EXHIBIT 10.1
EXECUTION COPY
(including updated Schedules reflecting Stone Acquisition)
CITY TRUCK AND TRAILER PARTS, INC.
____________________________________________________
$75,000,000
CREDIT AGREEMENT
June 1, 1998
____________________________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Administrative Agent and Syndication Agent
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
as Documentation Agent
BANCAMERICA ROBERTSON STEPHENS,
as Arranger
TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS.................................................... 2
1.1 Defined Terms.................................................... 2
1.2 Other Definitional Provisions.................................... 21
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS...................... 22
2.1 Revolving Commitments............................................ 22
2.2 Scheduled Reductions............................................. 22
2.3 Procedure for Revolving Loan Borrowing........................... 24
2.4 Commitment Fees, etc............................................. 24
2.5 Termination or Reduction of Revolving Commitments................ 25
2.6 Optional Prepayments............................................. 25
2.7 Special Mandatory Prepayment..................................... 25
2.8 Mandatory Commitment Reductions.................................. 25
2.9 Conversion and Continuation Options.............................. 26
2.10 Limitations on Eurodollar Tranches............................... 27
2.11 Interest Rates and Payment Dates................................. 27
2.12 Computation of Interest and Fees................................. 27
2.13 Inability to Determine Interest Rate............................. 28
2.14 Pro Rata Treatment and Payments.................................. 28
2.15 Requirements of Law.............................................. 29
2.16 Taxes............................................................ 30
2.17 Indemnity........................................................ 32
2.18 Change of Lending Office......................................... 32
2.19 Replacement of Lenders........................................... 32
SECTION 3. LETTERS OF CREDIT.............................................. 33
3.1 L/C Commitment................................................... 33
3.2 Procedure for Issuance of Letter of Credit....................... 33
3.3 Fees and Other Charges........................................... 34
3.4 L/C Participations............................................... 34
3.5 Reimbursement Obligation of the Borrower......................... 35
3.6 Obligations Absolute............................................. 35
3.7 Letter of Credit Payments........................................ 35
3.8 Applications..................................................... 35
SECTION 4. REPRESENTATIONS AND WARRANTIES................................. 36
4.1 Financial Condition.............................................. 36
4.2 No Change........................................................ 36
4.3 Existence; Compliance with Law................................... 37
4.4 Power; Authorization; Enforceable Obligations.................... 37
4.5 No Legal Bar..................................................... 37
4.6 Litigation....................................................... 38
4.7 No Default....................................................... 38
4.8 Ownership of Property; Liens..................................... 38
4.9 Intellectual Property............................................ 38
4.10 Taxes............................................................ 38
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4.11 Federal Regulations............................................. 38
4.12 Labor Matters................................................... 38
4.13 ERISA........................................................... 39
4.14 Investment Company Act; Other Regulations....................... 39
4.15 Subsidiaries.................................................... 39
4.16 Use of Proceeds................................................. 39
4.17 Environmental Matters........................................... 39
4.18 Accuracy of Information, etc.................................... 40
4.19 Security Documents.............................................. 41
4.20 Solvency........................................................ 41
4.21 Senior Indebtedness............................................. 41
4.22 Year 2000 Matters............................................... 41
4.23 Regulation H.................................................... 41
4.24 Certain Documents............................................... 42
SECTION 5. CONDITIONS PRECEDENT.......................................... 42
5.1 Conditions to Initial Extension of Credit....................... 42
5.2 Conditions to Each Extension of Credit.......................... 45
SECTION 6. AFFIRMATIVE COVENANTS......................................... 46
6.1 Financial Statements............................................ 46
6.2 Certificates; Other Information................................. 46
6.3 Payment of Obligations.......................................... 48
6.4 Maintenance of Existence; Compliance............................ 48
6.5 Year 2000 Compliance............................................ 48
6.6 Maintenance of Property; Insurance.............................. 48
6.7 Inspection of Property; Books and Records; Discussions.......... 48
6.8 Notices......................................................... 48
6.9 Environmental Laws.............................................. 49
6.10 Interest Rate Protection........................................ 49
6.11 Further Assurances.............................................. 50
6.12 Additional Collateral, etc...................................... 50
SECTION 7. NEGATIVE COVENANTS............................................ 51
7.1 Financial Condition Covenants................................... 51
7.2 Indebtedness.................................................... 53
7.3 Liens........................................................... 54
7.4 Fundamental Changes............................................. 55
7.5 Disposition of Property......................................... 56
7.6 Restricted Payments............................................. 56
7.7 Capital Expenditures; Foreign Expenditures...................... 57
7.8 Investments..................................................... 57
7.9 Optional Payments and Modifications of Certain Instruments...... 58
7.10 Transactions with Affiliates.................................... 58
7.11 Sales and Leasebacks............................................ 59
7.12 Changes in Fiscal Periods....................................... 59
7.13 Negative Pledge Clauses......................................... 59
7.14 Clauses Restricting Subsidiary Distributions.................... 59
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Page
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7.15 Lines of Business............................................... 59
7.16 Amendments to Acquisition Documents............................. 59
SECTION 8. EVENTS OF DEFAULT.............................................. 60
SECTION 9. THE AGENTS..................................................... 64
9.1 Appointment..................................................... 64
9.2 Delegation of Duties............................................ 64
9.3 Exculpatory Provisions.......................................... 64
9.4 Reliance by Agents.............................................. 65
9.5 Notice of Default............................................... 65
9.6 Non-Reliance on Agents and Other Lenders........................ 65
9.7 Indemnification................................................. 66
9.8 Agent in Its Individual Capacity................................ 66
9.9 Successor Administrative Agent.................................. 66
SECTION 10. MISCELLANEOUS................................................. 67
10.1 Amendments and Waivers.......................................... 67
10.2 Notices......................................................... 67
10.3 No Waiver; Cumulative Remedies.................................. 68
10.4 Survival of Representations and Warranties...................... 68
10.5 Payment of Expenses and Taxes................................... 68
10.6 Successors and Assigns; Participations and Assignments.......... 69
10.7 Adjustments; Set-off............................................ 71
10.8 Counterparts.................................................... 71
10.9 Severability.................................................... 72
10.10 Integration..................................................... 72
10.11 GOVERNING LAW................................................... 72
10.12 Submission To Jurisdiction; Waivers............................. 72
10.13 Acknowledgements................................................ 72
10.14 Confidentiality................................................. 73
10.15 WAIVERS OF JURY TRIAL........................................... 73
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ANNEX:
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A Pricing Grid
SCHEDULES:
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1.1A Commitments
1.1B Certain Consolidated EBITDA Adjustments
4.4 Approvals
4.6 Litigation
4.15(a) Subsidiaries
4.15(b) Capital Stock Agreements
4.19(a) UCC Filing Jurisdictions
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.8(e) Conditions to Stone Acquisition
7.10 Certain Affiliate Agreements
EXHIBITS:
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A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Exemption Certificate
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of Latham & Watkins
F-2 Form of Legal Opinion of Local Counsel
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CREDIT AGREEMENT, dated as of June 1, 1998, among CITY TRUCK AND
TRAILER PARTS, INC., an Alabama corporation (the "Borrower"), the several banks
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and other financial institutions or entities from time to time parties to this
Agreement (the "Lenders"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
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ASSOCIATION, a national banking association ("Bank of America"), as
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administrative agent and syndication agent for the Lenders hereunder, THE
INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH ("IBJ"), as documentation
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agent for the Lenders hereunder (in such capacity, the "Documentation Agent"),
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and BANCAMERICA ROBERTSON STEPHENS ("BARS"), as arranger (in such capacity, the
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"Arranger").
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W I T N E S S E T H :
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WHEREAS, BABF City Corp. (the "Buyer"), the Borrower, its affiliates
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and Merger Subsidiaries named in the Stock Purchase Agreement and the
Shareholders of the Borrower and its Affiliates and Merger Subsidiaries have
entered into a Stock Purchase Agreement, dated as of June 1, 1998 (the "City
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Truck Stock Purchase Agreement"), pursuant to which the Buyer will acquire 80%
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of the Capital Stock of the Borrower (the "City Truck Acquisition");
----------------------
WHEREAS, the City Truck Acquisition will be accomplished through the
following steps: (a) (i) the Buyer will purchase 80% of the Capital Stock of the
Borrower for $20,000,000 in cash, (ii) immediately after such purchase, the
Borrower will reclassify its Capital Stock to consist of shares of common stock,
$.01 par value, and shares of non-redeemable preferred stock and (iii) after
such reclassification, the Buyer will own approximately $46,543 in shares of
common stock of the Borrower (the "New Investor Common Stock") and $19,953,457
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in shares of non-redeemable preferred stock of the Borrower (the "Initial New
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Investor Preferred Stock"); (b) Brentwood Associates Buyout Fund II, L.P.
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("BABF") will purchase newly issued shares of redeemable preferred stock of the
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Borrower in exchange for $3,324,867 in cash (the "Initial New Investor
--------------------
Redeemable Preferred Stock", and together with the New Investor Common Stock and
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the Initial New Investor Preferred Stock, the "Initial New Investor Shares");
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(c) the Borrower, concurrently with the issuance of the Initial New Investor
Shares, will (i) repurchase all of its issued and outstanding shares of common
stock, other than the Initial New Investor Shares and certain shares of common
stock (such shares, the "Rollover City Truck Shares") owned by certain existing
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stockholders of the Borrower (the "Rollover City Truck Shareholders"), and (ii)
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refinance certain of its existing debt, for a maximum aggregate amount not to
exceed $62,000,000 (subject to adjustment in accordance with the terms of the
City Truck Stock Purchase Agreement); and (d) the Rollover City Truck Shares
will have an aggregate value of at least $5,000,000.
WHEREAS, in furtherance of its expansion plans, (x) the Borrower
intends to acquire substantially all of the assets (the "Stone Acquisition", and
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together with the City Truck Acquisition, the "Transactions") of Stone Heavy
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Duty ("Stone") in exchange for $26,666,000 (subject to adjustment in accordance
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with the terms of the Stone Acquisition Agreement) in cash and shares of common
stock and non-redeemable preferred stock (the "Rollover Stone Shares", and,
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together with the Rollover City Truck Shares, the "Rollover Shares") of the
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Borrower (the holders of such shares, the "Rollover Stone Shareholders", and,
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together with the Rollover City Truck Shareholders, the "Rollover
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Shareholders"); (y) in connection with the Stone Acquisition, the Buyer will
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purchase newly issued shares of non-redeemable preferred stock of the Borrower
in exchange for $7,000,000 in cash (the "Additional New Investor Preferred
---------------------------------
Stock"; the Initial New Investor Shares and the Additional New Investor
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Preferred Stock are referred to collectively as the "New Investor Shares"); and
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(z) the Rollover Stone Shares will have an aggregate value of at least
$3,000,000. Upon consummation of the Transactions, the Buyer will own at least
60% of the then outstanding shares of common stock of the Borrower and at least
60% of the then outstanding shares of preferred stock of the Borrower. The Buyer
may elect not to complete the reclassification referred to above concurrently
with the City Truck Acquisition, in which
2
case the Borrower will amend its articles of incorporation to create a class of
nonvoting redeemable preferred stock identical to the proposed Initial New
Investor Redeemable Preferred Stock, and BABF will acquire newly issued shares
of such new class in exchange for $3,324,867 concurrently with the City Truck
Acquisition. In such event, references to the Initial New Investor Preferred
Stock shall mean another $19,900,000 in shares of New Investor Common Stock, and
references to New Investor Common Stock will include such $19,900,000 in
additional shares. In addition, if such reclassification is not completed prior
to the Stone Acquisition, in connection with the Stone Acquisition, the Buyer,
the other shareholders of the Borrower and Stone may elect to contribute their
New Investor Common Stock to Holdings in exchange for shares of common stock and
preferred stock of Holdings having attributes identical to those described above
for the New Investor Common Stock and Initial New Investor Preferred Stock.
Thereafter, the Borrower would be a Wholly Owned Subsidiary of Holdings, and
references to New Investor Shares will be deemed references to the stock of
Holdings. In such event, Holdings would immediately contribute the former assets
of Stone to the Borrower.
WHEREAS, to finance (i) the City Truck Acquisition (a) the Borrower or
Holdings will have $28,324,867 in equity consisting of the Initial New Investor
Shares and the Rollover City Truck Shares, and (b) the Borrower will require
approximately $35,992,885 in Revolving Loans pursuant to this Agreement, and
(ii) the Stone Acquisition (a) the Borrower will receive $10,000,000 in equity
consisting of the Additional New Investor Preferred Stock and the Rollover Stone
Shares, and (b) the Borrower will require approximately $18,858,100 in Revolving
Loans pursuant to this Agreement.
WHEREAS, the Borrower, or a newly formed holding company of the
Borrower, intends to issue at least $75,000,000 of senior subordinated unsecured
notes in a public offering or Rule 144A private placement, the proceeds of which
would be used to reduce Revolving Loans outstanding (but not Revolving
Commitments) under this Agreement and, after such Revolving Loans outstanding
have been paid in full, to redeem, subject to the conditions set forth herein,
the Initial New Investor Redeemable Preferred Stock.
WHEREAS, the Lenders are willing to make available a senior secured
revolving credit facility upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
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this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Acquisition": as to any Person, the acquisition (in a single
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transaction or a series of related transactions) by such Person of (a) at least
50% of the outstanding Capital Stock of any other Person, (b) all or
substantially all of the assets of any other Person or (c) assets constituting
one or more business units or divisions of any other Person.
"Additional New Investor Preferred Stock": as defined in the recitals
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to this Agreement.
"Adjustment Date": as defined in the Pricing Grid.
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3
"Administrative Agent": Bank of America, together with its affiliates,
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as the arranger of the Revolving Commitments and as the administrative agent for
the Lenders under this Agreement and the other Loan Documents, together with any
of its successors.
"Affiliate": as to any Person, any other Person that, directly or
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indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agent-Related Persons": the Agents and any successor agent pursuant
---------------------
to Section 9.9, together with their respective Affiliates (including BARS), and
the officers, directors, employees, agents and attorneys-in-fact of such Persons
and Affiliates.
"Agents": the collective reference to the Documentation Agent and the
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Administrative Agent.
"Aggregate Exposure": with respect to any Lender at any time, an
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amount equal to the amount of such Lender's Revolving Commitment then in effect
or, if the Revolving Commitments have been terminated, the amount of such
Lender's Revolving Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at any
-----------------------------
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.
"Agreement": this Credit Agreement, as amended, supplemented or
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otherwise modified from time to time.
"Applicable Margin": (a) 1.50%, in the case of Base Rate Loans and
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(b) 2.50%, in the case of Eurodollar Loans; provided, that on and after the
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first Adjustment Date occurring after the Closing Date, the Applicable Margin
will be determined pursuant to the Pricing Grid.
"Application": an application, in such form as the Issuing Lender may
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specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"Approved Category": with respect to the cost savings associated with
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any Acquisition, those cost savings that result from elimination of any of the
following items: (a) accounting policy-related charges, (b) charges associated
with status as a closely held private company, (c) excess officer or owner
compensation, (d) charges having no relation to the acquired businesses to be
operated on an ongoing basis or (e) business-related charges.
"Arranger": as defined in the preamble to this Agreement.
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"Asset Sale": any Disposition of property or series of related
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Dispositions of property (excluding any such Disposition permitted by clause
(a), (b), (c) or (d) of Section 7.5) that yields gross proceeds to Holdings (if
any such holding company exists or is created), the Borrower or any of its
Subsidiaries (valued at the initial principal amount thereof in the case of non-
cash proceeds consisting of notes or other debt securities and valued at fair
market value in the case of other non-cash proceeds) in excess of $100,000.
4
"Assignee": as defined in Section 10.6(c).
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"Assignment and Acceptance": an Assignment and Acceptance,
-------------------------
substantially in the form of Exhibit E.
"Assignor": as defined in Section 10.6(c).
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"Available Revolving Commitment": as to any Lender at any time, an
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amount equal to the excess, if any, of (a) such Lender's Revolving Commitment
then in effect over (b) such Lender's Revolving Extensions of Credit then
----
outstanding.
"BABF": as defined in the recitals to this Agreement.
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"BARS": as defined in the preamble to this Agreement.
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"Base Rate": for any day, a rate per annum (rounded upwards, if
---------
necessary, to the next 1/16 of 1%) equal to the greater of (i) the rate of
interest publicly announced by Bank of America as its "reference rate" (the
"Reference Rate") and (ii) the Federal Funds Effective Rate in effect from time
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to time plus 0.50%; any change in the Base Rate due to a change in the Reference
----
Rate or the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Reference Rate or the
Federal Funds Effective Rate.
"Base Rate Loans": Revolving Loans the rate of interest applicable to
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which is based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.7(a).
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"Board": the Board of Governors of the Federal Reserve System of the
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United States (or any successor).
"Borrower": as defined in the preamble to this Agreement.
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"Borrowing Date": any Business Day specified by the Borrower as a date
--------------
on which the Borrower requests the relevant Lenders to make Revolving Loans
hereunder.
"Build-Up Capital Expenditures": as defined in Section 7.7(a).
-----------------------------
"Business": as defined in Section 4.17(b).
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"Business Day": a day other than a Saturday, Sunday or other day on
------------
which commercial banks in New York City, San Francisco, Alabama or Chicago are
authorized or required by law to close, provided, that with respect to notices
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and determinations in connection with, and payments of principal and interest
on, Eurodollar Loans, such day is also a day for trading by and between banks in
Dollar deposits in the interbank eurodollar market.
"Buyer": as defined in the recitals to this Agreement.
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"Capital Expenditures": for any period, with respect to any Person,
--------------------
the aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs
5
and improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of such
-------------------------
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
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other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or
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unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's
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Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
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nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"City Truck Acquisition": as defined in the recitals to this
----------------------
Agreement.
"City Truck Acquisition Documentation": collectively, the City Truck
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Stock Purchase Agreement and all schedules, exhibits and annexes thereto and all
side letters and agreements affecting the terms thereof or entered into in
connection therewith, in each case as amended, supplemented or otherwise
modified from time to time in accordance with Section 7.16.
"City Truck Stock Purchase Agreement": as defined in the recitals to
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this Agreement.
"Closing Date": the date on which the conditions precedent set forth
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in Section 5.1 shall have been satisfied, which date is June 1, 1998.
6
"Code": the Internal Revenue Code of 1986, as amended from time to
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time.
"Collateral": all property of the Loan Parties, now owned or hereafter
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acquired, upon which a Lien is purported to be created by any Security Document.
"Commitment Fee Rate": 0.50% per annum.
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"Commonly Controlled Entity": (a) an entity, whether or not
--------------------------
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414(b) or (c) of the Code and
(b) solely for the purposes of potential liability under Section 302(c)(11) of
ERISA and Section 412(c)(11) of the Code and the Lien created under Section
302(f) of ERISA and Section 412(n) of the Code, any Person which is a member of
any group of organizations described in Section 414(m) or (o) of the Code of
which the Borrower is a member.
"Compliance Certificate": a certificate duly executed by a Responsible
----------------------
Officer substantially in the form of Exhibit B.
"Consolidated Current Assets": at any date, all amounts (other than
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cash and Cash Equivalents) that would, in conformity with GAAP, be set forth
opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of the Test Party and its Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all amounts that
--------------------------------
would, in conformity with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of the Test
Party and its Subsidiaries at such date, but excluding (a) the current portion
of any Funded Debt of the Test Party and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness consisting of Revolving Loans
to the extent otherwise included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income for
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such period plus, without duplication and to the extent reflected as a charge in
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the statement of such Consolidated Net Income for such period, the sum of (a)
income tax expense, (b) Consolidated Interest Expense, amortization or writeoff
of debt discount and debt issuance costs and commissions, discounts and other
fees and charges associated with Indebtedness (including the Revolving Loans),
(c) depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (e) any
extraordinary, unusual or non-recurring non-cash expenses or losses (including,
whether or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, non-cash losses on sales of assets
outside of the ordinary course of business), provided, that the amounts referred
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to in this clause (e) shall not, in the aggregate, exceed $100,000 for any
fiscal year of the Test Party, (f) any other non-cash charges and (g) any
amounts of the type described on Schedule 1.1B, and minus, to the extent
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included in the statement of such Consolidated Net Income for such period, the
sum of (a) interest income, (b) any extraordinary, unusual or non-recurring
income or gains (including, whether or not otherwise includable as a separate
item in the statement of such Consolidated Net Income for such period, gains on
the sales of assets outside of the ordinary course of business) and (c) any
other non-cash income, all as determined on a consolidated basis. For the
purposes of calculating Consolidated EBITDA for any period (each, a "Reference
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Period"), (i) if at any time during such Reference Period, the Test Party or any
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Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for
such Reference Period shall be reduced by an amount equal to the Consolidated
EBITDA (if positive) attributable to the property
7
that is the subject of such Material Disposition for such Reference Period or
increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Reference Period and (ii) if during such Reference
Period the Borrower or any Subsidiary shall have made an Acquisition (which term
shall include the Stone Acquisition and, for the purposes of this definition
only, the City Truck Acquisition), Consolidated EBITDA for such Reference Period
shall be calculated after giving pro forma effect (A) to such Acquisition as if
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such Acquisition occurred on the first day of such Reference Period and (B) to
any cost savings to be implemented in connection with such Acquisition,
determined on the basis of a four-quarter period ("Acquisition Cost Savings"),
------------------------
as disclosed in Schedule 1.1B (in the case of the City Truck Acquisition and the
Stone Acquisition) or, in all other cases, which fall within an Approved
Category; provided that (x) for each full fiscal quarter completed after the
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consummation of an Acquisition, 25% of the Acquisition Cost Savings associated
with such Acquisition shall be excluded from the calculation of Consolidated
EBITDA (and comparable pro rata exclusions shall be made for post-Acquisition
--- ----
periods of less than a full fiscal quarter) and (y) in no event shall the
aggregate amount of Acquisition Cost Savings included in Consolidated EBITDA for
any period exceed 25% of the amount of such Consolidated EBITDA. As used in this
definition, "Material Disposition" means any Disposition of property or series
--------------------
of related Dispositions of property constituting a line of business or any
Disposition of a Subsidiary that, in any such case, yields gross proceeds to the
Borrower or any of its Subsidiaries in excess of $100,000. All calculations of
Consolidated EBITDA shall exclude any financial results or other items (positive
or negative) associated with City Transportation LLC.
"Consolidated Interest Coverage Ratio": for any period, the ratio of
------------------------------------
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.
"Consolidated Interest Expense": for any period, total cash interest
-----------------------------
expense (including that attributable to Capital Lease Obligations) of the Test
Party and its Subsidiaries for such period with respect to all outstanding
Indebtedness of the Test Party and its Subsidiaries, including (a) all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (b) net costs under Hedge
Agreements in respect of interest rates to the extent such net costs are
allocable to such period in accordance with GAAP and (c) cash dividends paid in
respect of preferred Capital Stock.
"Consolidated Leverage Ratio": as at the last day of any Test Period,
---------------------------
the ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA
for such period.
"Consolidated Net Income": for any period, the consolidated net income
-----------------------
(or loss) of the Test Party and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) the
--------
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Test Party or is merged into or consolidated with the Test
Party or any of its Subsidiaries (except as otherwise provided in the definition
of "Consolidated EBITDA"), (b) the income (or deficit) of any Person (other than
a Subsidiary of the Test Party) in which the Test Party or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Test Party or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of the Test Party to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary. It is understood
that, in determining Consolidated Net Income for any period, all components of
Consolidated Interest Expense for such period shall be reflected as a charge
against such Consolidated Net Income.
8
"Consolidated Net Worth": at any date, all amounts that would, in
----------------------
conformity with GAAP, be included on a consolidated balance sheet of the Test
Party and its Subsidiaries under stockholders' equity at such date.
"Consolidated Senior Debt": all Consolidated Total Debt which is not
------------------------
subordinated to the Obligations (or, as applicable, the obligations of the
relevant Guarantor under the Guarantee and Collateral Agreement) on terms and
conditions satisfactory to the Administrative Agent, provided, that during the
--------
period from the Senior Subordinated Note Date to the first date thereafter on
which any extension of credit hereunder is outstanding, such amount shall be
reduced by the amount of cash and Cash Equivalents reflected on the consolidated
balance sheet of the Test Party as of the relevant date of calculation.
"Consolidated Senior Debt Ratio": as of the last day of any Test
------------------------------
Period, the ratio of (a) Consolidated Senior Debt on such day to (b)
Consolidated EBITDA for such period.
"Consolidated Total Debt": at any date, the aggregate principal amount
-----------------------
of all Indebtedness of the Test Party and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP, provided, that
--------
during the period from the Senior Subordinated Note Date to the first date
thereafter on which any extension of credit hereunder is outstanding, such
amount shall be reduced by the amount of cash and Cash Equivalents reflected on
the consolidated balance sheet of the Test Party as of the relevant date of
calculation.
"Consolidated Working Capital": at any date, the excess of
----------------------------
Consolidated Current Assets on such date over Consolidated Current Liabilities
----
on such date.
"Continuing Directors": the directors of the Borrower on the Closing
--------------------
Date, after giving effect to the City Truck Acquisition and the other
transactions contemplated hereby to occur on the Closing Date, and each other
director, if, in each case, such other director's nomination for election to the
board of directors of the Borrower or Holdings (if any such holding company
exists or is created) is recommended by a majority of the then Continuing
Directors or such other director receives the vote of the Permitted Investors in
his or her election by the shareholders of the Borrower or Holdings (if any such
holding company exists or is created).
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control Investment Affiliate": as to any Person, any other Person
----------------------------
that (a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person and (b) is organized by such Person primarily
for the purpose of making equity or debt investments in one or more companies.
For purposes of this definition, "control" of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Default": any of the events specified in Section 8, whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Disposition": with respect to any property, any sale, lease, sale
-----------
and leaseback, assignment, conveyance, transfer or other disposition thereof.
The terms "Dispose" and "Disposed of" shall have correlative meanings.
------- -----------
9
"Documentation Agent": as defined in the preamble to this Agreement.
-------------------
"Dollars" and "$": dollars in lawful currency of the United States.
------- -
"Domestic Subsidiary": any Subsidiary of the Borrower organized under
-------------------
the laws of any jurisdiction within the United States.
"ECF Percentage": 50%.
--------------
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect and applicable to any Loan
Party.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum equal to the rate for
deposits in Dollars for the period commencing on the first day of such Interest
Period and ending on the last day of such Interest Period which appears on Page
3750 of the Dow Jones Markets screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. If at least two rates
appear on such Page of the Dow Jones Markets screen for such Interest Period,
the "Eurodollar Base Rate" shall be the arithmetic mean of such rates. If the
--------------------
"Eurodollar Base Rate" cannot be determined in accordance with the immediately
--------------------
preceding sentences with respect to any Interest Period, the "Eurodollar Base
---------------
Rate" with respect to each day during such Interest Period shall be the rate per
- ----
annum equal to the rate at which Bank of America is offered Dollar deposits at
or about 10:00 A.M., San Francisco time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations in respect of its
Eurodollar Loans are then being conducted for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of its Eurodollar Loan to be outstanding during such
Interest Period.
"Eurodollar Loans": Revolving Loans the rate of interest applicable to
----------------
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
---------------
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
10
Eurodollar Base Rate
-----------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans the
------------------
then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Revolving Loans shall
originally have been made on the same day).
"Event of Default": any of the events specified in Section 8, provided
---------------- --------
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess,
----------------
if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for
such fiscal year, (ii) an amount equal to the amount of all non-cash charges
(including depreciation and amortization) deducted in arriving at such
Consolidated Net Income, (iii) decreases in Consolidated Working Capital for
such fiscal year, and (iv) an amount equal to the aggregate net non-cash loss on
the Disposition of property by the Borrower and its Subsidiaries during such
fiscal year (other than sales of inventory in the ordinary course of business),
to the extent deducted in arriving at such Consolidated Net Income over (b) the
----
sum, without duplication, of (i) an amount equal to the amount of all non-cash
credits included in arriving at such Consolidated Net Income, (ii) the aggregate
amount actually paid by the Borrower and its Subsidiaries in cash during such
fiscal year on account of Capital Expenditures or Acquisitions permitted hereby
(excluding the principal amount of Indebtedness incurred in connection with such
expenditures and any such expenditures financed with the proceeds of any
Reinvestment Deferred Amount), (iii) the aggregate amount of all prepayments of
Revolving Loans during such fiscal year to the extent accompanying permanent
optional reductions of the Revolving Commitments, (iv) the aggregate amount of
all regularly scheduled principal payments of Funded Debt of the Borrower and
its Subsidiaries made during such fiscal year (other than in respect of any
revolving credit facility to the extent there is not an equivalent permanent
reduction in commitments thereunder), (v) increases in Consolidated Working
Capital for such fiscal year, and (vi) an amount equal to the aggregate net non-
cash gain on the Disposition of property by the Borrower and its Subsidiaries
during such fiscal year (other than sales of inventory in the ordinary course of
business), to the extent included in arriving at such Consolidated Net Income.
"Excess Cash Flow Application Date": as defined in Section 2.8(c).
---------------------------------
"Excluded Foreign Subsidiary": any Foreign Subsidiary in respect of
---------------------------
which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower.
"Federal Funds Effective Rate": for any day, the weighted average of
----------------------------
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a
------------------
Domestic Subsidiary.
11
"Funded Debt": as to any Person, all Indebtedness of such Person that
-----------
matures more than one year from the date of its creation or matures within one
year from such date but is renewable or extendible, at the option of such
Person, to a date more than one year from such date or arises under a revolving
credit or similar agreement that obligates the lender or lenders to extend
credit during a period of more than one year from such date, including all
current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the date of
its creation and, in the case of the Borrower, Indebtedness in respect of the
Revolving Loans.
"Funding Office": the office of the Administrative Agent specified in
--------------
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"GAAP": generally accepted accounting principles in the United States
----
as in effect from time to time, except that for purposes of Section 7.1, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements delivered pursuant to Section 4.1(b). In the event that
any "Accounting Change" (as defined below) shall occur and such change results
in a change in the method of calculation of financial covenants, standards or
terms in this Agreement, then the Borrower and the Administrative Agent agree to
enter into negotiations in order to amend such provisions of this Agreement so
as to equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of the Test Party and its
Subsidiaries shall be the same after such Accounting Changes as if such
Accounting Changes had not been made. Until such time as such an amendment
shall have been executed and delivered by the Borrower and the Majority Lenders,
all financial covenants, standards and terms in this Agreement shall continue to
be calculated or construed as if such Accounting Changes had not occurred.
"Accounting Changes" refers to changes in accounting principles required by the
------------------
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the SEC.
"Governmental Authority": any nation or government, any state or other
----------------------
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"Guarantee and Collateral Agreement": the Guarantee and Collateral
----------------------------------
Agreement to be executed and delivered by the Borrower and each Guarantor,
substantially in the form of Exhibit A, as the same may be amended, supplemented
or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
-------------------
of any other third Person (the "primary obligor") in any manner, whether
---------------
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
12
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
-------- -------
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Guarantors": the collective reference to Holdings (if any such
----------
holding company exists or is created) and the Subsidiary Guarantors.
"Hedge Agreements": all interest rate swaps, caps or collar
----------------
agreements, currency swaps or similar arrangements providing for protection
against fluctuations in interest rates or currency exchange rates or the
exchange of nominal interest obligations, either generally or under specific
contingencies.
"Holdings": any corporation, partnership or similar entity created
--------
after the Closing Date by shareholders of the Borrower to own the Capital Stock
of the Borrower.
"Indebtedness": of any Person at any date, without duplication, (a)
------------
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than trade
payables incurred in the ordinary course of such Person's business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations of such Person, (f)
all obligations of such Person, contingent or otherwise, as an account party
under acceptance, letter of credit or similar facilities, (g) for the purposes
of Section 7.2 only, the liquidation value of all redeemable preferred Capital
Stock of such Person, (h) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (g) above; (i) all
obligations of the kind referred to in clauses (a) through (h) above secured by
(or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation; and (j) for the purposes of
Section 8(e) only, all net obligations of such Person in respect of Hedge
Agreements.
"Initial New Investor Preferred Stock": as defined in the recitals to
------------------------------------
this Agreement.
"Initial New Investor Redeemable Preferred Stock": as defined in the
-----------------------------------------------
recitals to this Agreement.
"Initial New Investor Shares": as defined in the recitals to this
---------------------------
Agreement.
13
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intellectual Property": the collective reference to all rights,
---------------------
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day of
---------------------
each March, June, September and December to occur while such Revolving Loan is
outstanding and the final maturity date of such Revolving Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period
longer than three months, each day that is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of such
Interest Period and (d) as to any Revolving Loan (other than any Revolving Loan
that is a Base Rate Loan), the date of any repayment or prepayment made in
respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
---------------
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent no later than 8:00 A.M., San Francisco time, on the date
that is three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing provisions
--------
relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) the Borrower may not select an Interest Period that would
extend beyond the Revolving Termination Date;
(iii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an Interest
Period for such Revolving Loan.
"Investments": as defined in Section 7.8.
-----------
"Issuing Lender": Bank of America, in its capacity as issuer of any
--------------
Letter of Credit.
14
"L/C Commitment": $5,000,000.
--------------
"L/C Fee Payment Date": the last day of each March, June, September
--------------------
and December and the last day of the Revolving Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
---------------
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Lenders other
----------------
than the Issuing Lender.
"Lenders": as defined in the preamble to this Agreement.
-------
"Letters of Credit": as defined in Section 3.1(a).
-----------------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"Loan Documents": this Agreement, the Security Documents and the
--------------
Notes.
"Loan Parties": Holdings (if any such holding company exists or is
------------
created), the Borrower and each Subsidiary of the Borrower that is a party to a
Loan Document.
"Majority Lenders": the holders of more than 50% of the aggregate
----------------
unpaid principal amount of the Total Revolving Extensions of Credit outstanding
(or prior to any termination of the Revolving Commitments, the holders of more
than 50% of the Total Revolving Commitments).
"Management Subscription Agreements": the collective reference to any
----------------------------------
subscription agreement or stockholders agreement between the Borrower or
Holdings (if any such holding company exists or is created) and any present or
former officer or employee of Holdings (if any such holding company exists or is
created), the Borrower or any of its Subsidiaries.
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, property, operations, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including friable asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"Mortgages": each of the mortgages and deeds of trust made by any
---------
Loan Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Lenders, substantially in the form required or advisable under
the law of the jurisdiction in which such mortgage or deed of
15
trust is to be recorded, as the same may be amended, supplemented or otherwise
modified from time to time.
"Multiemployer Plan": a Plan that is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"New Investor Common Stock": as defined in the recitals to this
-------------------------
Agreement.
"New Investor Shares": as defined in the recitals to this Agreement.
-------------------
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
-----------------
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or the sale of any non-cash consideration or otherwise, but only as
and when received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset that is the subject of such Asset Sale or Recovery Event (other than
any Lien pursuant to a Security Document) and other customary fees and expenses
actually incurred in connection therewith and net of taxes paid or reasonably
estimated to be payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements) and (b) in
connection with any issuance or sale of equity securities or debt securities or
instruments or the incurrence of loans, the cash proceeds received from such
issuance or incurrence, net of attorneys' fees, investment banking fees,
accountants' fees, underwriting discounts and commissions and other customary
fees and expenses actually incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 2.16(a).
------------------
"Non-U.S. Lender": as defined in Section 2.16(d).
---------------
"Notes": the collective reference to any promissory note evidencing
-----
Revolving Loans.
"Obligations": the unpaid principal of and interest on (including
-----------
interest accruing after the maturity of the Revolving Loans and Reimbursement
Obligations and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Revolving Loans and
all other obligations and liabilities of the Borrower to the Administrative
Agent or to any Lender (or, in the case of Hedge Agreements, any affiliate of
any Lender), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, any other Loan Document, the Letters
of Credit, any Hedge Agreement entered into with any Lender or any affiliate of
any Lender or any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise.
"Other Taxes": any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
16
"Participant": as defined in Section 10.6(b).
-----------
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Acquisition": any Acquisition (other than the Stone
---------------------
Acquisition); provided, that (a) the Borrower satisfies, and will continue to
--------
satisfy through the Revolving Termination Date, after giving effect (on a pro
---
forma basis) to such Acquisition and any Indebtedness incurred in connection
- -----
therewith, the financial covenants set forth in Section 7.1 (with the base Test
Period for this purpose being the most recent period of 12 consecutive months
for which the relevant financial information is available (or, in the case of
Section 7.1(b), if shorter, a period consisting of each full month subsequent to
the Closing Date)) as set forth in reasonable detail in a certificate of the
chief financial officer of the Borrower delivered to the Lenders at least 10
Business Days prior to the consummation of such Acquisition; (b) the Borrower
delivers to the Lenders at least 10 Business Days prior to the consummation of
such Acquisition a description of the business being acquired (including
historical financial and operating data for the most recent 12 complete
consecutive calendar months for which such information is available), the
sources and uses of funding for such Acquisition, the cost savings to be
achieved in connection therewith (on a category-by-category basis) and
projections for the business being acquired for a period of at least 3 years
after the date such Acquisition is to be consummated; (c) such Acquisition is
approved by the Board of Directors (or other analogous body) of the Person which
is to be, or whose assets are to be, acquired, in such Acquisition; (d) the
Borrower shall have delivered (i) to the Administrative Agent (x) draft
documentation with respect to such Acquisition no later than 10 Business Days
prior to the consummation thereof and (y) any environmental reports relating to
such Acquisition promptly after they are received by the Borrower) and (ii) to
the Lenders, true and complete copies of the definitive documentation with
respect to such Acquisition no later than 5 Business Days after the consummation
thereof; (e) no Default or Event of Default has then occurred and is continuing
or would result therefrom; (f) in connection with the first $100,000,000 of
Acquisitions, including the Stone Acquisition, the Borrower must have received
at least $33,000,000 in cash equity consisting of common stock (with an
aggregate value between $90,000 and $600,000) (including the New Investor Common
Stock) and preferred stock (with an aggregate value between $24,410,000 and
$24,910,000) (including the Initial New Investor Preferred Stock and the
Additional New Investor Preferred Stock), and the balance in Rollover Shares or
other rolled equity interests; (g) with respect to any such Acquisition the
total consideration (including assumed Indebtedness) for which exceeds
$30,000,000, such Acquisition shall have been approved by Required Lenders; and
(h) the Available Revolving Commitments of all the Lenders are at least equal to
$7,500,000 after giving effect to such Acquisition.
"Permitted Investors": the collective reference to the Buyer and its
-------------------
Control Investment Affiliates.
"Person": an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan that is
----
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
------------
17
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
-----------------------
"Projections": as defined in Section 6.2(c).
-----------
"Properties": as defined in Section 4.17(a).
----------
"Recovery Event": any settlement of or payment in respect of any
--------------
property or casualty insurance claim or any condemnation proceeding relating to
any asset of Holdings (if any such holding company exists or is created), the
Borrower or any of its Subsidiaries that yields gross proceeds to Holdings (if
any such holding company exists or is created), the Borrower or any of its
Subsidiaries (valued at the initial principal amount thereof in the case of non-
cash proceeds consisting of notes or other debt securities and valued at fair
market value in the case of other non-cash proceeds) in excess of $100,000.
"Reference Lender": Bank of America National Trust and Savings
----------------
Association.
"Register": as defined in Section 10.6(d).
--------
"Regulation H": Regulation H of the Board as in effect from time to
------------
time.
"Regulation U": Regulation U of the Board as in effect from time to
------------
time.
"Reimbursement Obligation": the obligation of the Borrower to
------------------------
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
----------------------------
Event, the aggregate Net Cash Proceeds received by Holdings (if any such holding
company exists or is created), the Borrower or any of its Subsidiaries in
connection therewith that are not applied to reduce the Revolving Commitments
pursuant to Section 2.8 as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
------------------
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
-------------------
Officer stating that no Event of Default has occurred and is continuing and that
the Borrower (directly or indirectly through a Subsidiary) intends and expects
to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or
Recovery Event to acquire assets useful in its business (including to make
Permitted Acquisitions).
"Reinvestment Prepayment Amount": with respect to any Reinvestment
------------------------------
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire assets
useful in the business of the Borrower or any of its Subsidiaries.
"Reinvestment Prepayment Date": with respect to any Reinvestment
----------------------------
Event, the earlier of (a) the date occurring six months after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire assets useful in the business of the
Borrower or any of its Subsidiaries with all or any portion of the relevant
Reinvestment Deferred Amount.
18
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg.
(S) 4043.
"Required Lenders": the holders of more than 66-2/3% of the aggregate
----------------
unpaid principal amount of the Total Revolving Extensions of Credit outstanding
(or, prior to any termination of the Revolving Credit Commitments, the holders
of more than 66-2/3% of the Total Revolving Commitments).
"Requirement of Law": as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the chief executive officer, president or chief
-------------------
financial officer of the Borrower, but in any event, with respect to financial
matters, the chief financial officer of the Borrower.
"Restricted Payments": as defined in Section 7.6.
-------------------
"Revolving Commitment": as to any Lender, the obligation of such
--------------------
Lender, if any, to make Revolving Loans and participate in Letters of Credit in
an aggregate principal and/or face amount not to exceed the amount set forth
under the heading "Revolving Commitment" opposite such Lender's name on Schedule
1.1A or in the Assignment and Acceptance pursuant to which such Lender became a
party hereto, as the same may be changed from time to time pursuant to the terms
hereof. The original amount of the Total Revolving Commitments is $75,000,000.
"Revolving Commitment Period": the period from and including the
---------------------------
Closing Date to the Revolving Termination Date.
"Revolving Credit Facility": the Revolving Commitments and the
-------------------------
extensions of credit made thereunder.
"Revolving Extensions of Credit": as to any Lender at any time, an
------------------------------
amount equal to the sum of (a) the aggregate principal amount of all Revolving
Loans held by such Lender then outstanding, and (b) such Lender's Revolving
Percentage of the L/C Obligations then outstanding.
"Revolving Loans": as defined in Section 2.1.
---------------
"Revolving Percentage": as to any Lender at any time, the percentage
--------------------
which such Lender's Revolving Commitment then constitutes of the Total Revolving
Commitments (or, at any time after the Revolving Commitments shall have expired
or terminated, the percentage which the aggregate principal amount of such
Lender's Revolving Loans then outstanding constitutes of the aggregate principal
amount of the Revolving Loans then outstanding).
"Revolving Termination Date": the date which is six years after the
--------------------------
Closing Date.
19
"Rollover City Truck Shares": as defined in the recitals to this
--------------------------
Agreement.
"Rollover City Truck Shareholders": as defined in the recitals to this
--------------------------------
Agreement.
"Rollover Shares": as defined in the recitals to this Agreement.
---------------
"Rollover Shareholders": as defined in the recitals to this Agreement.
---------------------
"Rollover Stone Shares": as defined in the recitals to this Agreement.
---------------------
"Rollover Stone Shareholders": as defined in the recitals to this
---------------------------
Agreement.
"SEC": the Securities and Exchange Commission, any successor thereto
---
and any analogous Governmental Authority.
"Security Documents": the collective reference to the Guarantee and
------------------
Collateral Agreement, the Mortgages and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any property of any
Person to secure the obligations and liabilities of any Loan Party under any
Loan Document.
"Senior Subordinated Note Date": the date of issuance of at least
-----------------------------
$75,000,000 aggregate principal amount of Senior Subordinated Notes.
"Senior Subordinated Notes": any unsecured Indebtedness of Holdings or
-------------------------
the Borrower, no part of the principal of which is required to be paid (whether
by way of mandatory sinking fund, mandatory redemption, mandatory prepayment or
otherwise) prior to the tenth anniversary of the Closing Date; the payment of
the principal of and interest on which and other obligations of Holdings, the
Borrower or any Subsidiary Guarantor in respect thereof are subordinated to the
prior payment in full of the Obligations (or, as applicable, the obligations of
the relevant Guarantor under the Guarantee and Collateral Agreement) on terms
and conditions satisfactory to the Majority Lenders; and all other terms and
conditions of which are reasonably satisfactory in form and substance to the
Majority Lenders (as evidenced by their prior written approval thereof).
"Senior Subordinated Note Indenture": the Indenture entered into by
----------------------------------
Holdings or the Borrower (and, if guaranteed, certain of the relevant issuer's
Subsidiaries) in connection with the issuance of the Senior Subordinated Notes,
together with all instruments and other agreements entered into by Holdings or
the Borrower (or such Subsidiaries) in connection therewith, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
Section 7.9.
"Services Agreement": as defined in Section 7.10.
------------------
"Single Employer Plan": any Plan that is covered by Title IV of ERISA
--------------------
or that is subject to Section 412 of the Code, but that is not a Multiemployer
Plan.
"Solvent": when used with respect to any Person, means that, as of any
-------
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the
20
liability of such Person on its debts as such debts become absolute and matured,
(c) such Person will not have, as of such date, an unreasonably small amount of
capital with which to conduct its business, and (d) such Person will be able to
pay its debts as they mature. For purposes of this definition, (i) "debt" means
liability on a "claim", and (ii) "claim" means any (x) right to payment, whether
or not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured or (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
"Specified Change of Control": a "Change of Control" (or similar
---------------------------
concept) as defined in the Senior Subordinated Note Indenture.
"Specified Event of Default": as defined in Section 8(o).
--------------------------
"Stone": as defined in the recitals to this Agreement.
-----
"Stone Acquisition": as defined in the recitals to this Agreement.
-----------------
"Stone Acquisition Agreement": the asset purchase agreement pursuant
---------------------------
to which the Borrower acquires any assets of Stone.
"Stone Acquisition Documentation": collectively, the Stone Acquisition
-------------------------------
Agreement and all schedules, exhibits and annexes thereto and all side letter
and agreements affecting the terms thereof, in each case as amended,
supplemented or otherwise modified in accordance with Section 7.16.
"Subsidiary": as to any Person, a corporation, partnership, limited
----------
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower other than any
--------------------
Excluded Foreign Subsidiary.
"Test Party": (a) at any time prior to the creation of Holdings, the
----------
Borrower and (b) thereafter, Holdings.
"Test Period": except as otherwise expressly provided herein, any
-----------
period of four consecutive fiscal quarters of the Test Party.
"Total Revolving Commitments": at any time, the aggregate amount of
---------------------------
the Revolving Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the aggregate
------------------------------------
amount of the Revolving Extensions of Credit of the Lenders outstanding at such
time.
21
"Transactions": as defined in the recitals to this Agreement.
------------
"Transferee": any Assignee or Participant.
----------
"Type": as to any Revolving Loan, its nature as a Base Rate Loan or a
----
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
---------------
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.
"United States": the United States of America.
-------------
"U.S. Taxes": as defined in Section 10.6(d).
----------
"Wholly Owned Subsidiary": as to any Person, any other Person all of
-----------------------
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is
---------------------------------
a Wholly Owned Subsidiary of the Borrower.
"Year 2000 Problem": the inability of computers, as well as embedded
-----------------
microchips in non-computing devices, to perform properly date-sensitive
functions with respect to certain dates prior to and after December 31, 1999.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to Holdings (if any such holding company exists or is
created), the Borrower and its Subsidiaries not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), and (iv) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
22
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS
2.1 Revolving Commitments. (a) Subject to the terms and conditions
---------------------
hereof, each Lender severally agrees to make revolving credit loans ("Revolving
---------
Loans") to the Borrower from time to time during the Revolving Commitment Period
- -----
in an aggregate principal amount at any one time outstanding which, when added
to such Lender's Revolving Percentage of the L/C Obligations then outstanding,
does not exceed the amount of such Lender's Revolving Commitment. During the
Revolving Commitment Period the Borrower may use the Revolving Commitments by
borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing,
all in accordance with the terms and conditions hereof. The Revolving Loans may
from time to time be Eurodollar Loans or Base Rate Loans, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
2.3 and 2.9.
(b) The Borrower shall repay all outstanding Revolving Loans on the
Revolving Termination Date.
2.2 Scheduled Reductions. (a) The Total Revolving Commitments shall
--------------------
reduce on each of the dates set forth by the amount set forth below opposite
such date (each Lender's Revolving Commitment shall be reduced ratably in
connection with any such reduction in the Total Revolving Commitments in
accordance with Section 2.14(a)):
DATE REDUCTION AMOUNT
September 30, 2001 $ 2,500,000
December 31, 2001 2,500,000
March 31, 2002 2,500,000
June 30, 2002 2,500,000
September 30, 2002 2,500,000
December 31, 2002 2,500,000
March 31, 2003 2,500,000
June 30, 2003 2,500,000
September 30, 2003 2,500,000
December 31, 2003 2,500,000
March 31, 2004 2,500,000
Revolving Termination Date 47,500,000
(b) Notwithstanding the foregoing, in the event the Stone Acquisition
is not consummated on or prior to the day which is 90 days following the Closing
Date, the Total Revolving Commitments shall reduce automatically on the next
succeeding Business Day to the lower of (i) $40,000,000 and (ii) the sum of (x)
the aggregate principal amount of Revolving Loans then outstanding and (y)
$7,500,000 and, thereafter, the Total Revolving Commitments shall be reduced on
each of the dates set forth below by the amount set forth opposite such date
below. In the event that clause (ii) above is applicable, the amounts set forth
below shall be ratably reduced. Each Lender's Revolving Commitment shall be
reduced ratably in connection with each reduction of the Total Revolving
Commitments pursuant to this proviso in accordance with Section 2.14(a).
23
Date Reduction Amount
September 30, 1999 $1,500,000
December 31, 1999 $1,500,000
March 31, 2000 $1,500,000
June 30, 2000 $1,500,000
September 30, 2000 $1,750,000
December 31, 2000 $1,750,000
March 31, 2001 $1,750,000
June 30, 2001 $1,750,000
September 30, 2001 $2,000,000
December 31, 2001 $2,000,000
March 31, 2002 $2,000,000
June 30, 2002 $2,000,000
September 30, 2002 $2,000,000
December 31, 2002 $2,000,000
March 31, 2003 $2,000,000
June 30, 2003 $2,000,000
September 30, 2003 $2,750,000
December 31, 2003 $2,750,000
March 31, 2004 $2,750,000
Revolving Termination Date $2,750,000
(c) Notwithstanding the foregoing, in the event that the Stone
Acquisition is consummated but the Senior Subordinated Note Date does not occur
prior to the first anniversary of the Closing Date, the Total Revolving
Commitments shall be reduced on each of the dates set forth below by the amount
set forth below opposite such date (each Lender's Revolving Commitment shall be
reduced ratably in connection with any such reduction in the Total Revolving
Commitments in accordance with Section 2.14(a)):
Date Reduction Amount
September 30, 1999 $2,500,000
December 31, 1999 2,500,000
March 31, 2000 2,500,000
June 30, 2000 2,500,000
September 30, 2000 2,500,000
December 31, 2000 2,500,000
March 31, 2001 2,500,000
June 30, 2001 2,500,000
September 30, 2001 2,500,000
December 31, 2001 2,500,000
March 31, 2002 2,500,000
June 30, 2002 2,500,000
September 30, 2002 2,500,000
December 31, 2002 2,500,000
March 31, 2003 2,500,000
June 30, 2003 2,500,000
September 30, 2003 2,500,000
December 31, 2003 2,500,000
March 31, 2004 2,500,000
Revolving Termination Date 27,500,000
24
2.3 Procedure for Revolving Loan Borrowing. The Borrower may borrow
--------------------------------------
under the Revolving Commitments during the Revolving Commitment Period on any
Business Day; provided, that the Borrower shall give the Administrative Agent
--------
irrevocable notice (which notice must be received by the Administrative Agent
prior to 8:00 A.M., San Francisco time, (a) three Business Days prior to the
requested Borrowing Date, in the case of Eurodollar Loans, or (b) on the
requested Borrowing Date, in the case of Base Rate Loans), specifying (i) the
amount and Type of Revolving Loans to be borrowed, (ii) the requested Borrowing
Date and (iii) in the case of Eurodollar Loans, the respective amounts of each
such Type of Revolving Loan and the respective lengths of the initial Interest
Period therefor. Any Revolving Loans made on the Closing Date shall initially
be Base Rate Loans and, unless otherwise agreed by the Administrative Agent in
its sole discretion, no Revolving Loan may be made as, converted into or
continued as a Eurodollar Loan prior to the date that is 30 days after the
Closing Date. Each borrowing under the Revolving Commitments shall be in an
amount equal to (x) in the case of Base Rate Loans, $250,000 or a whole multiple
of $100,000 in excess thereof (or, if the then aggregate Available Revolving
Commitments are less than $250,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof.
Upon receipt of any such notice from the Borrower, the Administrative Agent
shall promptly notify each Lender thereof. Each Lender will make the amount of
its pro rata share of each borrowing available to the Administrative Agent for
--- ----
the account of the Borrower at the Funding Office prior to 11:00 A.M., San
Francisco time, on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to the Borrower by the Administrative Agent crediting the account
of the Borrower on the books of such office with the aggregate of the amounts
made available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
2.4 Commitment Fees, etc. The Borrower agrees to pay to the
---------------------
Administrative Agent for the account of each Lender a commitment fee for the
period from and including the Closing
25
Date to the last day of the Revolving Commitment Period, computed at the
Commitment Fee Rate on the daily amount of the Available Revolving Commitment of
such Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September and December and on the
Revolving Termination Date, commencing on the first of such dates to occur after
the date hereof.
(b) The Borrower agrees to pay to the Agents the fees in the amounts
and on the dates previously agreed to in writing by the Borrower and the Agents.
2.5 Termination or Reduction of Revolving Commitments. The Borrower
-------------------------------------------------
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Revolving Commitments or, from time to
time, to reduce the amount of the Revolving Commitments; provided, that no such
--------
termination or reduction of Revolving Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Loans made on the
effective date thereof, the Total Revolving Extensions of Credit would exceed
the Total Revolving Commitments. Any such reduction shall be in an amount equal
to $1,000,000, or a whole multiple thereof, and shall reduce permanently the
Revolving Commitments then in effect.
2.6 Optional Prepayments. The Borrower may at any time and from time
--------------------
to time prepay the Revolving Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent no later
than 8:00 A.M., San Francisco time, at least three Business Days prior thereto
in the case of Eurodollar Loans and at least one Business Day prior thereto in
the case of Base Rate Loans, which notice shall specify the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans or Base Rate Loans;
provided, that if a Eurodollar Loan is prepaid on any day other than the last
- --------
day of the Interest Period applicable thereto, the Borrower shall also pay any
amounts owing pursuant to Section 2.17. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with (except in the case of
Revolving Loans that are Base Rate Loans) accrued interest to such date on the
amount prepaid. Partial prepayments of Revolving Loans shall be in an aggregate
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.
2.7 Special Mandatory Prepayment. On any date of issuance of Senior
----------------------------
Subordinated Notes, the Borrower shall prepay outstanding Revolving Loans in an
amount equal to the lesser of (a) the aggregate principal amount of Revolving
Loans then outstanding and (b) the Net Cash Proceeds of the issuance of such
Senior Subordinated Notes. The Revolving Commitments shall not be reduced as a
result of any such prepayment.
2.8 Mandatory Commitment Reductions. (a) Unless the Majority Lenders
-------------------------------
shall otherwise agree, if any Capital Stock shall be issued (other than to the
Permitted Investors) by the Borrower or by Holdings (if any such holding company
exists or is created) in a public offering consummated after July 1, 2001, an
amount equal to 50% of the Net Cash Proceeds thereof shall be applied on the
date of such issuance toward the reduction of the Revolving Commitments.
(b) Unless the Majority Lenders shall otherwise agree, if on any date
Holdings (if any such holding company exists or its created), the Borrower or
any of its Subsidiaries shall receive Net Cash Proceeds from any Asset Sale or
Recovery Event then, unless a Reinvestment Notice shall be delivered in respect
thereof, such Net Cash Proceeds shall be applied on such date toward the
reduction of the Revolving Commitments; provided, that, notwithstanding the
--------
foregoing, (i) the aggregate Net Cash Proceeds of Asset Sales that may be
excluded from the foregoing requirement
26
pursuant to a Reinvestment Notice shall not exceed $500,000 in any fiscal year
of the Borrower and (ii) on each Reinvestment Prepayment Date, an amount equal
to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment
Event shall be applied toward the reduction of the Revolving Commitments.
(c) Unless the Majority Lenders shall otherwise agree, if, for any
fiscal year of the Borrower commencing with the fiscal year ending December 31,
2001, there shall be Excess Cash Flow, the Borrower shall, on the relevant
Excess Cash Flow Application Date, apply the ECF Percentage of such Excess Cash
Flow toward the reduction of the Revolving Commitments. Each such prepayment and
commitment reduction shall be made on a date (an "Excess Cash Flow Application
----------------------------
Date") no later than five days after the earlier of (i) the date on which the
financial statements of the Borrower referred to in Section 6.1(a), for the
fiscal year with respect to which such prepayment is made, are required to be
delivered to the Lenders and (ii) the date such financial statements are
actually delivered.
(d) Amounts to be applied in connection with reductions of the
Revolving Commitments made pursuant to this Section 2.8 shall reduce permanently
the Revolving Commitments. Any such reduction of the Revolving Commitments shall
be accompanied by prepayment of the Revolving Loans to the extent, if any, that
the Total Revolving Extensions of Credit exceed the amount of the Total
Revolving Commitments as so reduced, provided that if the aggregate principal
--------
amount of Revolving Loans then outstanding is less than the amount of such
excess (because L/C Obligations constitute a portion thereof), the Borrower
shall, to the extent of the balance of such excess, replace outstanding Letters
of Credit and/or deposit an amount in cash in a cash collateral account
established with the Administrative Agent for the benefit of the Lenders on
terms and conditions satisfactory to the Administrative Agent. The application
of any prepayment pursuant to this Section 2.8 shall be made, first, to Base
-----
Rate Loans and, second, to Eurodollar Loans. Each prepayment of the Revolving
------
Loans under this Section 2.8 (except in the case of Revolving Loans that are
Base Rate Loans) shall be accompanied by accrued interest to the date of such
prepayment on the amount prepaid.
2.9 Conversion and Continuation Options. (a) The Borrower may elect
-----------------------------------
from time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Administrative Agent irrevocable notice no later than 8:00 A.M., San Francisco
time, one Business Day prior to the effectiveness of such election, provided
--------
that any such conversion of Eurodollar Loans may only be made on the last day of
an Interest Period with respect thereto. The Borrower may elect from time to
time to convert Base Rate Loans to Eurodollar Loans by giving the Administrative
Agent irrevocable notice no later than 8:00 A.M., San Francisco time, three
Business Days prior to the effectiveness of such election (which notice shall
specify the length of the initial Interest Period therefor), provided that no
--------
Base Rate Loan may be converted into a Eurodollar Loan when any Event of Default
has occurred and is continuing and the Administrative Agent or the Majority
Lenders have determined in its or their sole discretion not to permit such
conversions. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Revolving Loans,
provided that no Eurodollar Loan may be continued as such when any Event of
- --------
Default has occurred and is continuing and the Administrative Agent has or the
Majority Lenders have determined in its or their sole discretion not to permit
such continuations, and provided, further, that if the Borrower shall
-------- -------
27
fail to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Revolving
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
2.10 Limitations on Eurodollar Tranches. Notwithstanding anything to
----------------------------------
the contrary in this Agreement, all borrowings, conversions and continuations of
Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $1,000,000 or a whole
multiple of $100,000 in excess thereof and (b) no more than ten Eurodollar
Tranches shall be outstanding at any one time.
2.11 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
--------------------------------
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Revolving
Loan or Reimbursement Obligation shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), all outstanding Revolving Loans
and Reimbursement Obligations (whether or not overdue) shall bear interest at a
rate per annum equal to (x) in the case of the Revolving Loans, the rate that
would otherwise be applicable thereto pursuant to the foregoing provisions of
this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate
----
applicable to Base Rate Loans plus 2%, and (ii) if all or a portion of any
----
interest payable on any Revolving Loan or Reimbursement Obligation or any
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the rate then applicable
to Base Rate Loans plus 2%, in each case, with respect to clauses (i) and (ii)
----
above, from the date of such non-payment until such amount is paid in full (as
well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
--------
shall be payable from time to time on demand.
2.12 Computation of Interest and Fees. (a) Interest and fees payable
--------------------------------
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed, except that, with respect to Base Rate Loans the rate of
interest on which is calculated on the basis of the Reference Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Revolving Loan
resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to
28
the Borrower a statement showing the quotations used by the Administrative Agent
in determining any interest rate pursuant to Section 2.11(a).
2.13 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Revolving Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as Base Rate Loans, (y) any Revolving
Loans that were to have been converted on the first day of such Interest Period
to Eurodollar Loans shall be continued as Base Rate Loans and (z) any
outstanding Eurodollar Loans shall be converted, on the last day of the then-
current Interest Period, to Base Rate Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made
or continued as such, nor shall the Borrower have the right to convert Revolving
Loans to Eurodollar Loans.
2.14 Pro Rata Treatment and Payments. (a) Each borrowing by the
-------------------------------
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Revolving Commitments of the Lenders
shall be made pro rata according to the respective Revolving Percentages of the
--- ----
relevant Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Loans shall be made pro
---
rata according to the respective outstanding principal amounts of the Revolving
- ----
Loans then held by the Lenders. Commitment reductions pursuant to Section 2.5 or
2.8 shall be applied pro rata to the relevant remaining scheduled Revolving
--- ----
Commitment reductions set forth in Section 2.2.
(c) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 8:00 A.M., San
Francisco time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the
29
preceding two sentences, interest thereon shall be payable at the then
applicable rate during such extension.
(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans, on demand, from the Borrower.
(e) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
--- ----
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
2.15 Requirements of Law. (a) If the adoption of or any change in any
-------------------
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application or
any Eurodollar Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.16 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, the
relevant lending office of such Lender that is not otherwise included in
the determination of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
30
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
within 15 days following its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable. If
any Lender becomes entitled to claim any additional amounts pursuant to this
paragraph, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time,
within 15 days following submission by such Lender to the Borrower (with a copy
to the Administrative Agent) of a written request therefor, the Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction; provided that the Borrower shall not be required to
--------
compensate a Lender pursuant to this paragraph for any amounts incurred more
than six months prior to the date that such Lender notifies the Borrower of such
Lender's intention to claim compensation therefor; and provided further that, if
-------- -------
the circumstances giving rise to such claim have a retroactive effect, then such
six-month period shall be extended to include the period of such retroactive
effect.
(c) A certificate in reasonable detail as to any additional amounts
payable pursuant to this Section submitted by any Lender to the Borrower (with a
copy to the Administrative Agent) shall be conclusive in the absence of manifest
error. The obligations of the Borrower pursuant to this Section shall survive
the termination of this Agreement and the payment of the Revolving Loans and all
other amounts payable hereunder.
2.16 Taxes. (a) All payments made by the Borrower under this
-----
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) and branch profits taxes imposed on the Administrative Agent
or any Lender as a result of a present or former connection between the
Administrative Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Administrative Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes
------------------
are required to be withheld from any amounts payable to the Administrative Agent
or any Lender hereunder, the amounts so payable to the Administrative Agent or
such Lender shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Non-Excluded Taxes and
Other Taxes) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Agreement, provided, however, that the
-------- -------
Borrower shall not be required to increase any such
31
amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that
are attributable to such Lender's failure to comply with the requirements of
paragraph (d) or (e) of this Section or (ii) that are United States withholding
taxes imposed on amounts payable to such Lender at the time the Lender becomes a
party to this Agreement, except to the extent that such Lender's assignor (if
any) was entitled, at the time of assignment, to receive additional amounts from
the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.
(d) Within 30 days after the date the Administrative Agent or any
Lender receives a refund of any Non-Excluded Taxes or Other Taxes for which it
has been indemnified by the Borrower pursuant to this Agreement, the
Administrative Agent or such Lender, as the case may be, shall pay to the
Borrower such refund of Non-Excluded Taxes or Other Taxes. Notwithstanding the
foregoing, the Administrative Agent or such Lender shall not be required to make
any payment hereunder before such time as the Borrower shall have made all
payments or indemnities then due pursuant to this Agreement; provided, that the
--------
Administrative Agent or such Lender shall be required to make such payment
promptly after such time as the Borrower shall have made all such payments or
indemnities.
(e) Each Lender (or Transferee) that is not a citizen or resident of
the United States of America, a corporation, partnership or other entity created
or organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject to federal income
taxation regardless of the source of its income (a "Non-U.S. Lender") shall
---------------
deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form 1001 or Form
4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit D and a Form W-8, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
32
(f) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
--------
legally entitled to complete, execute and deliver such documentation and in such
Lender's judgment such completion, execution or submission would not materially
prejudice the legal position of such Lender.
(g) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Revolving Loans and all other amounts
payable hereunder.
2.17 Indemnity. The Borrower agrees to indemnify each Lender and to
---------
hold each Lender harmless from any loss or expense that such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion
from Eurodollar Loans after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day that is not the last day of an Interest
Period with respect thereto. Such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest that would have accrued on the
amount so prepaid, or not so borrowed, converted or continued, for the period
from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Revolving Loans provided for herein (excluding, however, the Applicable
Margin included therein, if any) over (ii) the amount of interest (as reasonably
----
determined by such Lender) that would have accrued to such Lender on such amount
by placing such amount on deposit for a comparable period with leading banks in
the interbank eurodollar market. A certificate as to any amounts payable
pursuant to this Section submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Revolving Loans and all
other amounts payable hereunder.
2.18 Change of Lending Office. Each Lender agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 2.15 or 2.16(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Revolving Loans affected by such event
with the object of avoiding the consequences of such event; provided, that such
--------
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
-------- -------
or postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 2.15 or 2.16(a).
2.19 Replacement of Lenders. The Borrower shall be permitted to
----------------------
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 2.15 or 2.16(a) or (b) defaults in its obligation to make Revolving
Loans hereunder, with a replacement financial institution; provided that (i)
--------
such replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under Section 2.18 so as to eliminate the continued need for
33
payment of amounts owing pursuant to Section 2.15 or 2.16(a), (iv) the
replacement financial institution shall purchase, at par, all Revolving Loans
and other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Borrower shall be liable to such replaced Lender under
Section 2.17 if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement financial institution, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender
shall be obligated to make such replacement in accordance with the provisions of
Section 10.6 (provided that the Borrower shall be obligated to pay the
registration and processing fee referred to therein), (viii) until such time as
such replacement shall be consummated, the Borrower shall pay all additional
amounts (if any) required pursuant to Section 2.15 or 2.16(a), as the case may
be, and (ix) any such replacement shall not be deemed to be a waiver of any
rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
--------------
the Issuing Lender, in reliance on the agreements of the other Lenders set forth
in Section 3.4(a), agrees to issue letters of credit ("Letters of Credit") for
-----------------
the account of the Borrower on any Business Day during the Revolving Commitment
Period in such form as may be approved from time to time by the Issuing Lender;
provided that the Issuing Lender shall have no obligation to issue any Letter of
- --------
Credit if, after giving effect to such issuance, (i) the L/C Obligations would
exceed the L/C Commitment or (ii) the aggregate amount of the Available
Revolving Commitments would be less than zero. Each Letter of Credit shall (i)
be denominated in Dollars and (ii) expire no later than the earlier of (x) the
first anniversary of its date of issuance and (y) the date that is thirty
Business Days prior to the Revolving Termination Date, provided that any Letter
--------
of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may from
------------------------------------------
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower promptly following the issuance thereof. The
Issuing Lender shall promptly furnish to the Administrative
34
Agent, which shall in turn promptly furnish to the Lenders, notice of the
issuance of each Letter of Credit (including the amount thereof).
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on all
----------------------
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans, shared ratably among the
Lenders and payable quarterly in arrears on each L/C Fee Payment Date after the
issuance date. In addition, the Borrower shall pay to the Issuing Lender for its
own account a fronting fee of 0.25% per annum on the undrawn and unexpired
amount of each Letter of Credit, payable quarterly in arrears on each L/C Fee
Payment Date after the Issuance Date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to
------------------
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Percentage in the Issuing Lender's obligations and
rights under each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender's address for
notices specified herein an amount equal to such L/C Participant's Revolving
Percentage of the amount of such draft, or any part thereof, that is not so
reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans. A certificate of the Issuing Lender submitted to
any L/C Participant with respect to any amounts owing under this Section shall
be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
---
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
- ----
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
--- ----
provided, however, that in the event that any such payment received by the
- -------- -------
Issuing Lender shall be required to be returned by the Issuing
35
Lender, such L/C Participant shall return to the Issuing Lender the portion
thereof previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
----------------------------------------
reimburse the Issuing Lender within one Business Day after the Issuing Lender
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such draft
so paid and (b) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Each such payment shall be
made to the Issuing Lender at its address for notices specified herein in lawful
money of the United States and in immediately available funds. Interest shall
be payable on any and all amounts remaining unpaid by the Borrower under this
Section from the date of the applicable drawing until payment in full at the
rate set forth in (i) until the second Business Day following the date of the
applicable drawing, Section 2.11(b) and (ii) thereafter, Section 2.11(c).
3.6 Obligations Absolute. The Borrower's obligations under this
--------------------
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any Application
------------
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
36
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Revolving Loans and issue or participate in the
Letters of Credit, the Borrower hereby represents and warrants to the
Administrative Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma consolidated
------------------- --- -----
balance sheet of the Borrower and its consolidated Subsidiaries as at the date
of the most recent consolidated and combined balance sheet delivered pursuant to
clause (b) below and the December 31, 1997 balance sheet of City Friction, Inc.
(including the notes thereto) (the "Pro Forma Balance Sheet") has been prepared
-----------------------
giving effect (as if such events had occurred on such date) to (i) the
consummation of the City Truck Acquisition and the Stone Acquisition, (ii) the
Revolving Loans to be made on the Closing Date and the use of proceeds thereof
and (iii) the payment of fees and expenses in connection with the foregoing. The
Pro Forma Balance Sheet has been prepared based on the best information
available to the Borrower as of the date of delivery thereof, and presents
fairly on a pro forma basis the estimated financial position of Borrower and its
--- -----
consolidated Subsidiaries as at the date of the most recent consolidated and
combined balance sheet delivered pursuant to clause (b) below and the December
31, 1997 balance sheet of City Friction, Inc., assuming that the events
specified in the preceding sentence had actually occurred at such date. It is
understood that the representations and warranties in this paragraph shall be
made as of the date of delivery of the Pro Forma Balance Sheet pursuant to
Section 6.2(g).
(b) The audited consolidated and combined balance sheets of the
Borrower and certain Affiliates for the three most recent fiscal years for which
such financial statements are available, and the related consolidated and
combined statements of income and of cash flows for the fiscal years ended on
such dates, reported on by and accompanied by an unqualified report from Warren,
Averett, Kimbrough & Marino, P.C., present fairly the consolidated and combined
financial condition of the Borrower and certain Affiliates as at such dates, and
the consolidated and combined results of their operations and their consolidated
and combined cash flows for the respective fiscal years then ended. The
unaudited consolidated and combined balance sheet of the Borrower and certain
Affiliates for each quarterly period ended prior to the Closing Date and
subsequent to the date of the latest applicable financial statements delivered
pursuant to this paragraph, and the related unaudited consolidated and combined
statements of income and cash flows for the three-month period ended on such
date, present fairly the consolidated and combined financial condition of the
Borrower and certain Affiliates as at such date, and the consolidated and
combined results of their operations and their consolidated and combined cash
flows for the three-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except (i) as approved by the aforementioned
firm of accountants and disclosed therein and (ii) in the case of unaudited
financial statements, as disclosed in the City Truck Acquisition Documentation).
The Borrower and its Subsidiaries do not have any material Guarantee
Obligations, contingent liabilities and liabilities for taxes, or any long-term
leases or unusual forward or long-term commitments, including any interest rate
or foreign currency swap or exchange transaction or other obligation in respect
of derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from December 31, 1997 to and
including the date hereof there has been no Disposition by the Borrower of any
material part of its business or property, except as contemplated by the City
Truck Acquisition Documentation.
4.2 No Change. Since December 31, 1997 there has been no development
---------
or event that has had or could reasonably be expected to have a Material Adverse
Effect. As of the Closing
37
Date, there has been no development or event that has had or could reasonably be
expected to have a Material Adverse Effect on the City Truck Acquisition or the
Stone Acquisition. As of the date of consummation of the Stone Acquisition,
there has been no development or event that had or could reasonably be expected
to have a Material Adverse Effect on the Stone Acquisition.
4.3 Existence; Compliance with Law. Each of the Borrower and its
------------------------------
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the organizational
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation or limited
liability company and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of its business
requires such qualification except to the extent that failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
4.4 Power; Authorization; Enforceable Obligations. Each Loan Party
---------------------------------------------
has the organizational power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary
organizational action to authorize the execution, delivery and performance of
the Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the borrowings on the terms and conditions of this Agreement. No
material consent or authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person (collectively,
"Approvals") is required in connection with the City Truck Acquisition or the
Stone Acquisition and the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the Loan
Documents, except (i) Approvals with respect to the City Truck Acquisition
described in Schedule 4.4, which Approvals have been obtained or made and are in
full force and effect (or, in the case of the Stone Acquisition, such Approvals
as will be obtained or made prior to the consummation thereof) and (ii) the
filings referred to in Section 4.19. Each Loan Document has been duly executed
and delivered on behalf of each Loan Party party thereto. This Agreement
constitutes, and each other Loan Document upon execution will constitute, a
legal, valid and binding obligation of each Loan Party party thereto,
enforceable against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of this
------------
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of the Borrower or any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation (other than the Liens
created by the Security Documents), provided, that the "blanket" Lien granted
--------
pursuant to the Guarantee and Collateral Agreement shall not be deemed to
violate any contractual restrictions applicable to purchase money Liens or
leases permitted hereby that restrict the ability to grant Liens on the assets
subject to such purchase money Liens, or such leases, as the case may be. No
Requirement of Law or Contractual Obligation applicable to the Borrower or any
of its Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
38
4.6 Litigation. No litigation, investigation or proceeding of or
----------
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) that could reasonably be expected to have a Material
Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its Subsidiaries is
----------
in default under or with respect to any of its Contractual Obligations in any
respect that could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of the Borrower and its
----------------------------
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other property, and none of such property is subject to any Lien except as
permitted by Section 7.3.
4.9 Intellectual Property. The Borrower and each of its Subsidiaries
---------------------
owns, or is licensed to use, all Intellectual Property necessary for the conduct
of its business as currently conducted. No material claim has been asserted and
is pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
the Borrower know of any valid basis for any such claim. The use of
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person in any material respect.
4.10 Taxes. Each of the Borrower and each of its Subsidiaries has
-----
filed or caused to be filed all Federal, state and other material tax returns
that are required to be filed and has paid all taxes shown to be due and payable
on said returns or on any assessments made against it or any of its property and
all other taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any the amount or validity of that are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
4.11 Federal Regulations. No part of the proceeds of any Revolving
-------------------
Loans will be used for "buying" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U as now and
from time to time hereafter in effect or for any purpose that violates the
provisions of the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.
4.12 Labor Matters. Except as, in the aggregate, could not reasonably
-------------
be expected to have a Material Adverse Effect: (a) there are no strikes or other
labor disputes against the Borrower or any of its Subsidiaries pending or, to
the knowledge of the Borrower, threatened; (b) hours worked by and payment made
to employees of the Borrower and its Subsidiaries have not been in violation of
the Fair Labor Standards Act or any other applicable Requirement of Law dealing
with such matters; and (c) all payments due from the Borrower or any of its
Subsidiaries on account of employee health and welfare insurance have been paid
or accrued as a liability on the books of the Borrower or the relevant
Subsidiary.
39
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Single Employer Plan.
Each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Single Employer Plan has arisen, during
such five-year period. The present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits by a material amount. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could reasonably be
expected to result in a material liability under ERISA, and neither the Borrower
nor any Commonly Controlled Entity would become subject to any material
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. To the best knowledge of the Borrower, no such Multiemployer Plan
is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party is an
-----------------------------------------
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15 Subsidiaries. Except as disclosed to the Administrative Agent by
------------
the Borrower in writing from time to time after the Closing Date, (a) Schedule
4.15(a) sets forth the name and jurisdiction of organization of each Subsidiary
and, as to each such Subsidiary, the percentage of each class of Capital Stock
owned by any Loan Party and (b) there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock
options and/or purchased management shares subject to vesting provisions granted
to employees or directors and directors' qualifying shares) of any nature
relating to any Capital Stock of the Borrower as of the Closing Date or of any
Subsidiary, except as created by the Loan Documents or as set forth on Schedule
4.15(b).
4.16 Use of Proceeds. The proceeds of the Revolving Loans shall be
---------------
used to finance a portion of the City Truck Acquisition, including refinancing
Indebtedness, and to pay related fees and expenses and for general corporate
purposes, including Acquisitions permitted hereby.
4.17 Environmental Matters. Except as, in the aggregate, could not
---------------------
reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain, and
----------
have not previously contained, any Materials of Environmental Concern in
amounts or concentrations or under circumstances that constitute or
constituted a violation of, or could give rise to liability under, any
Environmental Law;
(b) neither the Borrower nor any of its Subsidiaries has received or
is aware of any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the
40
Properties or the business operated by the Borrower or any of its
Subsidiaries (the "Business"), nor does the Borrower have knowledge or
--------
reason to believe that any such notice will be received or is being
threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a
location that could give rise to liability under, any Environmental Law,
nor have any Materials of Environmental Concern been generated, treated,
stored or disposed of at, on or under any of the Properties in violation
of, or in a manner that could give rise to liability under, any applicable
Environmental Law;
(d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be
named as a party with respect to the Properties or the Business, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or
the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could give rise to liability under
Environmental Laws;
(f) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under or
about the Properties or violation of any Environmental Law with respect to
the Properties or the Business; and
(g) neither the Borrower nor any of its Subsidiaries has assumed any
liability of any other Person under Environmental Laws.
4.18 Accuracy of Information, etc. No statement or information
----------------------------
contained in this Agreement, any other Loan Document or any other document,
certificate or written statement furnished by or on behalf of any Loan Party to
the Administrative Agent or the Lenders, or any of them, for use in connection
with the transactions contemplated by this Agreement or the other Loan
Documents, contained as of the date such statement, information, document or
certificate was so furnished any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements contained herein or
therein not misleading. To the extent applicable to disclosure of matters that
relate to a business acquired pursuant to an Acquisition (other than the City
Truck Acquisition or the Stone Acquisition) for periods prior to the
consummation thereof, the representations and warranties set forth in the
preceding sentence shall be made only to the best knowledge of the Borrower. The
projections and pro forma financial information contained in the materials
--- -----
referenced above and delivered on or after the Closing Date are based upon good
faith estimates and assumptions believed by management of the Borrower to be
reasonable at the time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed as fact
and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. As of the date hereof, the representations and warranties
contained in the City Truck Acquisition Documentation are true and correct,
except as could not reasonably be expected to have a Material Adverse Effect.
There is no fact known to any officer of any Loan Party that could reasonably be
expected to have a Material Adverse Effect that has
41
not been expressly disclosed herein, in the other Loan Documents or in any other
documents, certificates and statements furnished to the Administrative Agent and
the Lenders for use in connection with the transactions contemplated hereby and
by the other Loan Documents.
4.19 Security Documents. (a) The Guarantee and Collateral Agreement
------------------
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement which is evidenced by
certificated securities, when stock certificates representing such Pledged Stock
are delivered to the Administrative Agent, and in the case of the other
Collateral described in the Guarantee and Collateral Agreement, when financing
statements and other filings specified on Schedule 4.19(a) in appropriate form
are filed in the offices specified on Schedule 4.19(a), the Guarantee and
Collateral Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as defined
in the Guarantee and Collateral Agreement), in each case prior and superior in
right to any other Person (except, in the case of Collateral other than Pledged
Stock, Liens permitted by Section 7.3).
(b) Each of the Mortgages, when executed and delivered, will be
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable Lien on the mortgaged properties
described therein and proceeds thereof, and when the Mortgages are filed in the
offices specified therein, each such Mortgage shall constitute a fully perfected
Lien on, and security interest in, all right, title and interest of the Loan
Parties in such mortgaged properties and the proceeds thereof, as security for
the Obligations, in each case prior and superior in right to any other Person
(other than Liens permitted by Section 7.3).
4.20 Solvency. Each Loan Party is, and after giving effect to the
--------
City Truck Acquisition, the Stone Acquisition and the incurrence of all
Indebtedness and obligations being incurred in connection herewith and therewith
will be and will continue to be, Solvent.
4.21 Senior Indebtedness. After the issuance of the Senior
-------------------
Subordinated Notes, (a) in the event that the Borrower is the issuer thereof,
the Obligations constitute "Senior Indebtedness" and "Designated Senior
Indebtedness" of the Borrower under and as defined in the Senior Subordinated
Note Indenture or (b) in the event that Holdings is the issuer thereof, (i) the
obligations of Holdings under the Guarantee and Collateral Agreement constitute
"Senior Indebtedness" and "Designated Senior Indebtedness" of Holdings under and
as defined in the Senior Subordinated Note Indenture and (ii) the Obligations
constitute "Guarantor Senior Indebtedness" of the Borrower under and as defined
in the Senior Subordinated Note Indenture. After the issuance of the Senior
Subordinated Notes, the obligations of each Subsidiary Guarantor under the
Guarantee and Collateral Agreement constitute "Guarantor Senior Indebtedness" of
such Subsidiary Guarantor under and as defined in the Senior Subordinated Note
Indenture.
4.22 Year 2000 Matters. On the basis of a comprehensive review and
-----------------
assessment of the Borrower's systems and equipment, the Borrower's management is
of the view that the Year 2000 Problem, including costs of remediation, will not
result in a Material Adverse Effect. The Borrower has developed feasible
contingency plans adequately to ensure uninterrupted and unimpaired business
operation in the event of failure of its own systems or equipment due to the
Year 2000 Problem, as well as a general failure of or interruption in its
communications and delivery infrastructure.
4.23 Regulation H. No Mortgage encumbers improved real property that
------------
is located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having
42
special flood hazards and in which flood insurance has been made available under
the National Flood Insurance Act of 1968, other than real property as to which
insurance required by Regulation H is in effect.
4.24 Certain Documents. The Borrower has delivered to the Agents a
-----------------
complete and correct copy (a) as of the Closing Date, of the City Truck
Acquisition Documentation, (b) as of the date of consummation of the Stone
Acquisition, of the Stone Acquisition Documentation and (c) as of the date of
issuance of Senior Subordinated Notes, of the Senior Subordinated Note
Indenture, including any amendments, supplements or modifications with respect
to any of the foregoing.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
-----------------------------------------
Lender to make the initial extension of credit requested to be made by it on the
Closing Date is subject to the satisfaction, prior to or concurrently with the
making of such extension of credit on the Closing Date (but in any event no
later than June 15, 1998), of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
--------------
this Agreement, executed and delivered by the Administrative Agent, the
Borrower and each Person listed on Schedule 1.1A, (ii) the Guarantee and
Collateral Agreement, executed and delivered by the Borrower and each
Subsidiary Guarantor, (iii) an Acknowledgement and Consent in the form
attached to the Guarantee and Collateral Agreement, executed and delivered
by each Issuer (as defined therein), if any, that is not a Loan Party, and
(iv) an agreement, in form and substance satisfactory to the Administrative
Agent, pursuant to which the Buyer shall agree to contribute cash equity to
the Borrower such that the Specified Event of Default shall not occur on
the day which is 91 days following the Closing Date.
Notwithstanding the foregoing, in the event that this Agreement has
not been duly executed and delivered by each Person listed on Schedule 1.1A
on the date scheduled to be the Closing Date, the condition referred to in
clause (i) above shall nevertheless be deemed satisfied if on such date the
Borrower and the Administrative Agent shall have designated one or more
Persons (the "Designated Lenders") to assume, in the aggregate, all of the
------------------
Revolving Commitments that would have been held by the Persons listed on
Schedule 1.1A (the "Non-Executing Persons") which have not so executed and
---------------------
delivered this Agreement (subject to each such Designated Lender's consent
and its execution and delivery of this Agreement). Schedule 1.1A shall
automatically be deemed to be amended to reflect the respective Commitments
of the Designated Lenders and the omission of the Non-Executing Persons as
Lenders hereunder.
(b) City Truck Acquisition. The following transactions shall have
----------------------
been consummated, in each case on terms and conditions reasonably
satisfactory to the Lenders:
(i) Shareholders of the Borrower shall have received at
least $20,000,000 in cash from the Buyer in respect of the purchase of
the Initial New Investor Shares and the Borrower shall have received
at least $3,324,867 from BABF in respect of the Initial New Investor
Redeemable Preferred Stock, in each case on terms and conditions
satisfactory to the Lenders. Without limiting the foregoing, the terms
of the Initial New Investor Redeemable Preferred Stock will provide
that, in the event Senior Subordinated Notes in an aggregate principal
amount of at least $75,000,000 are not issued on or prior to the first
anniversary of the Closing Date, the Initial New Investor
43
Redeemable Preferred Stock will cease to be entitled to current cash
dividends and shall cease to be redeemable.
(ii) The Administrative Agent and the Lenders be satisfied
that the integration of the Stone and City Truck management
information systems will not cost a material amount and can be
completed within 30 days after consummation of the Stone Acquisition.
(iii) The City Truck Acquisition shall have been consummated
in accordance with applicable law and on terms satisfactory to the
Agents. The City Truck Stock Purchase Agreement and other City Truck
Acquisition Documentation shall have terms and conditions reasonably
satisfactory to the Agents, shall be in full force and effect and no
provision of such documentation shall have been waived, amended,
supplemented or otherwise modified in any material respect without the
consent of the Required Lenders.
(iv) The Administrative Agent shall be satisfied that,
after giving effect to the City Truck Acquisition, the Rollover City
Truck Shares shall have an aggregate value of at least $5,000,000.
(c) Financial Statements. The Lenders shall have received (i) audited
--------------------
consolidated and combined financial statements of the Borrower for the
three most recent fiscal years and (ii) unaudited interim consolidated and
combined financial statements of the Borrower for the first quarterly
period and, to the extent available, each subsequent quarterly period,
ended subsequent to the date of the latest applicable financial statements
delivered pursuant to clause (i) of this paragraph, and such financial
statements shall not, in the reasonable judgment of the Lenders, reflect
any material adverse change in the consolidated and combined financial
condition of the Borrower and its Subsidiaries and Affiliates, as reflected
in the financial statements or projections contained in the business plan
referred to in Section 5.1(g).
(d) Stone Financials. The Lenders shall have received (i) audited
----------------
financial statements of Stone and its Subsidiaries for the most recent
fiscal year and reviewed statements for the prior two fiscal years and (ii)
unaudited interim consolidated financial statements of Stone and its
Subsidiaries for the first quarterly period and, to the extent available,
each subsequent quarterly period ended after the latest fiscal year
referred to in clause (i) above and such financial statements shall not
reflect any material adverse change in the consolidated financial condition
of Stone and its Subsidiaries from what was reflected in the financial
statements or projections previously furnished to the Lenders.
(e) EBITDA. The Agents shall be satisfied that (i) the Consolidated
------
EBITDA of the Borrower and its Subsidiaries and combined Affiliates for the
most recent Test Period for which the relevant financial information is
available shall equal at least $7,500,000 (and, after giving effect to the
Stone Acquisition, if consummated, will equal at least $11,400,000) and
(ii) the Consolidated Leverage Ratio after giving pro forma effect to the
--- -----
transactions occurring on the Closing Date shall not exceed 4.50 to 1.0,
and the Borrower shall provide support for each such calculation of a
nature which is satisfactory to the Agents.
(f) Approvals. All governmental and third party approvals (including
---------
landlords' and other consents) necessary in connection with the City Truck
Acquisition, the continuing operations of the Borrower and its Subsidiaries
and the transactions contemplated hereby shall
44
have been obtained on terms satisfactory to the Agents and be in full force
and effect, and all applicable waiting periods shall have expired without
any action being taken or threatened by any competent authority that would
restrain, prevent or otherwise impose adverse conditions on the City Truck
Acquisition or the financing contemplated hereby.
(g) Business Plan. The Lenders shall have received a satisfactory
-------------
business plan for fiscal years 1998-2004 and a satisfactory written
analysis of the business and prospects of the Borrower and its Subsidiaries
for the period from the Closing Date through the Revolving Termination
Date.
(h) Lien Searches. The Administrative Agent shall have received the
-------------
results of a recent lien search in each of the jurisdictions where assets
of the Loan Parties are located, and such search shall reveal no liens on
any of the assets of the Borrower or its Subsidiaries except for liens
permitted by Section 7.3 or discharged on or prior to the Closing Date
pursuant to documentation satisfactory to the Administrative Agent.
(i) Environmental Report. The Administrative Agent shall have
--------------------
received satisfactory Phase I environmental reports with respect to the
real properties owned or leased by the Borrower and its Subsidiaries and
Stone and its Subsidiaries from a consulting firm satisfactory to the
Administrative Agent.
(j) Termination of Existing Indebtedness. The Administrative Agent
------------------------------------
shall have received satisfactory evidence that all of the existing
Indebtedness of the Borrower and its Subsidiaries have been terminated or
will be terminated on the Closing Date (other than Indebtedness permitted
by Section 7.2), all amounts thereunder have been paid in full or will be
paid in full on the Closing Date and satisfactory arrangements have been
made for the termination of all Liens and security interests granted in
connection therewith.
(k) Fees. The Lenders, the Agents and the Arranger shall have
----
received all fees required to be paid, and all expenses for which invoices
have been presented (including the reasonable fees and expenses of legal
counsel), on or before the Closing Date. All such amounts will be paid with
proceeds of Revolving Loans made on the Closing Date and will be reflected
in the funding instructions given by the Borrower to the Administrative
Agent on or before the Closing Date.
(l) Closing Certificate. The Administrative Agent shall have
-------------------
received, with a counterpart for each Lender, a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit C, with
appropriate insertions and attachments.
(m) Legal Opinions. The Administrative Agent shall have received the
--------------
following executed legal opinions:
(i) the legal opinion of Latham & Watkins, counsel to the
Borrower and its Subsidiaries, substantially in the form of Exhibit F-
1;
(ii) the legal opinion of special Alabama and Tennessee counsel
to the Borrower and its Subsidiaries, substantially in the form of
Exhibit F-2; and
45
(iii) to the extent consented to by the relevant counsel, each
legal opinion, if any, delivered in connection with the City Truck
Stock Purchase Agreement, accompanied by a reliance letter in favor of
the Lenders.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(n) Pledged Stock; Stock Powers; Pledged Notes. The Administrative
------------------------------------------
Agent shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof and (ii) each
promissory note (if any) pledged to the Administrative Agent pursuant to
the Guarantee and Collateral Agreement endorsed (without recourse) in blank
(or accompanied by an executed transfer form in blank) by the pledgor
thereof.
(o) Filings, Registrations and Recordings. Each document (including
-------------------------------------
any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by the Administrative Agent
to be filed, registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected Lien on
the Collateral described therein, prior and superior in right to any other
Person (other than with respect to Liens permitted by Section 7.3), shall
be in proper form for filing, registration or recordation.
(p) Solvency Certificate. The Administrative Agent shall have
--------------------
received a satisfactory solvency certificate from an officer of the
Borrower which shall document the solvency of the Borrower and its
Subsidiaries after giving effect to the City Truck Acquisition.
(q) Insurance. The Administrative Agent shall have received insurance
---------
certificates satisfying the requirements of Section 5.2(b) of the Guarantee
and Collateral Agreement.
5.2 Conditions to Each Extension of Credit. The agreement of each
--------------------------------------
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date (except to the extent expressly relating
to an earlier date, in which case such representations and warranties shall
have been true and correct in all material respects on and as of the
relevant earlier date).
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
46
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving Commitments
remain in effect, any Letter of Credit remains outstanding or any Revolving Loan
or other amount is owing to any Lender or the Administrative Agent hereunder,
the Borrower shall and shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent and
--------------------
each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case in comparative
form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out
of the scope of the audit, by Ernst & Young LLP or other independent
certified public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments); and
(c) as soon as available, but in any event not later than 45 days
(or, in the case of October 1998 and each relevant succeeding month, 30
days) after the end of each month occurring during each fiscal year of the
Borrower (other than the third, sixth, ninth and twelfth such month), the
unaudited consolidated balance sheets of the Borrower and its Subsidiaries
as at the end of such month and the related unaudited consolidated
statements of income and of cash flows for such month and the portion of
the fiscal year through the end of such month, setting forth in each case
in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail. All financial statements
referred to in paragraph (a) or (b) above (except the financial statements for
the fiscal quarter ended June 30, 1998) shall be prepared in accordance with
GAAP applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or officer, as the case
may be, and disclosed therein). All financial statements referred to above
shall be prepared on a basis consistent with the Borrower's past practices.
6.2 Certificates; Other Information. Furnish to the Administrative
-------------------------------
Agent and each Lender (or, in the case of clause (h), to the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial
47
statements stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that such Responsible Officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate or as previously
disclosed in writing to the Administrative Agent and each Lender and (ii)
in the case of quarterly or annual financial statements, (x) a Compliance
Certificate containing all information and calculations necessary for
determining compliance by Holdings (if any such holding company exists or
is created), the Borrower and its Subsidiaries with the provisions of this
Agreement referred to therein as of the last day of the fiscal quarter or
fiscal year of the Borrower, as the case may be, and (y) to the extent not
previously disclosed to the Administrative Agent, a listing of any county
or state within the United States where any Loan Party keeps inventory or
equipment and of any Intellectual Property acquired by any Loan Party since
the date of the most recent list delivered pursuant to this clause (y) (or,
in the case of the first such list so delivered, since the Closing Date);
(c) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of the Borrower, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of the
following fiscal year, the related consolidated statements of projected
cash flow, projected changes in financial position and projected income and
a description of the underlying assumptions applicable thereto), and, as
soon as available, significant revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be accompanied by a
-----------
certificate of a Responsible Officer stating that such Projections are
based on reasonable estimates, information and assumptions and that such
Responsible Officer has no reason to believe that such Projections are
misleading in any material respect;
(d) within 45 days after the end of each fiscal quarter of the
Borrower (commencing with the fiscal quarter ended September 30, 1998), a
narrative discussion and analysis of the financial condition and results of
operations of the Borrower and its Subsidiaries for such fiscal quarter and
for the period from the beginning of the then current fiscal year to the
end of such fiscal quarter, as compared to the portion of the Projections
covering such periods and to the comparable periods of the previous year;
(e) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior
Subordinated Note Indenture, the City Truck Acquisition Documentation or
the Stone Acquisition Documentation;
(f) within five days after the same are sent, copies of all financial
statements and reports that Holdings (if any such holding company exists or
is created) or the Borrower sends to the holders of any class of its debt
securities or public equity securities and, within five days after the same
are filed, copies of all financial statements and reports that Holdings (if
any such holding company exists or is created) or the Borrower may make to,
or file with, the SEC;
(g) within 21 days after the Closing Date, (i) if the Stone
Acquisition has been consummated, audited financial statements of Stone and
its Subsidiaries for the 1995 and 1996
48
fiscal years, (ii) financial statements of the Borrower and its
Subsidiaries for the 1995, 1996 and 1997 fiscal years audited by Ernst &
Young LLP and (iii) a Pro Forma Consolidated Balance Sheet and Statement of
--- -----
Income of the Borrower and its Subsidiaries (assuming consummation of the
City Truck Acquisition and, if the Stone Acquisition has been consummated,
the Stone Acquisition) prepared by Ernst & Young LLP as at or for the
period ending on December 31, 1997 (or, if available, March 31, 1998); and
(h) promptly, such additional financial and other information
(including information relating to Permitted Acquisitions) as any Lender
may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
----------------------
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.
6.4 Maintenance of Existence; Compliance. (a) (i) Preserve, renew and
------------------------------------
keep in full force and effect its corporate existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 7.4 and except, in the case of clause (ii) above,
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.5 Year 2000 Compliance. By September 30, 1999, the Borrower shall
--------------------
have renovated all systems and equipment affected by the Year 2000 Problem to
cause them to perform correctly date-sensitive functions for relevant date data
from before and after December 31, 1999, or shall have replaced them with
technology not so affected, and completed testing of such replacement
technology.
6.6 Maintenance of Property; Insurance. (a) Keep all property useful
----------------------------------
and necessary in its business in good working order and condition, ordinary wear
and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business.
6.7 Inspection of Property; Books and Records; Discussions. (a) Keep
------------------------------------------------------
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time upon reasonable advance notice and as often as may reasonably be desired
and to discuss the business, operations, properties and financial and other
condition of Holdings (if any such holding company exists or is created), the
Borrower and its Subsidiaries with officers and employees of Holdings (if any
such holding company exists or is created), the Borrower and its Subsidiaries
and with its independent certified public accountants.
6.8 Notices. Promptly give notice to the Administrative Agent and
-------
each Lender of:
49
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of Holdings (if any such holding company exists or is created),
the Borrower or any of its Subsidiaries or (ii) litigation, investigation
or proceeding that may exist at any time between Holdings (if any such
holding company exists or is created), the Borrower or any of its
Subsidiaries and any Governmental Authority, that in either case, if not
cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting Holdings (if any such
holding company exists or is created), the Borrower or any of its
Subsidiaries in which the amount involved is $500,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Single Employer
Plan, a failure to make any required contribution to a Plan, the creation
of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan; and
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.8 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action Holdings (if any such holding company exists or
is created), the Borrower or the relevant Subsidiary proposes to take with
respect thereto.
6.9 Environmental Laws. (a) Comply in all material respects with, and
------------------
use reasonable efforts to ensure compliance in all material respects by all
tenants and subtenants, if any, with, all applicable Environmental Laws, and
obtain and comply in all material respects with and maintain, and use reasonable
efforts to ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all material licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities regarding
Environmental Laws.
6.10 Interest Rate Protection. In the case of the Borrower, in the
------------------------
event Senior Subordinated Notes in an aggregate principal amount at least equal
to $75,000,000 are not issued on or prior to the first anniversary of the
Closing Date, enter into Hedge Agreements to the extent necessary to provide
that at least 50% of the Revolving Credit Facility is subject to either a fixed
interest rate or interest rate protection for a period of not less than three
years, which Hedge Agreements shall have terms and conditions reasonably
satisfactory to the Administrative Agent.
50
6.11 Further Assurances. Upon the reasonable request of the
------------------
Administrative Agent, promptly perform or cause to be performed any and all acts
and execute or cause to be executed any and all documents (including, without
limitation, financing statements and continuation statements) for filing under
the provisions of the Uniform Commercial Code or any other Requirement of Law
which are necessary or advisable to maintain in favor of the Administrative
Agent, for the benefit of the Lenders, Liens on the Collateral that are duly
perfected in accordance with all applicable Requirements of Law.
6.12 Additional Collateral, etc. (a) With respect to any property
--------------------------
acquired after the Closing Date by Holdings (if any such holding company exists
or is created), the Borrower or any of its Subsidiaries (other than (x) any
property described in paragraph (b), (c) or (d) below, (y) any property subject
to a Lien permitted by Section 7.3(g) and (z) property acquired by any Excluded
Foreign Subsidiary) as to which the Administrative Agent, for the benefit of the
Lenders, does not have a perfected Lien, promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
or such other documents as the Administrative Agent deems necessary or advisable
to grant to the Administrative Agent, for the benefit of the Lenders, a security
interest in such property and (ii) take all actions necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in such property (subject only to Liens
permitted by Section 7.3), including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Collateral Agreement or by law or as may be requested by the Administrative
Agent.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $500,000 acquired after
the Closing Date by Holdings (if any such holding company exists or is created),
the Borrower or any of its Subsidiaries (other than (x) any such real property
subject to a Lien expressly permitted by Section 7.3(g) and (z) real property
acquired by any Excluded Foreign Subsidiary), promptly (i) execute and deliver a
first priority Mortgage (subject only to Liens permitted by Section 7.3), in
favor of the Administrative Agent, for the benefit of the Lenders, covering such
real property, (ii) if requested by the Administrative Agent, provide the
Lenders with (x) title and extended coverage insurance covering such real
property in an amount at least equal to the purchase price of such real property
(or such other amount as shall be reasonably specified by the Administrative
Agent) as well as a current ALTA survey thereof, together with a surveyor's
certificate and (y) any consents or estoppels reasonably deemed necessary or
advisable by the Administrative Agent in connection with such mortgage or deed
of trust, each of the foregoing in form and substance reasonably satisfactory to
the Administrative Agent and (iii) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by Holdings (if
any such holding company exists or is created) (which, for the purposes of this
paragraph (c), shall include any existing Subsidiary that ceases to be an
Excluded Foreign Subsidiary), the Borrower or any of its Subsidiaries, promptly
(i) execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement as the Administrative Agent deems necessary
or advisable to grant to the Administrative Agent, for the benefit of the
Lenders, a perfected first priority security interest in the Capital Stock of
such new Subsidiary that is owned by Holdings (if any such holding company
exists or is created), the Borrower or any of its Subsidiaries, (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of Holdings, the Borrower or such Subsidiary, as the case may
be, (iii)
51
cause such new Subsidiary (A) to become a party to the Guarantee and Collateral
Agreement, (B) to take such actions necessary or advisable to grant to the
Administrative Agent for the benefit of the Lenders a perfected first priority
security interest in the Collateral described in the Guarantee and Collateral
Agreement with respect to such new Subsidiary (subject only to Liens permitted
by Section 7.3), including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Administrative
Agent and (C) to deliver to the Administrative Agent a certificate of such
Subsidiary, substantially in the form of Exhibit C, with appropriate insertions
and attachments, and (iv) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by Holdings (if any such holding company exists
or is created), the Borrower or any of its Subsidiaries, promptly (i) execute
and deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement as the Administrative Agent deems necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in the Capital Stock of such new Subsidiary
that is owned by Holdings, the Borrower or any of its Subsidiaries (provided
that in no event shall more than 65% of the total outstanding Capital Stock of
any such new Subsidiary be required to be so pledged), (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly authorized
officer of Holdings, the Borrower or such Subsidiary, as the case may be, and
take such other action as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Administrative Agent's security
interest therein, and (iii) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving Commitments
remain in effect, any Letter of Credit remains outstanding or any Revolving Loan
or other amount is owing to any Lender or the Administrative Agent hereunder,
the Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly:
7.1 Financial Condition Covenants.
-----------------------------
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
---------------------------
Ratio as at the last day of any Test Period ending during any period set forth
below to exceed the ratio set forth below opposite such period:
Consolidated
Period Leverage Ratio
------ --------------
September 30, 1998 - June 29, 2000 6.00 to 1.0
June 30, 2000 - June 29, 2002 5.75 to 1.0
June 30, 2002 and thereafter 5.50 to 1.0
; provided, that, if the Senior Subordinated Note Date has not occurred on or
--------
prior to the end of the relevant Test Period, the applicable ratios shall
instead be as follows:
52
Consolidated
Period Leverage Ratio
------ --------------
September 30, 1998 - June 29, 2000 4.00 to 1.0
June 30, 2000 - June 29, 2001 3.75 to 1.0
June 30, 2001 - June 29, 2002 3.50 to 1.0
June 30, 2002 - June 29, 2003 3.25 to 1.0
June 30, 2003 - June 29, 2004 3.00 to 1.0
June 30, 2004 and thereafter 2.75 to 1.0
(b) Consolidated Interest Coverage Ratio. Permit the Consolidated
------------------------------------
Interest Coverage Ratio for any Test Period (or, if shorter, a period consisting
of each full fiscal quarter subsequent to the Closing Date) ending during any
period set forth below to be less than the ratio set forth below opposite such
period:
Consolidated Interest
Period Coverage Ratio
------ ---------------------
October 1, 1998 - June 29, 1999 1.50 to 1.0
June 30, 1999 - June 29, 2000 1.75 to 1.0
June 30, 2000 - June 29, 2001 1.90 to 1.0
June 30, 2001 - June 29, 2002 2.00 to 1.0
June 30, 2002 and thereafter 2.25 to 1.0
; provided, that the Test Party shall be required to comply with the
--------
Consolidated Interest Coverage Ratio as provided above (i) only if the Senior
Subordinated Note Date has occurred and (ii) only for each Test Period ended on
or after September 30, 1999 unless, on or prior to June 30, 1999, there shall at
------
any time be outstanding either (x) Total Revolving Extensions of Credit in
excess of $5,000,000 or (y) Total Revolving Extensions of Credit in excess of
the aggregate amount of cash and Cash Equivalents that would then appear on the
Test Party's balance sheet in accordance with GAAP, in which case the Test Party
shall be required to comply with the Consolidated Interest Coverage Ratio as
provided above for each Test Period ended on or after the date any such
circumstance first occurs, whether or not any such circumstance subsequently
ceases to exist; and
; provided, further, that, in the event that the Senior Subordinated Note Date
-------- -------
does not occur on or prior to the date that is 90 days after the Closing Date,
the applicable ratios shall instead be as follows (whether or not the Senior
Subordinated Note Date subsequently occurs):
Consolidated Interest
Period Coverage Ratio
------ ---------------------
September 30, 1998 - June 29, 2000 2.00 to 1.0
June 30, 2000 - June 29, 2002 2.25 to 1.0
June 30, 2002 and thereafter 2.50 to 1.0
(c) Consolidated Senior Debt Ratio. Permit the Consolidated Senior
------------------------------
Debt Ratio as at the last day of any Test Period ending during any period set
forth below to exceed the ratio set forth below opposite such period:
Consolidated Interest
Period Senior Debt Ratio
------ ---------------------
September 30, 1998 - June 29, 2000 3.00 to 1.0
53
June 30, 2000 - June 29, 2002 2.75 to 1.0
June 30, 2002 and thereafter 2.50 to 1.0
; provided, that, if the Senior Subordinated Note Date has not occurred on or
--------
prior to the end of the relevant Test Period, the applicable ratios shall
instead be as follows:
Consolidated Interest
Period Senior Debt Ratio
------ ---------------------
September 30, 1998 - June 29, 2000 4.00 to 1.0
June 30, 2000 - June 29, 2001 3.75 to 1.0
June 30, 2001 - June 29, 2002 3.50 to 1.0
June 30, 2002 - June 29, 2003 3.25 to 1.0
June 30, 2003 - June 29, 2004 3.00 to 1.0
June 30, 2004 and thereafter 2.75 to 1.0
(d) Minimum EBITDA. Permit Consolidated EBITDA for any Test Period
--------------
ending on or after September 30, 1998 to be less than the sum of (i) the greater
of (x) 85% of Consolidated EBITDA for the immediately preceding Test Period and
(y) the Consolidated EBITDA that was required for such immediately preceding
Test Period pursuant to this paragraph (d) plus (ii) 80% of Consolidated EBITDA
----
attributable to any Acquisition (determined at the time of such Acquisition with
respect to the most recent period of four consecutive fiscal quarters for which
the relevant financial information is available, giving effect to any cost
savings), to the extent such Consolidated EBITDA is not included in the amount
determined pursuant to clause (i) above. For the purposes of this paragraph (d),
the amount referred to in clause (i)(y) above for the Test Period ended
September 30, 1998 shall be (A) $11,400,000, if the Stone Acquisition has
occurred on or prior to such date or (B) $7,500,000, otherwise (in which case
such amount shall equal $11,400,000 for the first Test Period ending after the
Stone Acquisition is consummated).
7.2 Indebtedness. Create, issue, incur, assume, become liable in
------------
respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any Wholly
Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
(c) Guarantee Obligations incurred in the ordinary course of business
by the Borrower or any of its Subsidiaries of obligations of any Wholly
Owned Subsidiary Guarantor;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or extensions
thereof (without increasing, or shortening the maturity of, the principal
amount thereof);
(e) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $500,000 at any one time outstanding;
(f) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$100,000,000 and (ii) Guarantee Obligations of any Subsidiary Guarantor in
respect of such Indebtedness, provided that such Guarantee
--------
54
Obligations are subordinated to the same extent as the obligations of the
Borrower in respect of the Senior Subordinated Notes;
(g) the Initial New Investor Redeemable Preferred Stock;
(h) customary purchase price adjustments in connection with
Acquisitions or Dispositions permitted hereby;
(i) Indebtedness assumed in connection with an Acquisition permitted
hereby and not incurred in contemplation thereof in an aggregate principal
amount not to exceed $100,000 at any one time outstanding; and
(j) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $500,000 at any one time outstanding.
7.3 Liens. Create, incur, assume or suffer to exist any Lien upon any
-----
of its property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or that are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
--------
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business that are not
overdue for a period of more than 30 days or that are being contested in
good faith by appropriate proceedings;
(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
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(d), provided that no such
--------
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(e) to finance the acquisition
of fixed or capital assets (and extensions, renewals and replacements
thereof), provided that (i) such Liens shall be created substantially
--------
simultaneously with the acquisition of such fixed or capital assets, (ii)
such Liens do not at any time encumber any property other than the property
financed by such Indebtedness and the proceeds thereof and (iii) the amount
of Indebtedness secured thereby is not increased;
55
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor or a lessee under any lease
entered into by the Borrower or any other Subsidiary in the ordinary course
of its business and covering only the assets so leased;
(j) attachment and judgment Liens in connection with judgments not
otherwise resulting in an Event of Default so long as such Liens are not
prior or superior to the Liens in favor of the Administrative Agent in
respect of the Collateral;
(k) customary deposit and escrow arrangements serving as a source of
payment for a portion of the purchase price for any Acquisition permitted
hereby;
(l) any Lien existing on any fixed or capital asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
fixed or capital asset of any Person that becomes a Subsidiary after the
date hereof prior to the time such Person becomes a Subsidiary; provided
--------
that (i) such Lien is not created in contemplation of or in connection with
such acquisition or such Person becoming a Subsidiary, as the case may be,
(ii) such Lien shall not apply to any other property or assets of the
Borrower or any Subsidiary, (iii) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the date
such Person becomes a Subsidiary, as the case may be and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof and (iv) the aggregate principal amount of
Indebtedness secured by such Lien does not exceed the amount permitted by
Section 7.2(i);
(m) Liens resulting from the cash collateralization (in the aggregate
amount of up to $1,000,000) of letters of credit and overdraft obligations
of the Borrower and its Subsidiaries outstanding on the Closing Date; and
(n) Liens not otherwise permitted by this Section so long as neither
(i) the aggregate outstanding principal amount of the obligations secured
thereby nor (ii) the aggregate fair market value (determined as of the date
such Lien is incurred) of the assets subject thereto exceeds (as to the
Borrower and all Subsidiaries) $500,000 at any one time.
7.4 Fundamental Changes. Enter into any merger, consolidation or
-------------------
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
--------
surviving corporation) or with or into any Wholly Owned Subsidiary
Guarantor (provided that the Wholly Owned Subsidiary Guarantor shall be the
--------
continuing or surviving corporation);
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Wholly Owned Subsidiary Guarantor;
(c) any Subsidiary of the Borrower may be merged with any other
Person to effect a Permitted Acquisition permitted by Section 7.8(h) so
long as the surviving entity is a Subsidiary of the Borrower; and
56
(d) the mergers contemplated by the City Truck Acquisition
Documentation shall be permitted.
7.5 Disposition of Property. After the Closing Date, Dispose of
-----------------------
any of its property, whether now owned or hereafter acquired, or, in the case of
any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to
any Person, except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor; and
(e) the Disposition of other property having a fair market value not
to exceed $500,000 in the aggregate for any fiscal year of the Borrower.
7.6 Restricted Payments. Declare or pay any dividend (other than
-------------------
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of Holdings (if any such holding company
exists or is created), the Borrower or any Subsidiary, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Holdings (if any
such holding company exists or is created), the Borrower or any Subsidiary
(collectively, "Restricted Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the Borrower or
any Wholly Owned Subsidiary Guarantor;
(b) so long as no Default or Event of Default shall have occurred and
be continuing, the Borrower may (i) (A) purchase Capital Stock from present
or former officers or employees of the Borrower or any Subsidiary upon the
death, disability or termination of employment of such officer or employee,
or (B) pay dividends to Holdings (if any such holding company exists or is
created) to purchase Holdings' Capital Stock from present or former
officers or employees of Holdings, the Borrower or any Subsidiary upon the
death, disability or termination of employment of such officer or employee,
provided, that the aggregate amount of payments under clause (i) after the
--------
date hereof (net of any proceeds received by Holdings (if any such holding
company exists or is created) and contributed to the Borrower after the
date hereof in connection with resales of Capital Stock so purchased) shall
not exceed $100,000, (ii) pay fees expressly permitted by the last sentence
of Section 7.10 and (iii) pay customary directors' fees, expenses and
indemnities;
(c) the Borrower may pay dividends to Holdings (if any such holding
company exists or is created) to permit Holdings to (i) pay corporate
overhead expenses incurred in the ordinary course of business not to exceed
$250,000 in any fiscal year, (ii) pay any taxes that are due and payable by
Holdings and the Borrower as part of a consolidated group, (iii) pay
57
fees expressly permitted by the last sentence of Section 7.10 and (iv) pay
customary directors' fees, expenses and indemnities;
(d) so long as no Loans are outstanding hereunder, the Borrower may
redeem the Initial New Investor Redeemable Preferred Stock on or prior to
the first anniversary of the Closing Date with the proceeds of the issuance
of Senior Subordinated Notes or a capital contribution;
(e) the Borrower may make dividend payments with respect to any class
of preferred stock in the form of additional shares of such class of stock;
and
(f) the Borrower may pay cash dividends with respect to the Initial
New Investor Redeemable Preferred Stock, at a per annum rate not to exceed
10.5%, on or prior to the first anniversary of the Closing Date.
7.7 Capital Expenditures; Foreign Expenditures. (a) Make or commit to
------------------------------------------
make any Capital Expenditure, except (i) maintenance Capital Expenditures of the
Borrower and its Subsidiaries in the ordinary course of business not exceeding
$3,000,000 in any fiscal year; provided, that such amount shall increase at a
--------
rate of $1,000,000 per every $30,000,000 of consideration paid with respect to
Permitted Acquisitions; provided further, that (x) up to $1,000,000 of any such
--------
amount referred to above, if not so expended in the fiscal year for which it is
permitted, may be carried over for expenditure in the next succeeding fiscal
year and (y) Capital Expenditures made pursuant to this clause (i) during any
fiscal year shall be deemed made, first, in respect of amounts permitted for
-----
such fiscal year as provided above and, second, in respect of amounts carried
------
over from the prior fiscal year pursuant to subclause (x) above, (ii) Capital
Expenditures in connection with the "build-up" of new business units ("Build-Up
--------
Capital Expenditures") not exceeding $3,000,000 in any fiscal year, (iii)
- --------------------
Capital Expenditures made with the proceeds of any Reinvestment Deferred Amount
and (iv) pursuant to the Stone Acquisition and Permitted Acquisitions.
(b) Notwithstanding anything in this Agreement to the contrary, (i)
Permitted Acquisitions and Build-Up Capital Expenditures shall in each case
result in the acquisition of Capital Stock of Persons domiciled, or assets
located, in the United States or Canada and (ii) the aggregate amount expended
pursuant thereto to purchase Capital Stock of Persons domiciled in Canada or
assets owned by such Persons shall not exceed $5,000,000 during the term of this
Agreement.
7.8 Investments. Make any advance, loan, extension of credit (by way
-----------
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "Investments"), except:
-----------
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of Holdings (if any such holding
company exists or is created), the Borrower or any Subsidiary of the
Borrower in the ordinary course of business (including for travel,
entertainment and relocation expenses) in an aggregate amount
58
for Holdings (if any such holding company exists or is created), the
Borrower or any Subsidiary of the Borrower not to exceed $500,000 at any
one time outstanding;
(e) the City Truck Acquisition and, subject to the satisfaction of
the conditions set forth on Schedule 7.8(e), the Stone Acquisition;
(f) Investments in assets useful in the business of the Borrower and
its Subsidiaries made by the Borrower or any of its Subsidiaries with the
proceeds of any Reinvestment Deferred Amount;
(g) Investments by Holdings (if any such holding company exists or is
created), the Borrower or any of its Subsidiaries in the Borrower or any
Person that, prior to such investment, is a Wholly Owned Subsidiary
Guarantor;
(h) Permitted Acquisitions, provided that no such Acquisitions may be
--------
consummated prior to the consummation of the Stone Acquisition;
(i) notes or Capital Stock of any customer received in connection
with any workout or insolvency event relating to such customer; and
(j) in addition to Investments otherwise expressly permitted by this
Section, Investments by the Borrower or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed $500,000 during the term of
this Agreement.
7.9 Optional Payments and Modifications of Certain Instruments. (a)
----------------------------------------------------------
Make or offer to make any optional or voluntary payment, prepayment, repurchase
or redemption of or otherwise optionally or voluntarily defease or segregate
funds with respect to the Senior Subordinated Notes, (b) amend, modify, waive or
otherwise change, or consent or agree to any amendment, modification, waiver or
other change to, any of the terms of the Senior Subordinated Notes (other than
any such amendment, modification, waiver or other change that (i) would extend
the maturity or reduce the amount of any payment of principal thereof or reduce
the rate or extend any date for payment of interest thereon and (ii) does not
involve the payment of a consent fee), (c) amend, modify, waive or otherwise
change, or consent or agree to any amendment, modification, waiver or other
change to, any of the terms of the Initial New Investor Preferred Stock, the
Initial New Investor Redeemable Preferred Stock or the Additional New Investor
Preferred Stock (other than any such amendment, modification, waiver or other
change that (i) would extend the scheduled redemption date or reduce the amount
of any scheduled redemption payment or reduce the rate or extend any date for
payment of dividends thereon and (ii) does not involve the payment of a consent
fee) or (d) designate any Indebtedness (other than obligations of the Loan
Parties pursuant to the Loan Documents) as "Designated Senior Indebtedness" for
the purposes of the Senior Subordinated Note Indenture.
7.10 Transactions with Affiliates. Enter into any transaction,
----------------------------
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than Holdings (if any such holding company exists or is
created), the Borrower or any Wholly Owned Subsidiary Guarantor) unless such
transaction is (a) otherwise permitted under this Agreement, (b) in the ordinary
course of business of Holdings (if any such holding company exists or is
created), the Borrower or such Subsidiary, as the case may be, and (c) upon fair
and reasonable terms no less favorable to Holdings (if any such holding company
exists or is created), the Borrower or such Subsidiary, as the case may be, than
it would obtain in a comparable arm's length transaction with a Person that is
not an Affiliate. Notwithstanding the
59
foregoing, the Borrower and its Subsidiaries may pay to the Buyer and its
Control Investment Affiliates fees and expenses pursuant to the Corporate
Development and Administrative Services Agreement dated as of June 1, 1998 (the
"Services Agreement") and may perform their obligations under the agreements
------------------
listed on Schedule 7.10, in each case as such agreements are in effect on the
Closing Date.
7.11 Sales and Leasebacks. After the Closing Date, enter into any
--------------------
arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property that has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or such
Subsidiary.
7.12 Changes in Fiscal Periods. Permit the fiscal year of the Test
-------------------------
Party to end on a day other than December 31 or permit the first three fiscal
quarters of the Test Party to end on any dates other than March 31, June 30 and
September 30, respectively.
7.13 Negative Pledge Clauses. Enter into or suffer to exist or become
-----------------------
effective any agreement that prohibits or limits the ability of Holdings (if any
such holding company exists or is created), the Borrower or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property or revenues, whether now owned or hereafter acquired, to secure its
obligations under the Loan Documents to which it is a party other than (a) this
Agreement and the other Loan Documents; (b) any agreements governing any
purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in
which case, any prohibition or limitation shall only be effective against the
assets financed thereby); (c) customary clauses in leases restricting the
assignment thereof; and (d) the Senior Subordinated Note Indenture.
7.14 Clauses Restricting Subsidiary Distributions. Enter into or
--------------------------------------------
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or
advances to, or other Investments in, the Borrower or any other Subsidiary of
the Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents and (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement that has been entered into in connection with the
Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary.
7.15 Lines of Business. Enter into any business, either directly or
-----------------
through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement (after giving effect
to the City Truck Acquisition) or that are reasonably related thereto.
7.16 Amendments to Acquisition Documents. (a) Amend, supplement or
-----------------------------------
otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of
the indemnities and licenses furnished to the Borrower or any of its
Subsidiaries pursuant to the City Truck Acquisition Documentation or, after
consummation of the Stone Acquisition, the Stone Acquisition Documentation such
that after giving effect thereto such indemnities or licenses shall be
materially less favorable to the interests of the Loan Parties or the Lenders
with respect thereto or (b) otherwise amend, supplement or otherwise modify the
terms and conditions of the City Truck Acquisition Documentation or the Stone
Acquisition Documentation except for any such amendment, supplement
60
or modification that (i) becomes effective after the Closing Date and (ii) could
not reasonably be expected to have a Material Adverse Effect.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Revolving
Loan or Reimbursement Obligation when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Revolving
Loan or Reimbursement Obligation, or any other amount payable hereunder or
under any other Loan Document, within five days after any such interest or
other amount becomes due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) (i) any Loan Party shall default in the observance or performance
of any agreement contained in clause (i) or (ii) of Section 6.4(a) (with
respect to the Borrower only), Section 6.5, Section 6.7(a) or Section 7 of
this Agreement or Section 5.6 or Section 5.8(b) of the Guarantee and
Collateral Agreement or (ii) an "Event of Default" under and as defined in
any Mortgage shall have occurred and be continuing; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days after notice
to the Borrower from the Administrative Agent or any Lender; or
(e) Holdings (if any such holding company exists or is created), the
Borrower or any of its Subsidiaries shall (i) default in making any payment
of any principal of any Indebtedness (including any Guarantee Obligation,
but excluding the Revolving Loans) on the scheduled or original due date
with respect thereto (after giving effect to the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created); or (ii) default in making any payment of any interest on any such
Indebtedness beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii) default in
the observance or performance of any other agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable; provided, that a default, event or
--------
condition described in clause (i), (ii) or (iii) of this paragraph (e)
shall not at any time constitute an Event of Default unless, at such time,
one or more defaults, events or conditions of the type described in clauses
(i), (ii) and (iii) of this paragraph
61
(e) shall have occurred and be continuing with respect to Indebtedness the
outstanding principal amount of which exceeds in the aggregate $500,000; or
(f) (i) Holdings (if any such holding company exists or is created),
the Borrower or any of its Subsidiaries shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or Holdings (if any such holding company exists or is created), the
Borrower or any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against Holdings
(if any such holding company exists or is created), the Borrower or any of
its Subsidiaries any case, proceeding or other action of a nature referred
to in clause (i) above that (A) results in the entry of an order for relief
or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against Holdings (if any such holding company exists or is
created), the Borrower or any of its Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets that results in the entry of an order for any such relief that shall
not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) Holdings (if any such
holding company exists or is created), the Borrower or any of its
Subsidiaries shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) Holdings (if any such holding
company exists or is created), the Borrower or any of its Subsidiaries
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Majority Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Majority Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(h) one or more judgments or decrees shall be entered against
Holdings (if any such holding company exists or is created), the Borrower
or any of its Subsidiaries involving in the aggregate a liability (to the
extent not paid or fully covered by insurance as to which the relevant
insurance company has acknowledged coverage) of $500,000 or more, and all
such
62
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 30 days from the entry thereof; or
(i) any of the Security Documents shall cease, for any reason, to be
in full force and effect in accordance with its terms, or any Loan Party or
any Affiliate of any Loan Party shall so assert, or any Lien created by any
of the Security Documents shall cease to be enforceable and of the same
effect and priority purported to be created thereby; or
(j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and
effect or any Loan Party or any Affiliate of any Loan Party shall so
assert; or
(k) (i) the Permitted Investors shall cease to have the power to
directly or indirectly vote or direct the voting of securities having a
majority of the ordinary voting power for the election of directors of the
Borrower or Holdings (if any such holding company exists or is created)
(determined on a fully diluted basis); (ii) the Permitted Investors shall
cease to own, directly or indirectly, of record and beneficially, at least
45% of the outstanding stock (including Initial New Investor Preferred
Stock) of the Borrower or Holdings (if any such holding company exists or
is created) having ordinary voting power for the election of directors
(determined on a fully diluted basis); (iii) any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), excluding the Permitted
Investors, shall become, or obtain rights (whether by means or warrants,
options or otherwise) to become, the "beneficial owner" (as defined in
Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly,
of 45% or more of the outstanding stock (including Initial New Investor
Preferred Stock) of the Borrower or Holdings (if any such holding company
exists or is created) having ordinary voting power for the election of
directors; (iv) the board of directors of the Borrower or Holdings (if any
such holding company exists or is created) shall cease to consist of a
majority of Continuing Directors; (v) Holdings (if any such holding company
exists or is created) shall cease to own and control, of record and
beneficially, directly, 100% of each class of outstanding Capital Stock of
the Borrower free and clear of all Liens (except Liens created by the
Guarantee and Collateral Agreement); or (vi) after the issuance of the
Senior Subordinated Notes, a Specified Change of Control shall occur; or
(l) Holdings (if any such holding company exists or is created) shall
(i) conduct, transact or otherwise engage in, or commit to conduct,
transact or otherwise engage in, any business or operations other than
those incidental to its ownership of the Capital Stock of the Borrower,
(ii) incur, create, assume or suffer to exist any Indebtedness or other
liabilities or financial obligations, except (x) nonconsensual obligations
imposed by operation of law, (y) pursuant to the Senior Subordinated Note
Indenture or the Loan Documents to which it is a party and (z) obligations
with respect to its Capital Stock or the Services Agreement, or (iii) own,
lease, manage or otherwise operate any properties or assets (including cash
(other than cash received in connection with dividends made by the Borrower
in accordance with Section 7.6 pending application in the manner
contemplated by said Section) and Cash Equivalents) other than the
ownership of shares of Capital Stock of the Borrower;
(m) after the issuance of the Senior Subordinated Notes, the Senior
Subordinated Notes or the guarantees thereof shall cease, for any reason,
to be validly subordinated to the Obligations or the obligations of the
Subsidiary Guarantors under the Guarantee and Collateral
63
Agreement, as the case may be, as provided in the Senior Subordinated Note
Indenture, or any Loan Party or any Affiliate of any Loan Party shall so
assert;
(n) the Borrower shall fail to appoint a satisfactory chief executive
officer within 10 days after the Closing Date (it being hereby agreed that
Larry Clayton or, if the Stone Acquisition is consummated, Jim Stone shall
be a satisfactory chief executive officer);
(o) on the day which is 91 days after the Closing Date, the
Consolidated Leverage Ratio (with the Test Period for this purpose being
the most recent period of 12 consecutive months for which the relevant
financial information is available) shall exceed 4.0 to 1.0 (the "Specified
---------
Event of Default") unless (a) the Senior Subordinated Note Date shall have
---------------- ------
occurred on or prior to the day which is 90 days after the Closing Date and
(b) the Stone Acquisition shall have been consummated on or prior to such
day; or
(p) Holdings, if any such holding company exists or is created, shall
fail to become a Guarantor, and a "Grantor", pursuant to the Guarantee and
Collateral Agreement;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Revolving Commitments shall immediately terminate and the
Revolving Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement and the other Loan Documents (including all amounts
of L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) shall
immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Majority Lenders, the Administrative Agent may, or upon the
request of the Majority Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Revolving Commitments to be terminated forthwith,
whereupon the Revolving Commitments shall immediately terminate; and (ii) with
the consent of the Majority Lenders, the Administrative Agent may, or upon the
request of the Majority Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Revolving Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. With respect to all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the other Loan
Documents. After all such Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been satisfied and all
other obligations of the Borrower hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower (or such other Person as may be
lawfully entitled thereto). Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived by the Borrower.
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SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints each Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes each Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, neither Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against either Agent.
Without limiting the foregoing, the use of the term "agent" with respect to
either Agent is used as a matter of market custom and is intended to create or
reflect only an administrative relationship between independent contracting
parties. The Agents and the Lenders hereby acknowledge and agree that the
Administrative Agent shall be the only Agent which shall be a "Representative"
of the Lenders under the Senior Subordinated Note Indenture (after execution and
delivery thereof).
The Issuing Lender shall act on behalf of the Lenders with respect to
Letters of Credit issued or made under this Agreement and the documents
associated therewith. It is understood and agreed that the Issuing Lender (a)
shall have all of the benefits and immunities (i) provided to the Agents in this
Section 9 with respect to acts taken or omissions suffered by the Issuing Lender
in connection with Letters of Credit issued or made under this Agreement and the
documents associated therewith as fully as if the term "Agents", as used in this
Section 9, included the Issuing Lender with respect to such acts or omissions
and (ii) as additionally provided in this Agreement and (b) shall have all of
the benefits of the provisions of subsection 9.7 or Section 10 as fully as if
the term "Agents", as used in subsection 9.7 or Section 10, included the Issuing
Lender.
9.2 Delegation of Duties. Each Agent may execute any of its duties
--------------------
under this Agreement and the other Loan Documents by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Neither Agent shall be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither Agent nor any of their respective
----------------------
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any other Loan
Party or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agents under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower or any other Loan Party to perform
its obligations hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrower or any other Loan Party.
65
9.4 Reliance by Agents. Each Agent shall be entitled to rely, and
------------------
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower or any other Loan Party), independent
accountants and other experts selected by such Agent. The Administrative Agent
may deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. Each Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the relevant Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Loan Documents in accordance
with a request of the relevant Lenders entitled to so act, and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
the Lenders and all future holders of the Revolving Loans.
9.5 Notice of Default. Neither Agent shall be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Lenders entitled to so act; provided that unless and until the
--------
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders (except to the extent that
this Agreement expressly requires that such actions be taken or not be taken
only with the consent or upon the authorization of the Majority Lenders).
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
-----------------------------------------
acknowledges that neither Agent nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by such Agent or any such other Person
hereinafter taken, including any review of the affairs of the Borrower or any
other Loan Party, shall be deemed to constitute any representation or warranty
by such Agent or any such other Person to any Lender. Each Lender represents to
the Agents that it has, independently and without reliance upon any Agent-
Related Person or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Borrower and the other Loan Parties and made its own
decision to make its extensions of credit hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and the other Loan Parties. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agents
hereunder, the Agents shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property,
66
condition (financial or otherwise), prospects or creditworthiness of the
Borrower or any other Loan Party which may come into the possession of the
Agents or any of their respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
9.7 Indemnification. Whether or not the transactions contemplated
---------------
hereby are consummated, the Lenders agree to indemnify each Agent-Related Person
(to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Revolving Percentages in effect on the date on which indemnification is sought,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Revolving Loans) be imposed on, incurred by or
asserted against such Agent-Related Person in any way relating to or arising out
of, the Revolving Commitments, this Agreement, any of the other Loan Documents
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
such Agent-Related Person under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
- --------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent resulting from the relevant
Agent-Related Person's gross negligence or willful misconduct. The agreements
in this subsection shall survive the payment of the Revolving Loans and all
other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its Affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower and the other Loan Parties as though such Agent were
not an Agent hereunder and under the other Loan Documents and without notice to
or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, each Agent and its Affiliates may receive information regarding the
Borrower or the other Loan Parties or their respective Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Borrower or the other Loan Parties or their respective Affiliates) and
acknowledge that neither Agent nor their respective Affiliates shall be under an
obligation to provide such information to them. With respect to the Revolving
Loans made by it and with respect to any Letter of Credit issued or participated
in by it, each Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not an Agent, and the terms "Lender" and "Lenders" shall include each
Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
------------------------------
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Majority Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent (provided that it shall have been approved by the Borrower
--------
(which approval shall not be unreasonably withheld)), shall succeed to the
rights, powers and duties of the Administrative Agent hereunder. If no
successor agent is appointed prior to the effective date of the resignation of
the Administrative Agent, the Administrative Agent may appoint, after consulting
with the Lenders and the Borrower, a successor agent from among the Lenders.
Effective upon such appointment by the Majority Lenders or by the Administrative
Agent, the term "Administrative Agent" shall mean such successor agent, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any
holders of the Revolving Loans. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was
67
Administrative Agent under this Agreement and the other Loan Documents. If no
successor agent has accepted appointment as Administrative Agent by the date
which is 10 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall assume and perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Majority Lenders appoint a successor agent as provided for above.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other Loan
----------------------
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Majority Lenders and each Loan Party party to the relevant Loan Document may,
or, with the written consent of the Majority Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Majority Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
-------- -------
supplement or modification shall (i) extend the date of scheduled reduction of
the Revolving Commitments pursuant to Section 2.2 without approval of the
Required Lenders; (ii) forgive the principal amount or extend the final
scheduled date of maturity of any Revolving Loan, reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any payment
thereof, or increase the amount or extend the expiration date of any Lender's
Revolving Commitment, in each case without the consent of each Lender directly
affected thereby; (iii) amend, modify or waive any provision of this Section
10.1 or reduce any percentage specified in the definition of Majority Lenders or
Required Lenders, consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement and the other Loan Documents,
release all or substantially all of the Collateral or release all or
substantially all of the Subsidiary Guarantors from their obligations under the
Guarantee and Collateral Agreement, in each case without the written consent of
all Lenders; (iv) amend, modify or waive any provision of Section 9 without the
written consent of the Agents; or (v) amend, modify or waive any provision of
Section 3 without the written consent of the Issuing Lender. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon the Loan Parties, the Lenders, the
Agents and all future holders of the Revolving Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of Holdings (if any such holding
company exists or is created), the Borrower and the Administrative Agent, and as
set forth in an administrative questionnaire delivered to the Administrative
Agent in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:
68
The Borrower: City Truck and Trailer Parts, Inc.
2901 Third Avenue North
Birmingham, Alabama 35202
Attention: Larry Clayton
Facsimile: 205-251-4962
Telephone: 205-322-5621
The Administrative Agent: Bank of America National Trust and
Savings Association
1850 Gateway Boulevard
Concord, California 94520
Attention: Jerry W. Allard
Facsimile: 925-675-8500
Telephone: 925-675-8384
; provided, that any notice, request or demand to or upon the Administrative
--------
Agent or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Revolving Loans and other extensions of credit hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
-----------------------------
reimburse the Administrative Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
the consummation and administration of the transactions contemplated hereby and
thereby and the enforcement or preservation of its rights hereunder or
thereunder, including the reasonable fees and disbursements of counsel to the
Administrative Agent and filing and recording fees and expenses, with statements
with respect to the foregoing to be submitted to the Borrower prior to the
Closing Date (in the case of amounts to be paid on the Closing Date) and from
time to time thereafter on a quarterly basis or such other periodic basis as the
Administrative Agent shall deem appropriate, (b) to pay or reimburse each Lender
and the Administrative Agent for all its costs and expenses incurred in
connection with the enforcement or, while an Event of Default is in effect,
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, that may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any
69
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "Indemnitee") harmless from
----------
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the use of
proceeds of the Revolving Loans or the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of Holdings
(if any such holding company exists or is created), the Borrower any of its
Subsidiaries or any of the Properties and the reasonable fees and expenses of
legal counsel in connection with claims, actions or proceedings by any
Indemnitee against any Loan Party under any Loan Document (all the foregoing in
this clause (d), collectively, the "Indemnified Liabilities"), provided, that
----------------------- --------
the Borrower shall have no obligation hereunder to any Indemnitee (including
pursuant to the next succeeding sentence) with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnitee. Without
limiting the foregoing, and to the extent permitted by applicable law, the
Borrower agrees not to assert and to cause its Subsidiaries not to assert, and
hereby waives and agrees to cause its Subsidiaries to so waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee. All amounts due
under this Section 10.5 shall be payable promptly after written demand therefor.
Statements payable by the Borrower pursuant to this Section 10.5 shall be
submitted to Larry Clayton (Telephone No. (205) 322-5621, Telecopy No. (205)
251-4962, at the address of the Borrower set forth in Section 10.2, or to such
other Person or address as may be hereafter designated by the Borrower in a
written notice to the Administrative Agent. The agreements in this Section 10.5
shall survive repayment of the Revolving Loans and all other amounts payable
hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a) This
------------------------------------------------------
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent, all future holders of the Revolving Loans and
their respective successors and assigns, except that the Borrower may not assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
-----------
in any Revolving Loan owing to such Lender, any Commitment of such Lender or any
other interest of such Lender hereunder and under the other Loan Documents. In
the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Revolving Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Revolving
Loans or any fees payable hereunder, or postpone the date of the final maturity
of the Revolving Loans, in each case to the extent
70
subject to such participation. The Borrower agrees that if amounts outstanding
under this Agreement and the Revolving Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such participating
--------
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 10.7(a) as fully as if it
were a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.15, 2.16 and 2.17 with respect to its
participation in the Revolving Commitments and the Revolving Loans outstanding
from time to time as if it was a Lender; provided that, in the case of Section
--------
2.16, such Participant shall have complied with the requirements of said Section
and provided, further, that no Participant shall be entitled to receive any
-------- -------
greater amount pursuant to any such Section than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable
--------
law, at any time and from time to time assign to any Lender or any affiliate
thereof or, with the consent of the Borrower and the Administrative Agent
(which, in each case, shall not be unreasonably withheld or delayed), to an
additional bank, financial institution or other entity (an "Assignee") all or
--------
any part of its rights and obligations under this Agreement pursuant to an
Assignment and Acceptance, executed by such Assignee, such Assignor and any
other Person whose consent is required pursuant to this paragraph, and delivered
to the Administrative Agent for its acceptance and recording in the Register;
provided that no such assignment to an Assignee (other than any Lender or any
- --------
affiliate thereof) shall be in an aggregate principal amount of less than
$5,000,000 (other than in the case of an assignment of all of a Lender's
interests under this Agreement), unless otherwise agreed by the Borrower and the
Administrative Agent. Upon such execution, delivery, acceptance and recording,
from and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with a Commitment and/or Revolving Loans as
set forth therein, and (y) the Assignor thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of an
Assignor's rights and obligations under this Agreement, such Assignor shall
cease to be a party hereto). Notwithstanding any provision of this Section 10.6,
the consent of the Borrower shall not be required for any assignment that occurs
when an Event of Default pursuant to Section 8(f) shall have occurred and be
continuing with respect to the Borrower.
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
--------
recordation of the names and addresses of the Lenders and the Revolving
Commitment of, and the principal amount of the Revolving Loans owing to, each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, each other Loan Party, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of the Revolving Loans and any Notes
evidencing the Revolving Loans recorded therein for all purposes of this
Agreement. Any assignment of any Revolving Loan, whether or not evidenced by a
Note, shall be effective only upon appropriate entries with respect thereto
being made in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of a Revolving Loan evidenced by a Note
shall be registered on the Register only upon surrender for registration of
assignment or transfer of the Note evidencing
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such Revolving Loan, accompanied by a duly executed Assignment and Acceptance,
and thereupon one or more new Notes shall be issued to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
10.6(c), together with payment to the Administrative Agent of a registration and
processing fee of $4,000, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) record the information contained therein
in the Register on the effective date determined pursuant thereto.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.6 concerning assignments of
Revolving Loans and Notes relate only to absolute assignments and that such
provisions do not prohibit assignments creating security interests, including
any pledge or assignment by a Lender of any Revolving Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
(g) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (f) above.
10.7 Adjustments; Set-off. (a) Except to the extent that this
--------------------
Agreement expressly provides for payments to be allocated to a particular
Lender or to the Lenders, if any Lender (a "Benefitted Lender") shall, at any
-----------------
time after the Revolving Loans and other amounts payable hereunder shall
immediately become due and payable pursuant to Section 8, receive any payment
of all or part of the Obligations owing to it, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 8(f), or otherwise),
in a greater proportion than any such payment to or collateral received by any
other Lender, if any, in respect of the Obligations owing to such other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of the Obligations owing to each such
other Lender, or shall provide such other Lenders with the benefits of any such
collateral, as shall be necessary to cause such Benefitted Lender to share the
excess payment or benefits of such collateral ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
- -------- -------
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower, as the case may be. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
--------
such notice shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of
72
this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
10.9 Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
-----------
represent the agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower, as the case may be at its address set forth in Section 10.2 or at
such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
10.13 Acknowledgements. The Borrower hereby acknowledges that:
----------------
73
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower and the Lenders.
10.14 Confidentiality. Each of the Administrative Agent and each
---------------
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated by such Loan Party
as confidential; provided that nothing herein shall prevent the Administrative
--------
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender that
agrees to maintain the confidentiality thereof, (b) to any Transferee or
prospective Transferee that agrees to comply with the provisions of this
Section, (c) to its employees, directors, agents, attorneys, accountants and
other professional advisors or those of any of its affiliates, (d) upon the
request or demand of any Governmental Authority, (e) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (f) if required to do so in connection with
any litigation or similar proceeding, (g) that has been publicly disclosed, (h)
to the National Association of Insurance Commissioners or any similar
organization or any nationally recognized rating agency that requires access to
information about a Lender's investment portfolio in connection with ratings
issued with respect to such Lender, or (i) in connection with the exercise of
any remedy hereunder or under any other Loan Document.
10.15 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE LENDERS
---------------------
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
74
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
CITY TRUCK AND TRAILER PARTS, INC.
By: /s/ Larry Clayton
-----------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as Administrative
Agent and as a Lender
By: /s/ Barry R. Dunn
-----------------------------
Name: BARRY R. DUNN
Title: VICE PRESIDENT
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH,
as Documentation Agent and as a Lender
By: /s/ Takuya Honjo
-----------------------------
Name: TAKUYA HONJO
Title: SENIOR VICE PRESIDENT
Annex A
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PRICING GRID FOR REVOLVING LOANS
============================================================================================================
Consolidated Leverage Ratio Applicable Margin Applicable Margin for
for Eurodollar Loans Base Rate Loans
- ------------------------------------------------------------------------------------------------------------
Greater than or equal to 5.0 to 1.0 2.50% 1.50%
- ------------------------------------------------------------------------------------------------------------
Greater than or equal to 4.5 to 1.0 but less than 2.25% 1.25%
5.0 to 1.0
- ------------------------------------------------------------------------------------------------------------
Greater than or equal to 4.0 to 1.0 but less than 2.00% 1.00%
4.5 to 1.0
- ------------------------------------------------------------------------------------------------------------
Greater than or equal to 3.5 to 1.0 but less than 1.75% 0.75%
4.0 to 1.0
- ------------------------------------------------------------------------------------------------------------
Less than 3.5 to 1.0 1.50% 0.50%
============================================================================================================
Changes in the Applicable Margin resulting from changes in the Consolidated
Leverage Ratio shall become effective on the date (the "Adjustment Date") on
---------------
which financial statements are delivered to the Lenders pursuant to Section 6.1
(but in any event not later than the 45th day after the end of each of the first
three quarterly periods of each fiscal year or the 90th day after the end of
each fiscal year, as the case may be) and shall remain in effect until the next
change to be effected pursuant to this paragraph, provided, that the first
--------
Adjustment Date shall not occur prior to the earlier of the Senior Subordinated
Note Date and the date that is 90 days after the Closing Date. If any financial
statements referred to above are not delivered within the time periods specified
above, then, until such financial statements are delivered, the Consolidated
Leverage Ratio as at the end of the fiscal period that would have been covered
thereby shall for the purposes of this definition be deemed to be greater than
5.0 to 1.0. In addition, at all times while an Event of Default shall have
occurred and be continuing, the Consolidated Leverage Ratio shall for the
purposes of this definition be deemed to be greater than 5.0 to 1.0. Each
determination of the Consolidated Leverage Ratio pursuant to this pricing grid
shall be made with respect to (or, in the case of Consolidated Total Debt, as at
the end of) the Test Period ending at the end of the period covered by the
relevant financial statements.