each of them (or if no Notes are at the time outstanding, ratably
according to the respective amounts of their Commitments, or if no Commitments
are outstanding, the respective amounts of the Commitments immediately prior to
the time the Commitments ceased to be outstanding), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Floor Plan Agent in any way
relating to or arising out of this Agreement or any action taken or omitted by
the Floor Plan Agent under this Agreement, the Notes, the Swing Line Note and
the other Loan Documents (including action taken or omitted under Article II or
Article IV of this Agreement). Without limitation of the foregoing, each Bank
and the Swing Line Bank agrees to reimburse the Floor Plan Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including reasonable
counsel fees) incurred by the Floor Plan Agent in connection with the
preparation, execution, administration, or enforcement of, or legal advice in
respect of rights or responsibilities under, this Agreement, the Notes, the
Swing Line Note and the other Loan Documents to the extent that the Floor Plan
Agent is not reimbursed for such expenses by the Borrowers. The provisions of
this Section 12.11 shall survive the termination of this Agreement, the payment
of the Loans and/or the assignment of any of the Notes or the Swing Line Note.
(b) Notwithstanding the foregoing, no Bank nor the Swing Line Bank
shall be liable under this Section 12.11 to the Floor Plan Agent for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements
95
96
due to the Floor Plan Agent resulting from the Floor Plan Agent's gross
negligence or willful misconduct. Each Bank and the Swing Line Bank agrees,
however, that it expressly intends, under this Section 12.11, to indemnify the
Floor Plan Agent ratably as aforesaid for all such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements arising out of or resulting from the Floor Plan Agent's sole
ordinary or contributory negligence.
SECTION 12.12 Bank Credit Decision . Each Bank acknowledges that it
has, independently and without reliance upon the Floor Plan Agent, the Agent or
any other Bank and based on the financial statements referred to in Section 7.5
and Section 9.5 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank and the Swing Line Bank also acknowledges that it will,
independently and without reliance upon the Floor Plan Agent, the Swing Line
Bank, the Agent or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, the other Loan
Documents, any related agreement or any document furnished hereunder.
SECTION 12.13 Successor Agent . Subject to the appointment and
acceptance of a successor Floor Plan Agent as provided herein, the Floor Plan
Agent may resign at any time by giving written notice thereof to the Banks, the
Agent and the Company. Upon any such resignation, the Required Banks shall have
the right to appoint a successor Floor Plan Agent, subject to the approval of
the Company, which approval shall not be unreasonably withheld. If no successor
Floor Plan Agent shall have been so appointed by the Required Banks, approved by
the Company and shall have accepted such appointment, all within thirty (30)
calendar days after the retiring Floor Plan Agent's giving of notice of
resignation, then the Agent shall, on behalf of the Banks, appoint a successor
Floor Plan Agent, which shall be a commercial bank organized or licensed under
the laws of the United States or of any state thereof and having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000).
Upon the acceptance of any appointment as Floor Plan Agent hereunder, such
successor Floor Plan Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Floor Plan Agent, and
the retiring Floor Plan Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Floor Plan Agent's
resignation as the Floor Plan Agent hereunder, the provisions of this Article
XII and Section 13.4 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Floor Plan Agent under this Agreement.
SECTION 12.14 Notice of Default . The Floor Plan Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Floor Plan Agent shall have received notice from a
Borrower, a Bank or the Swing Line Bank, stating that such Default or Event of
Default has occurred and stating that such notice is a "notice of default or
"notice of event of default", as applicable. If the Floor Plan Agent receives
such a notice, the Floor Plan Agent shall be entitled to take action or refrain
from taking action with respect to such Default or Event of Default as provided
in Sections 12.8 and 12.9.
SECTION 12.15 Documentation Agent; Co-Agent. None of the Banks
identified on the facing page or signature pages of this Agreement as
Documentation Agent or Co-Agent shall have any right, power, obligation,
liability or responsibility or duty under this Agreement other than those
applicable to all Banks as such. Without limiting the foregoing, none of the
Banks so identified shall
96
97
have or be deemed to have any fiduciary relations with any Bank. Each Bank
acknowledges that it has not relied, and will not rely, on any of the Banks so
identified in deciding to enter into this Agreement or in taking any action
hereunder.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices, Etc . The Agent, any Bank, or the holder of any
of the Notes or Loans, the Floor Plan Agent, and the Swing Line Bank giving
consent or notice or making any request of the Company or any of the other
Borrowers provided for hereunder, shall notify each Bank, the Floor Plan Agent
and the Agent thereof. In the event that the holder of any Note (including any
Bank) shall transfer such Note, it shall promptly so advise the Agent which
shall be entitled to assume conclusively that no transfer of any Note has been
made by any holder (including any Bank) unless and until the Agent receives
written notice to the contrary. All notices, consents, requests, approvals,
demands and other communications (collectively, "Communications") provided for
herein shall be in writing (including telecopy Communications) and mailed,
telecopied or delivered:
(a) if to the Company, at 950 Echo Lane, Suite #350, Houston, Texas
77024, Attention of Scott Thompson, Chief Financial Officer (Telecopy No. (713)
467-6268);
(b) if to the Borrowers, or any individual Borrower, at the address of
the Company specified in Section 13.1(a) above;
(c) if to the Agent, at 707 Travis Street, Houston, Texas 77002,
Attention of David Jones, Associate (Telecopy No. (713) 216-4940) with a copy to
Chase Securities, Inc., 707 Travis Street, 8-TCBN-96, Houston, Texas 77002,
Attention of Keith Winzenreid, Managing Director (Telecopy No. (713) 216-2142);
(d) if to any Bank, as specified on the signature page for such Bank
hereto or, in the case of any Person who becomes a Bank after the date hereof,
as specified on the Assignment and Acceptance executed by such Person or in the
Administrative Questionnaire delivered by such Person or;
(e) in the case of any party hereto, such other address or telecopy
number as such party may hereafter specify for such purpose by notice to the
other parties;
(f) if to the Floor Plan Agent, at Comerica Bank National Dealer
Services, 1920 Main Street, Suite 1150 Irvine, California 92614, Attention of
Bruce Nowel, (Telecopy No. (714) 476-1222) with a copy to Comerica Bank,
Attention: Chris Stearns (Telecopy No. (313-222-9419).
All Communications shall, when mailed, telecopied or delivered, be effective
when (i) mailed by certified mail, return receipt requested to any party at its
address specified above, on the signature page hereof or on the signature page
of such Assignment and Acceptance (or other address
97
98
designated by such party in a Communication to the other parties hereto), or
(ii) telecopied to any party to the telecopy number set forth above, on the
signature page hereof or on the signature page of such Assignment and Acceptance
(or other telecopy number designated by such party in a Communication to the
other parties hereto) and confirmed by a transmission report verifying the
correct telecopier number and number of pages and that such transmission was
well transmitted, or (iii) delivered personally to any party at its address
specified above, on the signature page hereof or on the signature page of such
Assignment and Acceptance (or other address designated by such party in a
Communication to the other parties hereto); provided, however, Communications to
the Agent pursuant to Article VI or Article XI shall not be effective until
received by the Agent.
SECTION 13.2 Survival of Agreement . All covenants, agreements,
representations and warranties made by the Borrowers herein and in the other
Loan Documents and in the certificates or other instruments prepared or
delivered in connection with this Agreement shall be considered to have been
relied upon by the Banks and shall survive the making by the Banks of the Loans
and the execution and delivery to the Banks of the Notes evidencing such Loans
and shall continue in full force and effect as long as the principal of or any
accrued interest on any Note or any Commitment Fee or any other fee or amount
payable under the Notes or this Agreement is outstanding and unpaid and so long
as the Commitments have not been terminated.
SECTION 13.3 Successors and Assigns; Participations .
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of the
Borrowers, the Agent, the Floor Plan Agent or the Banks that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Except as permitted by ss.10.3, no Borrower may assign
or transfer any of its rights or Obligations hereunder without the prior written
consent of all the Banks.
(b) Each Bank may assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement (including
a portion of its Commitment and the same portion of the Loans at the time owing
to it and the Note held by it); provided, however, that (i) except in the case
of an assignment to a Bank or an Affiliate of a Bank, the Company (except during
the continuance of an Event of Default) and the Agent must give their prior
written consent by countersigning the Assignment and Acceptance (which consent
shall not be unreasonably withheld), (ii) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Bank's rights and
obligations to this Agreement, and be pro rata between the Acquisition Loan
Commitment and the Floor Plan Loan Commitment, (iii) the amount of the
Commitment of the assigning Bank subject to each such assignment (determined as
of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Agent) shall (A) be equal to the entire amount of the
Commitment of the assigning Bank or (B) if not equal to the entire amount of the
Commitment of the assigning Bank, in no event be less than Five Million Dollars
($5,000,000) and shall be in an amount which is an integral multiple of One
Million Dollars ($1,000,000); provided, however, for purposes of this Section
13.3(b)(iii)(B), that the retained Commitment of the assigning Bank may not be
less than Five Million Dollars ($5,000,000), (iv) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance substantially in the
form of Exhibit M
98
99
hereto (an "Assignment and Acceptance"), together with any Note subject to such
assignment and the assignor shall pay a processing and recordation fee of Three
Thousand Dollars ($3,000) payable by the Bank's assignor thereunder, and (v) the
assignee shall deliver to the Agent an Administrative Questionnaire. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be no
later than five (5) Business Days after the execution thereof unless otherwise
agreed to by the assigning Bank, the Eligible Assignee thereunder and the Agent,
(x) the assignee thereunder shall be a party hereto and under the other Loan
Documents and, to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Bank hereunder and under the other Loan
Documents and (y) the Bank thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Bank thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty contained in Section 5.14 and that it is the legal
and beneficial owner of the interest being assigned thereby free and clear of
any adverse claim, such assigning Bank makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, any other Loan Document or any other instrument or document furnished
pursuant hereto; (ii) such assigning Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any of
the Borrowers or the performance or observance by any of the Borrowers of any of
their Obligations under this Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements most recently delivered under either in Section 7.5 or
Section 9.5 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such Bank's assignor or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee and
can make the representation contained in Section 5.14 and has, to the extent
required, complied with the covenants contained therein; (vi) such assignee
appoints and authorizes the Agent and the Floor Plan Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Agent and the Floor Plan Agent by the terms hereof, together
with such powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Bank.
(d) The Agent shall maintain at its address referred to in Section 13.1
a copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Banks and the Commitments of, and
principal amount of the Loans owing to, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
demonstrable error, and the Borrowers and the Banks may treat each Person whose
name is recorded in the Register as a Bank hereunder for all purposes of this
Agreement and the Loan
99
100
Documents. The Register shall be available for inspection by the Borrowers or
any Bank at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an Eligible Assignee together with the Note subject to such
assignment, the processing and recordation fee referred to in paragraph (b)
above and, if required, the Company's written consent to such assignment, the
Agent shall (subject to the consent of the Company to such assignment, if
required), if such Assignment and Acceptance has been completed and is in the
form of Exhibit M, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Company and the Banks. Within five (5) Business Days after
receipt of notice, the Company, at its own expense, shall execute and deliver
and shall cause each of the other Borrowers to execute and deliver to the Agent
in exchange for the surrendered Note a new Note to the order of such Eligible
Assignee in an amount equal to the assigning Bank's Commitment assumed by it
pursuant to such Assignment and Acceptance, and a new Note to the order of the
assigning Bank in an amount equal to the portion of its Commitment retained by
the assigning Bank hereunder. Such new Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit C-1 or C-2 hereto, as
applicable. Each canceled Note shall be promptly returned to the Company.
(f) Each Bank may without the consent of any Borrower or the Agent sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it and the Note held by it); provided,
however, that (i) such Bank's obligations under this Agreement shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the participating banks or
other entities shall be entitled to the cost protection provisions and Tax
indemnities contained in Article V only to the same extent that the Bank from
which such participating bank or other entity acquired its participation would
be entitled to the benefit of such cost protection provisions and Tax
indemnities and (iv) the Borrowers, the Agent and the other Banks shall continue
to deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement, and such Bank shall retain the sole right
to enforce the Obligations of any of the Borrowers relating to the Loans and to
approve any amendment, modification or waiver of any provision of this Agreement
(other than amendments, modifications or waivers with respect to any fees
payable hereunder or the amount of principal of or the rate at which interest is
payable on the Loans, or the dates fixed for payments of principal of or
interest on the Loans).
(g) Any Bank or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
13.3, disclose to the assignee or participant or proposed assignee or
participant, any information relating to any Borrower furnished to such Bank by
or on behalf of any of the Borrowers; provided that prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall agree (subject to customary exceptions) to preserve the
confidentiality of any confidential information relating to any Borrower
received from such Bank.
100
101
(h) Anything in this Section 13.3 to the contrary notwithstanding, any
Bank may at any time, without the consent of any Borrower or the Agent, assign
and pledge all or any portion of its Commitment and the Loans owing to it to any
Federal Reserve Bank (and its transferees) as collateral security pursuant to
Regulation A of the Board and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Bank from its
obligations hereunder.
(i) All transfers of any interest in any Note hereunder shall be in
compliance with all federal and state securities laws, if applicable.
Notwithstanding the foregoing sentence, however, the parties to this Agreement
do not intend that any transfer under this Section 13.3 be construed as a
"purchase" or "sale" of a "security" within the meaning of any applicable
federal or state securities laws.
SECTION 13.4 Expenses of the Banks; Indemnity .
(a) The Borrowers agree to pay all reasonable out-of-pocket expenses
reasonably incurred by the Agent and the Floor Plan Agent in connection with the
preparation of this Agreement, the Notes and the other Loan Documents or with
any amendments, modifications or waivers of the provisions hereof (whether or
not the transactions hereby contemplated shall be consummated) or reasonably
incurred by the Agent, the Floor Plan Agent or any Bank in connection with the
enforcement or protection of their rights in connection with this Agreement or
with the Loans made or the Notes issued hereunder, including the reasonable fees
and disbursements of Jackson Walker L.L.P., special counsel for the Agent and
Bodman, Longley & Dahling, LLP, special counsel for the Floor Plan Agent, and,
in connection with such enforcement or protection, the reasonable fees and
disbursements of other counsel for any Bank, including allocated staff counsel
costs for any Bank that elects to use the services of staff counsel in lieu of
outside counsel. The Borrowers agree to indemnify the Banks from and hold them
harmless against any documentary taxes, assessments or charges made by any
Governmental Authority by reason of the execution and delivery of this Agreement
or any of the Notes or other Loan Documents.
(b) The Borrowers agree to indemnify the Agent, the Floor Plan Agent
and the Banks and their Affiliates, directors, officers, employees and agents
(each such Person being called an "Indemnitee") against, and to hold the Banks
and such other Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against any Indemnitee arising out of, in any
way connected with, or as a result of (i) the execution and delivery of this
Agreement and the other Loan Documents contemplated hereby, the performance by
the parties hereto and thereto of their respective obligations hereunder and
thereunder (including the making of the Commitment of each Bank) and
consummation of the transactions contemplated hereby and thereby, (ii) the use
of proceeds of the Loans or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Bank, apply to
any such losses, claims, damages, liabilities or related expenses that are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee. The Borrowers agree, however, that they expressly intend to
indemnify each Indemnitee from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses arising out of the
101
102
ordinary sole or contributory negligence of such Indemnitee, but not the gross
negligence or willful misconduct of such Indemnitee or to any of the foregoing
arising solely by reason of claims between the Lenders or any Lender and the
Agent or the Floor Plan Agent.
(c) The provisions of this Section 13.4 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any Note, or any investigation made by or on
behalf of any Bank. All amounts due under this Section 13.4 shall be payable
within ten (10) days following receipt by the Company of a detailed invoice or
statement setting forth in reasonable detail the basis of such claim and the
amounts so expended or lost or the amount of damages so incurred.
(d) No Indemnitee may settle any claim to be indemnified without prior
written notice to the Company; provided however, failure to provide such prior
written notice shall in no way affect the settlement of such claims.
(e) In the case of any indemnification hereunder, the Indemnitee shall
give notice to the Company of any such claim or demand being made against the
Indemnitee and the Company may participate in such proceeding at its own expense
if legal counsel to the Company is acceptable to the Agent.
SECTION 13.5 Right of Setoff . If an Event of Default shall have
occurred and be continuing, each Bank and the Swing Line Bank are hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Bank, the Swing Line Bank or any branch Subsidiary or
Affiliate thereof to or for the credit or the account of the Borrowers against
any of and all the Obligations of the Borrowers now or hereafter existing under
this Agreement and the Note held by such Bank and the Swing Line Bank,
respectively, according to their respective rights as otherwise provided herein,
irrespective of whether or not such Bank shall have made any demand under this
Agreement or such Note and although such Obligations may be unmatured. Each Bank
and the Swing Line Bank agree promptly to notify the Borrowers after any such
setoff and application, but the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Bank and the Swing
Line Bank under this Section 13.5 are in addition to other rights and remedies
(including other rights of setoff) which such Bank and the Swing Line Bank may
have under applicable law.
SECTION 13.6 Governing Law; Jurisdiction .
(a) This Agreement, the Notes, the other Loan Documents and all other
documents executed in connection herewith, shall be deemed to be contracts and
agreements executed by the Borrowers, the Agent, the Floor Plan Agent and the
Banks under the laws of the State of Texas and of the United States of America
and for all purposes shall be governed by, and construed and interpreted in
accordance with, the laws of said state and of the United States of America.
Without limitation of the foregoing, nothing in this Agreement, the Notes or the
other Loan Documents shall be deemed to constitute a waiver of any rights which
any Bank may have
102
103
under applicable federal legislation relating to the amount of interest which
such Bank may contract for, take, receive, or charge in respect of any Loans,
including any right to contract for, take, receive, reserve and charge interest
at the rate allowed by the law of the state where such Bank is located. The
Agent, the Floor Plan Agent, the Banks and the Borrowers further agree that
insofar as the provisions of Article 1.4, Subtitle 1, Title 79, of the Revised
Civil Statutes of Texas, 1925, as amended, are at any time applicable to the
determination of the Highest Lawful Rate with respect to the Notes, the
indicated rate ceiling computed from time to time pursuant to Section (a) of
such Article shall apply to the Notes, provided, however, that to the extent
permitted by such Article, the Agent may from time to time by notice from the
Agent to the Borrowers revise the election of such interest rate ceiling as such
ceiling affects the then-current or future balances of the Loans outstanding
hereunder and under the Notes. The provisions of Chapter 15 of Subtitle 3 of the
said Title 79 do not apply to this Agreement or any Note issued hereunder.
(b) Each Borrower hereby irrevocably submits generally and
unconditionally for itself and in respect of its property to the non-exclusive
jurisdiction of any Texas state court, or any United States federal court,
sitting in the City of Houston or County of Harris, Texas, and to the
non-exclusive jurisdiction of any state or United States federal court sitting
in the state in which any of the Collateral is located, over any suit, action or
proceeding arising out of or relating to this Agreement or the Obligations. Each
Borrower hereby agrees and consents that, in addition to any methods of service
of process provided for under applicable law, all service of process in any such
suit, action or proceeding in any Texas state court, or any United States
federal court, sitting in the City of Houston or County of Harris, Texas may be
made by certified or registered mail, return receipt requested, directed to such
Borrower at its address stated in Section 13.1, or at a subsequent address of
which Administrative Agent received actual notice from such Borrower in
accordance with this Agreement, and service so made shall be complete five (5)
days after the same shall have been so mailed.
SECTION 13.7 Waivers; Amendments.
(a) No failure or delay of the Agent, the Floor Plan Agent or any Bank
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agent, the Floor Plan Agent and
the Banks hereunder are cumulative and not exclusive of any rights or remedies
which they would otherwise have. No waiver of any provision of this Agreement,
the Notes or the other Loan Documents or consent to any departure by the
Borrowers therefrom shall in any event be effective unless the same shall be
authorized as provided in paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Borrowers in any case shall entitle the
Borrowers to any other or further notice or demand in similar or other
circumstances. Each holder of any Note shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not
such Note shall have been marked to indicate such amendment, modification,
waiver or consent.
(b) Neither this Agreement, any Loan Document nor any provision hereof
or thereof may be waived, amended or modified except pursuant to an agreement or
agreements in
103
104
writing entered into by the Borrowers and the Required Banks; provided, however,
that no such agreement shall (i) change the principal amount of, or extend or
advance the maturity of or any date for the payment of any principal of or
interest on, any Loan, or waive or excuse any such payment or any part thereof,
or, except as provided in this Agreement, change the rate of interest on any
Loan, without the written consent of each Bank affected thereby, (ii) change the
Commitment of any Bank without the written consent of such Bank or change the
Commitment Fees of any Bank without the written consent of each Bank, (iii)
release or defer the granting or perfecting of a Lien in any Collateral or
release any guaranty or similar undertaking provided by any Person or modify any
indemnity provided to the Banks hereunder or under the other Loan Documents;
provided however the Agent or the Floor Plan Agent, as the case may be, shall be
entitled to release any Collateral or any guaranty which a Borrower is permitted
to sell or transfer or otherwise release under the terms of this Agreement or
any Loan Document without notice to or any further action or consent of the
Banks; or (iv) amend or modify the provisions of this Section 13.7, Section
13.3, Section 4.6(c), Section 12.1(d), Section 6.7(a) or the definition of the
"Required Banks," without the written consent of each Bank; and provided further
that no such agreement shall amend, modify, waive or otherwise affect the rights
or duties of the Agent or the Floor Plan Agent hereunder without the written
consent of the Agent or the Floor Plan Agent, respectively. Each Bank and each
holder of any Note shall be bound by any modification or amendment authorized by
this Section 13.7 regardless of whether its Note shall be marked to make
reference thereto, and any consent by any Bank or holder of a Note pursuant to
this Section 13.7 shall bind any Person subsequently acquiring a Note from it,
whether or not such Note shall be so marked.
SECTION 13.8 Interest . Each provision in this Agreement and each other
Loan Document is expressly limited so that in no event whatsoever shall the
amount contracted for, charged, paid, or otherwise agreed to be paid, or
received to the Agent or any Bank for the use, forbearance or detention of the
money to be loaned under this Agreement or any Loan Document or otherwise
(including any sums paid as required by any covenant or obligation contained
herein or in any other Loan Document which is for the use, forbearance or
detention of such money), exceed that amount of money which would cause the
effective rate of interest to exceed the Highest Lawful Rate, and all amounts
owed under this Agreement and each other Loan Document shall be held to be
subject to reduction to the effect that such amounts so paid or agreed to be
paid which are for the use, forbearance or detention of money under this
Agreement or such Loan Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Anything in this Agreement or any Note or any other Loan Document to the
contrary notwithstanding, none of the Borrowers shall ever be required to pay
unearned interest on any Note and shall never be required to pay interest on
such Note at a rate in excess of the Highest Lawful Rate, and if the effective
rate of interest which would otherwise be payable under this Agreement, such
Note and the other Loan Documents would exceed the Highest Lawful Rate, or if
the holder of such Note shall receive any unearned interest or shall receive
monies that are deemed to constitute interest which would increase the effective
rate of interest payable by the Borrowers under this Agreement and such Note to
a rate in excess of the Highest Lawful Rate, then (a) the amount of interest
which would otherwise be payable by the Borrowers under this Agreement, such
Note or any Loan Document shall be reduced to the amount allowed under
applicable law, and (b) any unearned interest paid by the Borrowers or any
interest paid by the Borrowers in excess of the Highest Lawful Rate shall be
credited on the principal of such Note (or, if the principal amount of such Note
shall have been paid in full, refunded to the Borrowers). It is further agreed
that, without limitation of the
104
105
foregoing, all calculations of the rate of interest contracted for, charged or
received by any Bank under the Notes held by it, or under this Agreement, are
made for the purpose of determining whether such rate exceeds the Highest Lawful
Rate applicable to such Bank (such Highest Lawful Rate being such Bank's
"Maximum Permissible Rate"), and shall be made, to the extent permitted by usury
laws applicable to such Bank (now or hereafter enacted), by amortizing,
prorating and spreading in equal parts during the period of the full stated term
of the Loans evidenced by said Notes all interest at any time contracted for,
charged or received by such Bank in connection therewith. If at any time and
from time to time (i) the amount of interest payable to any Bank on any date
shall be computed at such Bank's Maximum Permissible Rate pursuant to this
Section 13.8 and (ii) in respect of any subsequent interest computation period
the amount of interest otherwise payable to such Bank would be less than the
amount of interest payable to such Bank computed at such Bank's Maximum
Permissible Rate, then the amount of interest payable to such Bank in respect of
such subsequent interest computation period shall continue to be computed at
such Bank's Maximum Permissible Rate until the total amount of interest payable
to such Bank shall equal the total amount of interest which would have been
payable to such Bank if the total amount of interest had been computed without
giving effect to this Section 13.8.
SECTION 13.9 Severability; Conflicts .
(a) In the event any one or more of the provisions contained in this
Agreement, the Notes or any other Loan Document should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
(b) In the event any of the terms and provisions of any other Loan
Document are inconsistent with the terms and provisions set forth in this
Agreement, the terms and provisions set forth in this Agreement shall prevail.
SECTION 13.10 Counterparts . This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 13.11.
SECTION 13.11 Binding Effect . This Agreement shall become effective on
the Closing Date, and thereafter shall be binding upon and inure to the benefit
of each Borrower, the Agent, the Floor Plan Agent and each Bank and their
respective successors and assigns, except that no Borrower shall have the right
to assign its rights hereunder or any interest herein except as provided in
Section 13.3(a).
SECTION 13.12 Further Assurances . Each Borrower shall make, execute or
endorse, and acknowledge and deliver or file or cause the same to be done, all
such vouchers, invoices, notices, certifications and additional agreements,
undertakings, conveyances, deeds of trust, mortgages, transfers, assignments,
financing statements or other assurances, and take any and all such other
action, as the Agent or the Floor Plan Agent may, from time to time, deem
reasonably necessary or proper in connection with any of the Loan Documents, the
Obligations of the Borrowers thereunder or for better assuring and confirming
unto the Banks all or any part of the security for any of such Obligations.
105
106
SECTION 13.13 Subsidiary Solvency Savings Clause . Each of the
Borrowers acknowledges the receipt and acceptance of valuable consideration as
of the Closing Date and thereafter in connection with this Agreement; and each
such Borrower further acknowledges and agrees that the direct benefits and
enrichment it derives from being a party to this Agreement constitute a
reasonably equivalent value to it in exchange for the joint and several
liability it has incurred pursuant to this the Agreement. Further, each of the
Borrowers acknowledges the interdependence by and among the other Borrowers in
successfully carrying out their business operations. Each of the Borrowers
represents that it is solvent prior to entering into this Agreement and that the
transactions completed hereby will not render it insolvent and will not cause it
to become financially non-viable in the future; provided, however in the event
that the Indebtedness incurred by any Borrower pursuant to this Agreement or the
transactions contemplated hereby would constitute a "fraudulent transfer"as to
any such Borrower under Section 548 of the Federal Bankruptcy Code or pursuant
to any applicable state law governing "fraudulent transfers" because such
Borrower is deemed to have become insolvent as a result of incurring such
Indebtedness, then, in such event, the liability of any such Borrower hereunder
shall be deemed for all purposes to be equal to one dollar less than that amount
of Indebtedness which would not render such Borrower insolvent.
SECTION 13.14 Joint and Several Liability and Related Matters .
(a) Each of Floor Plan Borrowers other than the Company authorizes the
Company with full power and authority as attorney-in-fact, to execute and
deliver Requests for Borrowings, requests for issuance of Letters of Credit and
each other instrument, certificate and report to be delivered by any Floor Plan
Borrower to the Agent, the Floor Plan Agent and the Banks pursuant to this
Agreement or any Loan Document. Each of the Floor Plan Borrowers other than the
Company agrees that it shall be bound by any action taken by the Company on its
behalf pursuant to such appointment.
(b) The obligations of the Borrowers under this Agreement and the other
Loan Documents are joint and several.
(c) Each Borrower acknowledges and agrees that it is the intent of the
parties that each Borrower be primarily liable for the obligations as a joint
and several obligor. It is the intention of the parties that with respect to
liability of any Borrower hereunder arising solely by reason of its being
jointly and severally liable for Loans and Letter of Credit Obligations and
other extensions of credit taken by other Borrowers, the obligations of such
Borrower shall be absolute, unconditional and irrevocable irrespective of:
(i) any lack of validity, legality or enforceability of this
Agreement, any Note or any Loan Document as to any other Borrower;
(ii) the failure of any Bank or any holder of any Note:
106
107
(A) to enforce any right or remedy against any
Borrower or any other Person (including any surety) under the
provisions of this Agreement, such Note or otherwise, or
(B) to exercise any right or remedy against any
surety of, or Collateral securing, any obligations;
(iii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations, or any other
extension, compromise or renewal of any Obligations;
(iv) any reduction, limitation, impairment or termination of
any Obligations with respect to any other Borrower for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and each Borrower hereby
waives any right to or claim of) any defense (other than the defense of
payment in full of the Obligations) or setoff, counterclaim, recoupment
or termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any
other event or occurrence affecting, any Obligations with respect to
any other Borrower;
(v) any addition, exchange, release, surrender or
nonperfection of any Collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any guaranty,
held by any Bank or any holder of the Notes securing any of the
Obligations; or
(vi) any other circumstance which might otherwise constitute a
defense (other than the defense of payment in full of the Obligations)
available to, or a legal or equitable discharge of, any other Borrower,
any surety or any guarantor.
(d) Each Borrower agrees that its joint and several liability hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must be restored by any Bank or any holder of any Note, upon the insolvency,
bankruptcy or reorganization of any Borrower as though such payment had not been
made.
(e) Each Borrower hereby expressly waives: (i) notice of the Banks'
acceptance of this Agreement; (ii) notice of the existence or creation or non
payment of all or any of the Obligations other than notices expressly provided
for in this Agreement; (iii) presentment, demand, notice of dishonor, protest,
and all other notices whatsoever other than notices expressly provided for in
this Agreement; and (iv) all diligence in collection or protection of or
realization upon the Obligations or any part thereof, any obligation hereunder,
or any security for or guaranty of any of the foregoing, subject, however, in
the case of Collateral in the possession of the Agent or a Bank to such Person's
duty to use reasonable care in the custody and preservation of such Collateral.
107
108
(f) No delay on any of the Banks' part in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
any of the Banks of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy. No action of any of the
Banks permitted hereunder shall in any way affect or impair any such Banks'
rights or any Borrower's Obligations under this Agreement.
(g) Each Borrower hereby represents and warrants to each of the Banks
that it now has and will continue to have independent means of obtaining
information concerning the Borrowers' affairs, financial condition and business.
Banks shall not have any duty or responsibility to provide any Borrower with any
credit or other information concerning the Borrowers' affairs, financial
condition or business which may come into the Banks' possession.
SECTION 13.15 WAIVER OF JURY TRIAL . THE BANKS, THE AGENT, THE FLOOR
PLAN AGENT AND EACH OF THE BORROWERS AFTER CONSULTING OR HAVING HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTION OF ANY OF THEM. NEITHER THE
BANKS, THE AGENT, FLOOR PLAN AGENT NOR ANY OF THE BORROWERS SHALL SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL
HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY
RESPECT OR RELINQUISHED BY THE BANKS, THE AGENT, THE FLOOR PLAN AGENT OR ANY OF
THE BORROWERS EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
SECTION 13.16 FINAL AGREEMENT OF THE PARTIES . THIS WRITTEN AGREEMENT
(INCLUDING THE EXHIBITS AND SCHEDULES HERETO), THE NOTES, THE AGENT'S LETTER,
THE FLOOR PLAN AGENT'S LETTER AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.2(a) OF THE TEXAS BUSINESS AND COMMERCE
CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER
HEREOF AND THEREOF. Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party other than
the parties hereto any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
* * *
Signatures following on succeeding pages
108
109
IN WITNESS HEREOF, the Borrowers, the Banks listed on the signature
pages hereto, the Agent and the Floor Plan Agent have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
BORROWERS: GROUP 1 AUTOMOTIVE, INC., a Delaware corporation
By: /s/ SCOTT THOMPSON
-------------------
Name: Scott Thompson
Title: Senior Vice President
SOUTHWEST TOYOTA, INC., a Texas corporation,
SMC LUXURY CARS, INC., a Texas corporation,
FOYT MOTORS, INC., a Texas corporation,
SMITH, LIU & CORBIN, INC., a Texas
corporation, COURTESY NISSAN, Inc., a Texas
corporation, ROUND ROCK NISSAN, INC., a
Texas corporation, SMITH, LIU & KUTZ, INC.,
a Texas corporation, TOWN NORTH NISSAN,
INC., a Texas corporation, TOWN NORTH
IMPORTS, INC., a Texas corporation, TOWN
NORTH SUZUKI, INC., a Texas corporation,
MIKE SMITH AUTOPLAZA, INC., a Texas
corporation, HOWARD PONTIAC-GMC, INC., an
Oklahoma corporation, BOB HOWARD CHEVROLET,
INC., an Oklahoma corporation, BOB HOWARD
MOTORS, INC., an Oklahoma corporation, BOB
HOWARD AUTOMOTIVE-H, INC., an Oklahoma
corporation, and BOB HOWARD DODGE, INC., an
Oklahoma corporation, by the undersigned, on
behalf of each of the foregoing:
By: /s/ SCOTT THOMPSON
-------------------
Name: Scott Thompson
Title: Vice President
Revolving Credit Agreement
Signature Page - 1
110
AGENT AND ISSUING BANK: TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By: /s/ CURTIS D. KARGES
---------------------------------------
Name: Curtis D. Karges
Title: Senior Vice President
FLOOR PLAN AGENT COMERICA BANK
AND SWING LINE BANK
By: /s/ JOSEPH A. MORAN
---------------------------------------
Name: Joseph A. Moran
Title: Senior Vice
Senior Vice President
Revolving Credit Agreement
Signature Page - 2
111
BANKS: NATIONSBANK OF TEXAS, N.A.
By: /s/ BRUCE CLAY
---------------------------------------
Name: Bruce Clay
Title: Vice President
Address: 140 Cypress Station #208
Houston, Texas 77090
Telecopy No.: 281-537-3246
Domestic Lending Office
Attention: Bruce Clay
Eurodollar Lending Office
Attention: Bruce Clay
Revolving Credit Agreement
Signature Page - 3
112
BANKS U.S. BANK
By: /s/ MICHAEL F. LUITEN
---------------------------------------
Name: Michael F. Luiten
-------------------------------------
Title: Senior Vice President
------------------------------------
Address: 10800 N.E. 8th, Suite 900
----------------------------------
Bellvue, WA 98004
----------------------------------
Telecopy No.: 425-450-5762
-----------------------------
Domestic Lending Office
Attention:
Eurodollar Lending Office
Attention:
Revolving Credit Agreement
Signature Page - 4
113
BANKS: Bank Of Scotland
By: /s/ ANNIE CHIN-TAT
---------------------------------------
Name: Annie Chin-Tat
Title: Vice President
Address: 565 5th Avenue
New York, New York 10017
Telecopy No.: (212) 557-9460
Domestic Lending Office
Attention: Annie Chin-Tat
Eurodollar Lending Office
Attention: Annie Chin-Tat
Revolving Credit Agreement
Signature Page - 5
114
BANKS TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ CURTIS D. KARGES
---------------------------------------
Name: Curtis D. Karges
Title: Senior Vice President
Address: 712 Main Street
8-TCBN-96
Houston, Texas 77002
Telecopy No.:
Domestic Lending Office
Attention: Gale Manning
Eurodollar Lending Office
Attention: Gale Manning
Revolving Credit Agreement
Signature Page - 6
115
BANKS COMERICA BANK
By: /s/ JOSEPH MORAN
---------------------------------------
Name: Joseph Moran
Title: Senior Vice President
Address: 1920 Main Street, Suite 1150
Irvine, California 92614
Telecopy No.: 714-476-1222
Domestic Lending Office
Attention: Bruce Nowel
Eurodollar Lending Office
Attention: Bruce Nowel
Revolving Credit Agreement
Signature Page - 7