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EXHIBIT 10.7
EXECUTION COPY
4/01/98
ALRENCO, INC.
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
DATED AS OF APRIL 1, 1998
COMERICA BANK, AS AGENT
BANK ONE, TEXAS, N.A. AS CO-AGENT
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TABLE OF CONTENTS
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1. DEFINITIONS 1
2. REVOLVING CREDIT 20
2.1 Revolving Credit Commitment 20
2.2 Accrual of Interest and Maturit 20
2.3 Requests for Advances and Requests for Refundings and Conversions of
Revolving Credit Advances 21
2.4 Disbursement of Revolving Credit Advances 23
2.5 Prime-based Advance in Absence of Election or Upon Default 24
2.6 Revolving Credit Commitment Fee 24
2.7 Reduction of Indebtedness; Revolving Credit Aggregate Commitment 25
2.8 Optional Reduction or Termination of Revolving Credit Aggregate
Commitment 25
2.9 Extension of Revolving Credit Maturity Date 26
2.10 Optional Increase in Commitment 26
3. LETTERS OF CREDIT 28
3.1 Letters of Credit 28
3.2 Conditions to Issuance 29
3.3 Notice 30
3.4 Letter of Credit Fees 30
3.5 Other Letter of Credit Fees 31
3.6 Draws and Demands for Payment Under Letters of Credit 31
3.7 Obligations Irrevocable 33
3.8 Risk Under Letters of Credit 34
3.9 Indemnification 35
3.10 Right of Reimbursement 36
4. SWING LINE CREDIT 37
4.1 Swing Line Advances 37
4.2 Accrual of Interest; Margin Adjustments 37
4.3 Requests for Swing Line Advances 37
4.4 Disbursement of Swing Line Advances 39
4.5 Refunding of or Participation Interest in Swing Line Advances 39
5. MARGIN ADJUSTMENTS; INTEREST PAYMENTS 41
5.1 Margin Adjustments 41
5.2 Prime-based Interest Payments 41
5.3 Eurocurrency-based Interest Payments 42
5.4 Quoted Rate Advance Interest Payments 42
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5.5 Interest Payments on Conversions 42
5.6 Interest on Default 43
5.7 Prepayment 43
6. CONDITIONS 43
6.1 Execution of Notes and this Agreement 44
6.2 Corporate Authority 44
6.3 Collateral Documents and Guaranties 45
6.4 Insurance 45
6.5 Compliance with Certain Documents and Agreements 45
6.6 Merger Documents 45
6.7 Opinion of Counsel 46
6.8 Company's Certificate 46
6.9 Payment of Fees 46
6.10 Other Documents and Instruments 46
6.11 Continuing Conditions 46
7. REPRESENTATIONS AND WARRANTIES 47
7.1 Corporate Authority 47
7.2 Due Authorization - Company 47
7.3 Due Authorization - Guarantors 47
7.4 Liens 48
7.5 Taxes 48
7.6 No Defaults 48
7.7 Enforceability of Agreement and Loan Documents -- Company 48
7.8 Enforceability of Loan Documents -- Guarantors 48
7.9 Compliance with Laws 48
7.10 Non-contravention -- Company 49
7.11 Non-contravention -- Guarantors 49
7.12 No Litigation 49
7.13 Consents, Approvals and Filings, Etc 50
7.14 Agreements Affecting Financial Condition 50
7.15 No Investment Company or Margin Stock 50
7.16 ERISA 50
7.17 Conditions Affecting Business or Properties 51
7.18 Environmental and Safety Matters 51
7.19 Subsidiaries 51
7.20 Accuracy of Information 51
7.21 No Change in Requirements of Laws 52
8. AFFIRMATIVE COVENANTS 52
8.1 Financial Statements 52
8.2 Certificates; Other Information 53
8.3 Payment of Obligations 55
8.4 Conduct of Business and Maintenance of Existence 55
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8.5 Maintenance of Property; Insurance 55
8.6 Inspection of Property; Books and Records, Discussions 55
8.7 Notices 56
8.8 Hazardous Material Laws 57
8.9 Minimum Tangible Net Worth 58
8.10 Positive Net Income 58
8.11 Fixed Charge Coverage Ratio 58
8.12 Leverage Ratio 58
8.13 Taxes 58
8.14 Governmental and Other Approvals 58
8.15 Compliance with ERISA 58
8.16 ERISA Notices 58
8.17 Offices 59
8.18 Security 60
8.19 Performance of Contract Duties, Defense of Collateral 60
8.20 Possessory Perfection in Contract Collateral 60
8.21 Use of Proceeds 60
8.22 Future Subsidiaries 60
8.23 Royalty Payments on Licenses and Trademarks 61
8.24 Further Assurances 61
9. NEGATIVE COVENANTS 61
9.1 Limitation on Debt 61
9.2 Limitation on Liens 62
9.3 Limitation on Guarantee Obligations 63
9.4 Acquisitions 63
9.5 Limitation on Mergers, or Sale of Assets 63
9.6 Dividends 64
9.7 Limitation on Capital Expenditures 64
9.8 Limitation on Investments, Loans and Advances 65
9.9 Transactions with Affiliates 65
9.10 Sale and Leaseback 66
9.11 Limitation on Negative Pledge Clauses 66
9.12 Prepayment of Debts 66
10. DEFAULTS 66
10.1 Events of Default 66
10.2 Exercise of Remedies 68
10.3 Rights Cumulative 69
10.4 Waiver by Company of Certain Laws 69
10.5 Waiver of Defaults 69
10.6 Set Off 69
11. PAYMENTS, RECOVERIES AND COLLECTIONS 70
11.1 Payment Procedure 70
11.2 Application of Proceeds of Collateral 71
11.3 Pro-rata Recovery 71
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12. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS 72
12.1 Reimbursement of Prepayment Costs 72
12.2 Agent's Eurocurrency Lending Office 72
12.3 Circumstances Affecting Eurocurrency-based Rate Availability 73
12.4 Laws Affecting Eurocurrency-based Advance Availability 73
12.5 Increased Cost of Eurocurrency-based Advances 73
12.6 Indemnity 74
12.7 Other Increased Costs 75
12.8 Substitution of Banks 75
13. AGENT 77
13.1 Appointment of Agent 77
13.2 Deposit Account with Agent 77
13.3 Scope of Agent's Duties 77
13.4 Successor Agent 78
13.5 Agent in its Individual Capacity 78
13.6 Credit Decisions 79
13.7 Agent's Fees 79
13.8 Authority of Agent to Enforce Notes and This Agreement 79
13.9 Indemnification 79
13.10 Knowledge of Default 80
13.11 Agent's Authorization; Action by Banks 80
13.12 Enforcement Actions by the Agent 80
13.13 Managers and Lead Managers 81
14. MISCELLANEOUS 81
14.1 Accounting Principles 81
14.2 Consent to Jurisdiction 81
14.3 Law of Michigan 81
14.4 Interest 82
14.5 Closing Costs and Other Costs; Indemnification 82
14.6 Notices 83
14.7 Further Action 84
14.8 Successors and Assigns; Participations; Assignments 84
14.9 Indulgence 87
14.10 Counterparts 87
14.11 Amendment and Waiver 87
14.12 Confidentiality 88
14.13 Withholding Taxes 88
14.14 Taxes and Fees 88
14.15 WAIVER OF JURY TRIAL 89
14.16 Interest 89
14.17 Complete Agreement; Conflicts 90
14.18 Severability 90
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14.19 Table of Contents and Headings 90
14.20 Construction of Certain Provisions 90
14.21 Independence of Covenants 90
14.22 Reliance on and Survival of Various Provisions 90
14.23 Amendment and Restatement 91
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SCHEDULES
Schedule 1.1 Applicable L/C Fee Percentage, Applicable
Revolving Commitment Fee Percentage and
Eurocurrency Margins
Schedule 1.2 Percentages
Schedule 2 Insurance Deposits
Schedule 6.2 Good Standing Certificates
Schedule 6.3(b) List of Jurisdictions in which UCC Financing
Statements will be filed
Schedule 7.9 Consumer Credit Laws
Schedule 7.12 Litigation
Schedule 7.16 Pension Plans
Schedule 7.17 Conditions Affecting Business
Schedule 7.18 Environmental Matters
Schedule 7.19 Subsidiaries
Schedule 7.20 Contingent Obligations
Schedule 9.1 Indebtedness
Schedule 9.2 Liens
Schedule 9.3 Permitted Guarantees
EXHIBITS
Exhibit A Form of Request for Revolving Credit Advance
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Notice of Letters of Credit
Exhibit D Form of Request for Swing Line Advance
Exhibit E Form of Swing Line Note
Exhibit F Form of Swing Line Participation Certificate
Exhibit G Form of New Bank Addendum
Exhibit H Form of Covenant Compliance Report
Exhibit I Form of Assignment Agreement
Exhibit J Form of Guaranty (including Exhibit "A" - Joinder
Agreement) Company
Exhibit K Form of Borrowing Base Certificate
Exhibit L Form of Security Agreement
Exhibit M Form of Pledge Agreement
Exhibit N Form of Intercompany Note
Exhibit O Store Listings
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ALRENCO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
THIS ALRENCO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
("Agreement") is made as of the 1st day of April, 1998, by and among Comerica
Bank-Texas and the other financial institutions from time to time parties
hereto as lenders of the Revolving Credit (individually, "Revolving Credit
Bank", and collectively "Revolving Credit Banks"), Comerica Bank-Texas, as
lender of the Swing Line Credit ("Swing Line Bank" and together with Revolving
Credit Banks, individually, a "Bank" and any or all collectively referred to as
the "Banks"), Comerica Bank, as agent for the Banks (in such capacity,
"Agent"), and Alrenco, Inc., an Indiana corporation ("Company").
A. Company has requested that the Banks amend, renew and/or
extend to it revolving credit and letters of credit as previously extended to
Company by the Banks under that certain Revolving Credit Agreement dated as of
February 26, 1998, by and among Company, Agent and the Banks (the "Prior Credit
Agreement") on the terms and conditions set forth herein.
B. The Banks are prepared to extend such credit as aforesaid, by
amendment and renewal (but not in novation) of the Prior Credit Agreement, but
only upon the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the covenants contained herein,
Company, the Banks and Agent agree as follows:
COMPANY, AGENT AND BANKS AGREE:
1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
"Account Party(ies)" shall mean, with respect to any Letter of Credit,
the account party (which shall be Company or RTO Operating, with the
countersignature of the Company) named in an application to the Issuing Bank
for the issuance of such Letter of Credit.
"Action Rent-to-Own" shall mean Action Rent-to-Own Holdings of South
Carolina, Inc., a South Carolina corporation.
"Advance(s)" shall mean Revolving Credit Advance(s) and Swing Line
Advance(s).
"Affected Lender" shall have the meaning set forth in Section 12.8.
"Affiliate" shall mean, with respect to any Person, any other Person
or group acting in concert in respect of the first Person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with such first Person.
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For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person or group of Persons, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise. Unless otherwise specified to the
contrary herein, or the context requires otherwise, Affiliate shall refer to
the Company's Affiliates.
"Agent" shall mean Comerica Bank, in its capacity as agent for the
Banks hereunder, or any successor agent appointed in accordance with Section
13.4 hereof.
"Agent's Fees" shall mean those agency, and other fees and expenses
required to be paid by Company to Agent under Section 13.7 hereof.
"Alternate Base Rate" shall mean, for any day, an interest rate per
annum equal to the Federal Funds Effective Rate in effect on such day, plus one
percent (1%).
"Applicable Commitment Fee Percentage" shall mean as of any date of
determination thereof, the applicable percentage used to calculate the
Revolving Credit Commitment Fee due and payable hereunder, determined (based
upon the Fixed Charge Coverage Ratio) by reference to the appropriate columns
in the pricing matrix attached to this Agreement as Schedule 1.1.
"Applicable L/C Fee Percentage" shall mean, as of any date of
determination thereof, the applicable percentage used to calculate the Letter
of Credit Fees due and payable hereunder, determined (based upon the Fixed
Charge Coverage Ratio) by reference to the appropriate columns in the pricing
matrix attached to this Agreement as Schedule 1.1.
"Applicable Interest Rate" shall mean (i) in respect of a Revolving
Credit Advance, the Eurocurrency-based Rate or the Prime-based Rate, applicable
to such Advance (in the case of a Eurocurrency-based Advance, for the relevant
Interest Period), and (ii) in respect of a Swing Line Advance, the Prime-based
Rate or the Quoted Rate, applicable to such Advance, for the relevant Interest
Period, as selected by Company from time to time subject to the terms and
conditions of this Agreement.
"Asset Sale" shall mean the sale, transfer or other disposition by the
Company or any Subsidiary of any asset to any Person, other than sales,
transfers or other dispositions of inventory in the ordinary course of
business.
"ATRO" shall mean ATRO, Inc., formerly known as RTO Trademark Company,
Inc., a South Carolina corporation.
"Average Receipts" shall mean, as of any date of determination, an
amount calculated by taking the sum of the highest two of the immediately
preceding three calendar months' Rental Receipts, dividing such sum by two, and
multiplying the quotient by four. For the purposes of this definition, "Rental
Receipts" shall mean, as of any date of determination, the amount of gross
rental payments (including the amount of each such payment allocated to
liability damage waiver, club fees, delivery, reinstatement and late fees, but
excluding amounts allocated to any sales tax, early payouts and cash sales)
received by the Company or any Subsidiary in collected
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funds from the related Obligor under any Rental Contract; and shall include
rental payments received under any Rental Contracts originated by a Person
prior to the time such Person became a Subsidiary of the Company (so long as
such Person is a Subsidiary on the applicable date of determination) and under
any Rental Contracts acquired by the Company or any Subsidiary of the Company,
in either case pursuant to a Permitted Acquisition (though such rental payments
were not received by the Company or such Subsidiary).
"Banks" shall mean Comerica Bank-Texas ("Comerica-Texas") and such
other financial institutions from time to time parties hereto as lenders and
shall include the Revolving Credit Banks, the Swing Line Bank, the Issuing Bank
and any assignee which becomes a Bank pursuant to Section 14.8 hereof.
"Borrowing Base" shall mean, as of any date of determination, the
lesser of the (a) Average Receipts, (b) 50% of the Rental Income Value and (c)
100% of Original Cost.
"Borrowing Base Certificate" shall mean a borrowing base certificate,
substantially in the form of Exhibit K, with appropriate insertions and
executed by a Responsible Officer.
"Business Day" shall mean any day on which commercial banks are open
for domestic and international business in Detroit, London and New York.
"Capital Expenditures" shall mean, without duplication, any amounts
accrued in respect of a period in respect of any purchase or other acquisition
for value of fixed or capital assets; provided that, in no event shall Capital
Expenditures include amounts expended in respect of normal repair and
maintenance of plant facilities, machinery, fixtures and other like capital
assets utilized in the ordinary conduct of business (to the extent such amounts
would not be capitalized in preparing a balance sheet determined in accordance
with GAAP).
"Collateral" shall mean all property or rights in which a security
interest, mortgage, lien or other encumbrance for the benefit of the Banks is
or has been granted or arises or has arisen, under or in connection with this
Agreement, the other Loan Documents, or otherwise.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 4001 of ERISA or which is part of a group which includes the Company
and which is treated as a single employer under Section 414 of the Internal
Revenue Code.
"Company" is defined in the Preamble.
"Consumer Credit Laws" shall mean the requirements of all applicable
federal, state and local laws, ordinances, codes, rules, regulations and
guidelines (including consent decrees and administrative orders) relating to
consumer credit and protection or the rent-to-own industry, including without
limitation, usury laws, the Federal Truth-in- Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act,
the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, Federal Reserve Board Regulations B, M and Z, state
adaptations of the National Consumer Act and of the Uniform Consumer Credit
Code, and laws regarding unfair and deceptive practices, and any and all other
Consumer Credit Laws regarding the ability of a Person to charge interest
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or a time price differential at a certain rate, and any equal credit
opportunity, discrimination and other disclosure laws and any other consumer
credit or equal opportunity disclosure.
"Contractual Obligation" shall mean 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.
"Covenant Compliance Report" shall mean the report to be furnished by
Company to the Agent pursuant to Section 8.2(b) hereof, in the form of attached
Exhibit H and certified by a Responsible Officer, in which report Company shall
set forth, among other things, detailed calculations and the resultant ratios
or financial tests with respect to the financial covenants contained in
Sections 8.9 through 8.12 and Sections 9.6 and 9.8 of this Agreement.
"Debt" shall mean, as of any applicable date of determination, all
items of indebtedness, obligation or liability of a Person, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as liabilities in
accordance with GAAP, including without limitation, any items so classified on
a balance sheet or the accompanying footnotes and any reimbursement obligations
in respect of letters of credit, obligations in respect of bankers acceptances,
payment obligations, if any, under interest rate protection agreements
(including without limitation interest rate swaps and similar agreements), and
currency swaps and ▇▇▇▇▇▇ and similar agreements; provided, however that for
purposes of calculating the aggregate Debt of such Person and its Subsidiaries
(if any), the direct and indirect and absolute and contingent obligations of
such Person (whether direct or contingent) shall be determined without
duplication.
"De Minimis Matters" shall mean environmental or other matters, the
existence of which and any liability which may result therefrom, would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the financial condition or businesses of the Company and its
Subsidiaries (taken as a whole) or on the ability of the Company and
Subsidiaries (taken as a whole) to pay their debts, as such debts become due.
"Default" shall mean any event which with the giving of notice or the
passage of time, or both, would constitute an Event of Default under this
Agreement.
"Dollars" and the sign "$" shall mean lawful money of the United
States of America.
"EBITDAR" of any Person shall mean, for any period, the sum of (a) Net
Income for such period (without giving effect to (i) any one-time cash charges
in an aggregate amount not to exceed $10,000,000 and any one-time non-cash
charges in an aggregate amount not to exceed $1,000,000 arising from the Merger
and (ii) any one-time cash charges in an aggregate amount not to exceed
$2,000,000 for the four fiscal quarters then ending arising from any
acquisition and/or mergers other than the Merger, in each case without netting
the amount of any taxes attributable thereto) plus (b) to the extent deducted
in the computation of such Net Income, (i) all amounts treated as expenses for
depreciation of fixed assets, amortization of intangible assets and interest
paid or payable on the Debt of such Person for such period, (ii) all accrued
taxes on or measured by income and (iii) the amount of all Rental Expenses,
determined in each case in accordance with GAAP.
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"Effective Date" shall mean the date on which all the conditions
precedent set forth in Sections 6.1 through 6.10 have been satisfied.
"Eligible Rental Contract" shall mean a Rental Contract which has been
included in a Borrowing Base Certificate to determine the Borrowing Base and as
to which Rental Contract the following is true and accurate as of the time it
was utilized to determine the Borrowing Base and as of the time the Company has
requested an Advance to be based in part thereon:
1.0.1. it is substantially in the form of the current
form of rental contract for the rental of goods with option to purchase
approved for use in each state in which such contract is intended to be used as
customized to meet the legal requirements of each such state by the Association
of Progressive Rental Organizations or is otherwise in compliance with
applicable state law; and
1.0.2. it (and the interest of Company or the applicable
Subsidiary thereunder) has not been sold, transferred or otherwise assigned or
encumbered by the Company or such Subsidiary to any Person, other than to the
Banks as security for the Indebtedness hereunder; and
1.0.3. the related Obligor thereunder is not an
Affiliate of the Company; and
1.0.4. as of the last day in the calendar month
referenced in such Borrowing Base Certificate, the Rental Contract remains in
full force and effect and it is a valid, binding and enforceable obligation of
such Obligor; and
1.0.5. it complied at the time it was originated or
made, and is currently in compliance in all respects, with all applicable laws,
rules and regulations, including any Consumer Credit Laws; and
1.0.6. subject to repair or replacement thereof by the
Company or the applicable Subsidiary in accordance with its obligations under
the applicable Rental Contract, the goods covered by the applicable Rental
Contract have been delivered to the related Obligor and, on the date of
delivery, satisfied all warranties, expressed or implied, made or deemed to be
made to such Obligor; and
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1.0.7. the Company or the applicable Subsidiary owns the
goods free and clear of all liens or encumbrances, except the security interest
granted by Company or such Subsidiary, as the case may be, to the Banks and
except for Liens permitted by Section 9.2 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor act or code and the regulations in effect
from time to time thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which is part of a group which includes the Company and would be
treated as a single employer under Section 414(b) or (c) of the Internal
Revenue Code.
"Eurocurrency-based Advance" shall mean a Revolving Credit Advance
which bears interest at the Eurocurrency- based Rate.
"Eurocurrency-based Rate" shall mean, with respect to any
Eurocurrency-Interest Period, the per annum interest rate which is equal to the
sum of the Margin plus the quotient of:
(A) the per annum interest rate at which deposits in eurodollars
are offered to Agent's Eurocurrency Lending Office by other
prime banks in the eurodollar market in an amount comparable
to the relevant Eurocurrency-based Advance and for a period
equal to the relevant Eurocurrency-Interest Period at
approximately 11:00 a.m. Detroit time two (2) Business Days
prior to the first day of such Eurocurrency-Interest Period,
divided by
(B) an amount equal to one minus the stated maximum rate
(expressed as a decimal) of all reserve requirements
(including, without limitation, any marginal, emergency,
supplemental, special or other reserves) that is specified on
the first day of such Eurocurrency-Interest Period by the
Board of Governors of the Federal Reserve System (or any
successor agency thereto) for determining the maximum reserve
requirement with respect to eurodollar funding (currently
referred to as "eurocurrency liabilities" in Regulation D of
such Board) maintained by a member bank of such System,
all as conclusively determined (absent manifest error) by the Agent, such sum
to be rounded upward, if necessary, to the nearest whole multiple of 1/16th of
1%.
"Eurocurrency-Interest Period" shall mean the Interest Period
applicable to a Eurocurrency-based Advance.
"Eurocurrency Lending Office" shall mean, (a) with respect to the
Agent, Agent's office located at Grand Cayman, British West Indies or such
other branch or branches of Agent, domestic or foreign, as it may hereafter
designate as a Eurocurrency Lending Office by notice to Company and the Banks,
and (b) as to each of the Banks, its office, branch or affiliate located at its
address set forth on the signature pages hereof (or identified thereon as a
Eurocurrency Lending Office), or at such other office, branch or affiliate of
such Bank as it may hereafter designate as its Eurocurrency Lending Office by
notice to Company and Agent.
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"Event of Default" shall mean each of the Events of Default specified
in Section 10.1 hereof.
"Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by Agent from three Federal funds brokers of recognized standing
selected by it, all as conclusively determined by the Agent, such sum to be
rounded upward, if necessary, to the nearest whole multiple of 1/16th of 1%.
"Fees" shall mean the Revolving Credit Commitment Fee, the Letter of
Credit Fees, the Agent's Fees, and the other fees and charges payable by
Company to the Banks or Agent hereunder.
"Financing Lease" shall mean, as applied to any Person, any lease of
any personal property the discounted present value of the rental obligations of
such Person as lessee under which, in conformity with GAAP, is required to be
capitalized on the balance sheet of that Person, and shall exclude any
Operating Leases.
"Fixed Charge Coverage Ratio" shall mean as of any date of
determination, a ratio (i) the numerator of which shall be equal to the sum of
EBITDAR for the preceding four fiscal quarters then ending, and (ii) the
denominator of which shall be Fixed Charges.
"Fixed Charges" of any Person shall mean, for any date of
determination for the preceding four fiscal quarters then ending, the sum,
without duplication, of (i) all interest expense paid or payable during such
period on the Total Debt of such Person plus (ii) the amount of all Rental
Expenses of such Person during such period, all determined in accordance with
GAAP plus (iii) all cash dividends paid by Company pursuant to Section 9.6
hereof.
"Funded Debt" shall mean as of any applicable date of determination,
all Debt of a Person for borrowed money (but excluding Debt of such Person to
its Subsidiaries, Debt of Subsidiaries of such Person to such Person or to
other Subsidiaries, trade payables, accruals and deferred income taxes) or
which has been incurred in connection with the acquisition of assets (including
the acquisition of assets in connection with the Merger) in each case
determined on a consolidated basis and in accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as in effect on the date hereof, consistently
applied.
"Governmental Obligations" means noncallable direct general
obligations of the United States of America or obligations the payment of
principal of and interest on which is unconditionally guaranteed by the United
States of America.
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"Guarantor(s)" shall mean (a) as of the Effective Date, RTO Operating,
RTO Holding, ATRO and Action Rent-To-Own and (b) thereafter, each of the
entities referred to in clause (a) and each other Subsidiary which from time to
time guaranties the obligations of the Company hereunder and under the other
Loan Documents.
"Guaranty" shall mean the Guaranty made by each of the Guarantors in
favor of the Agent for the ratable benefit of the Banks in connection with the
Prior Credit Agreement (or to be made by execution of a Joinder Agreement
substantially in the form of the Joinder Agreement attached as "Exhibit A" to
such Guaranty), as amended or otherwise modified from time to time.
"Guarantee Obligation" shall mean as to any Person (the "guaranteeing
person") (a) any obligation of the guaranteeing person or (b) any obligation of
another Person (including, without limitation, any bank under any letter of
credit), the creation of which was induced by a reimbursement, counter
indemnity or similar obligation issued by the guaranteeing person, in either
case guaranteeing or in effect guaranteeing any Debt, leases, dividends or
other obligations (the "primary obligations") of any other third Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, 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 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 Company in good faith.
"Hazardous Material" shall mean and include any hazardous, toxic or
dangerous waste, substance or material defined as such in (or for purposes of)
the Hazardous Material Laws.
"Hazardous Material Law(s)" shall mean all laws, codes, ordinances,
rules, regulations, orders, decrees and directives issued by any federal,
state, provincial, local, foreign or other governmental or quasi-governmental
authority or body (or any agency, instrumentality or political subdivision
thereof) pertaining to any hazardous, toxic or dangerous waste, substance or
material on or about any facilities owned, leased or operated by Company or any
of its Subsidiaries, or any portion thereof including, without limitation,
those relating to soil, surface, subsurface ground water conditions and the
condition of the ambient air; and any state and local laws and regulations
pertaining to any hazardous, toxic or dangerous waste, substance or material
and/or asbestos; any so-called "superfund" or "superlien" law; and any other
federal, state,
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provincial, foreign or local statute, law, ordinance, code, rule, regulation,
order or decree regulating, relating to, or imposing liability or standards of
conduct concerning, any hazardous, toxic or dangerous waste, substance or
material, as now or at any time hereafter in effect.
"Hereof", "hereto", "hereunder" and similar terms shall refer to this
Agreement and not to any particular paragraph or provision of this Agreement.
"Indebtedness" shall mean all indebtedness and liabilities (including
without limitation interest, fees and other charges) arising under this
Agreement or any of the other Loan Documents, whether direct or indirect,
absolute or contingent, of Company or any Guarantor to any of the Banks or to
the Agent, in any manner and at any time, whether evidenced by the Notes,
arising under any Guaranty, or any of the other Loan Documents, due or
hereafter to become due, now owing or that may hereafter be incurred by Company
or any Guarantor to, any of the Banks or by Agent, and any judgments that may
hereafter be rendered on such indebtedness or any part thereof, with interest
according to the rates and terms specified, or as provided by law, and any and
all consolidations, amendments, renewals, replacements, substitutions or
extensions of any of the foregoing; provided, however that for purposes of
calculating the Indebtedness outstanding under the Notes or any of the other
Loan Documents, the direct and indirect and absolute and contingent obligations
of the Company and the Guarantors (whether direct or contingent) shall be
determined without duplication.
"Intercompany Loan" shall mean any loan (or advance in the nature of a
loan) by the Company to any Guarantor or by any Guarantor to another Guarantor
provided, however that each such loan or advance is subordinated in right of
payment and priority to the Indebtedness on terms and conditions satisfactory
to Agent and the Banks; and provided further however that, all such loans shall
be evidenced by Intercompany Notes (originals of which shall have been
delivered to Agent), which notes shall be pledged to the Agent for the benefit
of the Banks as security for the Indebtedness hereunder.
"Intercompany Loans, Advances or Investments" shall mean any
Intercompany Loan and any advance or investment by the Company or any Guarantor
(including without limitation any guaranty of obligations or indebtedness to
third parties) to or in any 100% Subsidiary.
"Intercompany Note" shall mean an Intercompany Note evidencing
Intercompany Loans substantially in the form of Exhibit N, and otherwise on
terms and conditions satisfactory to the Agent and the Banks.
"Interest Period" shall mean (a) with respect to a Eurocurrency-based
Advance, one (1), two (2), three (3), six (6) or twelve (12) months (or any
lesser or greater number of days agreed to in advance by Company, Agent and the
Revolving Credit Banks) as selected by Company pursuant to Section 2.3,
provided, however, that any Eurocurrency- Interest Period which commences on
the last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month
and (b) with respect to a Swing Line Advance, shall mean a period of one (1) to
thirty (30) days agreed to in advance by Company and the Swing Line Bank as
selected by Company pursuant to Section 4.3. Each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the
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next succeeding Business Day or, if such next succeeding Business Day falls in
the next succeeding calendar month, on the next preceding Business Day, and no
Interest Period which would end after the Revolving Credit Maturity Date shall
be permitted with respect to any Advance.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and the regulations promulgated thereunder.
"Investment" shall mean, when used with respect to any Person, (a) any
loan, investment or advance made by such Person to any other Person (including,
without limitation, any contingent obligation) in respect of any capital stock,
Debt, obligation or liability of such other Person and (b) any other investment
made by such Person (however acquired) in stock or other ownership interests in
any other Person, including, without limitation, any investment made in
exchange for the issuance of shares of stock of such Person.
"Issuing Bank" shall mean Comerica Bank-Texas in its capacity as
issuer of one or more Letters of Credit hereunder.
"Issuing Office" shall mean Issuing Bank's office located at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or such other office as Issuing Bank shall
designate as its Issuing Office.
"Joinder Agreement" shall mean a joinder agreement in the form
attached as "Exhibit A" to the form of the Guaranty (Exhibit J to this
Agreement), to be executed and delivered by any Person required to be a
Guarantor pursuant to Section 8.22 of this Agreement.
"Letter(s) of Credit" shall mean any standby letters of credit issued
by Issuing Bank at the request of or for the account of an Account Party or
Account Parties pursuant to Article 3 hereof.
"Letter of Credit Agreement" shall mean, in respect of each Letter of
Credit, the application and related documentation satisfactory to the Issuing
Bank of an Account Party or Account Parties requesting Issuing Bank to issue
such Letter of Credit, as amended from time to time.
"Letter of Credit Fees" shall mean the fees payable to Agent for the
accounts of the Banks in connection with Letters of Credit pursuant to Section
3.4 hereof.
"Letter of Credit Maximum Amount" shall mean as of any date of
determination the lesser of:
(a) Two Million Dollars ($2,000,000); or
(b) the difference between (A) the lesser of (x) the Revolving
Credit Aggregate Commitment as of such date, and (y) the
Borrowing Base as of such date, MINUS (B) the aggregate
principal amount of Advances outstanding as of such date.
"Letter of Credit Obligations" shall mean at any date of
determination, the sum of (a) the aggregate undrawn amount of all Letters of
Credit then outstanding, (b) the aggregate face
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amount of all Letters of Credit requested but not yet issued as of such date
and (c) the aggregate amount of Reimbursement Obligations which have not been
reimbursed by the Company as of such date.
"Letter of Credit Payment" shall mean any amount paid or required to
be paid by the Issuing Bank in its capacity hereunder as issuer of a Letter of
Credit as a result of a draft or other demand for payment under any Letter of
Credit.
"Leverage Ratio" shall mean as of the last day of any computation
period, the ratio of (a) Total Debt as of such day to (b) the sum of Total Debt
plus Total Shareholders' Equity as of such day.
"Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, trust receipt, conditional sale
or title retaining contract, sale and leaseback transaction, financing
statement or comparable notice or other filing or recording, Financing Lease,
subordination or any claim or right, or any other type of lien, charge,
encumbrance, preferential or priority arrangement or other claim or right,
whether based on common law or statute.
"Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Letter of Credit Agreements, the Security Agreement, the Pledge Agreement,
the Guaranty(ies) and any other documents, certificates, instruments or
agreements executed pursuant to or in connection with any such document or this
Agreement, as such documents may be amended or otherwise modified from time to
time.
"Majority Banks" shall mean at any time Banks holding 66-2/3% of the
aggregate principal amount of the Indebtedness then outstanding under the Notes
(provided that, for purposes of determining Majority Banks hereunder,
Indebtedness outstanding under the Swing Line Notes shall be allocated among
the Banks based upon their respective Percentages), or, if no Indebtedness is
then outstanding, Banks holding 66-2/3% of the Percentages; provided, however
that at any time there are only two Banks party to this Agreement, "Majority
Banks" shall mean all Banks.
"Margin" shall mean, as of any date of determination thereof, the
applicable interest rate margin determined in accordance with the provisions of
Section 5.1 hereof (based upon the Fixed Charge Coverage Ratio) by reference to
the appropriate columns in the pricing matrix attached to this Agreement as
Schedule 1.1.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, property, or financial condition of the Company and
its Subsidiaries taken as a whole, (b) the ability of the Company to perform
its obligations under this Agreement, the Notes or any other Loan Document to
which it is a party, or (c) the validity or enforceability of this Agreement,
any of the Notes or any of the other Loan Documents or the rights or remedies
of the Agent or the Banks hereunder or thereunder.
"Merger" shall mean the merger of RTO into the Company pursuant to and
in accordance with the Merger Documents.
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"Merger Documents" shall mean the Agreement and Plan of Merger by and
between the Company and RTO dated as of September 28, 1997, as amended and the
Articles of Merger and Certificate of Merger issued by the secretary of state
of Indiana and Delaware, respectively.
"Multiemployer Plan" shall mean a Pension Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Net Income" shall mean the net income (or loss) of a Person for any
period determined in accordance with GAAP.
"New Bank Addendum" shall mean an Addendum, substantially in the form
of Exhibit G hereto, to be executed and delivered by each Bank becoming a party
to this Agreement pursuant to Section 2.10 hereof.
"New Equity" shall mean capital stock or other equity interests issued
and sold on or after the Effective Date by the Company, excluding capital stock
issued by the Company as part of the total acquisition consideration paid in
connection with a Permitted Acquisition.
"Notes" shall mean the Revolving Credit Notes and the Swing Line Note.
"Obligor" shall mean the Person obligated for the payment of rent and
other sums under any Rental Contract; and "related Obligor" shall, when used
with respect to any Rental Contract, mean the Person so obligated thereunder.
"Operating Lease" shall mean any lease other than a Financing Lease
and shall include, without limitation, any store leases.
"Original Cost" shall mean as of any date of determination, the
original cost of goods which are or may hereafter be subject to a Rental
Contract and which goods, as of the date of determination, satisfy (if such
goods are, as of such date subject to a Rental Contract), or would satisfy (if
such goods are not, as of such date, subject to a Rental Contract) all
warranties, expressed or implied, made or deemed to be made to an Obligor under
a Rental Contract, and which goods are owned by the Company or such Subsidiary,
subject to the security interest granted by Company or the applicable
Subsidiary pursuant to the Loan Documents, free and clear of all liens or
encumbrances.
"PBGC" shall mean the Pension Benefit Guaranty Corporation under
ERISA, or any successor corporation
"Pension Plan" shall mean each employee pension benefit plan, as
defined in Section 3(2) of ERISA, of the Company or an ERISA Affiliate but only
to the extent such Pension Plan is subject to ERISA, as provided in Section 4
of ERISA, and is subject to Section 412 of the Internal Revenue Code and
Section 302 of ERISA.
"Percentage" shall mean, with respect to any Bank, its percentage
share, as set forth on Schedule 1.2 hereto, of the Revolving Credit Aggregate
Commitment and Letters of Credit, as
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the context indicates, as such Exhibit may be revised from time to time by
Agent in accordance with provisions of Section 14.8.
"Permitted Acquisition" shall mean any acquisition by the Company or
any of its Subsidiaries of assets, businesses or business interests or shares
of stock or other ownership interests of or in any Person, conducted while no
Default or Event of Default has occurred and is continuing hereunder (both
before and after giving effect thereto) which, in the case of an acquisition
pursuant to clause (c) hereof, is approved in writing by the Majority Banks
prior to its consummation and is otherwise conducted in accordance with the
following requirements:
(a) Such acquisition is of a business or Person engaged in the
rent-to-own business;
(b) The board of directors (or other Person(s) exercising similar
functions) of the seller of the assets or issuer of the shares of stock or
other ownership interests being acquired shall not have disapproved such
transaction or recommended that such transaction be disapproved;
(c) in the event that the value of such proposed new acquisition,
computed on the basis of total acquisition consideration paid or incurred, or
to be paid or incurred, by the Company or its Subsidiaries with respect
thereto, including all indebtedness which is assumed or to which such assets,
businesses or business or ownership interests or shares, or any Person so
acquired, is subject,
(i) shall be greater than or equal to Fifteen Million
Dollars ($15,000,000), determined as of the date of such acquisition,
excluding from the calculation of the value of such acquisition the
value of any common shares transferred as a part of such acquisition,
or
(ii) shall be greater than or equal to Fifty Million
Dollars ($50,000,000), determined as of the date of such acquisition,
including in the calculation of the value of such acquisition the
value of any common shares transferred as a part of such acquisition,
or
(iii) when combined with the value of all other
acquisitions conducted as Permitted Acquisitions in same fiscal year
shall be greater than or equal to One Hundred Million Dollars
($100,000,000), determined as of the date of such acquisition,
including in the calculation of the aggregate value of all such
acquisitions, the value of any common shares transferred as a part of
such acquisitions,
then not less than thirty (30) nor more than ninety (90) days prior to the date
each such proposed acquisition is scheduled to be consummated, the Company
provides written notice thereof to Agent, accompanied by (A) draft of the
letter of intent and, when available, all material documents pertaining to such
proposed acquisition, (B) detail setting forth the acquisition price with
supporting documentation and historical financial information (including income
statement, balance sheet and cash flows) covering at least three complete
fiscal years of the acquisition target prior to the effective date of the
acquisition or the entire credit history of the acquisition target, whichever
period is shorter (provided, however, that, if the financial information
referred
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to in this subparagraph (B) is not available, Company shall furnish Agent with
financial information otherwise reasonably satisfactory to the Majority Banks,
and (C) Pro Forma Projected Financial Information, whereupon Agent shall
promptly notify each of the Banks of its receipt thereof and upon the written
request of any Bank distribute copies of all notices and other materials
received from Company under this clause (c) to each Bank;
(d) in the event that the value of such proposed new acquisition,
computed on the basis of total acquisition consideration paid or incurred, or
to be paid or incurred, by the Company or its Subsidiaries with respect
thereto, including all indebtedness which is assumed or to which such assets,
businesses or business or ownership interests or shares, or any Person so
acquired, is subject, but excluding the value of any common shares transferred
as a part of such acquisition is less than Fifteen Million Dollars
($15,000,000) determined as of the date of such acquisition, then not less than
ten (10) Business Days after date each such proposed acquisition has been
consummated, the Company provides written notice thereof to Agent (with
certified copies of all material documents pertaining to such acquisition),
whereupon Agent shall promptly notify each of the Banks of its receipt thereof
and upon the written request of any Bank distribute copies of all notices and
other materials received from Company under this clause (d) to each Bank;
(e) on the date of any such acquisition, all necessary or
appropriate governmental, quasi-governmental, agency, regulatory or similar
approvals of applicable jurisdictions (or the respective agencies,
instrumentalities or political subdivisions, as applicable, of such
jurisdictions) and all necessary or appropriate non-governmental and other
third-party approvals (other than landlord consents for stores purchased in
connection with the acquisition) which, in each case, are material to such
acquisition have been obtained and are in effect, and the Company and its
Subsidiaries are in full compliance therewith, and all necessary or appropriate
declarations, registrations or other filings with any court, governmental or
regulatory authority, securities exchange or any other person have been made;
and
(f) within thirty (30) days after any such acquisition has been
completed, the Company shall deliver to the Agent executed copies of all
material documents pertaining to such acquisition and the Company, its
Subsidiaries and any of the other business entities involved in such
acquisition, as required by Section 8.22 hereof, shall execute or cause to be
executed, and provide or cause to be provided to Agent, for the Banks, any Loan
Documents required by such Section 8.22.
"Permitted Guarantees" shall mean those guaranties listed on
Schedule 9.3
"Permitted Investments" shall mean
(a) Governmental Obligations;
(b) Obligations of a state of the United States, the
District of Columbia or any possession of the United States, or any
political subdivision thereof, which are described in Section 103(a)
of the Internal Revenue Code and are graded in any of the highest 3
major grades as determined by at least one nationally recognized
rating agency; or secured, as to payments of principal and interest,
by a letter of credit provided by a
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financial institution or insurance provided by a bond insurance
company which itself or its debt is rated in the highest 3 major
grades as determined by at least one nationally recognized rating
agency;
(c) Banker's acceptances, commercial accounts,
certificates of deposit, or depository receipts issued by a Bank or a
bank, trust company, savings and loan association, savings bank or
other financial institution whose deposits are insured by the Federal
Deposit Insurance Corporation and whose reported capital and surplus
equal at least $500,000,000;
(d) commercial paper with a minimum rating of "A-1"
(or better) by S&P or "P-1" (or better) by Moody's, full faith and
credit direct obligations of the United States of America,
certificates of deposit, and other short term investments (each of a
duration of one year or less), maintained by the Company or any of its
Subsidiaries consistent with the present investment practices of such
parties (as classified in the current financial statements of such
parties);
(e) Secured repurchase agreements against obligations
itemized in paragraph (a) above, and executed by a bank or trust
company or by members of the association of primary dealers or other
recognized dealers in United States government securities, the market
value of which must be maintained at levels at least equal to the
amounts advanced and repurchase agreements entered into with
counterparties having ratings in either of the highest two rating
categories by Moody's or S&P, or the highest rating category by Fitch
Investor Services, Duff & ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Bank Watch and providing
for underlying securities to be held by a third party;
(f) Any fund or other pooling arrangement which
exclusively purchases and holds the investments itemized in (a)
through (e) above; and
(g) Commercial accounts maintained at a bank, trust
company, savings and loan association, savings bank or other financial
institution whose deposits are federally insured, which accounts are
maintained in the ordinary course of RTO Operating's business with an
individual maximum daily balance not to exceed $35,000.
"Permitted Liens" shall mean:
(a) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of
the Company in conformity with GAAP;
(b) carriers', warehousemen's, mechanics',
materialmen's, repairmen's, landlord's liens or other like Liens
arising in the ordinary course of business which are not overdue for a
period of more than 60 days or which are being contested in good faith
by appropriate proceedings;
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(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation, and deposits securing liability to insurance carriers
under insurance or self-insurance arrangements (which deposits are
listed on Schedule 2);
(d) deposits to secure (i) the performance of bids,
trade contracts (other than for borrowed money), statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature in an aggregate amount not to exceed
$100,000 at any one time or (ii) the performance of leases permitted
hereunder, in each case given or incurred on terms, in amounts and
otherwise in the ordinary course of business; and
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and which 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 Company.
"Person" shall mean a natural person, corporation, limited liability
company, partnership, limited liability partnership, trust, incorporated or
unincorporated organization, joint venture, joint stock company, or a
government or any agency or political subdivision thereof or other entity of
any kind.
"Pledge Agreements" shall mean the Pledge Agreements executed and
delivered by the Company and RTO Holding in favor of the Agent in connection
with the Prior Credit Agreement or any pledge agreement to be executed and
delivered pursuant to Section 8.22 hereof substantially in the form of such
Pledge Agreements previously delivered by the Company and its Subsidiaries, as
amended or otherwise modified from time to time.
"Prime-based Advance" shall mean an Advance which bears interest at
the Prime-based Rate.
"Prime-based Rate" shall mean, for any day, that rate of interest
which is equal to the greater of (i) the Prime Rate, or (ii) the Alternate Base
Rate.
"Prime Rate" shall mean the per annum rate of interest announced by
the Agent, at its main office from time to time as its "prime rate" (it being
acknowledged that such announced rate may not necessarily be the lowest rate
charged by the Agent, to any of its customers), which Prime Rate shall change
simultaneously with any change in such announced rate.
"Prior Credit Agreement" is defined in the Recitals.
"Pro Forma Projected Financial Information" shall mean, as to any
proposed acquisition, a statement executed by a Responsible Officer of the
Company (supported by reasonable detail) setting forth the total consideration
to be paid or incurred in connection with the proposed acquisition and, pro
forma combined projected financial information for the Company and its
consolidated Subsidiaries and the acquisition target (if applicable),
consisting of projected
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balance sheets as of the proposed effective date of the acquisition or the
closing date and as of the end of at least the next succeeding two (2) fiscal
years of Company following the acquisition and projected statements of income
for each of those years, including sufficient detail to permit calculation of
the amounts and the financial covenants described in Sections 8.9 through 8.12
hereof, as projected as of the effective date of the acquisition and for those
fiscal years and accompanied by (i) a statement setting forth a calculation of
the ratios and amounts so described, (ii) a statement in reasonable detail
specifying all material assumptions underlying the projections and (iii) such
other information as the Majority Banks shall reasonably request.
"Prohibited Transaction" shall mean any transaction involving a
Pension Plan which constitutes a "prohibited transaction" as defined in ERISA
Section 406 and for which no statutory or administrative exemption applies
under ERISA Section 408, to the extent applicable to the GCC or any ERISA
Affiliate.
"Purchasing Lender" shall have the meaning set forth in Section 12.8.
"Quoted Rate" shall mean the rate of interest per annum offered by the
Swing Line Bank in its sole discretion with respect to a Swing Line Advance.
"Quoted Rate Advance" means any Swing Line Advance which bears
interest at the Quoted Rate.
"Rating Agency" shall mean ▇▇▇▇▇'▇ Investor Services, Standard and
Poor's Ratings Group or any other nationally recognized statistical rating
organization which is acceptable to the Agent.
"Reimbursement Obligation(s)" shall mean the obligation of an Account
Party or Account Parties under each Letter of Credit Agreement to reimburse the
Issuing Bank for each payment made by the Issuing Bank under the Letter of
Credit issued pursuant to such Letter of Credit Agreement, together with all
other sums, fees, charges and amounts which may be owing to the Issuing Bank
under such Letter of Credit Agreement.
"Rental Contract(s)" shall mean a rental purchase contract,
originated by Company or a Subsidiary of the Company and a related Obligor for
the rental of goods, whether such contract is now existing or hereafter
arising, and which Rental Contract provides by its terms that if the Obligor
continuously renews such contract for a set period (set forth in each such
contract), or if the Obligor exercises a specified early purchase option, the
title to such rental goods will be transferred to the Obligor at the end of
such period, or upon exercise of such purchase option.
"Rental Expense" shall mean with respect to any Person for any period,
the aggregate rental obligations of such Person paid or required to be paid in
respect of such period under Operating Leases, excluding vehicle leases in the
ordinary course of business, (net of income from sub-leases thereof, but
including taxes, insurance, maintenance and similar obligations under such
leases), whether or not such obligations are reflected as liabilities or
commitments on a balance sheet of such Person.
"Rental Income Value" shall mean, as of any date of determination, the
value of the rental payments remaining on all Eligible Rental Contracts,
assuming such Eligible Rental Contract
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will be continuously renewed by the related Obligor until title to the goods
rented thereunder has transferred to such Obligor.
"Request for Revolving Credit Advance" shall mean a Request for
Revolving Credit Advance issued by Company under Section 2.3 of this Agreement
in the form annexed hereto as Exhibit A, as amended or otherwise modified.
"Request for Swing Line Advance" shall mean a Request for Swing Line
Advance issued by Company under Section 4.3 of this Agreement in the form
attached hereto as Exhibit D, as amended or otherwise modified.
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and bylaws, the partnership agreement or other organizational or
governing documents of such Person and any law, treaty, rule or regulation or
determination of an arbitration 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" shall mean the chief executive officer, chief
financial officer, or the president of the Company, or any other officer having
substantially the same authority and responsibility; or with respect to
compliance with financial covenants, the chief financial officer, the treasurer
or the vice president of finance of the Company, or any other officer having
substantially the same authority and responsibility.
"Revolving Credit" shall mean the revolving credit loan to be advanced
to the Company by the Revolving Credit Banks pursuant to Article 2 hereof, in
an aggregate amount (subject to the terms hereof), not to exceed, at any one
time outstanding, the Revolving Credit Aggregate Commitment.
"Revolving Credit Advance" shall mean a borrowing requested by Company
and made by Revolving Credit Banks under Section 2.1 of this Agreement,
including without limitation any readvance, refunding or conversion of such
borrowing pursuant to Section 2.3 hereof and any advance in respect of a Letter
of Credit under Section 3.6 hereof, and shall include, as applicable, a
Eurocurrency-based Advance and/or Prime-based Advance.
"Revolving Credit Aggregate Commitment" shall mean Sixty Million
Dollars ($60,000,000) subject to the increase of the Revolving Credit Aggregate
Commitment, pursuant to Section 2.10 hereof, by an amount up to the amount of
the Revolving Credit Optional Increase and subject to reduction or termination
pursuant to Section 2.8 or 10.2 hereof.
"Revolving Credit Banks" shall mean Comerica Bank-Texas, Bank One,
Texas, N.A. and such other financial institutions from time to time parties
hereto as lenders of the Revolving Credit.
"Revolving Credit Commitment Fee" shall mean the fees payable to Agent
for distribution to the Revolving Credit Banks pursuant to Section 2.6 hereof.
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"Revolving Credit Maturity Date" shall mean the earlier to occur of
(i) February 26, 2001 as such date may be extended from time to time pursuant
to Section 2.9 hereof, and (ii) the date on which the Revolving Credit
Aggregate Commitment shall be terminated pursuant to Section 2.8 or Section
10.2 hereof.
"Revolving Credit Notes" shall mean the revolving credit notes
described in Section 2.1 hereof, made by Company to each of the Revolving
Credit Banks in the form annexed to this agreement as Exhibit B, as such notes
may be amended or supplemented from time to time, and any other notes issued in
substitution, replacement or renewal thereof from time to time.
"Revolving Credit Optional Increase" shall mean an amount up to Forty
Million Dollars ($40,000,000).
"RTO" shall mean RTO, Inc., a Delaware corporation.
"RTO Holding" shall mean RTO Holding Co., Inc., a Delaware
corporation.
"RTO Operating" shall mean RTO Operating, Inc., a Delaware
corporation.
"Security Agreement" shall mean the Security Agreement (including the
Trademark Agreement which shall be executed concurrently therewith) executed
and delivered by the Company and each Guarantor in favor of the Agent in
connection with the Prior Agreement, or to be executed and delivered pursuant
to Section 8.22 hereof , as amended or otherwise modified from time to time.
"Subsidiary(ies)" shall mean any other corporation, association, joint
stock company, business trust limited liability company or any other business
entity of which more than fifty percent (50%) of the outstanding voting stock,
share capital, membership or other interests, as the case may be, is owned
either directly or indirectly by any Person or one or more of its Subsidiaries,
or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by any Person and/or its
Subsidiaries. Unless otherwise specified to the contrary herein,
Subsidiary(ies) shall refer to the Company's Subsidiary(ies).
"Swing Line Advance" shall mean a borrowing made by Swing Line Bank to
Company pursuant to Section 4.1 hereof.
"Swing Line Commitment" shall mean Three Million Dollars ($3,000,000),
subject to termination pursuant to Section 10.2 hereof.
"Swing Line Credit" shall mean the revolving credit loan to be
advanced to the Company by the Swing Line Bank pursuant to Article 4 hereof, in
an aggregate amount (subject to the terms hereof), not to exceed, at any one
time outstanding, the amount set forth in Section 4.1.
"Swing Line Bank" shall mean Comerica Bank-Texas, in its capacity as
lender under Article 4 of this Agreement, and its successors and assigns.
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"Swing Line Note" shall mean the swing line note described in Section
4.1 hereof, made by Company to Swing Line Bank in the form annexed hereto as
Exhibit E, as such Note may be amended or supplemented from time to time, and
any notes issued in substitution, replacement or renewal thereof from time to
time.
"Tangible Net Worth" shall mean, as of any applicable date of
determination, the difference between (i) net book value of all assets of the
Company (other than patents, patent rights, trademarks, trade names,
franchises, copyrights, licenses, goodwill and similar intangible assets),
minus (ii) all Debt of Company, in each case as reflected on the balance sheet
of the Company's most recently filed Form 10-Q or Form 10-K.
"Total Debt" shall mean, without duplication, the sum of (i) all
Funded Debt plus (ii) the amount of all Financing Leases, plus (iii) all
Guarantee Obligations (but excluding the Permitted Guarantees), of the Company
and its Subsidiaries in each case determined in accordance with GAAP.
"Total Shareholders Equity" shall mean the total of shareholders'
equity (including capital stock, additional paid-in capital and retained
earnings after deducting treasury stock) of the Company, as determined in
accordance with GAAP.
"Uniform Commercial Code" shall mean the Uniform Commercial Code of
any applicable state, and, unless specified otherwise the Uniform Commercial
Code as in effect in the State of Michigan.
2. REVOLVING CREDIT
2.1. REVOLVING CREDIT COMMITMENT. Subject to the terms and
conditions of this Agreement (including Section 2.3 hereof), each Revolving
Credit Bank severally and for itself alone agrees to make Advances of the
Revolving Credit to Company from time to time on any Business Day during the
period from the Effective Date hereof until (but excluding) the Revolving
Credit Maturity Date in an aggregate amount not to exceed at any one time
outstanding each such Revolving Credit Bank's Percentage of the Revolving
Credit Aggregate Commitment. All of such Advances hereunder shall be evidenced
by the Revolving Credit Notes, under which advances, repayments and readvances
may be made, subject to the terms and conditions of this Agreement.
2.2. ACCRUAL OF INTEREST AND MATURITY. (a) The Revolving Credit
Notes, and all principal and interest outstanding thereunder, shall mature and
become due and payable in full on the Revolving Credit Maturity Date, and each
Advance evidenced by the Revolving Credit Notes from time to time outstanding
hereunder shall, from and after the date of such Advance, bear interest at its
Applicable Interest Rate. The amount and date of each Revolving Credit Advance,
its Applicable Interest Rate, its Interest Period, and the amount and date of
any repayment shall be noted on Agent's records, which records may be kept
electronically and which will be conclusive evidence thereof, absent manifest
error; provided, however, that any failure by the Agent to record any such
information shall not relieve Company of its
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obligation to repay the outstanding principal amount of such Advance, all
interest accrued thereon and any amount payable with respect thereto in
accordance with the terms of this Agreement and the Loan Documents.
2.3. REQUESTS FOR ADVANCES AND REQUESTS FOR REFUNDINGS AND
CONVERSIONS OF REVOLVING CREDIT ADVANCES. Company may request a Revolving
Credit Advance, refund any Revolving Credit Advance in the same type of
Revolving Credit Advance or convert any Revolving Credit Advance to any other
type of Revolving Credit Advance only after delivery to Agent of a Request for
Revolving Credit Advance executed by a person authorized by the Company to make
such requests on behalf of Company subject to the following and to the
remaining provisions hereof:
2.3.1. each such Request for Revolving Credit Advance
shall set forth the information required on the Request for Revolving Credit
Advance including without limitation:
2.3.1.1. the proposed date of Revolving
Credit Advance, which must be a Business Day;
2.3.1.2. whether the Revolving Credit Advance
is a refunding or conversion of an
outstanding Revolving Credit Advance; and
2.3.1.3. whether such Revolving Credit
Advance is to be a Prime-based Advance or a
Eurocurrency-based Advance, and, except in
the case of a Prime-based Advance, the
Interest Period applicable thereto;
2.3.2. each such Request for Revolving Credit Advance
shall be delivered to Agent by 11:00 a.m. (Detroit time) three (3) Business
Days prior to the proposed date of Revolving Credit Advance, except in the case
of a Prime-based Advance, for which the Request for Revolving Credit Advance
must be delivered by 10 a.m. (Detroit time) on such proposed date;
2.3.3. the principal amount of such requested Revolving
Credit Advance, plus the principal amount of all other Advances then
outstanding hereunder, plus the Letter of Credit Obligations, less the
principal amount of any outstanding Swing Line Advance or Revolving Credit
Advance to be refunded by the requested Revolving Credit Advance shall not
exceed the lesser of the then applicable (i) Revolving Credit Aggregate
Commitment and (ii) Borrowing Base;
2.3.4. in the case of a Prime-based Advance, the
principal amount of the initial funding of such Advance, as opposed to any
refunding or conversion thereof, shall be at least Two Million Dollars
($2,000,000) and (y) in the case of a Eurocurrency-based Advance, the
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principal amount of such Advance, plus the amount of any other outstanding
Indebtedness under this Agreement to be then combined therewith having the same
Interest Period shall be at least Two Million Dollars ($2,000,000) and at any
one time there shall not be in effect more than six (6) Interest Periods with
respect to the Revolving Credit;
2.3.5. each Request for Revolving Credit Advance shall
constitute and include a certification by the Company as of the date thereof
that:
2.3.5.1. both before and after the Revolving
Credit Advance, the obligations of the
Company and the Guarantors set forth in this
Agreement and the other Loan Documents, as
applicable, are valid, binding and
enforceable obligations of such parties;
2.3.5.2. to the best knowledge of Company all
conditions to Advances of the Revolving
Credit have been satisfied;
2.3.5.3. there is no Default or Event of
Default in existence, and none will exist
upon the making of the Advance;
2.3.5.4. the representations and warranties
contained in this Agreement and the other
Loan Documents (except, in the case of
refundings or conversions of outstanding
Advances, the representations set forth in
Sections 7.13 and 7.20) are true and correct
in all material respects and shall be true
and correct in all material respects as of
and immediately after the making of the
Advance; and
2.3.5.5. the execution of such Revolving
Credit Advance will not violate the material
terms and conditions of any material
contract, agreement or other borrowing of
Company or any of its Subsidiaries.
2.3.6. Notwithstanding the foregoing, however, during
the period beginning on the Effective Date and ending on a date which is the
earlier to occur of 180 days after the Effective Date and the activation by the
Company of the entire Revolving Credit Optional Increase pursuant to Section
2.10 (or such lesser number of days to which the Agent, in its sole discretion,
may agree) thereafter and unless the Agent shall agree otherwise, (i) any
Advance carried at the Eurocurrency-based Rate shall have an Interest Period of
one month (or a lesser number of days, as agreed to in Advance by the Company,
the Agent and the Banks), (ii) upon the completion of any such Advance, there
shall be no more than one (1) such Interest Period in effect for all Revolving
Credit Advances and (iii) all such Interest Periods shall end on the same day
of the month.
Agent, acting on behalf of the Banks, may, at its option, lend under this
Section 2 upon the telephone request of an authorized officer of Company and,
in the event Agent makes any such
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Advance upon a telephone request, the requesting officer shall, if so requested
by Agent, fax to Agent, on the same day as such telephone request, a Request
for Revolving Credit Advance. Company hereby authorizes Agent to disburse
Advances under this Section 2 pursuant to the telephone instructions of any
person purporting to be a person identified by name on a written list of
persons authorized by the Company to make Requests for Advance on behalf of the
Company. Notwithstanding the foregoing, the Company acknowledges that Company
shall bear all risk of loss resulting from disbursements made upon any
telephone request. Each telephone request for an Advance shall constitute a
certification of the matters set forth in the Request for Revolving Credit
Advance form as of the date of such requested Advance.
2.4. DISBURSEMENT OF REVOLVING CREDIT ADVANCES.
2.4.1. Upon receiving any Request for a Revolving Credit
Advance from Company under Section 2.3 hereof, Agent shall promptly notify each
Revolving Credit Bank by wire, telecopy, telex or by telephone (confirmed by
wire, telecopy or telex) of the amount of such Revolving Credit Advance to be
made and the date such Advance is to be made by said Revolving Credit Bank
pursuant to its Percentage of the Revolving Credit Advance. Unless such
Revolving Credit Bank's commitment to make Revolving Credit Advances hereunder
shall have been suspended or terminated in accordance with this Agreement, each
Revolving Credit Bank shall send the amount of its Percentage of the Advance in
same day funds in Dollars to Agent at the office of Agent located at One
Detroit Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ not later
than 3:00 p.m. (Detroit time) on the date of such Advance.
2.4.2. Subject to submission of a Request for Revolving
Credit Advance delivered in accordance with Section 2.3 hereof by Company
without exceptions noted in the compliance certification therein and to the
other terms and conditions hereof, Agent shall make available to Company the
aggregate of the amounts so received by it from the Revolving Credit Banks
under this Section 2.4, in like funds, not later than 4:00 p.m. (Detroit time)
on the date of such Revolving Credit Advance by credit to an account of Company
maintained with Agent or to such other account or third party as Company may
reasonably direct.
2.4.3. Unless Agent shall have been notified by any
Revolving Credit Bank prior to the date of any proposed Revolving Credit
Advance that such Revolving Credit Bank does not intend to make available to
Agent such Revolving Credit Bank's Percentage of the Revolving Credit Advance,
Agent may assume that such Revolving Credit Bank has made such amount available
to Agent on such date, as aforesaid and may, in its sole discretion and without
obligation to do so, in reliance upon such assumption, make available to
Company a corresponding amount. If such amount is not in fact made available to
Agent by such Revolving Credit Bank in accordance with Section 2.4(a), as
aforesaid, Agent shall be entitled to recover such amount on demand from such
Revolving Credit Bank. If such Revolving Credit Bank does not pay such amount
forthwith upon Agent's demand therefor, the Agent shall promptly notify
Company, and Company shall pay such amount to Agent. Agent shall also be
entitled to recover from such Revolving Credit Bank or from Company, as the
case may be but without duplication,
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interest on such amount in respect of each day from the date such amount was
made available by Agent to Company to the date such amount is recovered by
Agent, at a rate per annum equal to:
2.4.3.1. in the case of such Revolving Credit
Bank, the Federal Funds Effective Rate for
the first two (2) Business Days such amount
remains unpaid and at the rate of interest
applicable to the Revolving Credit Advances
thereafter; or
2.4.3.2. in the case of Company, the rate of
interest then applicable to the Revolving
Credit Advance.
The obligation of any Revolving Credit Bank to make any Revolving
Credit Advance hereunder shall not be affected by the failure of any
other Revolving Credit Bank to make any Revolving Credit Advance
hereunder, and no Bank shall have any liability to the Company, the
Agent, any other Bank, or any other party for another Bank's failure
to make any loan or Revolving Credit Advance hereunder.
2.5. PRIME-BASED ADVANCE IN ABSENCE OF ELECTION OR UPON DEFAULT.
If, as to any outstanding Eurocurrency- based Advance, Agent has not received
payment on the last day of the Interest Period applicable thereto, or does not
receive a timely Request for Revolving Credit Advance meeting the requirements
of Section 2.3 hereof with respect to the refunding or conversion of such
Advance, or, subject to Section 5.6 hereof, if on such day a Default or Event
of Default shall exist, the principal amount thereof which is not then prepaid
shall be converted automatically to a Prime-based Advance and the Agent shall
thereafter promptly notify Company of said action.
2.6. REVOLVING CREDIT COMMITMENT FEE. From the Effective Date to
the Revolving Credit Maturity Date, the Company shall pay to the Agent on
behalf of Banks a Revolving Credit Commitment Fee quarterly in arrears
commencing April 1, 1998 (in respect of the prior calendar quarter or portion
thereof), and on the first day of each Fiscal Quarter thereafter. The Revolving
Credit Commitment Fee shall be the sum of the Applicable Commitment Fee
Percentage times the daily average amount by which the Revolving Credit
Aggregate Commitment then applicable under Section 2.6 hereof exceeds the sum
of (i) the aggregate principal amount of Revolving Credit Advances outstanding
during such period, (ii) the Letter of Credit Obligations during such period,
and (iii) the aggregate principal amount of Swing Line Advances outstanding
during such period, in each case determined on a daily basis. The Revolving
Credit Commitment Fee shall be computed on the basis of a year of three hundred
sixty (360) days and assessed for the actual number of days elapsed. Whenever
any payment of the Revolving Credit Commitment Fee shall be due on a day which
is not a Business Day, the date for payment thereof shall be extended to the
next Business Day. Upon receipt of such payment, Agent shall make prompt
payment to each Bank of its share of the Revolving Credit Commitment Fee based
upon its respective Percentage. It is expressly understood that the Revolving
Credit Commitment Fees described in this Section are not refundable under any
circumstances.
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2.7. REDUCTION OF INDEBTEDNESS; REVOLVING CREDIT AGGREGATE
COMMITMENT. (a) If at any time and for any reason the aggregate principal
amount of Swing Line Advances and Revolving Credit Advances hereunder to
Company, plus the Letter of Credit Obligations which shall be outstanding at
such time, shall exceed the lesser of the then applicable (i) Revolving Credit
Aggregate Commitment then in effect or (ii) the Borrowing Base, Company shall
immediately reduce any pending request for an Advance on such day by the amount
of such excess and, to the extent any excess remains thereafter, immediately
repay an amount of the Indebtedness equal to such excess and, to the extent
such Indebtedness consists of Letter of Credit Obligations, provide cash
collateral on the basis set forth in Section 10.2 hereof. Company acknowledges
that, in connection with any repayment required hereunder, it shall also be
responsible for the reimbursement of any prepayment or other costs required
under Section 12.1 hereof; provided, however, that Company shall, in order to
reduce any such prepayment costs and expenses, first prepay such portion of the
Indebtedness then carried as a Prime-based Advance, if any.
(b) Immediately upon receipt by the Company or any Subsidiary of
any net cash proceeds from any Asset Sale, the Company shall prepay the
principal amount of Advances outstanding on such day by the amount of such net
cash proceeds. To the extent that, on the date any mandatory reduction of
outstanding Advances under this Section 2.7 is due, the outstanding Advances
are being carried being carried, in whole or in part, at the Eurocurrency-based
Rate and no Default or Event of Default has occurred and is continuing, the
Company shall first repay Advances being carried at the Prime-based rate, and
then the Company may deposit the amount of such mandatory repayment in a cash
collateral account to be held by the Agent, for and on behalf of the Banks
(which shall be an interest-bearing account), on such terms and conditions as
are reasonably acceptable to Agent and the Majority Banks. Subject to the terms
and conditions of said cash collateral account, sums on deposit in said cash
collateral account shall be applied (until exhausted) to reduce the principal
balance of the Eurocurrency-based Advances on the last day of each Interest
Period attributable to such Eurocurrency-based Advances.
2.8. OPTIONAL REDUCTION OR TERMINATION OF REVOLVING CREDIT
AGGREGATE COMMITMENT. The Company may, upon at least five (5) Business Days'
prior written notice to Agent, permanently reduce the Revolving Credit
Aggregate Commitment in whole at any time, or in part from time to time,
without premium or penalty, provided that: (i) each partial reduction of the
Revolving Credit Aggregate Commitment shall be in an aggregate amount equal to
at least Five Million Dollars ($5,000,000) or a larger integral multiple of One
Million Dollars ($1,000,000); (ii) each reduction shall be accompanied by the
payment of the Revolving Credit Commitment Fee, if any, accrued to the date of
such reduction; (iii) the Company shall prepay in accordance with the terms
hereof the amount, if any, by which the sum of the aggregate unpaid principal
amount of Swing Line Advances and Revolving Credit Advances, plus the Letter of
Credit Obligations, exceeds the lesser of (1) the then applicable Revolving
Credit Aggregate Commitment, taking into account the aforesaid reductions
thereof, together with accrued but unpaid interest on the principal amount of
such prepaid Advances to the date of prepayment and (2) Borrowing Base; and
(iv) no reduction shall reduce the amount of the Revolving Credit Aggregate
Commitment to an amount which is less than the Letter of Credit Obligations at
such time. Reductions of the Revolving Credit Aggregate Commitment and any
accompanying prepayments of the Revolving Credit Notes shall be distributed by
Agent to each Revolving Credit Bank in accordance with such Bank's
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Percentage thereof, and will not be available for reinstatement by or readvance
to the Company and any accompanying prepayments of the Swing Line Notes shall
be distributed by Agent to the Swing Line Bank and will not be available for
reinstatement by or readvance to the Company. Any reductions of the Revolving
Credit Aggregate Commitment hereunder shall reduce each Revolving Credit Bank's
portion thereof proportionately (based upon the applicable Percentages), and
shall be permanent and irrevocable. Any payments made pursuant to this Section
shall be applied first to outstanding Prime-based Advances under the Revolving
Credit, next to Swing Line Advances which bear interest at the Prime-based
Rate, next to Quoted Rate Advances and then to Eurocurrency-based Advances.
Company acknowledges that, in connection with any repayment required hereunder,
it shall also be responsible for the reimbursement of any prepayment or other
costs required under Section 12.1 hereof; provided, however, that Company
shall, in order to reduce any such prepayment costs and expenses, first prepay
such portion of the Indebtedness then carried as a Prime-based Advance, if any.
2.9. EXTENSION OF REVOLVING CREDIT MATURITY DATE. (a) Provided that
no Default or Event of Default has occurred and is continuing, Company may, by
written notice to Agent (with sufficient copies for each Bank) (which notice
shall be irrevocable and which shall not be deemed effective unless actually
received by Agent) prior to 60 days prior to Anniversary Date of fiscal years
1999 and/or 2000, as the case may be, request that the Banks extend the then
applicable Revolving Credit Maturity Date to a date that is one year later than
the Revolving Credit Maturity Date then in effect (each such request, a
"Request"). Each Bank shall, not later than thirty (30) calendar days
following the date of its receipt of the Request, give written notice to the
Agent stating whether such Bank is willing to extend the Revolving Credit
Maturity Date as requested. If Agent has received the aforesaid written
approvals of such Request from each of the Banks, then, effective upon the date
of Agent's receipt of all such written approvals from the Banks, as aforesaid,
the Revolving Credit Maturity Date shall be so extended for an additional one
year period, the term Revolving Credit Maturity Date shall mean such extended
date and Agent shall promptly notify the Company that such extension has
occurred. In no event however, shall the Revolving Credit Maturity Date be
extended beyond February 26, 2003.
(b) If (i) any Bank gives the Agent written notice
that it is unwilling to extend the Revolving Credit Maturity Date as requested
or (ii) any Bank fails to provide written approval to Agent of such a Request
within thirty (30) calendar days of the date of such Bank's receipt of the
Request, then (w) the Banks shall be deemed to have declined to extend the
Revolving Credit Maturity Date, (x) the then-current Revolving Credit Maturity
Date shall remain in effect (with no further right on the part of Company to
request extensions thereof under this Section 2.9), and (y) the commitments of
the Banks to make Advances of the Revolving Credit hereunder shall terminate on
the Revolving Credit Maturity Date then in effect, and Agent shall promptly
notify Company thereof.
2.10. OPTIONAL INCREASE IN COMMITMENT. Provided that no Default or
Event of Default has occurred and is continuing, and provided that the Company
has not previously elected to reduce or terminate the Revolving Credit
Aggregate Commitment under Section 2.8 hereof, the Company may request up to
two increases in the Revolving Credit Aggregate Commitment in an aggregate
amount for such increases not to exceed the Revolving Credit
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Optional Increase, subject, in each case, to Section 12.1 hereof and to the
satisfaction concurrently with or prior to the date of each such request of the
following conditions:
2.10.1. the Company shall have delivered to the Agent at
any time during the period beginning on the Effective Date and expiring one
hundred eighty (180) days after the Effective Date a written request for such
increase, specifying the amount of Revolving Credit Optional Increase thereby
requested (each such request, a "Request for Increase"); provided, however that
in the event the Company has previously delivered a Request for Increase
pursuant to this Section 2.10, the Company may not deliver a subsequent Request
for Increase until all the conditions to effectiveness of such first Request
for Increase have been fully satisfied hereunder;
2.10.2. a lender or lenders acceptable to the Company and
the Agent (the "New Bank(s)") shall have become a party to this Agreement by
executing and delivering a New Bank Addendum for a minimum amount for each such
New Bank of Ten Million Dollars ($10,000,000) and an aggregate amount for all
such New Banks of that portion of the Revolving Credit Optional Increase,
taking into account the amount of any prior increase in the Revolving Credit
Aggregate Commitment pursuant to this Section 2.10), covered by the applicable
request, provided, however that each New Bank shall remit to the Agent funds in
an amount equal to its Percentage (after giving effect to this Section 2.10) of
all Advances of the Revolving Credit then outstanding, such sums to be
reallocated among and paid to the existing Banks based upon the new
Percentages as determined below;
2.10.3. The Company shall have paid to the Agent for
distribution to the existing Banks, as applicable, all interest, fees
(including the Revolving Credit Commitment Fee) and other amounts, if any,
accrued to the effective date of such increase and any breakage fees
attributable to the reduction (prior to the last day of the applicable Interest
Period) of any outstanding Eurocurrency-based Advances, calculated on the basis
set forth in Section 12.1 hereof as though Company has prepaid such Advances;
2.10.4. The Company shall have executed and delivered to
the Agent new Revolving Credit Notes payable to each of the New Banks in the
face amount of each such New Bank's Percentage of the Revolving Credit
Aggregate Commitment (after giving effect to this Section 2.10) and, if
applicable, renewal and replacement Revolving Credit Notes payable to each of
each of the existing Banks in the face amount of each such Bank's Percentage of
the Revolving Credit Aggregate Commitment (after giving effect to this Section
2.10), each of such Revolving Credit Notes to be substantially in the form of
Exhibit B hereto and dated as of the effective date of such increase (with
appropriate insertions relevant to such notes and acceptable to the applicable
Bank (including the New Banks));
2.10.5. Except as disclosed pursuant to Section 7.20,
there shall have been no material adverse change in the condition (financial or
otherwise), properties, business, results or operations of Company or any of
its Subsidiaries, from the condition shown in the financial
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information delivered to Agent on or before the Effective Date; nor shall any
omission, inconsistency, inaccuracy, or any change in presentation or
accounting standards which renders such financial statements materially
misleading have been determined by Agent to exist; and
2.10.6. Such other amendments, acknowledgments,
supplemental legal opinions, consents, instruments, any registrations, if any,
shall have been executed and delivered and/or obtained by Company with respect
to the Collateral as required by Agent, in its reasonable discretion.
Promptly on or after the date on which all of the conditions to such Request
for Increase set forth above have been satisfied, Agent shall notify the
Company and each of the Banks of the amount of the Revolving Credit Aggregate
Commitment as increased pursuant this Section 2.10 and the date on which such
increase has become effective and shall prepare and distribute to Company and
each of the Banks (including the New Banks) a revised Schedule 1.2 to this
Agreement setting forth the applicable new Percentages of the Banks (including
the New Bank), taking into account such increase and assignments (if any).
3. LETTERS OF CREDIT
3.1. LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, Issuing Bank shall through its Issuing Office, at any time and from
time to time from and after the date hereof until thirty (30) days prior to the
Revolving Credit Maturity Date, upon the written request of an Account Party
accompanied by a duly executed Letter of Credit Agreement, and such other
documentation related to the requested Letter of Credit as the Issuing Bank may
reasonably require, issue Letters of Credit for the account of such Account
Party, in an aggregate amount for all Letters of Credit issued hereunder at any
one time outstanding not to exceed the Letter of Credit Maximum Amount. Each
Letter of Credit shall be in a minimum face amount of Fifty Thousand Dollars
($50,000) and each Letter of Credit (including any renewal thereof) shall
expire not later than ten (10) Business Days prior to the Revolving Credit
Maturity Date in effect on the date of issuance thereof. The submission of all
applications and the issuance of each Letter of Credit hereunder shall be
subject in all respects to the Uniform Customs and Practices for Documenting
Credits of the International Chamber of Commerce, 1993 Revisions, ICC
Publication No. 500. Each Application for Letter of Credit shall have noted on
the first page thereof, or shall be deemed to have noted thereon:
"Note: This application is entered into in accordance with
that certain Alrenco, Inc. Revolving Credit Agreement dated as of
February 26, 1998, as amended or otherwise modified from time to time
(the "Credit Agreement") among the Banks signatory thereto, Comerica
Bank, as Agent for the Banks and Alrenco, Inc., and in the event of a
conflict between this application and the Credit Agreement, the terms
and conditions of the Credit Agreement shall govern."
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3.2. CONDITIONS TO ISSUANCE. No Letter of Credit shall be issued at
the request and for the account of any Account Party unless, as of the date of
issuance of such Letter of Credit:
3.2.1. the face amount of the Letter of Credit requested
plus the Letter of Credit Obligations outstanding on such date does not exceed
the Letter of Credit Maximum Amount;
3.2.2. the obligations of Company and the Guarantors set
forth in this Agreement and the other Loan Documents are valid, binding and
enforceable obligations of Company and each of the Guarantors and the valid,
binding and enforceable nature of this Agreement and the other Loan Documents
has not been disputed by Company or any of the Guarantors;
3.2.3. both immediately before and immediately after
issuance of the Letter of Credit requested, no Default or Event of Default
exists;
3.2.4. the representations and warranties contained in
this Agreement and the other Loan Documents are true in all material respects
as if made on such date;
3.2.5. the execution of the Letter of Credit Agreement
with respect to the Letter of Credit requested will not violate the terms and
conditions of any material contract, agreement or other borrowing of Company or
any Guarantor;
3.2.6. the Account Party requesting the Letter of Credit
shall have delivered to Issuing Bank at its Issuing Office (with a copy sent by
Account Party to the Agent), not less than five (5) Business Days prior to the
requested date for issuance (or such shorter time as the Issuing Bank, in its
sole discretion, may permit), the Letter of Credit Agreement related thereto,
together with such other documents and materials as may be required pursuant to
the terms thereof, and the terms of the proposed Letter of Credit shall be
satisfactory to Issuing Bank and its Issuing Office;
3.2.7. no order, judgment or decree of any court,
arbitrator or governmental authority shall purport by its terms to enjoin or
restrain Issuing Bank from issuing the requested Letter of Credit, or any Bank
from taking an assignment of its Percentage thereof pursuant to Section 3.6
hereof, and no law, rule, regulation, request or directive (whether or not
having the force of law) shall prohibit or request that Issuing Bank refrain
from issuing, or any Bank refrain from taking an assignment of its Percentage
of, the Letter of Credit requested or letters of credit generally;
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3.2.8. there shall have been no introduction of or
change in the interpretation of any law or regulation that would make it
unlawful or unduly burdensome for the Issuing Bank to issue or for any Bank to
take an assignment of its Percentage of the requested Letter of Credit, no
declaration of a general banking moratorium by banking authorities in the
United States, Michigan or the respective jurisdictions in which the Banks, the
applicable Account Party and the beneficiary of the requested Letter of Credit
are located (each a "Banking Authority"), and no establishment of any new
material restrictions by any Banking Authority on transactions involving
letters of credit or on banks materially affecting the issuance of letters of
credit by banks; and
3.2.9. Issuing Bank shall have received the facing fee
required in connection with the issuance of such Letter of Credit pursuant to
Section 3.4(b) hereof.
Each Letter of Credit Agreement submitted to Issuing Bank pursuant hereto shall
constitute the certification by the Company and the Account Party of the
matters set forth in this Section 3.2 (a) through (e). The Issuing Bank shall
be entitled to rely on such certification without any duty of inquiry.
3.3. NOTICE. The Issuing Bank will deliver to the Agent,
concurrently or promptly following its delivery of any Letter of Credit, a true
and complete copy of each Letter of Credit. Promptly upon its receipt thereof,
Agent shall give notice, substantially in the form attached as Exhibit C, to
each Revolving Credit Bank of the issuance of each Letter of Credit, specifying
the amount thereof and the amount of such Bank's Percentage thereof.
3.4. LETTER OF CREDIT FEES. Company shall pay to the Agent for
distribution to the Issuing Bank and the Revolving Credit Banks in accordance
with the Percentages, Letter of Credit Fees as follows:
3.4.1. A per annum Letter of Credit Fee with respect to
the undrawn amount of each Letter of Credit issued pursuant hereto in the
amount of the Applicable L/C Fee Percentage (determined with reference to
Schedule 1.1 of this Agreement), exclusive of the facing fee to be paid to
Issuing Bank under Section 3.4(b) hereof.
3.4.2. A facing fee of one eighth percentage point
(1/8%) per annum on the undrawn amount of each Letter of Credit to be paid by
the Company to the Issuing Bank for its own account.
3.4.3. If any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (i) impose, modify or
cause to be deemed applicable any reserve, special deposit, limitation or
similar requirement against letters of credit issued by or participated in, or
assets
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held by, or deposits in or for the account of, Issuing Bank or any Bank or (ii)
impose on Issuing Bank or any of the Banks any other condition regarding this
Agreement or the Letters of Credit, and the result of any event referred to in
clause (i) or (ii) above shall be to increase in an amount deemed material by
Issuing Bank or such Bank the cost or expense to Issuing Bank or the Banks of
issuing or maintaining or participating in any of the Letters of Credit (which
increase in cost or expense shall be determined by the Issuing Bank's or such
Bank's reasonable allocation of the aggregate of such cost increases and
expense resulting from such events), then, upon demand by the Issuing Bank or
such Bank, as the case may be, the Company shall, within thirty days following
demand for payment, pay to Issuing Bank or such Bank, as the case may be, from
time to time as specified by the Issuing Bank or such Bank, additional amounts
which shall be sufficient to compensate the Issuing Bank or such Bank for such
increased cost and expense, together with interest on each such amount from
thirty days after the date demanded until payment in full thereof at the
Prime-based Rate. A certificate as to such increased cost or expense incurred
by the Issuing Bank or such Bank, as the case may be, as a result of any event
mentioned in clause (i) or (ii) above, shall be promptly submitted to the
Company and shall be conclusive evidence, absent manifest error, as to the
amount thereof.
3.4.4. All payments by the Company to the Agent for
distribution to the Issuing Bank or the Revolving Credit Banks under this
Section 3.4 shall be made in Dollars and in immediately available funds at the
principal office of the Agent or such other office of the Agent as may be
designated from time to time by written notice to the Company by the Agent. The
fees described in clause (a) above shall be nonrefundable under all
circumstances and shall be payable annually in advance (or such lesser period,
if applicable, for Letters of Credit issued with stated expiration dates of
less than one year) upon the issuance of each such Letter of Credit, and shall
be calculated on the basis of a 360 day year and assessed for the actual number
of days from the date of the issuance thereof to the stated expiration thereof.
3.5. OTHER LETTER OF CREDIT FEES. In connection with the Letters of
Credit, and in addition to the Letter of Credit Fees, the Company and the
applicable Account Party shall pay, for the sole account of the Issuing Bank,
standard documentation, administration, payment and cancellation charges
assessed by Issuing Bank or its Issuing Office, at the times, in the amounts
and on the terms set forth or to be set forth from time to time in the standard
fee schedule of Issuing Office in effect from time to time.
3.6. DRAWS AND DEMANDS FOR PAYMENT UNDER LETTERS OF CREDIT.
3.6.1. The Company and each applicable Account Party
agree to pay to the Agent for the account of the Issuing Bank, on the day on
which the Issuing Bank shall honor a draft or other demand for payment
presented or made under any Letter of Credit, an amount equal to the amount
paid by the Issuing Bank in respect of such draft or other demand under such
Letter of Credit and all reasonable expenses paid or incurred by the Issuing
Bank relative thereto. Unless the Company or the applicable Account Party
shall have made such payment to the Agent for the account of the Issuing Bank
on such day, upon each such payment by the Issuing Bank,
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the Agent shall be deemed to have disbursed to the Company, and the Company
shall be deemed to have elected to substitute for its Reimbursement Obligation,
a Prime-based Advance from the Banks in an amount equal to the amount so paid
by the Issuing Bank in respect of such draft or other demand under such Letter
of Credit. Such Prime-based Advance shall be disbursed notwithstanding any
failure to satisfy any conditions for disbursement of any Advance set forth in
Article 2 hereof and, to the extent of the Prime-based Advance so disbursed,
the Reimbursement Obligation of the Company or the applicable Account Party to
the Agent under this Section 3.6 shall be deemed satisfied.
3.6.2. If the Issuing Bank shall honor a draft or other
demand for payment presented or made under any Letter of Credit, the Issuing
Bank shall provide notice thereof to the Company and the applicable Account
Party on the date such draft or demand is honored, and to each Revolving Credit
Bank on such date unless the Company or applicable Account Party shall have
satisfied its Reimbursement Obligation under Section 3.6(a) by payment to the
Agent on such date. The Issuing Bank shall further use reasonable efforts to
provide notice to the Company or applicable Account Party prior to honoring any
such draft or other demand for payment, but such notice, or the failure to
provide such notice, shall not affect the rights or obligations of the Issuing
Bank with respect to any Letter of Credit or the rights and obligations of the
parties hereto, including without limitation the obligations of the Company or
applicable Account Party under Section 3.6(a) hereof.
3.6.3. Upon issuance by the Issuing Bank of each Letter
of Credit hereunder, each Revolving Credit Bank shall automatically acquire a
pro rata risk participation interest in such Letter of Credit and related
Letter of Credit Payment based on its respective Percentage. Each Revolving
Credit Bank, on the date a draft or demand under any Letter of Credit is
honored, shall make its Percentage share of the amount paid by the Issuing
Bank, and not reimbursed by the Company or applicable Account Party by payment
to the Agent on such day, available in immediately available funds at the
principal office of the Agent for the account of the Issuing Bank. If and to
the extent such Bank shall not have made such pro rata portion available to the
Agent, such Bank, the Company and the applicable Account Party severally agree
to pay to the Issuing Bank forthwith on demand such amount together with
interest thereon, for each day from the date such amount was paid by the
Issuing Bank until such amount is so made available to the Agent for the
account of the Issuing Bank at a per annum rate equal to the interest rate
applicable during such period to the related Advance disbursed under Section
3.6(a) in respect of the Reimbursement Obligation of the Company and the
applicable Account Party. If such Bank shall pay such amount to the Agent for
the account of the Issuing Bank together with such interest, such amount so
paid shall constitute a Prime-based Advance by such Bank disbursed in respect
of the Reimbursement Obligation of the Company or applicable Account Party
under Section 3.6(a) for purposes of this Agreement, effective as of the date
such amount was paid by the Issuing Bank. The failure of any Revolving Credit
Bank to make its pro rata portion of any such amount paid by the Issuing Bank
available to the Agent for the account of the Issuing Bank shall not relieve
any other Revolving Credit Bank of its obligation to make available its pro
rata portion of such amount, but no Bank shall be responsible for failure of
any other Bank to make such pro rata portion available to the Agent for the
account Issuing Bank.
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Notwithstanding the foregoing however, no Bank shall acquire a pro rata risk
participation in a Letter of Credit or related Letter of Credit Payment if the
Issuing Bank was notified prior to the issuance thereof that the Agent had
received written notice from a Bank specifically stating that such Bank
believed that one or more of the conditions precedent to the issuance of
Letters of Credit were not be satisfied and, in fact, such conditions precedent
were not satisfied at the time of the issuance of such Letter of Credit;
provided, however that each Bank shall acquire a pro rata risk participation in
such Letter of Credit and the related Letter of Credit Payment upon the earlier
of occur of (x) the date on which the Bank notifies the Agent that such prior
notice is withdrawn and (y) the date on which all conditions precedent to the
issuing of such Letter of Credit have been satisfied (or waived by the Majority
Banks or all Banks, as applicable).
3.6.4. Nothing in this Agreement shall be construed to
require or authorize any Bank other than the Issuing Bank to issue any Letter
of Credit, it being recognized that the Issuing Bank shall be the sole issuer
of Letters of Credit under this Agreement.
3.7. OBLIGATIONS IRREVOCABLE. The obligations of Company and any
Account Party to make payments to Agent for the account of the Issuing Bank or
of the Revolving Credit Banks with respect to Reimbursement Obligations under
Section 3.6 hereof, shall be unconditional and irrevocable and not subject to
any qualification or exception whatsoever, including, without limitation:
3.7.1. Any lack of validity or enforceability of any
Letter of Credit or any documentation relating to any Letter of Credit or to
any transaction related in any way to such Letter of Credit (the "Letter of
Credit Documents");
3.7.2. Any amendment, modification, waiver, consent, or
any substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to any of the Letter of Credit Documents;
3.7.3. The existence of any claim, setoff, defense or
other right which the Company or any Account Party may have at any time against
any beneficiary or any transferee of any Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be acting),
the Agent, the Issuing Bank or any other Bank or any other person or entity,
whether in connection with any of the Letter of Credit Documents, the
transactions contemplated herein or therein or any unrelated transactions;
3.7.4. Any draft or other statement or document
presented under any Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or inaccurate in
any respect;
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3.7.5. Any failure, omission, delay or lack on the part
of the Agent, the Issuing Bank or any other Bank or any party to any of the
Letter of Credit Documents to enforce, assert or exercise any right, power or
remedy conferred upon the Agent, the Issuing Bank, any other Bank or any such
party under this Agreement, any of the Loan Documents or any of the Letter of
Credit Documents, or any other acts or omissions on the part of the Agent, the
Issuing Bank, any other Bank or any such party; or
3.7.6. Any other event or circumstance that would, in
the absence of this Section 3.7, result in the release or discharge by
operation of law or otherwise of Company or any Account Party from the
performance or observance of any obligation, covenant or agreement contained in
Section 3.6.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which Company or any Account Party has or may
have against the beneficiary of any Letter of Credit shall be available
hereunder to Company or any Account Party against the Agent, the Issuing Bank
or any other Bank. Nothing contained in this Section 3.7 shall be deemed to
prevent Company or the Account Parties, after satisfaction in full of the
absolute and unconditional obligations of Company and the Account Parties
hereunder, from asserting in a separate action any claim, defense, set off or
other right which they (or any of them) may have against Agent, the Issuing
Bank or any Bank.
3.8. RISK UNDER LETTERS OF CREDIT. (a) In the handling of Letters
of Credit and any security therefor, or any documents or instruments given in
connection therewith, and notwithstanding the granting of risk participation
hereunder, the Issuing Bank shall have the sole right to take or refrain from
taking any and all actions under or upon the Letters of Credit.
(b) Subject to other terms and conditions of this
Agreement, Issuing Bank shall issue the Letters of Credit and shall
hold the documents related thereto in its own name and shall make all
collections thereunder and otherwise administer the Letters of Credit
in accordance with Issuing Bank's regularly established practices and
procedures and, Issuing Bank will have no further obligation with
respect thereto. In the administration of Letters of Credit, Issuing
Bank shall not be liable for any action taken or omitted on the advice
of counsel, accountants, appraisers or other experts selected by
Issuing Bank with due care and Issuing Bank may rely upon any notice,
communication, certificate or other statement from Company, any
Account Party, beneficiaries of Letters of Credit, or any other Person
which Issuing Bank believes to be authentic. Issuing Bank, will, upon
request, furnish the Banks with copies of Letter of Credit Agreements,
Letters of Credit and documents related thereto.
(c) In connection with the issuance and
administration of Letters of Credit and the assignments hereunder,
Issuing Bank makes no representation and shall, subject to Section 3.7
hereof, have no responsibility with respect to (i) the obligations of
Company or any Account Party or, the validity, sufficiency or
enforceability of any document or instrument given in connection
therewith, (ii) the financial condition of, any
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representations made by, or any act or omission of Company, the
applicable Account Party or any other Person, or (iii) any failure or
delay in exercising any rights or powers possessed by Issuing Bank in
its capacity as issuer of Letters of Credit, in the absence of its
gross negligence or willful misconduct. Each of the Banks expressly
acknowledge that they have made and will continue to make their own
evaluations of Company's creditworthiness without reliance on any
representation of Issuing Bank or Issuing Bank's officers, agents and
employees.
(d) If at any time Agent or the Issuing Bank shall
recover any part of any unreimbursed amount for any draw or other
demand for payment under a Letter of Credit, or any interest thereon,
Agent or the Issuing Bank, as the case may be, shall receive same for
the pro rata benefit of the Banks in accordance with their respective
Percentage interests therein and shall promptly deliver to each
Revolving Credit Bank its share thereof, less such Bank's pro rata
share of the costs of such recovery, including court costs and
attorney's fees. If at any time any Revolving Credit Bank shall
receive from any source whatsoever any payment on any such
unreimbursed amount or interest thereon in excess of such Bank's
Percentage share of such payment, such Bank will promptly pay over
such excess to Agent, for redistribution in accordance with this
Agreement.
3.9. INDEMNIFICATION. (a) The Company and each Account Party hereby
indemnifies and agrees to hold harmless the Banks, the Issuing Bank and the
Agent, and their respective officers, directors, employees and agents, from and
against any and all claims, damages, losses, liabilities, costs or expenses of
any kind or nature whatsoever which the Banks, the Issuing Bank or the Agent or
any such Person may incur or which may be claimed against any of them by reason
of or in connection with any Letter of Credit, and none of the Issuing Bank,
any Bank or the Agent or any of their respective officers, directors, employees
or agents shall be liable or responsible for: (i) the use which may be made of
any Letter of Credit or for any acts or omissions of any beneficiary in
connection therewith; (ii) the validity, sufficiency or genuineness of
documents or of any endorsement thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
(iii) payment by the Issuing Bank to the beneficiary under any Letter of Credit
against presentation of documents which do not comply with the terms of any
Letter of Credit; (iv) 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; or (v) any other event or
circumstance whatsoever arising in connection with any Letter of Credit;
provided, however
(X) Company and Account Parties shall not be required to
indemnify the Issuing Bank, the other Banks and the Agent and such
other Persons from and against any such claims, damages, losses,
liabilities, costs or expenses, and
(Y) the Issuing Bank shall be liable to the Company and the
Account Parties to the extent, but only to the extent, of any direct,
as opposed to consequential or incidental, damages suffered by Company
and the Account Parties
which were caused by (A) the Issuing Bank's wrongful dishonor of any Letter of
Credit after the presentation to it by the beneficiary thereunder of a draft or
other demand for payment and other
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documentation strictly complying with the terms and conditions of such Letter
of Credit, or (B) the Issuing Bank's payment to the beneficiary under any
Letter of Credit to the extent, but only to the extent, that such payment
constitutes gross negligence or wilful misconduct of the Issuing Bank (as
determined by a court of competent jurisdiction by final and nonappealable
judgment).
(b) It is understood that in making any payment under a Letter of
Credit the Issuing Bank will rely on documents presented to it under such
Letter of Credit as to any and all matters set forth therein without further
investigation and regardless of any notice or information to the contrary. In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit. It is further acknowledged and agreed that
Company or an Account Party may have rights against the beneficiary or others
in connection with any Letter of Credit with respect to which the Banks are
alleged to be liable and it shall be a condition of the assertion of any
liability of the Banks under this Section that Company or applicable Account
Party shall contemporaneously pursue all remedies in respect of the alleged
loss against such beneficiary and any other parties obligated or liable in
connection with such Letter of Credit and any related transactions.
3.10. RIGHT OF REIMBURSEMENT. Each Revolving Credit Bank agrees to
reimburse the Issuing Bank on demand (by payment to the Agent for the account
of the Issuing Bank), pro rata in accordance with their Percentages, any
amounts required to be paid by the Company or any Account Party under Section
3.9 hereof (such amounts determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought), to the extent the Company
or such Account Party fails to pay such amounts when due.
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4. SWING LINE CREDIT
4.1. SWING LINE ADVANCES. The Swing Line Bank shall, on the terms
and subject to the conditions hereinafter set forth (including Section 4.3),
make one or more advances (each such advance being a "Swing Line Advance") to
Company from time to time on any Business Day during the period from the date
hereof to (but excluding) the Revolving Credit Maturity Date in an aggregate
amount not to exceed the Swing Line Commitment at any time outstanding;
provided, however, that after giving effect to all Swing Line Advances and all
Revolving Credit Advances requested to be made on such date, the sum of the
aggregate principal amount of all outstanding Advances and Letter of Credit
Obligations shall not exceed the lesser of the then applicable (a) Revolving
Credit Aggregate Commitment and (b) Borrowing Base. All Swing Line Advances
shall be evidenced by the Swing Line Note, under which advances, repayments and
readvances may be made, subject to the terms and conditions of this Agreement.
Each Swing Line Advance shall mature and the principal amount thereof shall be
due and payable by Company on the last day of the Interest Period applicable
thereto. In no event whatsoever shall any outstanding Swing Line Advance be
deemed to reduce, modify or affect any Bank's commitment to make Revolving
Credit Advances based upon its Percentage.
4.2. ACCRUAL OF INTEREST; MARGIN ADJUSTMENTS. Each Swing Line
Advance shall, from time to time after the date of such Advance, bear interest
at its Applicable Interest Rate. The amount and date of each Swing Line
Advance, its Applicable Interest Rate, its Interest Period, and the amount and
date of any repayment shall be noted on Agent's records, which records will be
conclusive evidence thereof, absent manifest error; provided, however, that any
failure by the Agent to record any such information shall not relieve Company
of its obligation to repay the outstanding principal amount of such Advance,
all interest accrued thereon and any amount payable with respect thereto in
accordance with the terms of this Agreement and the Loan Documents.
4.3. REQUESTS FOR SWING LINE ADVANCES. Company may request a Swing
Line Advance only after delivery to Swing Line Bank of a Request for Swing Line
Advance executed by a person authorized by the Company to make such requests on
behalf of Company, subject to the following and to the remaining provisions
hereof:
4.3.1. each such Request for Swing Line Advance shall
set forth the information required on the Request for Swing Line Advance
including without limitation:
4.3.1.1. the proposed date of Swing Line
Advance, which must be a Business Day;
4.3.1.2. whether such Swing Line Advance is
to be a Prime-based Advance or Quoted Rate
Advance; and
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4.3.1.3. the duration of the Interest Period
applicable thereto;
4.3.2. each such Request for Swing Line Advance shall be
delivered to Swing Line Bank by 12:00 p.m. (Detroit time) on the proposed date
of the Swing Line Advance;
4.3.3. the principal amount of such requested Swing Line
Advance, plus the principal amount of all other Advances then outstanding
hereunder, plus the Letter of Credit Obligations, shall not exceed the lesser
of the then applicable (i) Revolving Credit Aggregate Commitment and (ii)
Borrowing Base;
4.3.4. the principal amount of such Swing Line Advance
shall be at least Two Hundred Thousand Dollars ($200,000) or any larger amount
in multiples of One Hundred Thousand Dollars ($100,000);
4.3.5. each Request for Swing Line Advance, once
delivered to Swing Line Bank, shall not be revocable by Company, and shall
constitute a certification by the Company as of the date thereof that:
4.3.5.1. both before and after the Swing Line
Advance, the obligations of the Company and
the Guarantors set forth in this Agreement
and the other Loan Documents, as applicable,
are valid, binding and enforceable
obligations of such parties;
4.3.5.2. to the best knowledge of Company all
conditions to Advances have been satisfied;
4.3.5.3. there is no Default or Event of
Default in existence, and none shall exist
upon the making of the Swing Line Advance;
and
4.3.5.4. the representations and warranties
contained in this Agreement and the Loan
Documents are true and correct in all
material respects and shall be true and
correct in all material respects as of and
immediately after the making of the Swing
Line Advance.
Swing Line Bank shall promptly deliver to Agent by telecopier a copy of any
Request for Swing Line Advance received.
Swing Line Bank, may, at its option, lend under this Section 4 upon
the telephone request of an authorized officer of Company and, in the event
Swing Line Bank makes any such Advance upon a telephone request, the requesting
officer shall, if so requested by Swing Line Bank, fax to Swing Line Bank, on
the same day as such telephone request, a Request for Swing Line
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Advance. Company hereby authorizes Swing Line Bank to disburse Advances under
this Section 4 pursuant to the telephone instructions of any person purporting
to be a person identified by name on a written list of persons authorized by
the Company to make Requests for Advance on behalf of the Company.
Notwithstanding the foregoing, the Company acknowledges that Company shall bear
all risk of loss resulting from disbursements made upon any telephone request.
Each telephone request for an Advance shall constitute a certification of the
matters set forth in the Request for Swing Line Advance form as of the date of
such requested Advance.
4.4. DISBURSEMENT OF SWING LINE ADVANCES. Subject to submission of
an executed Request for Swing Line Advance by Company without exceptions noted
in the compliance certification therein and to the other terms and conditions
hereof, Swing Line Bank shall make available to Company the amount so
requested, in same day funds, not later than 4:00 p.m. (Detroit time) on the
date of such Swing Line Advance by credit to an account of Company maintained
with Swing Line Bank or to such other account or third party as Company may
reasonably direct. Swing Line Bank shall promptly notify Agent of any Swing
Line Advance by telephone, telex or telecopier.
4.5. REFUNDING OF OR PARTICIPATION INTEREST IN SWING LINE ADVANCES.
4.5.1. The Swing Line Bank, at any time in its sole and
absolute discretion, may on behalf of the Company (which hereby irrevocably
directs the Swing Line Bank to act on its behalf) request each Revolving Credit
Bank (including the Swing Line Bank in its capacity as a Revolving Credit Bank)
to make a Prime-based Advance of the Revolving Credit in an amount equal to
such Revolving Credit Bank's Percentage of the principal amount of the Swing
Line Advances (the "Refunded Swing Line Advances") outstanding on the date such
notice is given; provided that (i) at any time as there shall be a Swing Line
Advance outstanding for more than thirty days, or the aggregate outstanding
principal amount of all Swing Line Advances exceeds the Swing Line Commitment,
then the Agent shall, on behalf of the Company (which hereby irrevocably
directs the Agent to act on its behalf), promptly request each Revolving Credit
Bank (including the Swing Line Bank) to make a Revolving Credit Advance in an
amount equal to such Revolving Credit Bank's Percentage of the principal amount
of such outstanding Swing Line Advance, (ii) Swing Line Advances may be prepaid
by the Company in accordance with the provisions of Section 5.7 or Section 12.1
hereof and (iii) Quoted Rate Advances which are converted to Revolving Credit
Advances at the request of the Swing Line Bank at a time when no Default or
Event of Default has occurred and is continuing shall not be subject to Section
5.7 and no losses, costs or expenses may be assessed by the Swing Line Bank
against the Company or the other Banks as a consequence of any such conversion
covered by this clause (iii). Unless any of the events described in Section
10.1(j) shall have occurred (in which event the procedures of paragraph (b) of
this Section 4.5 shall apply) and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving Credit
Advance are then satisfied, each Revolving Credit Bank shall make the proceeds
of its Revolving Credit Advance available to the Agent for the ratable benefit
of the Swing Line Bank at the office of the Agent specified in Section 2.4(a)
prior to 11:00 a.m. Detroit time, in funds immediately available on the
Business
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Day next succeeding the date such notice is given. The proceeds of such
Revolving Credit Advances shall be immediately applied to repay the Refunded
Swing Line Advances.
4.5.2. If, prior to the making of a Revolving Credit
Advance pursuant to paragraph (a) of this Section 4.5, one of the events
described in Section 10.1(j) shall have occurred, each Revolving Credit Bank
will, on the date such Revolving Credit Advance was to have been made, purchase
from the Swing Line Bank an undivided participating interest in the Refunded
Swing Line Advance in an amount equal to its Percentage of such Refunded Swing
Line Advance. Each Bank will immediately transfer to the Agent, in immediately
available funds, the amount of its participation and upon receipt thereof the
Agent will deliver to such Bank a Swing Line Bank Participation Certificate in
the form of Exhibit F dated the date of receipt of such funds and in such
amount.
4.5.3. Each Bank's obligation to make Revolving Credit
Advances and to purchase participation interests in accordance with clauses (a)
and (b) above shall be absolute and unconditional and shall not be affected by
any circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Bank may have against Swing Line
Bank, the Company or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of any Default or Event of Default; (iii) any adverse
change in the condition (financial or otherwise) of the Company or any other
Person; (iv) any breach of this Agreement by the Company or any other Person;
(v) any inability of the Company to satisfy the conditions precedent to
borrowing set forth in this Agreement on the date upon which such participating
interest is to be purchased or (vi) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. If any Bank does
not make available to the Agent the amount required pursuant to clause (a) or
(b) above, as the case may be, the Agent shall be entitled to recover such
amount on demand from such Bank, together with interest thereon for each day
from the date of non-payment until such amount is paid in full at the Federal
Funds Effective Rate for the first two Business Days and at the Alternate Base
Rate thereafter.
Notwithstanding the foregoing however, no Bank shall be required to
make any Revolving Credit Advance to refund a Swing Line Advance or to purchase
a participation in a Swing Line Advance if prior to the making of such Swing
Line Advance by the Swing Line Bank, the Agent received written notice from a
Bank specifically stating that such Bank believed that one or more of the
conditions precedent to the making of Swing Line Advance(s) had not been met
and, in fact, such conditions precedent were not satisfied at the time of the
making of such Advance; provided, however that the obligation of the Banks to
make such Revolving Credit Advance or purchase a participation in such Swing
Line Advance shall be acquired upon the earlier of occur of (x) the date on
which the Bank notifies the Agent that such prior notice is withdrawn and (y)
the date of which all conditions precedent to the making of such Swing Line
Advance have been satisfied (or waived by the Majority Banks or all Banks, as
applicable).
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5. MARGIN ADJUSTMENTS; INTEREST PAYMENTS
5.1. MARGIN ADJUSTMENTS. Adjustments in the Margin applicable to
Eurocurrency-based Advances, the Applicable Commitment Fee Percentage and the
Applicable L/C Fee Percentage, each based upon the Fixed Charge Coverage Ratio,
shall be implemented on a quarterly basis as follows:
5.1.1. Such adjustments shall be given prospective
effect only, effective (i) as to the Applicable Commitment Fee Percentage and
the Applicable L/C Fee Percentage, upon the required date of delivery of the
financial statements under Sections 8.1(a) and 8.1(b) hereunder, in each case
establishing applicability of the appropriate adjustment, and (ii) as to each
Eurocurrency-based Advance outstanding hereunder, effective upon the expiration
of the applicable Interest Period(s), if any, in effect on the date of the
delivery of such financial statements, in each case with no retroactivity or
claw-back. In the event Company fails timely to deliver the financial
statements required under Section 8.1(a) or 8.1(b), then from the date delivery
of such financial statements was required until such financial statements are
delivered, the margins and fee percentages shall be those set forth under the
Level IV Column of the pricing matrix attached to this Agreement as Schedule
1.1.
5.1.2. With respect to Eurocurrency-based Advances
outstanding hereunder, an adjustment hereunder, after becoming effective, shall
remain in effect only through the end of the applicable Interest Period(s) for
such Eurocurrency-based Advances if any; provided, however, that upon any
change in the Margin level then in effect, as aforesaid, or the occurrence of
any other event which under the terms hereof causes such adjustment no longer
to be applicable, then any such subsequent adjustment or no adjustment, as the
case may be, shall be effective (and said pricing shall thereby be adjusted up
or down, as applicable) with the commencement of each Interest Period following
such change or event, all in accordance with the preceding subparagraph.
5.1.3. Such Margin adjustments under this Section 5.1
shall be made irrespective of, and in addition to, any other interest rate
adjustments hereunder.
5.1.4. Notwithstanding the foregoing however, from the
date hereof until the required date of delivery under Section 8.1(b) of the
Company's financial statements for the fiscal quarter ending June 30, 1998, the
margins and fee percentages shall be those set forth under the Level III column
of the pricing matrix attached to this Agreement as Schedule 1.1.
5.2. PRIME-BASED INTEREST PAYMENTS. Interest on the unpaid balance
of all Prime-based Advances from time to time outstanding shall accrue from the
date of such Advances to the Revolving Credit Maturity Date (and until paid),
at a per annum interest rate equal to the
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Prime-based Rate, and shall be payable in immediately available funds quarterly
commencing on the first day of the calendar quarter next succeeding the
calendar quarter during which the initial Advance is made and on the first day
of each calendar quarter thereafter. Interest accruing at the Prime-based Rate
shall be computed on the basis of a 360 day year and assessed for the actual
number of days elapsed, and in such computation effect shall be given to any
change in the interest rate resulting from a change in the Prime-based Rate on
the date of such change in the Prime-based Rate.
5.3. EUROCURRENCY-BASED INTEREST PAYMENTS. Interest on each
Eurocurrency-based Advance having a related Eurocurrency-Interest Period of 3
months or less shall accrue at its Eurocurrency-based Rate and shall be payable
in immediately available funds on the last day of the Interest Period
applicable thereto. Interest shall be payable in immediately available funds on
each Eurocurrency-based Advance outstanding from time to time having a
Eurocurrency- Interest Period of 6 months or longer, at intervals of 3 months
after the first day of the applicable Interest Period, and shall also be
payable on the last day of the Interest Period applicable thereto. Interest
accruing at the Eurocurrency-based Rate shall be computed on the basis of a 360
day year and assessed for the actual number of days elapsed from the first day
of the Interest Period applicable thereto to, but not including, the last day
thereof.
5.4. QUOTED RATE ADVANCE INTEREST PAYMENTS. Interest on each Quoted
Rate Advance shall accrue at its Quoted Rate and shall be payable in
immediately available funds on the last day of the Interest Period applicable
thereto. Interest accruing at the Quoted Rate shall be computed on the basis
of a 360 day year and assessed for the actual number of days elapsed from the
first day of the Interest Period applicable thereto to, but not including the
last day thereof.
5.5. INTEREST PAYMENTS ON CONVERSIONS. Notwithstanding anything to
the contrary in Sections 5.2 and 5.3, all accrued and unpaid interest on any
Revolving Credit Advance refunded or converted pursuant to Section 2.3 hereof
shall be due and payable in full on the date such Advance is refunded or
converted.
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5.6. INTEREST ON DEFAULT. Notwithstanding anything to the contrary
set forth in Sections 5.2, 5.3 and 5.4, in the event and so long as any Event
of Default shall exist under this Agreement, interest shall be payable daily on
the principal amount of all Advances from time to time outstanding (and, to the
extent delinquent, on all other monetary obligations of Company hereunder and
under the other Loan Documents) at a per annum rate equal to the Applicable
Interest Rate (and, with respect to Eurocurrency-based Advances calculated on
the basis of the maximum Margins) in respect of each such Advance, plus, in the
case of Eurocurrency-based Advances and Quoted Rate Advances, two percent (2%)
per annum for the remainder of the then existing Interest Period, if any, and
at all other such times and for all Prime-based Advances, at a per annum rate
equal to the Prime-based Rate, plus two percent (2%).
5.7. PREPAYMENT. Company may prepay all or part of the outstanding
balance of any Prime-based Advance(s) at any time, provided that the amount of
any partial prepayment shall be at least Five Hundred Thousand Dollars
($500,000) and the aggregate balance of Prime-based Advance(s) remaining
outstanding, if any, under the Revolving Credit Notes shall be at least One
Million Dollars ($1,000,000) and the aggregate amount outstanding under all
Swing Line Advances shall be at least Five Hundred Thousand Dollars ($500,000).
Company may prepay all or part of any Eurocurrency-based Advance (subject to
not less than three (3) Business Days' notice to Agent) only on the last day of
the Interest Period applicable thereto, provided that the amount of any such
partial prepayment shall be at least Five Hundred Thousand Dollars ($500,000),
and the unpaid portion of such Advance which is refunded or converted under
Section 2.7 shall be at least Two Million Dollars ($2,000,000). Company may
prepay Quoted Rate Advances only on the last day of the Interest Period
applicable thereto. Any prepayment made in accordance with this Section shall
be without premium, penalty or prejudice to the right to reborrow under the
terms of this Agreement. Any other prepayment of all or any portion of the
Revolving Credit, whether by acceleration, mandatory or required prepayment or
otherwise, shall be subject to Section 12.1 hereof, but otherwise without
premium, penalty or prejudice. All prepayments of Revolving Credit Advances
shall be made to the Agent for distribution ratably to the Banks in accordance
with their Percentages.
6. CONDITIONS
The obligations of Banks to make Advances and of the Issuing Bank to
issue Letters of Credit pursuant to this Agreement are subject to the following
conditions; provided, however that Sections 6.1 through 6.10 below shall only
apply to the initial Advances, Letters of Credit or loans hereunder:
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6.1. EXECUTION OF NOTES AND THIS AGREEMENT. Company shall have
executed and delivered to Agent for the account of each Bank, the Revolving
Credit Notes, the Swing Line Note, this Agreement and the other Loan Documents
to which it is a party (including all schedules, exhibits, certificates,
opinions, financial statements and other documents to be delivered pursuant
hereto), and such Notes, this Agreement and the other Loan Documents shall be
in full force and effect.
6.2. CORPORATE AUTHORITY. Agent shall have received, with a
counterpart thereof for each Bank:
6.2.1. In connection with the Company, a certificate of
Responsible Officer as to:
6.2.1.1. resolutions of the board of
directors of the Company evidencing approval
of the transactions contemplated by this
Agreement and the Notes and authorizing the
execution and delivery thereof and the
borrowing of Advances and the requesting of
Letters of Credit hereunder,
6.2.1.2. the incumbency and signature of the
officers of the Company executing any Loan
Document,
6.2.1.3. a certificate of good standing or
continued existence (or the equivalent
thereof) from the State of Indiana, and from
every state or other jurisdiction listed on
Schedule 6.2 hereof, if issued by such
jurisdiction, subject to the limitations (as
to qualification and authorization to do
business) contained in Section 7.1; and
6.2.1.4. copies of Company's articles of
incorporation and bylaws and/or other
constitutional documents as in effect on the
Effective Date;
6.2.2. in connection with each Guarantor, a certificate
from an authorized officer of such Guarantor as to:
6.2.2.1. resolutions of the board of
directors of such Guarantor evidencing
approval of the transactions contemplated by
the Loan Documents to which such Guarantor is
a party and authorizing the execution and
delivery thereof,
6.2.2.2. the incumbency and signature of the
officers of such Guarantor executing any Loan
Document to which such Guarantor is a party,
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6.2.2.3. a certificate of good standing from
the state or other jurisdiction of such
Guarantor's incorporation, and from every
state or other jurisdiction in which such
Guarantor is qualified to do business, if
issued by such jurisdiction, subject to the
limitations (as to qualification and
authorization to do business) contained in
Section 7.1, hereof, and
6.2.2.4. copies of such Guarantor's articles
of incorporation and bylaws and/or other
constitutional documents as in effect on the
Effective Date.
6.3. COLLATERAL DOCUMENTS AND GUARANTIES. The Agent shall have
received a Reaffirmation of Certain Loan Documents (which shall reaffirm
certain loan documents executed and delivered in connection with the Prior
Credit Agreement including the Pledge Agreements, the Security Agreement and
the Guaranty) executed and delivered by each of the Company, RTO Operating, RTO
Holding, ATRO and Action-Rent-to-Own.
6.4. INSURANCE. The Agent shall have received evidence satisfactory
to it that the Company has obtained the insurance policies required by Section
8.5 hereof and that such insurance policies are in full force and effect.
6.5. COMPLIANCE WITH CERTAIN DOCUMENTS AND AGREEMENTS. The Company
and each Guarantor (and any of their respective Subsidiaries or Affiliates)
shall have each performed and complied in all material respects with all
agreements and conditions contained in this Agreement, other Loan Documents, or
any agreement or other document executed thereunder and required to be
performed or complied with by each of them (as of the applicable date) and none
of such parties shall be in material default in the performance or compliance
with any of the terms or provisions hereof or thereof.
6.6. MERGER DOCUMENTS. The Merger shall have become effective
pursuant to the Merger Documents and the Agent shall have received executed
copies of the Merger Documents, the ▇▇▇▇ of Sale, the Assignment, Assumption
Agreement (trademarks/service marks) and Assignment and Assumption Agreement
(all intangibles other than real property leases and trademarks/service marks)
and Assignment and Assumption Agreement (real property), in each case certified
as a true and correct copy as in effect on such date by a Responsible Officer
of the Company.
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6.7. OPINION OF COUNSEL. Company and each Guarantor shall furnish
Agent prior to the initial Advance under this Agreement, and with signed copies
for each Bank, opinions of counsel to the Company and such Guarantor, dated the
date hereof, and covering such matters as reasonably required by and otherwise
reasonably satisfactory in form and substance to the Agent and each of the
Banks.
6.8. COMPANY'S CERTIFICATE. The Agent shall have received, with a
signed counterpart for each Bank, a certificate of a Responsible Officer of
Company dated the date of the making of Advances hereunder, stating that to the
best of his or her knowledge after due inquiry, (a) the conditions of
paragraphs 6.1, 6.3, 6.4, 6.5 and 6.6 hereof have been fully satisfied; (b) the
representations and warranties made by Company, each Guarantor or any other
party to any of the Loan Documents (excluding the Agent and Banks) in this
Agreement or any of the Loan Documents, and the representations and warranties
of any of the foregoing which are contained in any certificate, document or
financial or other statement furnished at any time hereunder or thereunder or
in connection herewith or therewith shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects on and as of the Effective Date; and (c) no Default or Event of
Default shall have occurred and be continuing, and, except as previously
disclosed to Agent and Banks in writing, there shall have been no material
adverse change in the financial condition, properties, business, results or
operations of the Company and its Subsidiaries taken as a whole from December
31, 1997 to the date of the making of the first borrowing hereunder.
6.9. PAYMENT OF FEES. Company shall have paid to the Agent all
fees, costs and expenses required hereunder to be paid to Agent upon execution
of this Agreement.
6.10. OTHER DOCUMENTS AND INSTRUMENTS. The Agent shall have
received, with a photocopy for each Bank, such other instruments and documents
as each of the Banks may reasonably request in connection with the making of
Advances or issuance of Letters of Credit hereunder, and all such instruments
and documents shall be satisfactory in form and substance to Agent and each
Bank.
6.11. CONTINUING CONDITIONS. The obligations of the Banks to make
Advances (including the initial Advance) and the obligation of the Issuing Bank
to issue Letters of Credit (including the initial Letter of Credit) under this
Agreement shall be subject to the continuing conditions that:
6.11.1. No Default or Event of Default shall exist as of
the date of the Advance or the request for the Letter of Credit; and
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6.11.2. Each of the representations and warranties
contained in this Agreement and in each of the other Loan Documents shall be
true and correct in all material respects as of the date of the Advance or
Letter of Credit.
7. REPRESENTATIONS AND WARRANTIES
Company represents and warrants that as of the Effective Date:
7.1. CORPORATE AUTHORITY. Company is a corporation duly organized
and existing in good standing under the laws of the State of Indiana, each
Guarantor is a corporation or other business entity duly organized and existing
in good standing under the laws of the state of its incorporation; each other
Subsidiary is duly organized and existing in good standing under the laws of
the state of its incorporation; and each of the Company and each of its
Subsidiaries is duly qualified and authorized to do business as a foreign
corporation in each jurisdiction where the character of its assets or the
nature of its activities makes such qualification necessary and where failure
to be so qualified would have a material adverse effect on their respective
businesses.
7.2. DUE AUTHORIZATION - COMPANY. Execution, delivery and
performance of this Agreement, the Merger Documents, the other Loan Documents
and any other documents and instruments required under or in connection with
this Agreement or the other Loan Documents (or to be so executed and
delivered), and the issuance of the Notes by Company are within its corporate
powers, have been duly authorized, are not in contravention of law or the terms
of the Company's organizational documents and, except as have been previously
obtained or as referred to in Section 7.13, below, do not require the consent
or approval, material to the transactions contemplated by this Agreement and
the other Loan Documents, of any governmental body, agency or authority.
7.3. DUE AUTHORIZATION - GUARANTORS. Execution, delivery and
performance of the Guaranty, the other Loan Documents to which it is a party
and any other documents and instruments required of Guarantors under or in
connection with this Agreement and the other Loan Documents (or to be so
executed and delivered) are within the partnership or corporate powers of each
such Guarantor, have been duly authorized, are not in contravention of law or
the terms of such Guarantor's organizational documents, and, except as have
been previously obtained (or as referred to in Section 7.13 below), do not
require the consent or approval, material to the transactions contemplated by
this Agreement and the other Loan Documents, of any governmental body, agency
or authority not previously obtained.
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7.4. LIENS. There are no security interests in, liens, mortgages,
or other encumbrances on and no financing statements on file with respect to
any of the property owned by Company or any of its Guarantors except for Liens
permitted pursuant to Section 9.2.
7.5. TAXES. Company and each of its Guarantors has filed on or
before their respective due dates or within the applicable grace periods, all
federal, and material state and foreign tax returns which are required to be
filed or has obtained extensions for filing such tax returns and is not
delinquent in filing such returns in accordance with such extensions and has
paid all taxes which have become due pursuant to those returns or pursuant to
any assessments received by any such party, as the case may be, to the extent
such taxes have become due, except to the extent such tax payments are being
actively contested in good faith by appropriate proceedings and with respect to
which adequate provision has been made on the books of Company or such
Guarantor as may be required by GAAP.
7.6. NO DEFAULTS. There exists no material default under the
provisions of any instrument evidencing any indebtedness for borrowed money of
the Company or any of its Guarantors which is permitted hereunder or of any
agreement relating thereto.
7.7. ENFORCEABILITY OF AGREEMENT AND LOAN DOCUMENTS -- COMPANY.
This Agreement, each of the other Loan Documents to which Company is a party,
and all other certificates, agreements and documents executed and delivered by
Company under or in connection herewith or therewith have each been duly
executed and delivered by its duly authorized officers and constitute the valid
and binding obligations of Company, enforceable in accordance with their
respective terms, except as enforcement thereof may be limited by applicable
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or
similar laws affecting the enforcement of creditor's rights, generally and by
general principles of equity (regardless of whether enforcement is considered
in a proceeding in law or equity).
7.8. ENFORCEABILITY OF LOAN DOCUMENTS -- GUARANTORS. The Loan
Documents to which each of the Guarantors is a party, and all certificates,
documents and agreements executed in connection therewith by the Guarantors
have each been duly executed and delivered by the duly authorized officers of
the Guarantors and constitute the valid and binding obligations of such
Guarantors, enforceable in accordance with their respective terms, except as
enforcement thereof may be limited by applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium or similar laws affecting the
enforcement of creditor's rights, generally and by general principles of equity
(regardless of whether enforcement is considered in a proceeding in law or
equity).
7.9. COMPLIANCE WITH LAWS. Except as disclosed on Schedule 7.9,
each of the Company and each of its Guarantors has complied with all applicable
federal, state and local laws, ordinances, codes, rules, regulations and
guidelines (including consent decrees and administrative orders) including
without limitation, all Consumer Credit Laws in effect from
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time to time, except to the extent that failure to comply therewith would not
materially interfere with the conduct of the business of Company and its
Guarantors taken as a whole, or would not have a Material Adverse Effect;
except for such matters as are not likely to have a Material Adverse Effect,
and except as set forth in Schedule 7.9 hereof, and without limiting the
generality of Section 7.12, there is no pending or threatened, litigation,
action, proceeding or controversy affecting the Company or any of its
Guarantors, and no pending or threatened complaint, notice or inquiry to the
Company or any of its Guarantors, regarding potential liability of the Company
or any of its Guarantors, or any officer, director, agent or employee of the
Company or any Guarantor under or arising from any Consumer Credit Law; and, to
the knowledge of the Company, no facts or situation exists that could form the
basis for any such litigation, action, proceeding, controversy, complaint,
notice or inquiry.
7.10. NON-CONTRAVENTION -- COMPANY. The execution, delivery and
performance of this Agreement and the other Loan Documents and any other
documents and instruments required under or in connection with this Agreement
by Company are not in contravention of the terms of any indenture, agreement or
undertaking to which Company or any of its Guarantors is a party or by which
its or their properties are bound or affected where such violation would
reasonably be expected to have a Material Adverse Effect.
7.11. NON-CONTRAVENTION -- GUARANTORS. The execution, delivery and
performance of those Loan Documents signed by the Guarantors, and any other
documents and instruments required under or in connection with this Agreement
by the Guarantors are not in contravention of the terms of any indenture,
agreement or undertaking to which any Guarantor or Company is a party or by
which it or its properties are bound or affected where such violation would
reasonably be expected to have a Material Adverse Effect.
7.12. NO LITIGATION. Except for De Minimis Matters or as set forth
on Schedule 7.12 hereof, there is no suit, action, proceeding, including,
without limitation, any bankruptcy proceeding, or governmental investigation
pending against or to the knowledge of Company, affecting Company or any
Guarantor (other than any suit, action or proceeding in which Company or such
Guarantor is the plaintiff and in which no counterclaim or cross-claim against
Company or such Guarantor has been filed), nor is Company or any of its
Guarantors or any of its or their officers or directors, as the case may be,
subject to any suit, action, proceeding or governmental investigation as a
result of which any such officer or director is or may be entitled to
indemnification by Company or a Guarantor, as applicable, which suits, if
resolved adversely to Company or any of its Guarantors, are reasonably likely
to have a Material Adverse Effect. Except as set forth on Schedule 7.12, there
is not outstanding against Company or any Guarantor any judgment, decree,
injunction, rule, or order of any court, government, department, commission,
agency, instrumentality or arbitrator nor is Company or any Guarantor in
violation of any applicable law, regulation, ordinance, order, injunction,
decree or requirement of any governmental body or court where such violation
would reasonably be expected to have a Material Adverse Effect.
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7.13. CONSENTS, APPROVALS AND FILINGS, ETC. Except as have been
previously obtained, no authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory authority or
any securities exchange or any other person or party (whether or not
governmental) is required in connection with the execution, delivery and
performance: (i) by Company of this Agreement, any of the other Loan Documents
to which it is a party, or any other documents or instruments to be executed
and or delivered by Company in connection therewith or herewith; (ii) by any
Guarantor, of any of the other Loan Documents to which such Guarantor is a
party, or (iii) by Company or any of the Guarantors, of the liens, pledges,
mortgages, security interests or other encumbrances granted, conveyed or
otherwise established (or to be granted, conveyed or otherwise established) by
or under this Agreement or the other Loan Documents, except for such filings to
be made concurrently herewith as are required by the Security Agreement to
perfect liens in favor of the Agent. All such authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations and
registrations which have previously been obtained or made, as the case may be,
are in full force and effect and are not the subject of any attack, or to the
knowledge of Company threatened attack (in any material respect) by appeal or
direct proceeding or otherwise.
7.14. AGREEMENTS AFFECTING FINANCIAL CONDITION. Neither the Company
nor any of its Guarantors is party to any agreement or instrument or subject to
any charter or other corporate restriction which materially adversely affects
the financial condition or operations of the Company and its Guarantors (taken
as a whole).
7.15. NO INVESTMENT COMPANY OR MARGIN STOCK. Neither the Company nor
any of its Guarantors is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Neither the Company nor any of its
Guarantors is engaged principally, or as one of its important activities,
directly or indirectly, in the business of extending credit for the purpose of
purchasing or carrying margin stock. None of the proceeds of any of the
Advances will be used by the Company or any of its Guarantors to purchase or
carry margin stock or will be made available by the Company or any of its
Guarantors in any manner to any other Person to enable or assist such Person in
purchasing or carrying margin stock. Terms for which meanings are provided in
Regulation U of the Board of Governors of the Federal Reserve System or any
regulations substituted therefor, as from time to time in effect, are used in
this paragraph with such meanings.
7.16. ERISA. Except as set forth in Schedule 7.16, neither the
Company nor any ERISA Affiliate maintains or contributes to any Pension Plan.
As of the Effective Date, (a) with respect to any Pension Plan for which the
Company or any ERISA Affiliate is the administrator or plan sponsor as defined
in ERISA Section 3(16)(A) and (B), there is no accumulated funding deficiency
as defined in ERISA Section 302(a)(2), or any existing material liability owed
to the PBGC under ERISA Sections 4062, 4063 or 4064, nor has any "reportable
event" or any "prohibited transaction" as defined in ERISA, occurred; and (b)
all such Pension Plans are in material compliance with the requirements of the
Internal Revenue Code and ERISA. As to any Multiemployer Plan, neither the
Company nor any ERISA Affiliate has had a complete or partial withdrawal from
any Multiemployer Plan which has
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resulted or could reasonably be expected to result in a material liability
under ERISA and neither the Company nor any ERISA Affiliate has actual
knowledge of or has received notice of reorganization under ERISA Section 4242
or notice of plan insolvency under ERISA Section 4245(e).
7.17. CONDITIONS AFFECTING BUSINESS OR PROPERTIES. Except as
disclosed in Schedule 7.17, neither the respective businesses nor the
properties of Company or any of its Guarantors is affected by any fire,
explosion, accident, strike, lockout or other dispute, drought, storm, hail,
earthquake, embargo, Act of God or other casualty (not covered by insurance),
which materially adversely affects, or if such event or condition were to
continue for more than ten (10) additional days would reasonably be expected to
materially adversely affect, any such businesses or properties of Company and
its Guarantors (taken as a whole).
7.18. ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in
Schedule 7.18 and except for such matters as are not likely to have a Material
Adverse Effect:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Company or any of its Guarantors,
have been, and continue to be, owned or leased by the Company and the
Guarantors in material compliance with all Hazardous Material Laws;
(b) to the best knowledge of the Company, there have
been no past, and there are no pending or threatened
(i) claims, complaints, notices or
requests for information received by the Company or any of its
Guarantors with respect to any alleged violation of any
Hazardous Material Law, or
(ii) complaints, notices or inquiries to
the Company or any of its Guarantors regarding potential
liability under any Hazardous Material Law; and
(c) no conditions exist at, on or under any property
now or previously owned or leased by the Company or any of its
Guarantors which, with the passage of time, or the giving of notice or
both, would give rise to liability under any Hazardous Material Law.
7.19. SUBSIDIARIES. The Company has no Subsidiaries, except as
disclosed on Schedule 7.19 hereto.
7.20. ACCURACY OF INFORMATION. (a) Except to the extent the
preparation of such financial statements are affected by "pooling of interests"
in connection with acquisitions, each of the Company's financial statements
previously furnished to Agent and the Banks on or after February 1, 1997 has
been prepared in accordance with GAAP and is complete and
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correct in all material respects and fairly presents (subject to year-end
adjustments in the case of interim statements) the financial condition of
Company and the results of its operations for the periods covered thereby.
(b) Since December 31, 1997 through the Effective
Date, except as previously disclosed in writing to the Agent and the Banks,
there has been no material adverse change in the financial condition of Company
or its Guarantors taken as a whole; to the best knowledge of Company, neither
Company nor any of its Guarantors has any contingent obligations (including any
liability for taxes) not disclosed by or reserved against in the December 31,
1997 balance sheets, as applicable, except as set forth on Schedule 7.20
hereof, and at the present time there are no unrealized or anticipated losses
from any present commitment of Company or any of its Guarantors which in the
aggregate is likely to have a Material Adverse Effect.
7.21. NO CHANGE IN REQUIREMENTS OF LAWS. Except as disclosed in
Schedule 7.21 hereof, there has been no introduction of or change in any
Consumer Credit Laws or any other applicable federal, state, or local laws,
ordinances, codes, rules, regulations and guidelines (such as the enactment of
any proposed regulation of rental purchase transactions as credit sales subject
to interest rate limitations and other consumer lending restrictions) which
would have a Material Adverse Effect.
8. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, and, as applicable, cause
each of its Guarantors to, until the Revolving Credit Maturity Date and
thereafter until expiration of all Letters of Credit and final payment in full
of the Indebtedness and the performance by the Company of all other obligations
under this Agreement and the other Loan Documents:
8.1. FINANCIAL STATEMENTS. Furnish to the Agent with sufficient
copies for each Bank:
(a) as soon as available, but in any event within 120
days after the end of each fiscal year of the Company a copy of the
audited consolidated and consolidating financial statements of the
Company as at the end of such year and the related audited statements
of income, accumulated earnings, cash flows and balance sheets for
such year, setting forth in each case in comparative form the figures
for the previous year, certified by a nationally recognized certified
public accountant satisfactory to the Agent and the Banks as being
fairly stated in all material respects; and
(b) as soon as available, but in any event not later
than 50 days after the end of each of the first three quarterly
periods and 60 days after the end of the fourth quarterly period of
each fiscal year of the Company, the unaudited consolidated and
consolidating financial statements of the Company as at the end of
such quarter and the related unaudited statements of income,
accumulated earnings, cash flows and balance
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sheets of the Company for 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.
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such officer and disclosed therein), provided
however that the quarterly financial statements delivered hereunder will not be
required to include footnotes and will be subject to year-end adjustments.
8.2. CERTIFICATES; OTHER INFORMATION. Furnish to the Agent with
sufficient copies for each Bank:
8.2.1. as soon as available, but in any event not later
than 20 days after the end of each calendar month,
8.2.1.1. a Borrowing Base Certificate
executed by a Responsible Officer,
substantially in the form attached hereto as
Exhibit K; and
8.2.1.2. a "BOR Report" (reporting the total
number of rental units under Rental Contract
as of the end of such calendar month); and
8.2.1.3. a "Reconciliation Report" (showing
the number of stores opened, closed and/or
acquired during such calendar month; and for
any stores which are opened or acquired
during such calendar month, the address
(including the county) of each such store);
and
8.2.1.4. an "Idle Inventory Report" (showing
the amount of inventory not under Rental
Contract as of the end of such calendar
month); and
8.2.1.5. a "Delinquency Report" (showing the
percentage of Rental Contracts one day or
more past due as of the last Saturday of such
calendar month);
8.2.2. as soon as available, but in any event not later
than 50 days after the end of each fiscal quarter a Covenant Compliance Report
executed by a Responsible Officer, substantially in the form attached hereto as
Exhibit H;
8.2.3. not later than 120 days following the end of each
fiscal year of the Company, a copy of the projections by the Company of the
balance sheets, operating budget and
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cash flow budget of the Company and its Subsidiaries, covering, on a quarterly
basis, the three year period following the last day of the fiscal year then
ending, such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such projections have been prepared on the basis of
sound financial planning practice and that such Officer has no reason to
believe they are incorrect or misleading in any material respect;
8.2.4. "Same Store Sales Report": (x) deliver together
with the financial statements to be delivered pursuant to Sections 8.1(a) and
8.1(b) hereof, which for all stores opened for 24 months or longer as of the
end of the fiscal quarter then ending, compares sales for the quarter then
ending with sales for the same quarter ending 12 months earlier) and (y)
deliver together with the annual financial statements to be delivered pursuant
to Section 8.1(a) hereof, which for all stores owned as of the last day of the
fiscal year then ending which were also owned as of the last day of the
immediately preceding fiscal year, compares annual revenues as for such stores
as of the last day of the fiscal year then ending with annual revenues for such
stores as of the last day of the immediately preceding fiscal year.
8.2.5. not later than 60 days following the end of each
fiscal quarter of the Company, a schedule of pending litigation of the Company
in which the amount in controversy exceeds $500,000, in form satisfactory to
the Agent and in reasonable detail (including the amount in controversy),
certified as to accuracy by a Responsible Officer to the best of such
Responsible Officer's knowledge;
8.2.6. as soon as available, the Company's 10-Q and 10-K
Reports filed with the U.S. Securities and Exchange Commission, and in any
event, with respect to the 10-Q Report, within sixty (60) days of the end of
each of the Company's fiscal quarters, and with respect to the 10-K Report,
within 120 days after and as of the end of each of Company's fiscal years, and,
as soon as available, copies of all other documents filed by the Company with
the Securities and Exchange Commission (other than any registration statement
and prospectus included therein relating to an employee benefit plan and filed
on Form S-8 or any successor form) and copies of any orders in any proceedings
to which the Company or any Subsidiary is a party issued by any governmental
agency;
8.2.7. promptly as issued, all press releases, notices
to shareholders and all other material written communications transmitted to
the general public or to the trade or industry in which the Company is engaged;
and
8.2.8. promptly, such additional financial and other
information, or other reports as any Bank may from time to time reasonably
request.
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8.3. PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be, all
of 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 Company.
8.4. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Each of the
Company and each Guarantor shall:
(a) continue to engage primarily in the business (or
in the franchising of such business) as now conducted by it and
preserve, renew and keep in full force and effect its existence;
(b) take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal
conduct of its business except as otherwise permitted pursuant to
Section 9.4; and
(c) 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.
8.5. MAINTENANCE OF PROPERTY; INSURANCE. The Company will
maintain, cause to be maintained or cause each Guarantor to maintain with
responsible insurance companies insurance with respect to the Collateral, its
or their properties and business, against such casualties and contingencies and
of such types and in such amounts as is customary in the case of similar
businesses, and will furnish to the Agent prior the initial Advance, and upon
reasonable request by any Bank at reasonable intervals thereafter, a
certificate of a Responsible Officer, as well as independent evidence of
coverage, setting forth the nature and extent of all insurance policies
maintained by the Company or any Guarantor in accordance with this Section.
The Company shall give immediate written notice to the Banks and to the
insurers of any significant loss or damage to the Collateral or other property
to be insured and shall promptly file proofs of loss with such insurers.
8.6. INSPECTION OF PROPERTY; BOOKS AND RECORDS, DISCUSSIONS.
Permit Agent and each Bank, through their authorized attorneys, accountants and
representatives (a) to examine Company's and each Guarantor's books, accounts,
records, ledgers and assets and properties of every kind and description
(including without limitation, all promissory notes, security agreements,
customer applications, vehicle title certificates, chattel paper, Uniform
Commercial Code filings) wherever located at all reasonable times during normal
business hours, upon oral or written request of Agent or such Bank, and (b) at
any time and from time to time at the request of the Majority Banks, to conduct
full or partial collateral audits, provided, however that prior to the
occurrence and continuance of any Event of Default, the Company shall be
required to reimburse the Agent and the Banks for all reasonable costs and
expenses of no more than one full collateral audit per year and after the
occurrence and during the continuance of an Event of Default, the Company shall
be required to reimburse
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the Agent and the Banks for all reasonable costs and expenses of all collateral
audits; and permit Agent and each Bank or their authorized representatives, at
reasonable times and intervals, to visit all of their respective offices,
discuss their respective financial matters with their respective officers and
independent certified public accountants, and, by this provision, Company
authorizes such accountants to discuss the finances and affairs of Company and
its Guarantors (provided that Company is given an opportunity to participate in
such discussions) and examine any of its or their books and other corporate
records. Notwithstanding the foregoing, all information furnished to the Agent
or the Banks hereunder shall be subject to the undertaking of the banks set
forth in Section 14.12 hereof.
8.7. NOTICES. Promptly give notice to the Agent of:
(a) the occurrence of any Default or Event of Default
of which the Company has knowledge;
(b) any (i) default or event of default under any
Contractual Obligation of the Company or any Guarantor or (ii)
litigation, investigation or proceeding which may exist at any time
between the Company or any Guarantor and any Governmental Authority,
which in either case, if not cured or if adversely determined, as the
case may be, would have a Material Adverse Effect;
(c) the following events, as soon as possible and in
any event within 30 days after the Company knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any "reportable
event" as defined in ERISA with respect to any Pension 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 Pension Benefit Guaranty Corporation
or the Company or any Commonly Controlled Entity or any Multiemployer
Plan with respect to the withdrawal from or the terminating,
reorganization or insolvency of any Pension Plan;
(d) after the effectiveness thereof, any material
amendment, supplement or other modification of (i) the Company's
management information system which permits the daily tracking of each
store's rental and collection activity, or (ii) the Company's
accounting policies regarding its Rental Contracts;
(e) a material adverse change in the business,
operations, property, or financial condition of the Company; and
(f) promptly furnish to the Agent notice as to (i)
any development related to the business or financial condition of the
Company, its Affiliates or Guarantors, which would have or has a
Material Adverse Effect and (ii) any material and adverse litigation
or investigation to which the Company, any Affiliate or any Guarantor
is a party; and
(g) in the event that the Company or any Subsidiary
shall open any new retail location (other than those listed on Exhibit
O hereof), execute and deliver to the Agent all such amendments,
supplements and other modifications to this Agreement and
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the other Loan Documents together with signed (or pre-signed)
financing statements and all other instruments of further assurance
required by the Agent or the Majority Banks, and will take such other
actions as the Agent or the Majority Banks reasonably request and deem
necessary or advisable in order for Agent to perfect its security
interest in the Collateral located at such new retail location.
(h) any introduction of or change in any Consumer
Credit Laws or any other applicable federal, state, or local laws,
ordinances, codes, rules, regulations and guidelines (such as the
enactment of any proposed regulation of rental purchase transactions
as credit sales subject to interest rate limitations and other
consumer lending restrictions) which would have a Material Adverse
Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto.
8.8. HAZARDOUS MATERIAL LAWS.
(a) Use and operate all of its facilities and
properties in material compliance with all material Hazardous Material
Laws, keep all necessary permits, approvals, certificates, licenses
and other authorizations relating to environmental matters in effect
and remain in material compliance therewith, and handle all Hazardous
Materials in material compliance with all applicable Hazardous
Material Laws;
(b) Promptly notify Agent and provide copies upon
receipt of all written claims, complaints, notices or inquiries
received by the Company of a material nature relating to its
facilities and properties or compliance with Hazardous Material Laws,
and shall promptly cure and have dismissed with prejudice to the
satisfaction of the Majority Banks any actions and proceedings
relating to compliance with Hazardous Material Laws to which the
Company is named as a party; and
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(c) Provide such information and certifications which
any Bank may reasonably request from time to time to evidence
compliance with this Section 8.8.
8.9. MINIMUM TANGIBLE NET WORTH. Maintain at all times a minimum
Tangible Net Worth of $25,000,000 plus 50% of Net Income (if positive) earned
in each fiscal quarter beginning with the quarter ending March 31, 1998 plus
100% of the proceeds of the issuance of any New Equity (net of reasonable and
customary costs and expenses of issuance) during such fiscal quarter.
8.10. POSITIVE NET INCOME. Maintain as of the end of each fiscal
quarter beginning with the quarter ending March 31, 1998, Net Income (exclusive
of any tax benefit resulting from a loss carry forward or otherwise, plus to
the extent deducted in the computation of such Net Income, all accrued taxes on
or measured by income, and without giving effect, but without duplication, to
one-time cash charges in an aggregate amount not to exceed $10,000,000 and any
one- time non-cash charges in an aggregate amount not to exceed $1,000,000
arising from the Merger for the first two fiscal quarters ending after the
Merger, as such charges were given effect prior to giving effect to any taxes
on or measured by income) greater than zero.
8.11. FIXED CHARGE COVERAGE RATIO. Maintain a Fixed Charge Coverage
Ratio of not less than the ratio set forth below during the applicable period
set forth below:
---------------------------------------------------------
Quarter(s) Ending Ratio
---------------------------------------------------------
March 31, 1998 1.50 to 1.0
---------------------------------------------------------
June 30, 1998 1.75 to 1.0
---------------------------------------------------------
September 30, 1998 1.85 to 1.0
---------------------------------------------------------
December 31, 1998 and March 31, 1999 2.00 to 1.0
---------------------------------------------------------
June 30, 1999 through March 31, 2000 2.25 to 1.0
---------------------------------------------------------
June 30, 2000 and thereafter 2.35 to 1.0
---------------------------------------------------------
8.12. LEVERAGE RATIO. Maintain, as of the end of each fiscal
quarter, a Leverage Ratio of not more than 0.50 : 1.0.
8.13. TAXES. Pay and discharge all taxes and other governmental
charges, and all material contractual obligations calling for the payment of
money, before the same shall become overdue, unless and to the extent only that
such payment is being contested in good faith by appropriate proceedings and is
reserved for, as required by GAAP on its balance sheet, or where the failure to
pay any such matter could not have a Material Adverse Effect.
8.14. GOVERNMENTAL AND OTHER APPROVALS. Apply for, obtain and/or
maintain in effect, as applicable, all authorizations, consents, approvals,
licenses, qualifications, exemptions, filings, declarations and registrations
(whether with any court, governmental agency, regulatory authority, securities
exchange or otherwise) which are necessary in connection with the execution,
delivery and performance: (i) by Company, of this Agreement, the Loan
Documents, or any other documents or instruments to be executed and/or
delivered by Company in connection therewith or herewith; and (ii) by each of
the Guarantors, of the Loan Documents to which it is a party.
8.15. COMPLIANCE WITH ERISA. With respect to any Pension Plan for
which the Company or any ERISA Affiliate is the plan sponsor or administrator
as defined in ERISA Section 3(16)(A) and (B), materially comply with the
requirements imposed by ERISA as presently in effect or hereafter promulgated,
including but not limited to, the minimum funding requirements of any Pension
Plan.
8.16. ERISA NOTICES. Promptly notify the Agent upon the occurrence
of any of the following events:
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(a) the termination of any Pension Plan subject to
Subtitle C of Title IV of ERISA;
(b) the appointment of a trustee by a United States
District Court to administer any Pension Plan subject to Title IV of
ERISA;
(c) the commencement by the Pension Benefit Guaranty
Corporation, or any successor thereto, of any proceeding to terminate
any Pension Plan subject to Title IV of ERISA;
(d) the failure of the Company or any ERISA Affiliate
to make any payment in respect of any Pension Plan required under
Section 412 of the Internal Revenue Code;
(e) the withdrawal of the Company or any ERISA
Affiliate from any multiemployer plan (as defined in Section 3(37) of
ERISA; or
(f) the occurrence of a "reportable event" which is
required to be reported by the Company under Section 4043 of ERISA or
a "prohibited transaction" as defined in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code which is likely to have a
Material Adverse Effect.
8.17. OFFICES. The Company agrees that it will and will cause each
of the Guarantors to operate each of its offices as a licensed location in the
jurisdiction requiring such license in conformity with all such licensing and
other laws applicable to the origination of Rental Contracts, Sales Finance
Agency Acts, or any other law regulating the rent-to-own industry if failure to
do so would reasonably be expected to have a Material Adverse Effect. To the
extent the Company does not have a license for each location, and such failure
could reasonably be expected to have a Material Adverse Effect, it will
immediately procure a license or advise the Agent of the reason that it is
exempt from such licensing requirement or that no such licensing requirement
exists in the jurisdiction of such location.
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8.18. SECURITY. The Company hereby agrees to take such actions as
the Majority Banks may from time to time reasonably request to establish and
maintain first perfected security interests in and Liens on all of its
Collateral.
8.19. PERFORMANCE OF CONTRACT DUTIES, DEFENSE OF COLLATERAL. The
Company warrants that it has performed, and covenants and agrees that it will
continue to perform, in all material respects its duties and obligations under
each Rental Contract. The Company covenants to defend the Collateral from any
Liens other than Liens permitted by Section 9.2.
8.20. POSSESSORY PERFECTION IN CONTRACT COLLATERAL. The Company
covenants that it will, beginning no later than the date 60 days after the
Effective Date, cause RTO Operating to prominently stamp or ▇▇▇▇ (or cause to
be so stamped or marked) each original Rental Contract originated on or after
such date with the legend set forth below:
"RTO Operating, Inc. has collaterally assigned its rights in
this Rental Contract to Comerica Bank as agent for itself and
certain other Banks."
8.21. USE OF PROCEEDS. The initial Advances made to the Company
shall be used by Company (i) to pay the costs and expenses of the transactions
contemplated by this Agreement which are due and payable on the closing date,
and (ii) for the payment of any monies due in connection with the assignment of
the Prior Credit Agreement to the Agent and the Banks; proceeds of any
subsequent Advances made hereunder shall be used by Company solely for the
general business purposes including without limitation working capital and to
finance Permitted Acquisitions. Company shall not use any portion of the
proceeds of any such advances for the purpose of purchasing or carrying any
"margin stock" (as defined in Regulation G of the Board of Governors of the
Federal Reserve System) in any manner which violates the provisions of
Regulation G, T, U or X of said Board of Governors or for any other purpose in
violation of (x) any applicable statute or regulation or (y) the terms and
conditions of this Agreement.
8.22. FUTURE SUBSIDIARIES. With respect to each Person which
becomes a Subsidiary of the Company subsequent to the Effective Date, within
sixty (60) days of the date such new Subsidiary is created or acquired (but in
any event before any payments under the Rental Contracts owned by such
Subsidiary shall be included in the Borrowing Base),
(a) (X) cause such Subsidiary to execute and deliver
to Agent, for and on behalf of each of the Banks, (i) a Joinder
Agreement whereby such Subsidiary becomes obligated as a Guarantor
under the Guaranty and (ii) a Security Agreement, and (Y) shall
execute, or cause to be executed, and deliver to the Agent a stock
pledge encumbering 100% of the share capital of each such Subsidiary;
or
(b) merge, or cause such Subsidiary to enter into a
merger with RTO Operating, so long as RTO Operating is the surviving
corporation;
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together in each case with such supporting documentation, including without
limitation financing statements, stock certificates and stock powers (in the
case of clause (a) hereof) or certificates of merger (in the case of clause (b)
hereof) and in either case, corporate resolutions and other authority
documents, certificates and opinions of counsel, all as reasonably required by
the Agent and the Majority Banks.
8.23. ROYALTY PAYMENTS ON LICENSES AND TRADEMARKS. So long as no
Default or Event of Default has occurred and is continuing, and subject to
Section 9.9 hereof, any Guarantor may make royalty payments or pay licensing
fees to ATRO under royalty agreements or licensing agreements in an aggregate
amount for all such payments by all Guarantors not to exceed in any year 3% of
gross revenues of RTO Operating as shown on the financial statements delivered
under Section 8.1 hereof.
8.24. FURTHER ASSURANCES. Execute and deliver or cause to be
executed and delivered to Agent within a reasonable time following Agent's
request, and at the Company's expense, such other documents or instruments as
Agent may reasonably require to effectuate more fully the purposes of this
Agreement or the other Loan Documents.
9. NEGATIVE COVENANTS
Company covenants and agrees that, until the Revolving Credit Maturity
Date and thereafter until expiration of all Letters of Credit and final payment
in full of the Indebtedness and the performance by Company and the Guarantors
of all other obligations under this Agreement and the other Loan Documents it
will not, and will not permit any of the Subsidiaries, to:
9.1. LIMITATION ON DEBT. Create, incur, assume or suffer to exist
any Debt, except:
(a) Indebtedness in respect of the Notes, the Letters
of Credit and other obligations of the Company or any Guarantor under
this Agreement and the other Loan Documents to which it is a party;
(b) any Debt set forth in Schedule 9.1 attached
hereto and any renewals or refinancing of such Debt in amounts not
exceeding the scheduled amounts (less any required amortization
according to the terms thereof), on substantially the same terms and
otherwise in compliance with this Agreement;
(c) Debt of the Company or RTO Operating incurred to
finance the acquisition of motor vehicles (whether pursuant to a loan
or a Financing Lease) in an aggregate principal amount not exceeding
$5,000,000 at any time outstanding and other Debt of the Company or
RTO Operating incurred to finance the acquisition of fixed or capital
assets other than motor vehicles (whether pursuant to a loan or a
Financing Lease)
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in an aggregate amount not exceeding $1,000,000 at any time
outstanding, and any renewals or refinancing of such Debt in amounts
not exceeding the scheduled amounts (less any required amortization
according to the terms thereof), on substantially the same terms and
otherwise in compliance with this Agreement;
(d) Debt of the Company or RTO Operating in
connection with non-competition agreements or signing bonus entered
into by the Company or RTO Operating in connection with Permitted
Acquisitions, in an aggregate amount not exceeding $3,000,000 at any
one time;
(e) Debt in respect of taxes, assessments or
governmental charges to the extent that payment thereof shall not at
the time be required to be made in accordance with Section 8.13;
(f) current unsecured trade, utility or
nonextraordinary accounts payable arising in the ordinary course of
Company's or such Guarantor's businesses;
(g) Intercompany Loans from the Company to RTO
Operating but only to the extent permitted under the other applicable
terms and limitations of this Agreement, including but not limited to
Section 9.8 hereof;
(h) Intercompany Loans from the Company to RTO
Holding but only to the extent such loans are immediately readvanced
to RTO Operating pursuant to the terms of the applicable Intercompany
Note and otherwise as permitted under the other applicable terms and
limitations of this Agreement, including but not limited to Section
9.8 hereof;
(i) intercompany loans from the Company or any
Guarantor to any Subsidiary but only to the extent permitted under the
applicable terms and limitations of this Agreement, including but not
limited to Section 9.8 hereof; and
(j) additional Debt of the Company or RTO Operating
not exceeding $5,000,000 in aggregate principal amount at any one time
outstanding, provided that only the principal component of obligations
shall be considered in calculating such $5,000,000 amount.
9.2. LIMITATION ON LIENS. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Permitted Liens;
(b) Liens securing Debt permitted by Section 9.1(c)
incurred to finance the acquisition of fixed or capital assets,
provided that (i) such Liens shall be created substantially
simultaneously with the acquisition of such motor vehicles, or fixed
or capital assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such Debt, (iii) the
amount of Debt secured thereby is not increased
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and (iv) the principal amount of Debt secured by any such Lien shall
at no time exceed 100% of the original purchase price of such
property;
(c) any Lien securing indebtedness assumed pursuant
to a Permitted Acquisition, provided that such Lien is limited to the
property so acquired, and was not entered into, extended or renewed in
contemplation of such acquisition;
(d) Liens in favor of Agent, as security for the
Indebtedness; and
(e) Liens securing Debt under any Intercompany Loans;
(f) other Liens, existing on the Effective Date, set
forth on Schedule 9.2.
9.3. LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation except the Guaranties or the Permitted
Guarantees.
9.4. ACQUISITIONS. Other than Permitted Acquisitions and except as
permitted pursuant to Section 9.7 hereof, purchase or otherwise acquire or
become obligated for the purchase of all or substantially all or any material
portion of the assets or business interests of any Person, firm or corporation,
or any shares of stock (or other ownership interests) of any corporation,
trusteeship or association, or any business or going concern, or in any other
manner effectuate or attempt to effectuate an expansion of present business by
acquisition.
9.5. LIMITATION ON MERGERS, OR SALE OF ASSETS. Other than the
Merger and except as permitted under Section 9.4 hereof, enter into any merger
or consolidation or convey, sell, lease, assign, transfer or otherwise dispose
of any of its property, business or assets (including, without limitation,
receivables and leasehold interests), whether now owned or hereafter acquired,
except:
(a) inventory leased or sold pursuant to Rental
Contracts in the ordinary course of business;
(b) obsolete or worn out property, property no longer
useful in the conduct of Company's business or property from closed
offices, in each case disposed of in the ordinary course of business;
(c) the merger of the Company into a special purpose
Delaware corporation by way of reincorporation so long as (x) the
Company gives forty-five days prior written notice of such
reincorporation to the Agent and the Banks, (y) the surviving entity
assumes in writing all of the obligations of the Company pursuant to
this Agreement on terms and conditions satisfactory to the Agent and
the Banks and (z) the surviving entity delivers authority documents,
opinions, documents evidencing the merger, financing statements,
replacement notes and such other documents as shall be required by the
Agent and the Banks in connection therewith;
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(d) the merger of any Subsidiary (other than RTO
Operating) with and into the Company or RTO Operating, so long as the
Company (if the Company is a party to such merger) or RTO Operating
(if RTO Operating is a party to the merger)is the surviving
corporation;
(e) Asset Sales (other than Asset Sales otherwise
permitted by this Section 9.5); provided however that in each case
(X) the sales price is at least equal to the fair market value of the
assets sold or otherwise disposed of and the transfer is on terms and
conditions satisfactory to the Agent and the Banks, (Y) promptly but
in any event no more than three (3) days following the date of such
Asset Sale, after giving effect to such sale, the Company shall
deliver, or cause to be delivered, a Borrowing Base Certificate
executed by a Responsible Officer, (Z) immediately upon receipt by
the Company or such Subsidiary of the proceeds of such Asset Sale,
then pursuant to Section 2.7 hereof, the Company shall prepay any
outstanding Advances by the amount of such proceeds (net of any
reasonable direct expenses of sale); and
(f) the sale, transfer or other disposition of other
property in an amount not to exceed and aggregate amount of $1,000,000
disposed of during any fiscal year of the Company;
provided that, with respect to the merger, sale, transfer or other disposition
of assets pursuant to clauses (c), (d), (e) or (f) above, no Default or Event
of Default shall have occurred and be continuing (both before and after giving
effect thereto).
9.6. DIVIDENDS. Declare or pay any dividends on or make any other
distribution with respect to any shares of its capital stock or other equity
interests (other than dividends or similar distributions payable solely in
common stock or membership interests), whether by reduction of stockholders'
equity or otherwise or permit any Subsidiary to make any such distributions,
except for:
(a) dividends and other distributions by Subsidiaries
of the Company to Company; and
(b) so long as the Fixed Charge Coverage Ratio is
greater than or equal to 4.0:1 (both before and after giving effect
thereto), cash dividends by the Company;
provided that, with respect to the payment of dividends or other distributions
under clauses (a) or (b), above no Default or Event of Default has occurred and
is continuing at the time such dividends or other distributions are declared
and at the time such dividends or other distributions are paid.
9.7. LIMITATION ON CAPITAL EXPENDITURES. Except in connection with
the Merger, make or commit to make (by way of the acquisition of securities of
a Person or otherwise) any expenditure in respect of the purchase or other
acquisition of fixed or capital assets (excluding
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any such asset acquired in connection with normal replacement and maintenance
programs properly charged to current operations) except for:
(a) Permitted Acquisitions permitted by Section 9.4,
to the extent assets are acquired which constitute Capital
Expenditures; and
(b) expenditures in the ordinary course of business
not exceeding, in the aggregate for the Company and its Subsidiaries
(i) during fiscal year 1998, $6,000,000 and (ii) during any fiscal
year thereafter, $3,000,000.
9.8. LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities, of or any assets
constituting a business unit of, or make any other investment in, any Person,
except:
(a) Permitted Investments;
(b) extensions of trade credit in the ordinary course
of business;
(c) loans and advances to officers and employees of
the Company for travel and entertainment in the ordinary course of
business in an aggregate amount, not to exceed $200,000 at any one
time outstanding, and advances to employees for the purposes of
purchasing for personal use items otherwise classified as inventory,
in an aggregate amount for all such advances not to exceed $300,000 at
any one time;
(d) Permitted Acquisitions permitted pursuant to
Section 9.4; and
(e) Intercompany Loans, Advances and Investments by
the Company to RTO Operating or to RTO Holding;
(f) Intercompany Loan, Advances and Investments by
RTO Holding to RTO Operating, or by RTO Operating to RTO Holding; and
(g) loans, advances and investments by the Company
or any Guarantor in any Subsidiary other than RTO Holding and RTO
Operating in an aggregate outstanding amount not to exceed $500,000
at any time.
In valuing any Investments for the purpose of applying the limitations set
forth in this Section 9.8 (except as otherwise expressly provided herein), such
Investment shall be taken at the original cost thereof, without allowance for
any subsequent write-offs or appreciation or depreciation, but less any amount
repaid or recovered on account of capital or principal.
9.9. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service, with any Affiliate of the Company
unless such transaction is otherwise permitted under this
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Agreement, is in the ordinary course of the Company's or such Guarantor's
business and is upon fair and reasonable terms no less favorable to the Company
or such Guarantor than it would obtain in a comparable arms length transaction
with a Person not a Guarantor.
9.10. SALE AND LEASEBACK. Except as permitted by Section 9.1(c),
and except in connection with any property acquired pursuant to a Permitted
Acquisition, enter into any arrangement with any Person providing for the
leasing by the Company or any Guarantor of real or personal property which has
been or is to be sold or transferred by the Company or such Guarantor 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
Company or such Guarantor, as the case may be.
9.11. LIMITATION ON NEGATIVE PLEDGE CLAUSES. Except for the Loan
Documents and any other agreements, documents or instruments pursuant to which
Liens not prohibited by the terms of this Agreement are created, entered into,
or allowed to exist, enter into any agreement, document or instrument which
would restrict or prevent Company and its Guarantors from granting Agent on
behalf of Banks liens upon, security interests in and pledges of their
respective assets which are senior in priority to all other Liens.
9.12. PREPAYMENT OF DEBTS. Except in connection with Debt assumed in
connection with a Permitted Acquisition, prepay, purchase, redeem or defease
any Debt for money borrowed or any capital leases excluding, subject to the
terms hereof, the Indebtedness, and excluding paydowns from time to time of
permitted working capital facilities or other revolving debt and mandatory
payments, prepayments or redemptions for which Company or any Guarantor is
obligated as of the date hereof.
10. DEFAULTS
10.1. EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an Event of Default hereunder:
(a) non-payment when due of (i) the principal or
interest under any of the Notes issued hereunder in accordance with
the terms thereof, (ii) any Reimbursement Obligation, or (iii) any
Fees, and in the case of interest payments and Fees, continuance
thereof for three (3) Business Days;
(b) non-payment of any money by Company under this
Agreement or by Company or any Guarantor under any of the Loan
Documents, other than as set forth in subsection (a), above within ten
(10) Business Days after notice from Agent that the same is due and
payable;
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(c) default in the observance or performance of any
of the conditions, covenants or agreements of Company set forth in
Sections 2.7, 3.6, 8.1, 8.2, 8.4(a), 8.6, 8.7, 8.9 through 8.12, 8.20,
or 9 (in its entirety);
(d) default in the observance or performance of any
of the other conditions, covenants or agreements set forth in this
Agreement by Company and continuance thereof for a period of thirty
(30) consecutive days;
(e) any representation or warranty made by Company or
any Guarantor herein or in any instrument submitted pursuant hereto or
by any other party (other than the Agent or any Bank) to the Loan
Documents proves untrue or misleading in any material adverse respect
when made;
(f) default in the observance or performance of or
failure to comply with any of the conditions, covenants or agreements
of Company or any Guarantor set forth in any of the other Loan
Documents, and the continuance thereof beyond any period of grace or
cure specified in any such document;
(g) default (i) in the payment of any indebtedness
for borrowed money (other than Indebtedness hereunder) of Company or
any Guarantor in excess of Five Hundred Thousand Dollars ($500,000) in
the aggregate when due (whether by acceleration or otherwise) and
continuance thereof beyond any applicable period of cure or (ii)
failure to comply with the terms of any other obligation of Company or
any Guarantor with respect to any indebtedness for borrowed money
(other than Indebtedness hereunder) in excess of Five Hundred Thousand
Dollars ($500,000) in the aggregate, which with the giving of notice
or passage of time or both would permit the holder or holders thereto
to accelerate such other indebtedness for borrowed money or terminate
its commitment thereunder, as applicable;
(h) the rendering of any judgment(s) for the payment
of money in excess of the sum of One Million Dollars ($1,000,000)
individually or in the aggregate against Company or any Guarantor, and
such judgments shall remain unpaid, unvacated, unbonded or unstayed by
appeal or otherwise for a period of forty five (45) consecutive days,
except as covered by adequate insurance with a reputable carrier and
an action is pending in which an active defense is being made with
respect thereto;
(i) (i) the Company or any ERISA Affiliate shall
engage in any Prohibited Transaction involving any Pension Plan or
(ii) any event described in Section 7.16 shall occur or (iii) the
Company or any ERISA Affiliate shall, or in the reasonable opinion of
the Majority Banks is likely to, incur any liability in connection
with a withdrawal from, or the insolvency, or reorganization of, a
Multiemployer Plan and in each case in clauses (i) through (iii)
above, (x) a period of sixty (60) days, or more, has elapsed from the
occurrence of such event or condition and (y) such event or condition,
together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect;
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(j) a receiver, liquidator, custodian or trustee of
the Company or any Guarantor, or of all or any part of the property of
the Company or any Guarantor, shall be appointed by court order and
such order shall remain in effect for more than sixty (60) days, or an
order for relief shall be entered with respect to the Company or any
Guarantor, or the Company or any Guarantor shall be adjudicated a
bankrupt or insolvent; or any of the property of the Company or any
Guarantor shall be sequestered by court order and such order shall
remain in effect for more than sixty (60) days; or a petition shall be
filed against the Company or any Guarantor under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, and shall not be dismissed within sixty (60) days
after such filing; or the Company or any Guarantor shall file a
petition in voluntary bankruptcy or seeking relief under any provision
of any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or shall consent to
the filing of any petition against it under any such law; or the
Company or any Guarantor shall make an assignment for the benefit of
its creditors, or shall admit in writing its inability, or shall fail,
to pay its debts generally as they become due, or shall consent to the
appointment of a receiver, liquidator or trustee of the Company or any
Guarantor or of all or any part of the property of the Company or any
Guarantor.
(k) there shall be any change for any reason
whatsoever in the management of Company which shall in the reasonable
judgment of the Majority Banks adversely affect future prospects for
the successful operation of Company; or
(l) any provision of any Guaranty, the Pledge
Agreement or the Security Agreement shall at any time for any reason
cease to be valid and binding and enforceable against the Company or
any of the Guarantors, as applicable, or the validity, binding effect
or enforceability thereof shall be contested by any Person, or the
Company or any of the Guarantors shall deny that it has any or further
liability or obligation under the Guaranty, the Pledge Agreement or
the Security Agreement, as the case may be, or the Guaranty, the
Pledge Agreement or the Security Agreement, as the case may be, shall
be terminated, invalidated, revoked or set aside or in any way cease
to give or provide to the Banks and the Agent the benefits purported
to be created thereby.
10.2. EXERCISE OF REMEDIES. If an Event of Default has occurred and
is continuing hereunder: (a) the Agent shall, upon being directed to do so by
the Majority Banks, declare the Revolving Credit Aggregate Commitment
terminated; (b) the Agent shall, upon being directed to do so by the Majority
Banks, declare the entire unpaid principal Indebtedness, including the Notes,
immediately due and payable, without presentment, notice or demand, all of
which are hereby expressly waived by Company; (c) upon the occurrence of any
Event of Default specified in subsection 10.1(j), above, and notwithstanding
the lack of any declaration by Agent under preceding clause (b), the entire
unpaid principal Indebtedness, including the Notes, shall become automatically
and immediately due and payable, and the Revolving Credit Aggregate Commitment
shall be automatically and immediately terminated; (d) the Agent shall, upon
being directed to do so by the Majority Banks, demand immediate delivery of
cash collateral, and the Company and each Account Party agrees to deliver such
cash collateral upon demand, in an amount equal to the maximum amount that may
be available to be drawn
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at any time prior to the stated expiry of all outstanding Letters of Credit,
and (e) the Agent shall, if directed to do so by the Majority Banks or the
Banks, as applicable (subject to the terms hereof), exercise any remedy
permitted by this Agreement, the Loan Documents or law.
10.3. RIGHTS CUMULATIVE. No delay or failure of Agent and/or Banks
in exercising any right, power or privilege hereunder shall affect such right,
power or privilege, nor shall any single or partial exercise thereof preclude
any further exercise thereof, or the exercise of any other power, right or
privilege. The rights of Agent and Banks under this Agreement are cumulative
and not exclusive of any right or remedies which Banks would otherwise have.
10.4. WAIVER BY COMPANY OF CERTAIN LAWS. To the extent permitted by
applicable law, Company hereby agrees to waive, and does hereby absolutely and
irrevocably waive and relinquish the benefit and advantage of any valuation,
stay, appraisement, extension or redemption laws now existing or which may
hereafter exist, which, but for this provision, might be applicable to any sale
made under the judgment, order or decree of any court, on any claim for
interest on the Notes, or any security interest or mortgage contemplated by or
granted under or in connection with this Agreement. These waivers have been
voluntarily given, with full knowledge of the consequences thereof.
10.5. WAIVER OF DEFAULTS. No Event of Default shall be waived by the
Banks except in a writing signed by an officer of the Agent in accordance with
Section 14.11 hereof. No single or partial exercise of any right, power or
privilege hereunder, nor any delay in the exercise thereof, shall preclude
other or further exercise of their rights by Agent or the Banks. No waiver of
any Event of Default shall extend to any other or further Event of Default. No
forbearance on the part of the Agent or the Banks in enforcing any of their
rights shall constitute a waiver of any of their rights. Company expressly
agrees that this Section may not be waived or modified by the Banks or Agent by
course of performance, estoppel or otherwise.
10.6. SET OFF.
Upon the occurrence and during the continuance of any Event of
Default, each Bank may at any time and from time to time, without notice to the
Company but subject to the provisions of Section 11.3 hereof, (any requirement
for such notice being expressly waived by the Company) set off and apply
against any and all of the obligations of the Company now or hereafter existing
under this Agreement, whether owing to such Bank or any other Bank or the
Agent, any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Bank
to or for the credit or the account of the Company and any property of the
Company from time to time in possession of such Bank, irrespective of whether
or not such deposits held or indebtedness owing by such Bank may be contingent
and unmatured and regardless of whether any Collateral then held by Agent or
any Bank is adequate to cover the Indebtedness. Promptly following any such
setoff, such Bank shall give written notice to Agent and to Company of the
occurrence thereof. The Company hereby grants to the Banks and the Agent a lien
on and security interest in all such deposits, indebtedness and
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property as collateral security for the payment and performance of all of the
obligations of the Company under this Agreement. The rights of each Bank under
this Section 10.6 are in addition to the other rights and remedies (including,
without limitation, other rights of setoff) which such Bank may have.
11. PAYMENTS, RECOVERIES AND COLLECTIONS
11.1. PAYMENT PROCEDURE.
(a) All payments by Company of principal of, or
interest on, the Notes, or of Fees, shall be made without setoff or
counterclaim on the date specified for payment under this Agreement
not later than 12:00 noon (Detroit time) in immediately available
funds to Agent, for the ratable account of the Banks, at Agent's
office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
(care of Agent's Eurocurrency Lending Office, for Eurocurrency-based
Advances). Upon receipt by the Agent of each such payment, the Agent
shall make prompt payment in like funds received to each Bank as
appropriate, or, in respect of Eurocurrency-based Advances, to such
Bank's Eurocurrency Lending Office.
(b) Unless the Agent shall have been notified by
Company prior to the date on which any payment to be made by Company
is due that Company does not intend to remit such payment, the Agent
may, in its sole discretion and without obligation to do so, assume
that the Company has remitted such payment when so due and the Agent
may, in reliance upon such assumption, make available to each Bank on
such payment date an amount equal to such Bank's share of such assumed
payment. If Company has not in fact remitted such payment to the Agent
each Bank shall forthwith on demand repay to the Agent the amount of
such assumed payment made available or transferred to such Bank,
together with the interest thereon, in respect of each day from and
including the date such amount was made available by the Agent to such
Bank to the date such amount is repaid to the Agent at a rate per
annum equal to (i) for Prime-based Advances, the Federal Funds
Effective Rate (daily average), as the same may vary from time to
time, and (ii) with respect to Eurocurrency-based Advances, Agent's
aggregate marginal cost (including the cost of maintaining any
required reserves or deposit insurance and of any fees, penalties,
overdraft charges or other costs or expenses incurred by Agent) of
carrying such amount.
(c) Subject to the definition of Interest Period,
whenever any payment to be made hereunder shall otherwise be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in computing interest, if any, in connection with such
payment.
(d) All payments to be made by the Company under this
Agreement or any of the Notes (including without limitation payments
under the Swing Line Note) shall be made without set-off or
counterclaim, as aforesaid, and without deduction for or on account of
any present or future withholding or other taxes of any nature imposed
by any governmental authority or of any political subdivision thereof
or any federation or
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organization of which such governmental authority may at the time of
payment be a member, unless Company is compelled by law to make
payment subject to such tax. In such event, Company shall:
(i) pay to the Agent for Agent's own account
and/or, as the case may be, for the account
of the Banks (and, in the case of Advances
of the Swing Line, pay to the Swing Line
Bank which funded such Advances) such
additional amounts as may be necessary to
ensure that the Agent and/or such Bank or
Banks receive a net amount equal to the full
amount which would have been receivable had
payment not been made subject to such tax;
and
(ii) remit such tax to the relevant taxing
authorities according to applicable law, and
send to the Agent or the applicable Bank
(including the Swing Line Bank) or Banks, as
the case may be, such certificates or
certified copy receipts as the Agent or such
Bank or Banks shall reasonably require as
proof of the payment by the Company, of any
such taxes payable by the Company.
As used herein, the terms "tax", "taxes" and "taxation" include all
existing taxes, levies, imposts, duties, charges, fees, deductions and
withholdings and any restrictions or conditions resulting in a charge together
with interest thereon and fines and penalties with respect thereto which may be
imposed by reason of any violation or default with respect to the law regarding
such tax, assessed as a result of or in connection with the transactions
hereunder, or the payment and or receipt of funds hereunder, or the payment or
delivery of funds into or out of any jurisdiction other than the United States
(whether assessed against Company, Agent or any of the Banks).
11.2. APPLICATION OF PROCEEDS OF COLLATERAL. Notwithstanding
anything to the contrary in this Agreement, after an Event of Default, the
proceeds of any Collateral, together with any offsets, voluntary payments by
Company or any Guarantor or others and any other sums received or collected in
respect of the Indebtedness, shall be applied, first, to the Notes and the
Reimbursement Obligations (if any) on a pro rata basis (or in such order and
manner as determined by the Majority Banks; subject, however, to the applicable
Percentages of the loans held by each of the Banks), next, to any other
Indebtedness on a pro rata basis, and then, if there is any excess, to Company
or the applicable Guarantor, as the case may be. The application of such
proceeds and other sums to the Revolving Credit Notes and the Reimbursement
Obligations (if any) shall be based on each Bank's Percentage of the aggregate
of the loans.
11.3. PRO-RATA RECOVERY. If any Bank shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of, or interest on, any of the Indebtedness
in excess of its pro rata share of payments then or thereafter obtained by all
Banks upon principal of and interest on all Indebtedness, such Bank shall
purchase from the other Banks such participations in the Revolving Credit Notes
and/or Reimbursement Obligation held by them as shall be necessary to cause
such purchasing Bank
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to share the excess payment or other recovery ratably in accordance with the
Percentage with each of them; provided, however, that if all or any portion of
the excess payment or other recovery is thereafter recovered from such
purchasing holder, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.
12. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS
12.1. REIMBURSEMENT OF PREPAYMENT COSTS. If Company makes any
payment of principal with respect to any Eurocurrency-based Advance or Quoted
Rate Advance on any day other than the last day of the Interest Period
applicable thereto (whether voluntarily, by acceleration, or otherwise), or if
Company fails to borrow any Eurocurrency-based Advance or Quoted Rate Advance
after notice has been given by Company to Agent in accordance with the terms
hereof requesting such Advance, or if Company fails to make any payment of
principal or interest in respect of a Eurocurrency- based Advance or Quoted
Rate Advance when due, then Company shall reimburse Agent and Banks, as the
case may be on demand for any resulting loss, cost or expense incurred by Agent
and Banks, as the case may be as a result thereof, including, without
limitation, any such loss, cost or expense incurred in obtaining, liquidating,
employing or redeploying deposits from third parties, whether or not Agent and
Banks, as the case may be shall have funded or committed to fund such Advance.
Such amount payable by Company to Agent and Banks, as the case may be may
include, without limitation, an amount equal to the excess, if any, of (a) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, refunded or converted, for the period from the date of such
prepayment or of such failure to borrow, refund or convert, through the last
day of the relevant Interest Period, at the applicable rate of interest for
said Advance(s) provided under this Agreement, over (b) the amount of interest
(as reasonably determined by Agent and Banks, as the case may be) which would
have accrued to Agent and Banks, as the case may be on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. Calculation of any amounts payable to any Bank
under this paragraph shall be made as though such Bank shall have actually
funded or committed to fund the relevant Advance through the purchase of an
underlying deposit in an amount equal to the amount of such Advance and having
a maturity comparable to the relevant Interest Period; provided, however, that
any Bank may fund any Eurocurrency-based Advance or Quoted Rate Advance, as the
case may be in any manner it deems fit and the foregoing assumptions shall be
utilized only for the purpose of the calculation of amounts payable under this
paragraph. Upon the written request of Company, Agent and Banks shall deliver
to Company a certificate setting forth the basis for determining such losses,
costs and expenses, which certificate shall be conclusively presumed correct,
absent manifest error.
12.2. AGENT'S EUROCURRENCY LENDING OFFICE. For any Advance to which
the Eurocurrency-based Rate is applicable, if Agent shall designate a
Eurocurrency Lending Office which maintains books separate from those of the
rest of Agent, Agent shall have the option of maintaining and carrying the
relevant Advance on the books of such Eurocurrency Lending Office.
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12.3. CIRCUMSTANCES AFFECTING EUROCURRENCY-BASED RATE AVAILABILITY.
If with respect to any Interest Period, Agent or the Banks (after consultation
with Agent) shall determine that, by reason of circumstances affecting the
interbank markets generally, deposits in eurodollars in the applicable amounts
are not being offered to the Agent for such Interest Period, then Agent shall
forthwith give notice thereof to the Company. Thereafter, until Agent notifies
Company that such circumstances no longer exist, the obligation of the Banks to
make Eurocurrency-based Advances, and the right of Company to convert an
Advance to or refund an Advance as a Eurocurrency-based Advance shall be
suspended, and the Company shall repay in full (or cause to be repaid in full)
the then outstanding principal amount of each such Eurocurrency-based Advance
covered hereby together with accrued interest thereon, any amounts payable (but
not yet paid) under Section 12.1, hereof, and all other amounts payable
hereunder on the last day of the then current Interest Period applicable to
such Advance. Upon the date for repayment as aforesaid and unless Company
notifies Agent to the contrary within two (2) Business Days after receiving a
notice from Agent pursuant to this Section, such outstanding principal amount
shall be converted to a Prime-based Advance as of the last day of such Interest
Period.
12.4. LAWS AFFECTING EUROCURRENCY-BASED ADVANCE AVAILABILITY. In the
event that any applicable law, rule or regulation (whether domestic or foreign)
now or hereafter in effect and whether or not currently applicable to any Bank
or the Agent or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Agent or any of the Banks (or any of their
respective Eurocurrency Lending Offices) with any request or directive (whether
or not having the force of law) of any such authority, shall make it unlawful
or impossible for any of the Banks (or any of their respective Eurocurrency
Lending Offices) to honor its obligations hereunder to make or maintain any
Advance with interest at the Eurocurrency-based Rate, such Bank or the Agent
shall forthwith give notice thereof to Company and the Agent. Thereafter the
Agent shall so notify Company and the right of Company to convert an Advance or
refund an Advance as a Eurocurrency-based Advance, shall be suspended and
thereafter Company may select as Applicable Interest Rates only those which
remain available and which are permitted to be selected hereunder, and if any
of the Banks may not lawfully continue to maintain an Advance to the end of the
then current Interest Period applicable thereto as a Eurocurrency-based
Advance, Company shall immediately prepay such Advance, together with interest
to the date of payment, and any amounts payable under Sections 12.1 or 12.6
with respect to such prepayment and the applicable Advance shall immediately be
converted to a Prime-based Advance and the Prime-based Rate shall be applicable
thereto.
12.5. INCREASED COST OF EUROCURRENCY-BASED ADVANCES. In the event
that any change in applicable law, rule or regulation (whether domestic or
foreign) now or hereafter in effect and whether or not currently applicable to
any Bank or the Agent or any interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or any of the
Banks (or any of their respective Eurocurrency Lending Offices) with any
request or directive (whether or not having the force of law) made by any such
authority, central bank or comparable agency after the date hereof:
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(a) shall subject the Agent or any of the Banks (or
any of their respective Eurocurrency Lending Offices) to any tax, duty
or other charge with respect to any Advance or any Note or shall
change the basis of taxation of payments to the Agent or any of the
Banks (or any of their respective Eurocurrency Lending Offices) of the
principal of or interest on any Advance or any Note or any other
amounts due under this Agreement in respect thereof (except for
changes in the rate of tax on the overall net income or revenues of
the Agent or of any of the Banks (or any of their respective
Eurocurrency Lending Offices) imposed by the United States of America
or the jurisdiction in which such Bank's principal executive office is
located); or
(b) shall impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System), special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by the Agent or any of the Banks (or any of their
respective Eurocurrency Lending Offices) or shall impose on the Agent
or any of the Banks (or any of their respective Eurocurrency Lending
Offices) or the interbank markets any other condition affecting any
Advance or any of the Notes;
and the result of any of the foregoing is to increase the costs to the Agent or
any of the Banks of making, funding or maintaining any part of the Indebtedness
hereunder as a Eurocurrency-based Advance or to reduce the amount of any sum
received or receivable by the Agent or any of the Banks under this Agreement or
under the Notes in respect of a Eurocurrency-based Advance then Agent or such
Bank, as the case may be, shall promptly notify the Company of such fact and
demand compensation therefor and, within fifteen (15) days after such notice,
Company agrees to pay to Agent or such Bank such additional amount or amounts
as will compensate Agent or such Bank or Banks for such increased cost or
reduction. A certificate of Agent or such Bank setting forth the basis for
determining such additional amount or amounts necessary to compensate such Bank
or Banks shall accompany such demand for payment and shall be conclusively
presumed to be correct save for manifest error.
For purposes of this Section, a change in law, rule, regulation,
interpretation, administration, request or directive shall include, without
limitation, any change made or which becomes effective on the basis of a law,
rule, regulation, interpretation, administration, request or directive
presently in force, the effective date of which change is delayed by the terms
of such law, rule, regulation, interpretation, administration, request or
directive.
12.6. INDEMNITY. The Company will indemnify Agent and each of the
Banks against any loss or expense which may arise or be attributable to the
Agent's and each Bank's obtaining, liquidating or employing deposits or other
funds acquired to effect, fund or maintain the Advances (a) as a consequence of
any failure by the Company to make any payment when due of any amount due
hereunder in connection with a Eurocurrency-based Advance, (b) due to any
failure of the Company to borrow on a date specified therefor in a Request for
Revolving Credit Advance or (c) due to any payment or prepayment of any
Eurocurrency-based Advance on a date other than the last day of the Interest
Period for such Revolving Credit Advance, whether required by another provision
of this Agreement or otherwise. The Agent's and each Bank's (as applicable)
calculations of any such loss or
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expense shall be furnished to the Company and shall be conclusively presumed
correct, absent manifest error.
12.7. OTHER INCREASED COSTS. In the event that after the date hereof
the adoption of or any change in any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Bank or Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or Agent
with any guideline, request or directive of any such authority (whether or not
having the force of law), including any risk based capital guidelines, affects
or would affect the amount of capital required or expected to be maintained by
such Bank or Agent (or any corporation controlling such Bank or Agent) and such
Bank or Agent, as the case may be, determines that the amount of such capital
is increased by or based upon the existence of such Bank's or Agent's
obligations or Advances hereunder and such increase has the effect of reducing
the rate of return on such Bank's or Agent's (or such controlling
corporation's) capital as a consequence of such obligations or Advances
hereunder to a level below that which such Bank or Agent (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank or Agent to be material (collectively, "Increased Costs"),
then Agent or such Bank shall notify the Company, and thereafter the Company
shall pay to such Bank or Agent, as the case may be, from time to time, upon
request by such Bank or Agent, additional amounts sufficient to compensate such
Bank or Agent (or such controlling corporation) for any increase in the amount
of capital and reduced rate of return which such Bank or Agent reasonably
determines to be allocable to the existence of such Bank's or Agent's
obligations or Advances hereunder; provided, however that the Company shall
not be obligated to reimburse any Bank for any Increased Costs pursuant to this
Section 12.7 unless such Bank notifies Company and the Agent within 180 days
after such affected Bank has obtained actual knowledge of such Increased Costs
(but in any event within 365 days after such affected Bank is required to
comply with the applicable change in law). A statement as to the amount of
such compensation, prepared in good faith and in reasonable detail by such Bank
or Agent, as the case may be, shall be submitted by such Bank or by Agent to
the Company, reasonably promptly after becoming aware of any event described in
this Section 12.7 and shall be conclusive, absent manifest error in
computation.
12.8. SUBSTITUTION OF BANKS. If (i) the obligation of any Bank to
make Eurocurrency-based Advances has been suspended pursuant to Section 12.3 or
Section 12.4 or (ii) any Bank has demanded compensation under Section 12.5 (in
each case, an "Affected Lender"), then Company shall have the right, with the
assistance of the Agent, to seek a substitute lender or lenders (which may be
one or more of the Banks (the "Purchasing Lender" or "Purchasing Lenders") to
purchase the Revolving Credit Note and assume the commitment (including without
limitation its participations in Swing Line Advances and Letters of Credit)
under this Agreement of such Affected Lender. The Affected Lender shall be
obligated to sell its Revolving Credit Note and assign its commitment to such
Purchasing Lender or Purchasing Lenders within fifteen days after receiving
notice from Company requiring it to do so, at an aggregate price equal to the
outstanding principal amount thereof plus unpaid interest accrued thereon up to
but excluding the date of the sale. In connection with any such sale, and as a
condition
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thereof, Company shall pay to the Affected Lender all fees accrued for its
account hereunder to but excluding the date of such sale, plus, if demanded by
the Affected Lender at least two Business Days prior to such sale, (i) the
amount of any compensation which would be due to the Affected Lender under
Section 12.1 if Company has prepaid the outstanding Eurocurrency-based Advances
of the Affected Lender on the date of such sale and (ii) any additional
compensation accrued for its account under Section 12.5 to but excluding said
date. Upon such sale, the Purchasing Lender or Purchasing Lenders shall assume
the Affected Lender's commitment and the Affected Lender shall be released from
its obligations hereunder to a corresponding extent. If any Purchasing Lender is
not already one of the Banks, the Affected Lender, as assignor, such Purchasing
Lender, as assignee, Company and the Agent, with the subscribed consent of the
Swing Line Bank shall enter into an Assignment Agreement pursuant to Section
14.8 hereof, whereupon such Purchasing Lender shall be a Bank party to this
Agreement, shall be deemed to be an assignee hereunder and shall have all the
rights and obligations of a Bank with a Percentage equal to its ratable share of
the Revolving Credit Aggregate Commitment of the Affected Lender. In connection
with any assignment pursuant to this Section 12.8, Company or the Purchasing
Lender shall pay to the Agent the administrative fee for processing such
assignment referred to in Section 14.8. Upon the consummation of any sale
pursuant to this Section 12.8, the Affected Lender, the Agent and Company shall
make appropriate arrangements so that, if required, each Purchasing Lender
receives a new Revolving Credit Note.
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13. AGENT
13.1. APPOINTMENT OF AGENT. Each Bank and the holder of each Note
irrevocably appoints and authorizes the Agent to act on behalf of such Bank or
holder under this Agreement and the other Loan Documents and to exercise such
powers hereunder and thereunder as are specifically delegated to Agent by the
terms hereof and thereof, together with such powers as may be reasonably
incidental thereto, including without limitation the power to execute or
authorize the execution of financing or similar statements or notices, and
other documents. In performing its functions and duties under this Agreement,
the Agent shall act solely as agent of the Banks and does not assume and shall
not be deemed to have assumed any obligation towards or relationship of agency
or trust with or for Company. Each Bank agrees (which agreement shall survive
any termination of this Agreement) to reimburse Agent for all reasonable
out-of-pocket expenses (including house and outside attorneys' fees and
disbursements) incurred by Agent hereunder or in connection herewith or with an
Event of Default or in enforcing the obligations of Company under this
Agreement or the other Loan Documents or any other instrument executed pursuant
hereto, and for which Agent is not reimbursed by Company, pro rata according to
such Bank's Percentage, but excluding any such expense resulting from Agent's
gross negligence or wilful misconduct. Agent shall not be required to take any
action under the Loan Documents, or to prosecute or defend any suit in respect
of the Loan Documents, unless indemnified to its satisfaction by the Banks
against loss, costs, liability and expense (excluding liability resulting from
its gross negligence or wilful misconduct). If any indemnity furnished to Agent
shall become impaired, it may call for additional indemnity and cease to do the
acts indemnified against until such additional indemnity is given.
13.2. DEPOSIT ACCOUNT WITH AGENT. Company hereby authorizes Agent,
in Agent's sole discretion, to charge its general deposit account(s), if any,
maintained with Agent for the amount of any principal, interest, or other
amounts or costs due under this Agreement when the same become due and payable
under the terms of this Agreement or the Notes.
13.3. SCOPE OF AGENT'S DUTIES. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement or otherwise, have a fiduciary relationship with any
Bank (and no implied covenants or other obligations shall be read into this
Agreement against the Agent). None of Agent, its Affiliates nor any of their
respective directors, officers, employees or agents shall be liable to any Bank
for any action taken or omitted to be taken by it or them under this Agreement
or any document executed pursuant hereto, or in connection herewith or
therewith with the consent or at the request of the Majority Banks (or all of
the Banks for those acts requiring consent of all of the Banks) (except for its
or their own wilful misconduct or gross negligence), nor be responsible for or
have any duties to ascertain, inquire into or verify (a) any recitals or
warranties made by the Company, or any Subsidiary or Affiliate of the Company,
or any officer thereof contained herein or therein, (b) the effectiveness,
enforceability, validity or due execution of this Agreement or any document
executed pursuant hereto or any security thereunder, (c) the performance by
Company of its obligations hereunder or thereunder, or (d) the satisfaction of
any condition hereunder or thereunder, including without limitation the
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making of any Advance or the issuance of any Letter of Credit. Agent and its
Affiliates shall be entitled to rely upon any certificate, notice, document or
other communication (including any cable, telegraph, telex, facsimile
transmission or oral communication) believed by it to be genuine and correct
and to have been sent or given by or on behalf of a proper person. Agent may
treat the payee of any Note as the holder thereof. Agent may employ agents and
may consult with legal counsel (who may be counsel for Company), independent
public accountants and other experts selected by it and shall not be liable to
the Banks (except as to money or property received by them or their authorized
agents), for the negligence or misconduct of any such agent selected by it with
reasonable care or for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
13.4. SUCCESSOR AGENT. Agent may resign as such at any time upon at
least 30 days prior notice to Company and all Banks. If Agent at any time
shall resign or if the office of Agent shall become vacant for any other
reason, Majority Banks shall, by written instrument, appoint successor
agent(s) satisfactory to such Majority Banks, and, so long as no Default or
Event of Default has occurred and is continuing, to Company. Such successor
agent shall thereupon become the Agent hereunder, as applicable, and shall be
entitled to receive from the prior Agent such documents of transfer and
assignment as such successor Agent may reasonably request. Any such successor
Agent shall be a commercial bank organized under the laws of the United States
or any state thereof and shall have a combined capital and surplus of at least
$500,000,000. If a successor is not so appointed or does not accept such
appointment before the resigning Agent's resignation becomes effective, the
resigning Agent may appoint a temporary successor to act until such appointment
by the Majority Banks is made and accepted or if no such temporary successor is
appointed as provided above by the resigning Agent, the Majority Banks shall
thereafter perform all of the duties of the resigning Agent hereunder until
such appointment by the Majority Banks is made and accepted. Such successor
Agent shall succeed to all of the rights and obligations of the resigning Agent
as if originally named. The resigning Agent shall duly assign, transfer and
deliver to such successor Agent all moneys at the time held by the resigning
Agent hereunder after deducting therefrom its expenses for which it is entitled
to be reimbursed. Upon such succession of any such successor Agent, the
resigning agent shall be discharged from its duties and obligations hereunder,
except for its gross negligence or wilful misconduct arising prior to its
resignation hereunder, and the provisions of this Article 13 shall continue in
effect for the benefit of the resigning Agent in respect of any actions taken
or omitted to be taken by it while it was acting as Agent.
13.5. AGENT IN ITS INDIVIDUAL CAPACITY. Comerica Bank, its
Affiliates and their respective successors and assigns, shall have the same
rights and powers hereunder as any other Bank and may exercise or refrain from
exercising the same as though Comerica Bank were not the Agent. Comerica Bank
and its Affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to, and generally engage in any kind of banking,
trust, financial advisory or other business with Company (or its Subsidiaries)
as if Comerica Bank were not acting as Agent hereunder, and may accept fees and
other consideration therefor without having to account for the same to the
Banks.
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13.6. CREDIT DECISIONS. Each Bank acknowledges that it has,
independently of Agent and each other Bank and based on the financial
statements of Company and such other documents, information and investigations
as it has deemed appropriate, made its own credit decision to extend credit
hereunder from time to time. Each Bank also acknowledges that it will,
independently of Agent and each other Bank and based on such other documents,
information and investigations as it shall deem appropriate at any time,
continue to make its own credit decisions as to exercising or not exercising
from time to time any rights and privileges available to it under this
Agreement or any document executed pursuant hereto.
13.7. AGENT'S FEES. Company shall pay to Agent the annual agency fee
and such other fees and charges in the amounts and at the times set forth in
the letter agreement between Company and Agent dated December 9, 1997, as such
letter may be amended or restated from time to time. The Agent's Fees described
in this Section 13.7 shall not be refundable under any circumstances.
13.8. AUTHORITY OF AGENT TO ENFORCE NOTES AND THIS AGREEMENT. Each
Bank, subject to the terms and conditions of this Agreement, authorizes the
Agent with full power and authority as attorney-in-fact to institute and
maintain actions, suits or proceedings for the collection and enforcement of
the Notes and to file such proofs of debt or other documents as may be
necessary to have the claims of the Banks allowed in any proceeding relative to
Company, or any of its Subsidiaries, or their respective creditors or affecting
their respective properties, and to take such other actions which Agent
considers to be necessary or desirable for the protection, collection and
enforcement of the Notes, this Agreement or the other Loan Documents.
13.9. INDEMNIFICATION. The Banks agree to indemnify the Agent and
its Affiliates (to the extent not reimbursed by Company, but without limiting
any obligation of Company to make such reimbursement), ratably according to
their respective Percentages, from and against any and all claims, damages,
losses, liabilities, costs or expenses of any kind or nature whatsoever
(including, without limitation, fees and disbursements of counsel) which may be
imposed on, incurred by, or asserted against the Agent and its Affiliates in
any way relating to or arising out of this Agreement, any of the other Loan
Documents or the transactions contemplated hereby or any action taken or
omitted by the Agent and its Affiliates under this Agreement or any of the Loan
Documents; provided, however, that no Bank shall be liable for any portion of
such claims, damages, losses, liabilities, costs or expenses resulting from the
Agent's or its Affiliates's gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank agrees to reimburse the Agent and its
Affiliates promptly upon demand for its ratable share of any out-of-pocket
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Agent and its Affiliates in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement or any of the other
Loan Documents, to the extent that the Agent and its Affiliates is not
reimbursed for such expenses by Company, but without limiting the obligation of
Company to make such reimbursement. Each Bank agrees to reimburse the Agent
and its Affiliates promptly upon demand for its ratable share of any amounts
owing to the Agent and its Affiliates by the Banks pursuant to this Section,
provided
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that, if the Agent or its Affiliates is subsequently reimbursed by the Company
for such amounts, it shall refund to the Banks on a pro rata basis the amount
of any excess reimbursement. If the indemnity furnished to the Agent and its
Affiliates under this Section shall, in the judgment of the Agent, be
insufficient or become impaired, the Agent may call for additional indemnity
from the Banks and cease, or not commence, to take any action until such
additional indemnity is furnished.
13.10. KNOWLEDGE OF DEFAULT. It is expressly understood and agreed
that the Agent shall be entitled to assume that no Event of Default has
occurred and is continuing, unless the officers of the Agent immediately
responsible for matters concerning this Agreement shall have been notified in a
writing specifying such Event of Default and stating that such notice is a
"notice of default" by a Bank or by Company. Upon receiving such a notice, the
Agent shall promptly notify each Bank of such Event of Default and provide each
Bank with a copy of such notice and, shall endeavor to provide such notice to
the Banks within three (3) Business Days (but without any liability whatsoever
in the event of its failure to do so). Agent shall also furnish the Banks,
promptly upon receipt, with copies of all other notices or other information
required to be provided by Company hereunder.
13.11. AGENT'S AUTHORIZATION; ACTION BY BANKS. Except as otherwise
expressly provided herein, whenever the Agent is authorized and empowered
hereunder on behalf of the Banks to give any approval or consent, or to make
any request, or to take any other action on behalf of the Banks (including
without limitation the exercise of any right or remedy hereunder or under the
other Loan Documents), the Agent shall be required to give such approval or
consent, or to make such request or to take such other action only when so
requested in writing by the Majority Banks or the Banks, as applicable
hereunder. Action that may be taken by Majority Banks or all of the Banks, as
the case may be (as provided for hereunder) may be taken (i) pursuant to a vote
at a meeting (which may be held by telephone conference call) as to which all
of the Banks have been given reasonable advance notice, or (ii) pursuant to the
written consent of the requisite Percentages of the Banks as required
hereunder, provided that all of the Banks are given reasonable advance notice
of the requests for such consent.
13.12. ENFORCEMENT ACTIONS BY THE AGENT. Except as otherwise
expressly provided under this Agreement or in any of the other Loan Documents
and subject to the terms hereof, Agent will take such action, assert such
rights and pursue such remedies under this Agreement and the other Loan
Documents as the Majority Banks or all of the Banks, as the case may be (as
provided for hereunder), shall direct; provided, however, that the Agent shall
not be required to act or omit to act if, in the judgment of the Agent, such
action or omission may expose the Agent to personal liability or is contrary to
this Agreement, any of the Loan Documents or applicable law. Except as
expressly provided above or elsewhere in this Agreement or the other Loan
Documents, no Bank (other than the Agent, acting in its capacity as agent)
shall be entitled to take any enforcement action of any kind under any of the
Loan Documents.
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13.13. CO-AGENT. Bank One, Texas, N.A. has been designated by the
Company as "Co-Agent" under this Agreement. Other than its rights, powers,
obligations, liabilities, responsibilities, remedies and duties as a Bank
hereunder, Co- Agent shall have no administrative, collateral or other rights,
powers, obligations, liabilities, responsibilities or duties hereunder,
provided, however, that Co-Agent shall be entitled to the benefits afforded to
the Agent under Sections 13.5 and 13.6 hereof.
14. MISCELLANEOUS
14.1. ACCOUNTING PRINCIPLES. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, it shall be done, unless otherwise specified
herein, in accordance with GAAP. Furthermore, all financial statements required
to be delivered hereunder shall be prepared in accordance with GAAP.
14.2. CONSENT TO JURISDICTION. Company, Agent and Banks hereby
irrevocably submit to the non-exclusive jurisdiction of any United States
Federal Court or Michigan state court sitting in Detroit, Michigan or Texas
state court sitting in Dallas County, Texas in any action or proceeding arising
out of or relating to this Agreement or any of the Loan Documents and Company,
Agent and Banks hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in any such United States
Federal Court or Michigan state court or Texas state court. Company irrevocably
consents to the service of any and all process in any such action or proceeding
brought in any court in or of the State of Michigan or the State of Texas by
the delivery of copies of such process to Company at its address specified on
the signature page hereto or by certified mail directed to such address or such
other address as may be designated by Company in a notice to the other parties
that complies as to delivery with the terms of Section 14.6. Nothing in this
Section shall affect the right of the Banks and the Agent to serve process in
any other manner permitted by law or limit the right of the Banks or the Agent
(or any of them) to bring any such action or proceeding against Company or any
Guarantor or any of its or their property in the courts with subject matter
jurisdiction of any other jurisdiction. Company hereby irrevocably waives any
objection to the laying of venue of any such suit or proceeding in the above
described courts.
14.3. LAW OF MICHIGAN. This Agreement and the Notes have been
delivered at Detroit, Michigan, and shall be governed by and construed and
enforced in accordance with the laws of the State of Michigan (without regard
to its conflict of laws provisions). Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
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14.4. INTEREST. In the event the obligation of Company to pay
interest on the principal balance of the Notes is or becomes in excess of the
maximum interest rate which Company is permitted by law to contract or agree to
pay, giving due consideration to the execution date of this Agreement, then, in
that event, the rate of interest applicable with respect to such Bank's
Percentage shall be deemed to be immediately reduced to such maximum rate and
all previous payments in excess of the maximum rate shall be deemed to have
been payments in reduction of principal and not of interest.
14.5. CLOSING COSTS AND OTHER COSTS; INDEMNIFICATION. (a) Company
agrees to pay, or reimburse the Agent for payment of, on demand (i) all
reasonable closing costs and expenses, including, by way of description and not
limitation, house and outside attorney fees (but without duplication of fees
and expenses for the same services provided to the same party) and advances,
appraisal and accounting fees, and lien search fees incurred by Agent in
connection with the commitment, consummation and closing of the loans
contemplated hereby or in connection with the administration of this Agreement
or any amendment, refinancing or restructuring of the credit arrangements
provided under this Agreement, (ii) all stamp and other taxes and fees payable
or determined to be payable in connection with the execution, delivery, filing,
recording or amendment of this Agreement and the Loan Documents and the
consummation of the transactions contemplated hereby, and any and all
liabilities with respect to or resulting from any delay in paying or omitting
to pay such taxes or fees, (iii) in connection with any Default or Event of
Default, all reasonable costs and expenses of the Agent or any of the Banks
(including reasonable fees and expenses of house and outside counsel (but
without duplication of fees and expenses for the same services) and whether
incurred through negotiations, legal proceedings or otherwise) in connection
with the amendment, waiver or enforcement of this Agreement, or the Loan
Documents or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement and (iv) all reasonable costs and
expenses of the Agent or any of the Banks (including reasonable fees and
expenses of house and outside counsel (but without duplication of fees and
expenses for the same services) in connection with any action or proceeding
relating to a court order, injunction or other process or decree restraining or
seeking to restrain the Agent or any of the Banks from paying any amount under,
or otherwise relating in any way to, any Letter of Credit and any and all costs
and expenses which any of them may incur relative to any payment under any
Letter of Credit. At Agent's option, all of said amounts required to be paid by
Company, if not paid when due, may be charged by Agent as a Prime-based Advance
against the Indebtedness.
(b) Company agrees to indemnify and save Agent and each of the
Banks harmless from all loss, cost, damage, liability or expenses, including
reasonable house and outside attorneys' fees and disbursements (but without
duplication of fees and expenses for the same services), incurred by Agent and
the Banks by reason of an Event of Default, or enforcing the obligations of
Company or any Guarantor under this Agreement or any of the other Loan
Documents or in the prosecution or defense of any action or proceeding
concerning any matter growing out of or connected with this Agreement or any of
the Loan Documents, excluding, however, any loss, cost, damage, liability or
expenses arising solely as a result of the gross negligence or willful
misconduct of the party seeking to be indemnified under this Section 14.5(b).
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(c) Company agrees to defend, indemnify and hold harmless Agent
and each of the Banks, and their respective employees, agents, officers and
directors from and against any and all claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses of whatever kind or nature
arising out of or related to (i) the presence, disposal, release or threatened
release of any Hazardous Materials on, from or affecting any premises owned or
occupied by Company or any of its Subsidiaries, (ii) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Materials, (iii) any lawsuit or other proceeding
brought or threatened, settlement reached or governmental order or decree
relating to such Hazardous Materials, (iv) the cost of removal of all Hazardous
Materials from all or any portion of any premises owned by Company or its
Subsidiaries, (v) the taking of necessary precautions to protect against the
release of Hazardous Materials on or affecting any premises owned by Company or
any of its Subsidiaries, (vi) complying with all Hazardous Material Laws and/or
(vii) any violation of Hazardous Material Laws, including without limitation,
reasonable attorneys and consultants fees, investigation and laboratory fees,
environmental studies required by Agent or any Bank in connection with the
violation of Hazardous Material Laws (whether before or after the occurrence of
any Default or Event of Default hereunder), court costs and litigation
expenses, excluding however, those arising as a result of its or their gross
negligence or willful misconduct. The obligations of Company under this Section
14.5(c) shall be in addition to any and all other obligations and liabilities
the Company may have to Agent or any of the Banks at common law or pursuant to
any other agreement.
(d) For all purposes of this Agreement, to the extent permitted by
applicable law, the Company shall not assert, and the Company hereby waives,
any claims against the Agent, the Issuing Bank, any of the Banks, and their
respective officers, directors, employees and agents, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, or in connection with, or as a
result of, this Agreement, any other Loan Document, or any agreement or
instrument contemplated hereby or any Advance or Letter of Credit or the use of
the proceeds thereof.
14.6. NOTICES. Except as expressly provided otherwise in this
Agreement, all notices and other communications provided to any party hereto
under this Agreement or any other Loan Document shall be in writing and shall
be given by personal delivery, by mail, by reputable overnight courier, by
telex or by facsimile and addressed or delivered to it at its address set forth
on the signature pages hereof or at such other address as may be designated by
such party in a notice to the other parties that complies as to delivery with
the terms of this Section 14.6. Any notice, if personally delivered or if
mailed and properly addressed with postage prepaid and sent by registered or
certified mail, shall be deemed given when received or when delivery is
refused; any notice, if given to a reputable overnight courier and properly
addressed, shall be deemed given 2 Business Days after the date on which it was
sent, unless it is actually received sooner by the named addressee; and any
notice, if transmitted by telex or facsimile, shall be deemed given when
received (answer back confirmed in the case of telexes and receipt confirmed in
the case of telecopies). Agent may, but, except as specifically provided
herein, shall not be required to, take any action on the basis of any notice
given to it by telephone, but the giver of any such notice shall promptly
confirm such notice in writing or by telex or facsimile, and such notice will
not be deemed to have been received until such confirmation is deemed received
in accordance with the provisions of this Section set forth
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above. If such telephonic notice conflicts with any such confirmation, the
terms of such telephonic notice shall control.
14.7. FURTHER ACTION. Company, from time to time, upon written
request of Agent will make, execute, acknowledge and deliver or cause to be
made, executed, acknowledged and delivered, all such further and additional
instruments, and take all such further action as may reasonably be required to
carry out the intent and purpose of this Agreement or the Loan Documents, and
to provide for Advances under and payment of the Notes, according to the intent
and purpose herein and therein expressed.
14.8. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; ASSIGNMENTS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of Company and the Banks and their respective successors and assigns.
(b) The foregoing shall not authorize any assignment by Company,
of its rights or duties hereunder, and no such assignment shall be made (or
effective) without the prior written approval of the Banks.
(c) The Company and Agent acknowledge that each of the Banks may
at any time and from time to time, subject to the terms and conditions hereof,
assign or grant participations in such Bank's rights and obligations hereunder
and under the other Loan Documents to any commercial bank, savings and loan
association, insurance company, pension fund, mutual fund, commercial finance
company or other similar financial institution, the identity of which
institution is approved by Company and Agent, such approval not to be
unreasonably withheld or delayed; provided, however, that (i) the approval of
Company shall not be required upon the occurrence and during the continuance of
a Default or Event of Default, and (ii) the approval of Company and Agent shall
not be required for any such sale, transfer, assignment or participation to the
Affiliate of an assigning Bank, any other Bank or any Federal Reserve Bank. The
Company authorizes each Bank to disclose to any prospective assignee or
participant, once approved by Company and Agent, any and all financial
information in such Bank's possession concerning the Company which has been
delivered to such Bank pursuant to this Agreement; provided that each such
prospective participant shall execute a confidentiality agreement consistent
with the terms of Section 14.12 hereof.
(d) Each assignment by a Bank of any portion of its rights and
obligations hereunder and under the other Loan Documents shall be made pursuant
to an Assignment Agreement substantially (as determined by Agent) in the form
attached hereto as Exhibit I (with appropriate insertions acceptable to Agent)
and shall be subject to the terms and conditions hereof, and to the following
restrictions:
14.8.0.1. each assignment shall cover all of the Notes
issued by Company hereunder to the assigning Bank
(and not any particular note or notes), and
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shall be for a fixed and not varying percentage
thereof, with the same percentage applicable to each
such Note;
14.8.0.2. each assignment shall be in a minimum amount
of the lesser of (X) Ten Million Dollars
($10,000,000) or such lesser amount to which the
Company and the Agent may consent and (Y) the entire
remaining amount of assigning Bank's interest in the
Revolving Credit (and participations in any
outstanding Letters of Credit); provided however
that, after giving effect to any assignment pursuant
to this Section 14.8(d), in no event shall the entire
remaining amount (if any) of assigning Bank's
interest in the Revolving Credit (and participations
in any outstanding Letters of Credit) be less than
$10,000,000;
14.8.0.3. no assignment shall violate any "blue sky" or
other securities law of any jurisdiction or shall
require the Company, or any other Person to file a
registration statement or similar application with
the United States Securities and Exchange Commission
(or similar state regulatory body) or to qualify
under the "blue sky" or other securities laws of any
jurisdiction; and
14.8.0.4. no assignment shall be effective unless Agent
has received from the assignee (or from the assigning
Bank) an assignment fee of $3,500 for each such
assignment.
In connection with any assignment, Company and Agent shall be entitled to
continue to deal solely and directly with the assigning Bank in connection with
the interest so assigned until (x) the Agent shall have received a notice of
assignment duly executed by the assigning Bank and an Assignment Agreement
(with respect thereto) duly executed by the assigning Bank and each assignee;
and (y) the assigning Bank shall have delivered to the Agent the original of
each Note held by the assigning Bank under this Agreement. From and after the
date on which the Agent shall notify Company and the assigning Bank that the
foregoing conditions shall have been satisfied and all consents (if any)
required shall have been given, the assignee thereunder shall be deemed to be a
party to this Agreement. To the extent that rights and obligations hereunder
shall have been assigned to such assignee as provided in such notice of
assignment (and Assignment Agreement), such assignee shall have the rights and
obligations of a Bank under this Agreement and the other Loan Documents
(including without limitation the right to receive fees payable hereunder in
respect of the period following such assignment). In addition, the assigning
Bank, to the extent that rights and obligations hereunder shall have been
assigned by it as provided in such notice of assignment (and Assignment
Agreement), but not otherwise, shall relinquish its rights and be released from
its obligations under this Agreement and the other Loan Documents.
Within five (5) Business Days following Company's receipt of notice from the
Agent that Agent has accepted and executed a notice of assignment and the duly
executed Assignment Agreement, Company shall, to the extent applicable, execute
and deliver to the Agent in exchange for any
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surrendered Note, new Note(s) payable to the order of the assignee in an amount
equal to the amount assigned to it pursuant to such notice of assignment (and
Assignment Agreement), and with respect to the portion of the Indebtedness
retained by the assigning Bank, to the extent applicable, new Note(s) payable
to the order of the assigning Bank in an amount equal to the amount retained by
such Bank hereunder shall be executed and delivered by the Company. Agent, the
Banks and the Company acknowledge and agree that any such new Note(s) shall be
given in renewal and replacement of the surrendered Notes and shall not effect
or constitute a novation or discharge of the Indebtedness evidenced by any
surrendered Note, and each such new Note may contain a provision confirming
such agreement. In addition, promptly following receipt of such Notes, Agent
shall prepare and distribute to Company and each of the Banks a revised
Schedule 1.2 to this Agreement setting forth the applicable new Percentages of
the Banks (including the assignee Bank), taking into account such assignment.
(e) Each Bank agrees that any participation agreement permitted
hereunder shall comply with all applicable laws and shall be subject to the
following restrictions (which shall be set forth in the applicable
Participation Agreement):
(i) such Bank shall remain the holder of its Notes
hereunder, notwithstanding any such participation;
(ii) except as expressly set forth in this Section 14.8(e)
with respect to rights of setoff and the benefits of
Section 12 hereof, a participant shall have no direct
rights or remedies hereunder;
(iii) a participant shall not reassign or transfer, or
grant any sub-participations in its participation
interest hereunder or any part thereof; and
(iv) such Bank shall retain the sole right and
responsibility to enforce the obligations of the
Company relating to the Notes and the other Loan
Documents, including, without limitation, the right
to proceed against any Guaranties, or cause Agent to
do so (subject to the terms and conditions hereof),
and the right to approve any amendment, modification
or waiver of any provision of this Agreement without
the consent of the participant, except in the case of
participations granted to an Affiliate of such Lender
and except for those matters covered by Section
14.11(a) through (e) and (h) hereof (provided that a
participant may exercise approval rights over such
matters only on an indirect basis, acting through
such Bank, and Company, Agent and the other Banks may
continue to deal directly with such Bank in
connection with such Bank's rights and duties
hereunder).
Company agrees that each participant shall be deemed to have the right of
setoff under Section 10.6 hereof in respect of its participation interest in
amounts owing under this Agreement and the other Loan Documents to the same
extent as if the Indebtedness were owing directly to it as a Bank under this
Agreement, shall be subject to the pro rata recovery provisions of Section 11.3
hereof and shall be entitled to the benefits of Section 12 hereof. The amount,
terms and conditions of any participation shall be as set forth in the
participation agreement between the issuing Bank and the Person purchasing such
participation, and none of the Company, the Agent and the other Banks shall
have any responsibility or obligation with respect thereto, or to any
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Person to whom any such participation may be issued. No such participation
shall relieve any issuing Bank of any of its obligations under this Agreement
or any of the other Loan Documents, and all actions hereunder shall be
conducted as if no such participation had been granted.
(f) Nothing in this Agreement, the Notes or the other Loan
Documents, expressed or implied, is intended to or shall confer on any Person
other than the respective parties hereto and thereto and their successors and
assignees and participants permitted hereunder and thereunder any benefit or
any legal or equitable right, remedy or other claim under this Agreement, the
Notes or the other Loan Documents.
14.9. INDULGENCE. No delay or failure of Agent and the Banks in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege nor shall any single or partial exercise thereof preclude
any further exercise thereof, nor the exercise of any other right, power or
privilege. The rights of Agent and the Banks hereunder are cumulative and are
not exclusive of any rights or remedies which Agent and the Banks would
otherwise have.
14.10. COUNTERPARTS. This Agreement may be executed in several
counterparts, and each executed copy shall constitute an original instrument,
but such counterparts shall together constitute but one and the same
instrument.
14.11. AMENDMENT AND WAIVER. No amendment or waiver of any provision
of this Agreement or any other Loan Document, nor consent to any departure by
Company or any Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Majority Banks (or by the Agent at
the written request of the Majority Banks) or, if this Agreement expressly so
requires with respect to the subject matter thereof, by all Banks (and, with
respect to any amendments to this Agreement or the other Loan Documents, by
Company or the Guarantors which are signatories thereto), and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all the Banks, do any of the
following: (a) increase any Bank's commitments hereunder, (b) reduce the
principal of, or interest on, the Notes or any Fees or other amounts payable
hereunder, (c) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any Fees or other amounts payable hereunder, (d)
waive any Event of Default specified in Sections 10.1(a) or (b) hereof, (e)
except as expressly permitted hereunder, or under the Security Agreement,
release or defer the granting or perfecting of a lien or security interest in
any Collateral or release any guaranty or similar undertaking provided by any
Person, except as shall be otherwise expressly permitted in this Agreement or
any other Loan Document, provided however that Agent shall be entitled to
release any Collateral which the Company or any Guarantor is permitted to sell
or transfer under the terms of this Agreement or the other Loan Documents
without notice to or any further action or consent of the Banks (f) terminate
or modify any indemnity provided to the Banks hereunder or under the other Loan
Documents, except as shall be otherwise expressly provided in this Agreement or
any other Loan Document, (g) take any action which requires the approval or
consent of all Banks pursuant to the terms of this Agreement or any other Loan
Document, (h) change the aggregate unpaid principal amount of the Notes which
shall be required for the Banks or any
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of them to take any action under this Agreement or any Loan Document or (i)
change the definition of "Majority Banks" or this Section 14.11; provided
further, that no amendment, waiver or consent shall, unless in writing signed
by the Swing Line Bank do any of the following: (x) reduce the principal of, or
interest on, the Swing Line Note or (y) postpone any date fixed for any payment
of principal of, or interest on, the Swing Line Note; and provided further,
however, that no amendment, waiver, or consent shall, unless in writing and
signed by the Agent in addition to all the Banks, affect the rights or duties
of the Agent under this Agreement or any other Loan Document. All references in
this Agreement to "Banks" or "the Banks" shall refer to all Banks, unless
expressly stated to refer to Majority Banks.
14.12. CONFIDENTIALITY. Each Bank agrees that it will not disclose
without the prior consent of Company (other than to its employees, its
Guarantors, another Bank or to its auditors or counsel) any information with
respect to Company, which is furnished pursuant to this Agreement or any of the
other Loan Documents; provided that any Bank may disclose any such information
(a) as has become generally available to the public or has been lawfully
obtained by such Bank from any third party under no duty of confidentiality to
Company, (b) as may be required or appropriate in any report, statement or
testimony submitted to, or in respect to any inquiry, by, any municipal, state
or federal regulatory body having or claiming to have jurisdiction over such
Bank, including the Board of Governors of the Federal Reserve System of the
United States, the Office of the Comptroller of the Currency or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or appropriate
in respect to any summons or subpoena or in connection with any litigation, (d)
in order to comply with any law, order, regulation or ruling applicable to such
Bank, and (e) to any permitted transferee or assignee or to any approved
participant of, or with respect to, the Notes, as aforesaid.
14.13. WITHHOLDING TAXES. If any Bank is not incorporated under the
laws of the United States or a state thereof, such Bank shall promptly deliver
to the Agent two executed copies of (i) Internal Revenue Service Form 1001
specifying the applicable tax treaty between the United States and the
jurisdiction of such Bank's domicile which provides for the exemption from
withholding on interest payments to such Bank, (ii) Internal Revenue Service
Form 4224 evidencing that the income to be received by such Bank hereunder is
effectively connected with the conduct of a trade or business in the United
States or (iii) other evidence satisfactory to the Agent and Company that such
Bank is exempt from United States income tax withholding with respect to such
income. Such Bank shall amend or supplement any such form or evidence as
required to insure that it is accurate, complete and non-misleading at all
times. Promptly upon notice from the Agent of any determination by the Internal
Revenue Service that any payments previously made to such Bank hereunder were
subject to United States income tax withholding when made, such Bank shall pay
to the Agent the excess of the aggregate amount required to be withheld from
such payments over the aggregate amount actually withheld by the Agent.
14.14. TAXES AND FEES. Should any tax (other than as a result of a
Bank's failure to comply with Section 14.13 or a tax based upon the net income
or capitalization of any Bank or the Agent by any jurisdiction where a Bank or
Agent is located), recording or filing fee
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96
become payable in respect of this Agreement or any of the other Loan Documents
or any amendment, modification or supplement hereof or thereof, the Company
agrees to pay the same, together with any interest or penalties thereon arising
from the Company's act or omission, and agrees to hold the Agent and the Banks
harmless with respect thereto. Notwithstanding the foregoing, nothing
contained in this Section 14.14 shall affect or reduce the rights of any Bank
or the Agent under Section 12.7 hereof.
14.15. WAIVER OF JURY TRIAL. THE BANKS, THE AGENT AND THE COMPANY
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTION OF ANY OF THEM. NEITHER THE BANKS, THE
AGENT, NOR COMPANY SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY
SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT
BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE BANKS AND
THE AGENT OR COMPANY EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
14.16. INTEREST. It is the intention of the parties hereto that each
Bank and the Agent shall conform to usury laws applicable to them, if any.
Accordingly, if the transactions with any Bank or Agent contemplated hereby
would be usurious under such applicable laws, then, notwithstanding anything to
the contrary in the Notes or Loan Documents payable to such Bank, this
Agreement or any other agreement entered into in connection with or as security
for or guaranteeing this Agreement or the Indebtedness, it is agreed as
follows: (i) the aggregate of all consideration which constitutes interest
under applicable law that is contracted for, taken, reserved, charged or
received by such Bank under the Notes payable to such Bank, this Agreement, the
Loan Documents or under any other agreement entered into in connection with or
as security for or guaranteeing this Agreement or such Notes or Loan Documents
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be credited automatically, if theretofore
paid, on the principal amount of the Indebtedness owed to such Bank or, if no
Indebtedness to such Bank is outstanding, shall be refunded to Company by such
Bank, and (ii) in the event that the maturity of any such Note or other
Indebtedness is accelerated or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to such Bank may never include more than the maximum amount allowed
by such applicable law and excess interest, if any, to such Bank shall be
cancelled automatically as of the date of such acceleration or prepayment and,
if theretofore paid, shall be credited by such Bank on the principal amount of
the Indebtedness owed to such Bank by the Company or, if no Indebtedness to
such Bank is then outstanding, shall be refunded by such Bank to the Company.
Without limiting any provision of the Notes or Loan Documents, if for any
reason Texas law is applicable to this Agreement or any Note, it is expressly
agreed that Tex. Rev. Civ. Stat. ▇▇▇. art. ▇▇▇▇, ▇▇. 15, as amended (which
regulates certain revolving credit loan
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97
accounts and revolving triparty accounts) shall not apply to this Agreement,
such Note, such Loan Documents, the Loans or any transaction contemplated
hereby, and unless changed in accordance with law, the rate ceiling applicable
to any Indebtedness to which Texas law is applicable under Texas law shall be
the indicated (weekly) rate ceiling from time to time in effect as provided in
Tex. Rev. Civ. Stat. ▇▇▇. 5069-1.04, as amended.
14.17. COMPLETE AGREEMENT; CONFLICTS. This Agreement, the Notes, any
Requests for Revolving Credit Advance and Requests for Swing Line Advance
hereunder, and the other Loan Documents contain the entire agreement of the
parties hereto, superseding all prior agreements, discussions and
understandings relating to the subject matter hereof, and none of the parties
shall be bound by anything not expressed in writing. In the event of any
conflict between the terms of this Agreement and the other Loan Documents, this
Agreement shall govern.
14.18. SEVERABILITY. In case any one or more of the obligations of
Company under this Agreement, the Notes or any of the other Loan Documents
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining obligations of Company shall not
in any way be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of Company under this Agreement, the Notes or
any of the other Loan Documents in any other jurisdiction.
14.19. TABLE OF CONTENTS AND HEADINGS. The table of contents and the
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify or affect any of the terms or provisions
hereof.
14.20. CONSTRUCTION OF CERTAIN PROVISIONS. If any provision of this
Agreement or any of the Loan Documents refers to any action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
whether or not expressly specified in such provision.
14.21. INDEPENDENCE OF COVENANTS. Each covenant hereunder shall be
given independent effect (subject to any exceptions stated in such covenant) so
that if a particular action or condition is not permitted by any such covenant
(taking into account any such stated exception), the fact that it would be
permitted by an exception to, or would be otherwise within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default.
14.22. RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of Company or any party
to any of the Loan Documents made herein or in any of the Loan Documents or in
any certificate, report,
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98
financial statement or other document furnished by or on behalf of Company or
any Guarantor in connection with this Agreement or any of the Loan Documents
shall be deemed to have been relied upon by the Banks, notwithstanding any
investigation heretofore or hereafter made by any Bank or on such Bank's
behalf, and those covenants and agreements of Company set forth in Section 12.6
hereof (together with any other indemnities of Company or any Guarantor
contained elsewhere in this Agreement or in any of the other Loan Documents)
and of Banks set forth in Section 13.9 hereof shall survive the repayment in
full of the Indebtedness and the termination of the Revolving Credit Aggregate
Commitment.
14.23. AMENDMENT AND RESTATEMENT. This Agreement constitutes an
amendment and restatement of the Prior Credit Agreement, which Prior Credit
Agreement is fully superseded and amended and restated in its entirety hereby;
provided, however, that the Indebtedness governed by the Prior Credit Agreement
shall remain outstanding and in full force and effect and provided further that
this Agreement does not constitute a novation of such Indebtedness.
* * *
[Signatures follow on succeeding pages]
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WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK, ALRENCO, INC.
as Agent
By: By:
------------------------------ ------------------------------------
Its: Vice President Its: President
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
9th Floor MC 3289 Attention: Chief Financial Officer
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇ Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Copy to: General Counsel (same address)
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
SWING LINE BANK: COMERICA BANK - TEXAS
By:
------------------------------------
Eurocurrency Lending Office:
Comerica Bank Its: Vice President
One Detroit Center ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
9th Floor MC 3289 Attention: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
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REVOLVING CREDIT BANKS: COMERICA BANK - TEXAS
By:
-----------------------------------
Eurocurrency Lending Office:
Comerica Bank Its: Vice President
One Detroit Center ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
9th Floor MC 3289 Attention: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
BANK ONE, TEXAS, N.A.
By:
-----------------------------------
Its:
----------------------------------
SIGNATURE PAGE AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
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101
SCHEDULES AND EXHIBITS
TO
ALRENCO, INC. REVOLVING CREDIT AGREEMENT (SEE WPD 0035705)
SCHEDULES
Schedule 1.1 Applicable L/C Fee Percentage, Applicable
Revolving Commitment Fee Percentage and
Eurocurrency Margins
Schedule 1.2 Percentages
Schedule 2 Insurance Deposits
Schedule 6.2 Good Standing Certificates
Schedule 6.3(b) List of Jurisdictions in which UCC Financing
Statements will be filed
Schedule 7.9 Consumer Credit Laws
Schedule 7.12 Litigation
Schedule 7.16 Pension Plans
Schedule 7.17 Conditions at Closing Affecting Business
Schedule 7.18 Environmental Matters
Schedule 7.19 Subsidiaries
Schedule 7.20 Contingent Obligations
Schedule 7.21 Changes in Requirements of Laws
Schedule 9.1 Indebtedness
Schedule 9.2 Existing Liens
Schedule 9.3 Permitted Guarantees
EXHIBITS
Exhibit A Form of Request for Revolving Credit Advance
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Notice of Letters of Credit
Exhibit D Form of Request for Swing Line Advance
Exhibit E Form of Swing Line Note
Exhibit F Form of Swing Line Participation Certificate
Exhibit G New Bank Addendum
Exhibit H Form of Covenant Compliance Report
Exhibit I Form of Assignment Agreement
Exhibit K Form of Borrowing Base Certificate
Exhibit N Intercompany Note
Exhibit O Store Listings
Exhibit P Reaffirmation of Certain Loan Documents
102
SCHEDULE 1.1
APPLICABLE FEE PERCENTAGE
AND EUROCURRENCY MARGINS
========================================================================================================
BASIS FOR PRICING LEVEL I LEVEL II LEVEL III* LEVEL IV
========================================================================================================
Fixed Charge > or = 2.8 : 1 > or = 2.25 : 1 < or = 2.25 : 1.0
Coverage Ratio > or = 4.0 : 1.0 but but
< 4.0 : 1 < 2.8 : 1
--------------------------------------------------------------------------------------------------------
Commitment Fee 0.30% 0.375% 0.425% 0.50%
--------------------------------------------------------------------------------------------------------
Eurocurrency Margin 1.10% 1.25% 1.40% 1.65%
--------------------------------------------------------------------------------------------------------
Letter of Credit Fee 1.10% 1.25% 1.40% 1.65%
========================================================================================================
* Initial Level
SIGNATURE PAGE AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
103
SCHEDULE 1.2
PERCENTAGES AND ALLOCATIONS
Bank Percentage Allocation
Comerica Bank-Texas 58.333333333% $35,000,000
Bank One, Texas, N.A. 41.666666667% 25,000,000
------------- -----------
Total: 100.000000000% $60,000,000
104
SCHEDULE 2
INSURANCE DEPOSITS
------------------------------------------------------------------
Insurance Deposits:
------------------------------------------------------------------
------------------------------------------------------------------
Risk Management- Workers Comp $ 8,000.00
------------------------------------------------------------------
------------------------------------------------------------------
Hartford Ins. Co.- Workers Comp $ 64,169.00
------------------------------------------------------------------
------------------------------------------------------------------
Risk Management-General Liability & Auto $ 20,000.00
------------------------------------------------------------------
------------------------------------------------------------------
American Comm-Health Insurance $ 40,248.02
------------------------------------------------------------------
------------------------------------------------------------------
Total $132,417.02
------------------------------------------------------------------
105
SCHEDULE 6.2
REQUIRED GOOD STANDING CERTIFICATES
Texas
106
SCHEDULE 6.3(b)
LIST OF JURISDICTIONS IN WHICH UCC FINANCING
STATEMENTS WILL BE FILED
[To be provided by Comerica]
107
SCHEDULE 7.9
CONSUMER CREDIT LAWS
▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ v. Alrenco, Inc. et. al., class action lawsuit
filed in the Circuit Court of ▇▇▇▇▇▇▇▇▇▇ County, Alabama, Civil Action No.
CV-98-45-R, alleging breach of contract and fraud in charging late fee.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ v. Alrenco, Inc. et. al., class action lawsuit filed in the
Circuit Court of ▇▇▇▇▇▇▇▇▇▇ County, Alabama, Civil Action No. CV-98-508-G,
alleging unjust enrichment and fraud in charging late fee.
108
SCHEDULE 7.12
LITIGATION
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ v. RTO, Inc. (formerly d/b/a Action Rent to Own), Cause No.
97-11497, filed in the 261st Judicial District Court of ▇▇▇▇▇▇ County, Texas,
alleging sexual harassment and hostile work environment.
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ v. RTO Operating, Inc. et. al., Case No. 98-1014-E, filed
in the 148th Judicial District Court of Nueces County, Texas, alleging wrongful
termination and defamation.
McAllen Independent School District v. Seajay Investment Group, Inc. et. al.,
Case No. T-241-98-C, filed in the 139th Judicial District Court of ▇▇▇▇▇▇▇
County, Texas, alleging nonpayment of taxes.
Equal Employment Opportunity Commission ("EEOC") Charge No. 270970406 filed
with the New Orleans, Louisiana Division of the EEOC by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a
former employee of RTO, alleging discrimination on the basis of disability.
EEOC Charge No. 270980418 filed with the New Orleans, Louisiana District Office
of the EEOC, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a former employee of RTO, alleging
discrimination on the basis of race.
EEOC Charge No. 39098033 filed with the Albuquerque, New Mexico EEOC office by
▇▇▇▇▇ ▇▇▇▇▇▇▇, alleging sex discrimination.
EEOC Charge No. 31980477 filed with the Oklahoma City, Oklahoma EEOC office by
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, alleging sex discrimination.
▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ v. Alrenco, Inc. and ▇▇▇ ▇▇▇▇▇▇▇, Case No.
1-97-CV-3564, filed in U.S. District Court, Northern District of Georgia -
Atlanta Division, alleging sexual harassment.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ v. Alrenco, Inc., Case No. 96-25349-CA, filed in Dade County,
Florida Circuit Court, alleging personal injuries suffered while employee.
B & H Rentals, Inc. v. Alrenco, Inc., ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇, filed in Sixteenth
Judicial Court ▇▇▇▇ County, Illinois, alleging conversion of accounts
receivable.
Norle Investments, Inc. v. Alrenco, Inc. et. al., Case No. 49DOZ9801CP000109,
filed in ▇▇▇▇▇▇ Superior Court, Indiana, alleging breach of contract for not
providing insurance coverage for landlord's store which was destroyed by fire.
▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ v. Alrenco, Inc. et. al., class action lawsuit
filed in the Circuit Court of ▇▇▇▇▇▇▇▇▇▇ County, Alabama, Civil Action No.
CV-98-45-R, alleging breach of contract and fraud in charging late fee.
109
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ v. Alrenco, Inc. et. al., class action lawsuit filed in the
Circuit Court of ▇▇▇▇▇▇▇▇▇▇ County, Alabama, Civil Action No. CV-98-508-G,
alleging unjust enrichment and fraud in charging late fee.
EEOC Charge filed with the Miami, Florida Office of the EEOC, by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, a former employee of Alrenco, Inc., alleging discrimination on the
basis of race and age.
EEOC Charge filed with the Miami, Florida Office of the EEOC, by ▇▇▇▇▇▇ ▇▇▇▇, a
former employee of Alrenco, Inc., alleging discrimination on the basis of race
and sex.
EEOC Charge filed with the Indianapolis, Indiana Office of the EEOC, by ▇▇▇▇▇▇▇
▇. Kindle, alleging discrimination on the basis of sex.
EEOC Charge filed with the Montgomery, Alabama Office of the EEOC, by ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, alleging sexual harassment.
EEOC Charge filed with the Montgomery, Alabama Office of the EEOC, by ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, alleging race and sex discrimination.
Matters being handled by insurance carriers.
110
SCHEDULE 7.16
PENSION PLANS SUBJECT TO TITLE IV OF ERISA
ALRENCO, INC.:
Life, AD&D, and Medical Insurance Plan
American Community Mutual Life Ins. Co.
Group # 2185
Short Term Disability Plan
(Self-Administered)
Section 125 Plan
(Self-Administered)
Voluntary Term Life and AD & D Insurance Plan
Medical Life Insurance Company
Master Policy #ML2200
Dental Insurance
Medical Life Insurance Company
Policy # G3299
Long Term Disability Insurance Plan
Reliance Standard Life Insurance Co.
Policy #LTD-67885
401(k) Salary Reduction Plan
Lincoln National Life Insurance Co.
RTO, INC./RTO OPERATING, INC.:
Life and AD&D Insurance, Medical and Dental Plan
Great-West Life & Annuity Insurance Co.
Policy # 52893
Long Term Disability Insurance Plan
Liberty Life Assurance Company of Boston
Policy # 09-419313
401(k) and Profit Sharing Plan
Massachusetts Mutual Life Insurance Co.
Contract # SF-6945
Section 125 Plan
(Self-Administered)
111
ACQUIRED WITH INSTANT RENT-TO-OWN, INC.:
401(k) Plan
Pan-American Life Insurance Co.
Contract # GA-95045
ACQUIRED WITH B & L CONCEPTS, INC. (ACTION RENT TO OWN OR FLORIDA, INC.):
401(k) Plan
Massachusetts Mutual Life Insurance Co.
Trustee - Frontier Trust Co.
Administered by: BISYS Plan Services
Client No. 003209
ACQUIRED WITH HUT COMPANY:
Profit Sharing Plan
Administered by: Commerce Bank, St. Louis, Mo.
STOCK OPTION PLANS:
Alrenco, Inc. 1995 Stock Incentive Plan
Alrenco, Inc. 1998 Stock Incentive Plan
RTO, Inc. 1996 Employee Stock Option Plan
RTO, Inc. 1996 Stock Option Plan for Non-Employee Directors
112
SCHEDULE 7.17
MATTERS EFFECTING BUSINESS OR PROPERTIES
Norle Investments, Inc. v. Alrenco, Inc. et. al., Case No. 49DOZ9801CP000109,
filed in ▇▇▇▇▇▇ Superior Court, Indiana, alleging breach of contract for not
providing insurance coverage for landlord's store which was destroyed by fire.
113
SCHEDULE 7.18
ENVIRONMENTAL AND SAFETY MATTERS
With respect to the property located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, certain environmental reports have been prepared and tests
conducted, including but not limited to, a Phase I Environmental Site
Assessment, a Contaminated Soil Excavation Report, a Soil Removal Report, an
Underground Storage Tank Assessment and a Limited Asbestos Evaluation. These
tests and reports were prepared by or under the supervision of S&ME, Inc. of
Spartanburg, South Carolina. With respect to the property located at 1600 and
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, an Asbestos Survey & Assessment was
conducted and a related report prepared by TERRANEXT, Toxicology & Health
Related Sciences Division of Little Rock, Arkansas.
114
SCHEDULE 7.19
SUBSIDIARIES
RTO Holding Co., Inc.
Action Rent-To-Own Holdings of South Carolina, Inc.
RTO Operating, Inc.
ATRO, Inc.
115
SCHEDULE 7.20
CONTINGENT OBLIGATIONS
Two Letters of Credit for a total undrawn amount of approximately $850,000.00.
116
SCHEDULE 7.21
CHANGES IN REQUIREMENTS OF LAWS
The following is as of the Effective Date:
Forty-eight states have adopted legislation regulating rental-purchase
transactions. Of those states, 45 require companies to provide certain
disclosures to customers regarding the terms of the rental-purchase
transaction. North Carolina, Wisconsin and Minnesota regulate rental-purchase
transactions as credit sales subject to consumer lending restrictions. North
Carolina and Minnesota subject the transactions to interest rate or finance
charge limitations. In addition, recent court decisions in New Jersey have
created a legal environment in that state which is prohibitive to
rental-purchase transactions. The Company operates in North Carolina, but does
not operate in the other three states. Twenty-two of the 23 states in which
the Company operates impose some type of disclosure requirements, either in
advertising or in the rental-purchase agreement, or both. The regulations in
these states also distinguish rental- purchase transactions from credit sales.
The management of the Company believes that the operations of the Company are
in material compliance with applicable state rental-purchase laws. Although
certain proposed federal regulations are under consideration, no federal
legislation has been enacted regulating rental-purchase transactions. As of
the Effective Date, two bills have been introduced in Congress that would
regulate the rental-purchase industry. One of the bills is supported by the
Association of Progressive Rental Organizations ("APRO") and the Company does
not believe that this ▇▇▇▇, if enacted, would have a material adverse effect
upon the Company's operations. The other ▇▇▇▇ would regulate rental-purchase
transactions as credit sales, and if enacted, could have a Material Adverse
Effect.
117
SCHEDULE 9.1
INDEBTEDNESS
Two Letters of Credit for a total undrawn amount of approximately $850,000.00.
Debt assumed in the acquisition of Seajay Investment Group, Inc. in connection
with real property in Killeen, Texas.
Convertible Promissory Note, dated January 7, 1997, wherein RTO, Inc. (Maker)
promises to pay to B&L Concepts, Inc. (Holder), the original principal sum of
$3,000,000.
Convertible Promissory Note, dated May 30, 1997, wherein RTO, Inc. (Maker)
promises to pay to ▇▇▇▇▇ ▇▇▇▇▇▇ (Holder), the original principal sum of
$2,000,000.
Debt described in Noncompetition Agreement, dated January 3, 1997, between RTO,
Inc. and ▇▇▇▇▇▇ ▇. ▇▇▇▇.
Debt described in Noncompetition Agreement, dated January 3, 1997, between RTO,
Inc. and ▇▇▇▇▇ ▇. ▇▇▇▇.
Debt described in Noncompetition Agreement, dated January 3, 1997, between RTO,
Inc. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
Debt described in Noncompetition Agreement, dated January 3, 1997, between RTO,
Inc. and ▇▇▇▇ ▇. ▇▇▇▇▇.
Debt described in Noncompetition Agreement, dated January 3, 1997, between RTO,
Inc. and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
Debt described in Noncompetition Agreement, dated January 3, 1997, between RTO,
Inc. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
Debt described in Noncompetition Agreement, dated January 3, 1997, between RTO,
Inc. and ▇▇▇▇▇ ▇. ▇▇▇▇.
118
SCHEDULE 9.2
LIENS
Comerica Bank-Texas liens.
Associates Leasing.
Landlord liens under leases.
119
SCHEDULE 9.3
PERMITTED GUARANTEES
None.
120
EXHIBIT A
REQUEST FOR REVOLVING CREDIT ADVANCE
No._______________ Dated:
To: Comerica Bank - Agent
Re: Alrenco Amended and Restated Revolving Credit Agreement by and among
Comerica Bank, as Agent, the lenders from time to time parties thereto
(collectively, "Banks"), and Alrenco, Inc. ("Company") dated as of
April 1, 1998, (as amended from time to time, the "Agreement").
Pursuant to the Agreement, the Company requests an Advance from Banks
as follows:
A. Date of Advance:
B. Amount of Advance:
$
Comerica Bank Account No. ____________________________
Other: _______________________________________________
_______________________________________________
C. Type of Activity:
1. Advance
2. Refunding
of a Revolving Credit Advance
of a Swing Line Advance
3. Conversion
D. Interest Rate:
1. Prime-based Rate
2. Eurocurrency-based Rate
E. Interest Period (for Eurocurrency-based Advances only):
121
1. One (1) Month
2. Two (2) Months
3. Three (3) Months
4. Six (6) Months
5. Twelve (12) Months
F. Availability:
1. Principal amount of requested Advance (new $
money only):
2. Principal amount of all Revolving Advances $
outstanding on the date of this Request:
3. Principal amount of all Swing Line Advances $
outstanding on the date of this Request:
4. Aggregate undrawn portion of Letters of Credit $
outstanding on the date of this Request:
5. Aggregate face amount of all Letters of Credit $
requested but not yet issued on the date of this
Request:
6. Sum of Items 2 through 5: $
7. Revolving Credit Aggregate Commitment in effect $
on the date of this Request:
8. Borrowing Base as of the most recently delivered $
certificate:
9. Lesser of Items 7 and 8: $
10. Item 9 minus Item 6 (Availability): Item 1 must $
be less than Item 10
122
The Company certifies to the matters specified in Section 2.3(e) of
the Agreement.
ALRENCO, INC.
By:
Its:
Agent Approval:
123
EXHIBIT B
REVOLVING CREDIT NOTE
$______________ ______________, 1998
On the Revolving Credit Maturity Date, FOR VALUE RECEIVED, Alrenco,
Inc., an Indiana corporation ("Company") promises to pay to the order of
[insert Bank] ("Bank") at Detroit, Michigan, in care of Agent, in lawful money
of the United States of America, the sum of [Insert Amount derived from
Percentages] Dollars ($____________), or so much of said sum as may from time
to time have been advanced and then be outstanding hereunder pursuant to the
Alrenco Amended and Restated Revolving Credit Agreement dated as of April 1,
1998, made by and among the Company, certain banks, including the Bank, and
Comerica Bank as Agent for such banks, as the same may be amended from time to
time (the "Agreement"), together with interest thereon as hereinafter set
forth.
Each of the Advances made hereunder shall bear interest at the
Applicable Interest Rate from time to time applicable thereto under the
Agreement or as otherwise determined thereunder, and interest shall be
computed, assessed and payable as set forth in the Agreement.
This Note is a note under which advances (including refundings and
conversions), repayments and readvances may be made from time to time, but only
in accordance with the terms and conditions of the Agreement. This Note
evidences borrowings under, is subject to, is secured in accordance with, and
may be accelerated or matured under, the terms of the Agreement, to which
reference is hereby made. Definitions and terms of the Agreement are hereby
incorporated by reference herein.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan (without regard to its conflict of laws principles).
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, release,
or forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note.
124
Nothing herein shall limit any right granted Bank by any other
instrument or by law.
ALRENCO, INC.
By:
Its:
125
EXHIBIT C
LETTER OF CREDIT NOTICE
TO: Members of the Bank Group
RE: Issuance of Letter of Credit pursuant to Article 3 of the Alrenco
Amended and Restated Revolving Credit Agreement (as amended or
otherwise modified from time to time, "Agreement") dated April 1, 1998
among Alrenco, Inc. ("Company"), Agent and the Banks.
On ______________________, 19__,(1) Issuing Bank, in accordance with
Article 3 of the Agreement, issued its Letter of Credit number ______________,
in favor of ____________________(2) for the account of Company [and
______________ ________________].(3) The face amount of such Letter of Credit is
$____________. The amount of each Bank's participation in the Letter of Credit
is as follows:(4)
Comerica Bank $
Comerica Bank-Texas $
This notification is delivered this ___ day of ___________, 19___,
pursuant to Section 3.3 of the Agreement. Except as otherwise defined,
capitalized terms used herein have the meanings given them in the Agreement.
Signed:
COMERICA BANK, as Agent
By:
Its:
------------
(1) Date of Issuance
(2) Beneficiary
(3) Other Account Party (i.e. Affiliate of Company), if any
(4) Amounts based on Percentages
126
EXHIBIT D
REQUEST FOR SWING LINE ADVANCE
No.________________ Dated:
To: Comerica Bank-Texas, Swing Line Bank
Re: Alrenco Amended and Restated Revolving Credit Agreement by and among
Comerica Bank, as Agent, the lenders from time to time parties thereto
(collectively, "Banks"), and Alrenco, Inc. ("Company") dated as of
April 1, 1998 (as amended from time to time, the "Agreement").
Pursuant to the Agreement, the Company requests a Swing Line Advance
from the Swing Line Bank as follows:
A. Date of Advance:
B. Amount of Advance:
$
Comerica Bank Account No. ______________________________
Other: _________________________________________________
_________________________________________________
C. Interest Rate:
1. Prime-based Rate
2. Quoted Rate
D. Interest Period:
1. _______ days(1)
-------------
(1) Insert up to 30 days.
127
E. Availability:
1. Principal amount of requested Advance (new money only): $
2. Principal amount of all Revolving Advances outstanding $
on the date of this Request:
3. Principal amount of all Swing Line Advances outstanding $
on the date of this Request:
4. Aggregate undrawn portion of Letters of Credit $
outstanding on the date of this Request:
5. Aggregate face amount of all Letters of Credit requested $
but not yet issued on the date of this Request:
6. Sum of Items 2 through 5: $
7. Revolving Credit Aggregate Commitment in effect on the $
date of this Request:
8. Borrowing Base as of the most recently delivered $
certificate:
9. Lesser of Items 7 and 8: $
10. Item 9 minus Item 6 (Availability): Item 1 must be $
less than Item 10
The Company certifies to the matters specified in Section 4.3(e) of
the Agreement.
ALRENCO, INC.
By:
Its:
Swing Line Bank Approval:
128
EXHIBIT E
SWING LINE NOTE
$3,000,000 April 1, 1998
On the Revolving Credit Maturity Date, FOR VALUE RECEIVED, Alrenco,
Inc., an Indiana corporation ("Company") promises to pay to the order of
Comerica Bank-Texas ("Bank") at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, in care
of Agent, in lawful money of the United States of America, the sum of Three
Million Dollars ($3,000,000), or so much of said sum as may from time to time
have been advanced and then be outstanding hereunder pursuant to Article 4 of
the Alrenco Amended and Restated Revolving Credit Agreement dated as of April
1, 1998, executed by and among the Company, certain banks, including the Bank,
and Comerica Bank as Agent for such banks, as the same may be amended from time
to time (the "Agreement"), together with interest thereon as hereinafter set
forth.
The unpaid principal indebtedness from time to time outstanding under
this Note shall be due and payable on the last day of the Interest Period
applicable thereto or as otherwise set forth in the Agreement, provided that no
Swing Line Advance may mature or be payable on a day later than the Revolving
Credit Maturity Date.
Each of the Swing Line Advances made hereunder shall bear interest at
the Prime-based Rate or the Quoted Rate from time to time applicable thereto
under the Agreement or as otherwise determined thereunder, and interest shall
be computed, assessed and payable as set forth in the Agreement.
This Note is a note under which advances, repayments and readvances
may be made from time to time, but only in accordance with the terms and
conditions of the Agreement. This Note evidences borrowings under, is subject
to, is secured in accordance with, and may be accelerated or matured under, the
terms of the Agreement, to which reference is hereby made. Definitions and
terms of the Agreement are hereby incorporated by reference herein.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan (without regard to its conflict of laws provisions).
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, release,
or forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note.
129
Nothing herein shall limit any right granted Bank by any other
instrument or by law.
ALRENCO, INC.
By:
Its:
130
EXHIBIT F
FORM OF
SWING LINE LOAN PARTICIPATION CERTIFICATE
__________________, 19__
[Name of Bank]
_________________________
_________________________
Ladies and Gentlemen:
Pursuant to Section 4.5(b) of the Alrenco Amended and Restated
Revolving Credit Agreement dated as of April 1, 1998, among Alrenco, Inc., the
Banks named therein and Comerica Bank, as Agent, the undersigned hereby
acknowledges receipt from you of $___________________ as payment for a
participating interest in the following Swing Line Loan:
Date of Swing Line Loan:________________________________
Principal Amount of Swing Line Loan:____________________
The participation evidenced by this certificate shall be subject to the terms
and conditions of the Revolving Credit Agreement including without limitation
Section 4.5(b) thereof.
Very truly yours,
COMERICA BANK, as Agent
By:___________________________________
Its:__________________________________
131
EXHIBIT G
[FORM OF NEW BANK ADDENDUM]
NEW BANK ADDENDUM, dated____________, to the Alrenco Amended and
Restated Revolving Credit Agreement dated as of April 1, 1998 (as amended or
otherwise modified from time to time, the "Credit Agreement"), among Alrenco,
Inc. ("Company"), each of the financial institutions party thereto
(collectively, the "Banks") and Comerica Bank, as Agent for the Banks.
W I T N E S S E T H:
WHEREAS, the Credit Agreement provides in Section 2.10 thereof that
any financial institution, although not originally a party thereto, may become
a party to the Credit Agreement with the consent of the Company and the Agent
by executing and delivering to the Agent a New Bank Addendum to the Credit
Agreement in substantially the form of this new bank addendum; and
WHEREAS, the undersigned was not an original party to the Credit
Agreement but now desires to become a party thereto;
NOW, THEREFORE, the undersigned hereby agrees as follows:
The New Bank hereby confirms that it has received a copy of the Credit
Agreement and the exhibits and schedules referred to therein, and all other
Loan Documents which it considers necessary, together with copies of the other
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the loans thereunder. The New Bank acknowledges and
agrees that it: (a) has made and will continue to make such inquiries and has
taken and will take such care on its own behalf as would have been the case had
its commitment been granted and its loans been made directly by such New Bank
to the Company without the intervention of the Agent or any other Bank; and (b)
has made and will continue to make, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information as it has
deemed appropriate, its own credit analysis and decisions relating to the
Credit Agreement. The New Bank further acknowledges and agrees that the Agent
has not made any representations or warranties about the creditworthiness of
the Company or any other party to the Credit Agreement or any other of the Loan
Documents, or with respect to the legality, validity, sufficiency or
enforceability of the Credit Agreement, or any other of the Loan Documents.
New Bank represents and warrants that it is a Person to which
assignments are permitted pursuant to Sections 14.8(c) and (d) of the Credit
Agreement.
132
Except as otherwise provided in the Credit Agreement, effective as of
the Effective Date (as defined below):
(a) the New Bank (i) shall be deemed automatically to have become
a party to the Credit Agreement and the other Loan Documents,
and to have all the rights and obligations of a party to the
Credit Agreement and the other Loan Documents, as if it were
an original signatory; and (ii) agrees to be bound by the
terms and conditions set forth in the Credit Agreement and the
other Loan Documents as if it were an original signatory
thereto; and
(b) the New Bank shall be a Bank and its Percentage of the
Revolving Credit shall be as set forth in the attached revised
Schedule 1.2 (Percentages).
As used herein, the term "Effective Date" means the date on which all
of the following have occurred or have been completed, as reasonably determined
by the Agent:
(1) the Company shall have paid to the Agent, all interest, fees
(including the Revolving Credit Commitment Fee) and other
amounts, if any, accrued to the Effective Date for which
reimbursement is then owing under the Credit Agreement;
(2) New Bank shall have remitted to the Agent funds in an amount
equal to its Percentage of all Advances of the Revolving
Credit outstanding as of the Effective Date; and
(3) the Company shall have executed and delivered to the Agent for
the New Bank, new Revolving Credit Notes payable to such New
Bank in the face amount of such New Bank's Percentage of the
Revolving Credit Aggregate Commitment (after giving effect to
this New Bank Addendum, and any other New Bank Addendum
executed concurrently herewith).
The Agent shall notify the New Bank, along with Company, of the
Effective Date.
The New Bank hereby advises the Agent of the following administrative
details with respect to the assigned loans:
(A) Address for Notices:
Institution Name:
Address:
Attention:
Telephone:
Facsimile:
133
(B) Payment Instructions:
Terms defined in the Credit Agreement and not otherwise defined herein
shall have their defined meanings when used herein.
IN WITNESS WHEREOF, the undersigned has caused this New Bank Addendum
to be executed and delivered by a duly authorized officer on the date first
above written.
[INSERT NAME OF BANK]
By:____________________________________
Title:_________________________________
Accepted this _______ of
___________________, 199___.
ALRENCO, INC.
By: _______________________________________
Title: ____________________________________
Accepted this ____ of
__________________, 199___.
COMERICA BANK, as Agent
By: _______________________________________
Title: ____________________________________
134
EXHIBIT H
COVENANT COMPLIANCE REPORT
To: Comerica Bank, as Agent
Re: Alrenco Amended and Restated Revolving Credit Agreement dated
as of April 1, 1998 (as amended or otherwise modified from
time to time, the "Agreement")
This Covenant Compliance and Interest Rate Adjustment Report
("Report") is furnished pursuant to Section 8.2 of the Agreement and sets forth
various information as of _____________, 19__ (the "Computation Date").
1. Minimum Tangible Net Worth, Section 8.9. On the Computation
Date, the Tangible Net Worth which is required to be not less than $25,000,000
plus 50% of Net Income (if positive) earned in each fiscal quarter beginning
with the quarter ending March 31, 1998 plus 100% of the proceeds of the
issuance of any New Equity (net of reasonable and customary costs and expenses
of issuance) during such fiscal quarter was ___________ as computed in the
supporting documents attached hereto as Schedule 1.
2. Positive Net Income, Section 8.10. On the Computation Date,
Net Income (exclusive of any tax benefit resulting from a loss carry forward or
otherwise, plus to the extent deducted in the computation of some Net Income,
all accrued taxes on or measured by income, and without giving effect, but
without duplication, to (x) one-time cash charges in an aggregate amount not to
exceed $8,000,000 any one-time non-cash charges in an aggregate amount not to
exceed $1,000,000 arising from the Merger for the first two fiscal quarters
ending after the Merger or (y) to any one-time cash charges in an aggregate
amount not to exceed $2,000,000 for the four fiscal quarters then ending
arising from any acquisition and/or mergers other than the Merger, in either
case as such charges were given effect prior to giving effect to any taxes on
or measured by income) greater than zero, was $______________ as computed in
the supporting documents attached hereto as Schedule 2.
3. Fixed Charge Coverage Ratio, Section 8.11. On the Computation
Date, the Fixed Charge Coverage Ratio, which is required to be not less than
___ to 1.0 was ___________ as computed in the supporting documents attached as
Schedule 3.
4. Leverage Ratio, Section 8.12. On the Computation Date, the
Leverage Ratio which is required to be not more than 0.50 to 1.0 was
______________ as computed in the supporting documents attached hereto as
Schedule 4.
135
5. Eurocurrency Margin. The aggregate applicable Margin which
shall become effective pursuant to the provisions of Section 5.1 of the
Agreement and which is based on the Fixed Charge Coverage Ratio on the
Computation Date is _______________________ percent (_____%).
6. Limitation on Debt, Section 9.1. On the Computation Date:
(a) Clause (c)(i): The aggregate principal amount
of Debt of the Company or a Guarantor incurred to finance the
acquisition of motor vehicles (whether pursuant to a loan or a
Financing Lease) which shall not exceed $5,000,000 at any time
outstanding, and any renewals or refinancings thereof, was
$________, as set forth in Schedule 6(a);
(b) Clause (c)(ii): The aggregate amount of Debt
of the Company or a Guarantor incurred to finance the
acquisition of fixed or capital assets other than motor
vehicles (whether pursuant to a loan or a Financing Lease)
which shall not exceed $1,000,000 at any time outstanding, and
any renewals or refinancings thereof, was $_________ as set
forth in Schedule 6(b);
(c) Clause (d): The aggregate amount of Debt of
the Company or a Guarantor arising in connection with
non-competition agreements entered into by the Company or such
Guarantor in connection with Permitted Acquisitions (as
defined by the Agreement), which shall not exceed $3,000,000
at any one time, was $________ as set forth in Schedule 6(c);
(d) Clause (j): The aggregate principal amount of
"additional Debt" pursuant to Section 9.1(g) of the Agreement,
which shall not exceed $5,000,000 at any one time outstanding,
provided that only the principal component of obligations
shall be considered in calculating such amount, was
$_________.
7. Limitation on Mergers or Sale of Assets, Section 9.5. On the
Computation Date, "other property" disposed of pursuant to Section 9.5(e) of
the Agreement, which shall not exceed $1,000, 000 during any fiscal year of the
Company, was $__________.
8. Limitation on Capital Expenditures, Section 9.7. On the
Computation Date, the aggregate amount of capital expenditures pursuant to
Section 9.7(b) of the Agreement, which shall not exceed $6,000,000 for the
Company during fiscal year 1998 and $3,000,000 during any fiscal year
thereafter any fiscal year of the Company, was $ __________.
9. Limitation on Investments, Loans and Advances, Section 9.8. On
the Computation Date
(a) Clause (c): the aggregate amount of loans and
advances to officers and employees of the Company for travel
and entertainment in the ordinary course of business, which
shall not exceed $200,000 at any one time outstanding, was
$___________ and the aggregate amount of advances to employees
to purchase inventory for personal use, which shall not exceed
$300,000 at any one time outstanding, was $____________;
136
(b) Clause (g): loans, advances or investments by
Company or any Guarantor in any Subsidiary (other than RTO
Holding or RTO Operating) which shall not exceed $500,000 at
any one time outstanding was $____________;
The undersigned officer of Company hereby certifies that:
A. All of the information set forth in this Report (and in any
Schedule attached hereto) is true and correct in all material respects.
B. As of the Computation Date, the Company and its Subsidiaries
has observed and performed all of its covenants and other agreements contained
in the Agreement and in the Notes and any other Loan Documents to be observed,
performed and satisfied by them.
C. He/she has reviewed the Agreement and this Report is based on
an examination sufficient to assure that this Report is accurate.
D. Attached hereto as Exhibit D are the Same Store Reports as
required under the Credit Agreement.
E. Except as stated in Schedule D hereto (which shall describe
any existing Default or Event of Default and the notice and period of existence
thereof and any action taken with respect thereto or contemplated to be taken
by Company), no Default or Event of Default, has occurred and is continuing on
the date of this Report.
Capitalized terms used in this Report and in the schedules hereto,
unless specifically defined to the contrary, have the meanings given to them in
the Agreement.
IN WITNESS WHEREOF, Company has caused this Report to be executed and
delivered by its duly authorized officer this ______ day of __________________,
19__.
ALRENCO, INC.
By:___________________________________
Its:__________________________________
137
EXHIBIT I
FORM OF
ASSIGNMENT AGREEMENT
Date:
To: ALRENCO, INC.
and
COMERICA BANK, AS AGENT ("Agent")
Re: Alrenco Amended and Restated Revolving Credit Agreement dated as of
April 1, 1998 (as amended or otherwise modified from time to time, the
"Credit Agreement"), among Alrenco, Inc. ("Company"), Agent and
certain Banks
Gentlemen and Ladies:
Reference is made to Section 14.8(c), (d) and (e) of the Credit
Agreement. Unless otherwise defined herein or the context otherwise requires,
all initially capitalized terms used herein without definition shall have the
meanings specified in the Credit Agreement.
This Agreement constitutes notice to each of you of the proposed
assignment and delegation by [insert assignor Bank] (the "Assignor") to
[insert proposed assignee] (the "Assignee"), and the Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor, a % undivided interest in each of Assignor's rights and
obligations under the Credit Agreement and the other Loan Documents such that,
after giving effect to the foregoing assignment and assumption, [and the other
assignments by Assignor to ___________ on the date hereof,] the Assignee's
interest in the Revolving Credit (and participation in any outstanding Letters
of Credit) shall equal $__________________ and the Assignee's Percentage shall
equal ___%.
Assignor does hereby irrevocably sell, assign and transfer to Assignee
without recourse to the Assignor and the Assignee does hereby irrevocably
purchase and assume from the Assignor without recourse to the Assignor,
effective as of the "Effective Date" (as hereafter defined) _______% of
Assignor's right, title and interest in, to and under the Assignor's Note, the
Credit Agreement and the other Loan Documents.
The Assignor hereby instructs the Agent to make all payments from and
including the Effective Date hereof in respect of the interest assigned hereby,
directly to the Assignee. The Assignor and the Assignee agree that all interest
and fees accrued up to, but not including, the Effective Date of the assignment
and delegation being made hereby are the property of the
138
Assignor, and not the Assignee. The Assignee agrees that, upon receipt of any
such interest or fees accrued up to the Effective Date, the Assignee will
promptly remit the same to the Assignor.
The Assignee hereby confirms that it has received a copy of the Credit
Agreement and the exhibits and schedules referred to therein, and all other
Loan Documents which it considers necessary, together with copies of the other
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the loans thereunder. The Assignee acknowledges and
agrees that it: (a) legally authorized to enter into this Assignment Agreement;
(b) has made and will continue to make such inquiries and has taken and will
take such care on its own behalf as would have been the case had its Percentage
been granted and its loans been made directly by such Assignee to the Company
without the intervention of the Agent, the Assignor or any other Bank; and (c)
has made and will continue to make, independently and without reliance upon the
Agent, the Assignor or any other Bank, and based on such documents and
information as it has deemed appropriate, its own credit analysis and decisions
relating to the Credit Agreement. The Assignee further acknowledges and agrees
that neither the Agent, nor the Assignor has made any representations or
warranties about the creditworthiness of the Company or any other party to the
Credit Agreement or any other of the Loan Documents, or with respect to the
legality, validity, sufficiency or enforceability of the Credit Agreement, or
any other of the Loan Documents. This assignment shall be made without recourse
to or warranty by the Assignor, except as set forth herein.
Assignee represents and warrants that it is a Person to which
assignments are permitted pursuant to Section 14.8(c) of the Credit Agreement.
Assignor represents and warrants, as of the Effective Date, that it is
the legal and beneficial owner of the interest being assigned and delegated by
it hereunder and that such interest is free and clear of any pledge,
encumbrance or other adverse claim or interest created by Assignor.
Except as otherwise provided in the Credit Agreement, effective as of
the Effective Date:
(a) the Assignee: (i) shall be deemed automatically to have become
a party to the Credit Agreement and the other Loan Documents,
to have assumed all of the Assignor's obligations thereunder
to the extent of the percentage of Assignor's rights and
obligations assigned to Assignee pursuant to this Assignment
Agreement, and to have all the rights and obligations of a
party to the Credit Agreement and the other Loan Documents, as
if it were an original signatory thereto to the extent
specified in the second paragraph hereof; and (ii) agrees to
be bound by the terms and conditions set forth in the Credit
Agreement and the other Loan Documents as if it were an
original signatory thereto; and
(b) the Assignor's obligations under the Credit Agreement and the
other Loan Documents shall be reduced by the percentage
assigned to Assignee pursuant to this Assignment Agreement.
As used herein, the term "Effective Date" means the date on which all
of the following have occurred or have been completed, as reasonably determined
by the Agent:
139
(1) the delivery to the Agent of an original of this Assignment
Agreement executed by the Assignor and the Assignee;
(2) the payment to the Agent, of all accrued fees, expenses and
other items for which reimbursement is then owing under the
Credit Agreement;
(3) the payment to the Agent of the $3,500 processing fee referred
to in Section 14.8(d) (iv) of the Credit Agreement; and
(4) all other restrictions and items noted in Sections 14.8(c),
(d) and (e) of the Credit Agreement have been satisfied.
The Agent shall notify the Assignor, the Assignee and the Company of the
Effective Date.
On the Effective Date, the Assignee shall pay to the Assignor an
amount equal to the outstanding principal amount of the indebtedness owed to it
by the Company under the Credit Agreement in respect of the interest being
assigned hereby.
The obligations of the Assignor and the Assignee hereunder are
conditioned upon (i) the approval of the Company and the Agent (as required
under the Credit Agreement) to the assignment evidenced hereby which approval
shall be evidenced by their due execution of this Assignment Agreement and (ii)
the Agent's satisfaction that the restrictions and items noted in Section
14.8(c) and (d) of the Agreement have been satisfied (waived pursuant to this
Assignment Agreement).
The Assignee hereby advises each of you of the following
administrative details with respect to the assigned loans:
(A) Address for Notices:
Institution Name:
Address:
140
Attention:
Telephone:
Facsimile:
(B) Payment Instructions:
(C) Proposed effective date of assignment.
The Assignee has delivered to the Agent (or is delivering to the Agent
concurrently herewith) the tax forms referred to in Section 14.13 of the Credit
Agreement, other forms reasonably requested by the Agent, and the original of
each Note held by the Assignor under the Credit Agreement.
Please evidence your consent to and acceptance of the proposed
assignment and delegation set forth herein by signing and returning
counterparts hereof to the Assignor and the Assignee.
[ASSIGNOR]
By:
Its:
141
[ASSIGNEE]
By:
Its:
ACCEPTED AND CONSENTED TO
this ___ day of ________, 199_
COMERICA BANK, Agent
By:
Its:
ALRENCO, INC.
By:
Its:
[This form of Assignment Agreement (including footnotes) is subject in all
respects to the terms and conditions of the Credit Agreement which shall govern
in the event of any inconsistencies or omissions.]
142
EXHIBIT K
ALRENCO, INC.
BORROWING BASE CERTIFICATE
FOR MONTH ENDED:
Comerica Bank, as Agent
and the Banks parties to the
Credit Agreement referred to below
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
This Borrowing Base Certificate ("Certificate") is furnished pursuant
to Section 8.2 of the Amended and Restated Alrenco Revolving Credit Agreement
dated as of April 1, 1998, as amended from time to time, and sets forth various
information as of _____________, 19__ (the "Computation Date").
A. The Borrowing Base for the calendar month _________ is
calculated as follows:
1. Average Receipts
(a) Rental Receipts for calendar month immediately $
preceding the Computation Date:
(b) Rental Receipts for calendar month immediately $
preceding the calendar month in item 1(a):
(c) Rental Receipts for calendar month immediately $
preceding the calendar month in item 1(b):
(d) Sum of the highest two items of the above items $
1(a), 1(b) and 1(c):
(e) Item 1(d) divided by 2 and multiplied by 4 $
(Average Receipts)
2. Rental Income Value
(a) Value of all Rental Contracts $
(b) Value of all Eligible Rental Contracts $
(c) 50% of Item 2(b) (Rental Income Value) $
3. 100% of Original Cost determined on a consolidated
basis.
4. The lesser of Items 1(e), 2(c) and 3 (Borrowing Base): $
143
B. Attached hereto as Exhibit A is the BOR Report for the
calendar month ending on the Computation Date.
C. Attached hereto as Exhibit B is the Reconciliation Report for
the calendar month ending on the Computation Date.
D. Attached hereto as Exhibit C is the Idle Inventory Report for
the calendar month ending on the Computation Date.
E. Attached hereto as Exhibit D is the Delinquency Report as of
the last Saturday in the Calendar month ending on the
Computation Date.
The undersigned officer of the Company hereby certifies that:
(a) All of the information set forth in this Certificate (and in
any Exhibit attached hereto) is true and correct in all material respects.
(b) As of the Computation Date, the Company and its Subsidiaries
has observed and performed all of its covenants and other agreements contained
in the Credit Agreement and in the Notes and any other Loan Documents to be
observed, performed and satisfied by them.
(c) He/she has reviewed the Credit Agreement and this Certificate
is based on an examination sufficient to assure that this Certificate is
accurate.
(d) Except as stated in Schedule 1 hereto (which shall describe
any existing Default or Event of Default and the notice and period of existence
thereof and any action taken with respect thereto or contemplated to be taken
by the Company), no Default or Event of Default, has occurred and is continuing
on the date of this Certificate.
Capitalized terms used in this Certificate and in the schedules
hereto, unless specifically defined to the contrary, have the meanings given to
them in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by its duly authorized officer this ______ day of
__________________, 19__.
ALRENCO, INC.
By:___________________________________
Its:__________________________________
144
EXHIBIT N
FORM OF INTERCOMPANY NOTE
(See attached.)
145
EXHIBIT O
STORE LISTINGS
[Company to Provide]
SIGNATURE PAGE
REAFFIRMATION OF CERTAIN LOAN DOCUMENTS
146
EXHIBIT P
FORM OF REAFFIRMATION OF CERTAIN LOAN DOCUMENTS
This Reaffirmation of Loan Documents dated as of April 1, 1998 (this
"Reaffirmation") executed by Alrenco, Inc., an Indiana corporation (the
"Company"), RTO Operating, Inc., a Delaware corporation ("RTO Operating"), RTO
Holding Co., Inc., a Delaware corporation ("RTO Holding"), ATRO, Inc., a South
Carolina corporation ("ATRO") and Action Rent-to- Own Holdings of South
Carolina, Inc., a South Carolina corporation ("Action Rent-to Own" and together
with RTO Operating, RTO Holding and ATRO, the "Guarantors") reaffirms the
following documents, each dated as of February 26, 1998 and each executed in
favor of the Agent for and on behalf of the Banks (collectively, the
"Reaffirmed Loan Documents"):
(a) the Guaranty executed by each of the Guarantors;
(b) the Pledge Agreement executed by the Company;
(c) the Pledge Agreement executed by RTO Holding;
(d) the Security Agreement executed by the Company and each of the
Guarantors; and
(e) the Agreement (Trademark) executed by RTO Operating and ATRO.
0.5.1. Each of the undersigned acknowledges that the Company,
the Banks and the Agent have executed the Amended and Restated Revolving Credit
Agreement dated as of April 1, 1998 (as amended or otherwise modified from time
to time, the "Amended and Restated Credit Agreement"). Capitalized terms not
otherwise defined herein will have the meanings given in the Amended and
Restated Credit Agreement.
0.5.2. Each of the undersigned hereby ratifies and confirms its
obligations under the Reaffirmed Loan Documents to which such undersigned is a
party and agrees that such Reaffirmed Loan Documents remain in full force and
effect after giving effect to the effectiveness of the Amended and Restated
Credit Agreement and that, upon such effectiveness, all references in such
Reaffirmed Loan Documents to the "Credit Agreement" or the "Notes" issued
thereunder shall be references to the Amended and Restated Credit Agreement and
the Notes issued thereunder.
0.5.3. This Reaffirmation may be signed in counterparts and by
the various parties on separate counterparts. This Reaffirmation shall be
governed by and construed in accordance with the laws of the State of, and be
enforceable in, the State of Michigan. This Reaffirmation shall be binding upon
the undersigned, the Banks and the Agent and their respective successors and
assigns. This Reaffirmation shall be effective as of the date hereof.
[SIGNATURES FOLLOW ON SUCCEEDING PAGE]
147
WITNESS, the due execution hereof as of the date and year first above
written.
ALRENCO, INC., an Indiana corporation
By:__________________________________________
Its:_________________________________________
RTO OPERATING, INC., a Delaware corporation
By:__________________________________________
Its:_________________________________________
RTO HOLDING CO., INC., a Delaware corporation
By:__________________________________________
Its:_________________________________________
ATRO, INC., a South Carolina corporation
By:__________________________________________
Its:_________________________________________
ACTION RENT-TO-OWN HOLDINGS OF SOUTH
CAROLINA, INC., a South Carolina corporation
By:__________________________________________
Its:_________________________________________
SIGNATURE PAGE
REAFFIRMATION OF CERTAIN LOAN DOCUMENTS
148
GUARANTY
[SEE EXHIBIT J TO PRIOR CREDIT AGREEMENT]
SIGNATURE PAGE
REAFFIRMATION OF CERTAIN LOAN DOCUMENTS
149
SECURITY AGREEMENT
[SEE EXHIBIT L TO PRIOR CREDIT AGREEMENT]
150
PLEDGE AGREEMENTS
[SEE EXHIBITS M-1 AND M-2 TO PRIOR CREDIT AGREEMENT:
PLEDGE AGREEMENT]