EXHIBIT 10.2
RENTERS CHOICE, INC.
REVOLVING CREDIT AGREEMENT
DATED AS OF NOVEMBER 27, 1996
COMERICA BANK, AS AGENT
TABLE OF CONTENTS
PAGE
1. DEFINITIONS.................................................... 1
2. REVOLVING CREDIT............................................... 20
2.1 Revolving Credit Commitment............................ 20
2.2 Accrual of Interest and Maturity....................... 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
3. LETTERS OF CREDIT.............................................. 26
3.1 Letters of Credit...................................... 26
3.2 Conditions to Issuance................................. 27
3.3 Notice................................................. 28
3.4 Letter of Credit Fees.................................. 29
3.5 Issuance Fees.......................................... 30
3.6 Draws and Demands for Payment Under Letters
of Credit............................................. 30
3.7 Obligations Irrevocable................................ 32
3.8 Risk Under Letters of Credit........................... 33
3.9 Indemnification........................................ 34
3.10 Right of Reimbursement................................. 35
4. SWING LINE CREDIT.............................................. 35
4.1 Swing Line Advances.................................... 35
4.2 Accrual of Interest; Margin Adjustments................ 36
4.3 Requests for Swing Line Advances....................... 36
4.4 Disbursement of Swing Line Advances.................... 38
4.5 Refunding of or Participation Interest in
Swing Line Advances................................... 38
5. MARGIN ADJUSTMENTS; INTEREST PAYMENTS.......................... 39
5.1 Margin Adjustments..................................... 39
5.2 Prime-based Interest Payments.......................... 40
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PAGE
5.3 Eurocurrency-based Interest Payments................... 41
5.4 Quoted Rate Advance Interest Payments.................. 41
5.5 Interest Payments on Conversions....................... 41
5.6 Interest on Default.................................... 41
5.7 Prepayment............................................. 42
6. CONDITIONS..................................................... 42
6.1 Execution of Notes and this Agreement.................. 42
6.2 Corporate Authority.................................... 42
6.3 Collateral Documents and Guaranties.................... 43
6.4 Insurance.............................................. 44
6.5 Compliance with Certain Documents and
Agreements............................................ 44
6.6 Opinion of Counsel..................................... 44
6.7 Company's Certificate.................................. 44
6.8 Payment of Fees........................................ 45
6.9 Assignment of Existing Credit Agreement................ 45
6.10 Other Documents and Instruments........................ 45
6.11 Continuing Conditions.................................. 45
7. REPRESENTATIONS AND WARRANTIES................................. 45
7.1 Corporate Authority.................................... 45
7.2 Due Authorization - Company............................ 46
7.3 Due Authorization - Guarantors......................... 46
7.4 Liens.................................................. 46
7.5 Taxes.................................................. 46
7.6 No Defaults............................................ 46
7.7 Enforceability of Agreement and Loan
Documents -- Company.................................. 47
7.8 Enforceability of Loan Documents --
Guarantors............................................ 47
7.9 Compliance with Laws................................... 47
7.10 Non-contravention -- Company........................... 48
7.11 Non-contravention -- Guarantors........................ 48
7.12 No Litigation.......................................... 48
7.13 Consents, Approvals and Filings, Etc................... 48
7.14 Agreements Affecting Financial Condition............... 49
7.15 No Investment Company or Margin Stock.................. 49
7.16 ERISA.................................................. 49
7.17 Conditions Affecting Business or Properties............ 49
7.18 Environmental and Safety Matters....................... 50
7.19 Subsidiaries........................................... 50
7.20 Accuracy of Information................................ 50
7.21 No Change in Requirements of Laws...................... 51
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TABLE OF CONTENTS
(Continued)
PAGE
8. AFFIRMATIVE COVENANTS.......................................... 51
8.1 Financial Statements................................... 51
8.2 Certificates; Other Information........................ 52
8.3 Payment of Obligations................................. 53
8.4 Conduct of Business and Maintenance of
Existence............................................. 53
8.5 Maintenance of Property; Insurance..................... 54
8.6 Inspection of Property; Books and Records,
Discussions........................................... 54
8.7 Notices................................................ 55
8.8 Hazardous Material Laws................................ 56
8.9 Maintain Minimum Tangible Net Worth.................... 56
8.10 Fixed Charge Coverage Ratio............................ 56
8.11 Leverage Ratio......................................... 56
8.12 Taxes.................................................. 56
8.13 Governmental and Other Approvals....................... 56
8.14 Compliance with ERISA.................................. 57
8.15 ERISA Notices.......................................... 57
8.16 Offices; FTC........................................... 57
8.17 Security............................................... 57
8.18 Performance of Contract Duties, Defense of
Collateral............................................ 58
8.19 Possessory Perfection in Contract
Collateral............................................ 58
8.20 Use of Proceeds........................................ 58
8.21 Subsidiaries; Guaranties............................... 58
8.22 Further Assurances..................................... 59
9. NEGATIVE COVENANTS............................................. 59
9.1 Limitation on Debt..................................... 59
9.2 Limitation on Liens.................................... 60
9.4 Acquisitions........................................... 61
9.5 Limitation on Mergers, or Sale of Assets............... 61
9.6 Dividends.............................................. 61
9.7 Limitation on Capital Expenditures..................... 61
9.8 Limitation on Investments, Loans and
Advances.............................................. 62
9.9 Transactions with Affiliates........................... 62
9.10 Sale and Leaseback..................................... 62
9.11 Limitation on Negative Pledge Clauses.................. 63
9.12 Prepayment of Debts.................................... 63
10. DEFAULTS....................................................... 63
10.1 Events of Default...................................... 63
10.2 Exercise of Remedies................................... 65
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TABLE OF CONTENTS
(Continued)
PAGE
10.3 Rights Cumulative...................................... 66
10.4 Waiver by Company of Certain Laws...................... 66
10.5 Waiver of Defaults..................................... 66
10.6 Set Off................................................ 67
11. PAYMENTS, RECOVERIES AND COLLECTIONS........................... 67
11.1 Payment Procedure...................................... 67
11.2 Application of Proceeds of Collateral.................. 69
11.3 Pro-rata Recovery...................................... 69
12. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS............... 70
12.1 Reimbursement of Prepayment Costs...................... 70
12.2 Agent's Eurocurrency Lending Office.................... 70
12.3 Circumstances Affecting Eurocurrency-based
Rate Availability..................................... 71
12.4 Laws Affecting Eurocurrency-based Advance
Availability.......................................... 71
12.5 Increased Cost of Eurocurrency-based
Advances.............................................. 72
12.6 Indemnity.............................................. 73
12.7 Other Increased Costs.................................. 73
12.8 Substitution of Banks.................................. 74
13. AGENT.......................................................... 75
13.1 Appointment of Agent................................... 75
13.2 Deposit Account with Agent............................. 75
13.3 Scope of Agent's Duties................................ 75
13.4 Successor Agent........................................ 76
13.5 Agent in its Individual Capacity....................... 77
13.6 Credit Decisions....................................... 77
13.7 Agent's Fees........................................... 77
13.8 Authority of Agent to Enforce Notes and
This Agreement........................................ 78
13.9 Indemnification........................................ 78
13.10 Knowledge of Default................................... 79
13.11 Agent's Authorization; Action by Banks................. 79
13.12 Enforcement Actions by the Agent....................... 79
14. MISCELLANEOUS.................................................. 79
14.1 Accounting Principles.................................. 79
14.2 Consent to Jurisdiction................................ 80
14.3 Law of Michigan........................................ 80
14.4 Interest............................................... 80
14.5 Closing Costs and Other Costs;
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(Continued)
PAGE
Indemnification....................................... 81
14.6 Notices................................................ 82
14.7 Further Action......................................... 83
14.8 Successors and Assigns; Participations;
Assignments........................................... 83
14.9 Indulgence............................................. 86
14.10 Counterparts........................................... 86
14.11 Amendment and Waiver................................... 86
14.12 Confidentiality........................................ 87
14.13 Withholding Taxes...................................... 88
14.14 Taxes and Fees......................................... 88
14.15 WAIVER OF JURY TRIAL................................... 88
14.16 Interest............................................... 89
14.17 Complete Agreement; Conflicts.......................... 89
14.18 Severability........................................... 90
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
SCHEDULES
1.1 Applicable L/C Fee Percentage, Applicable
Revolving Commitment Fee Percentage and
Eurocurrency Margins
2 Insurance Deposits
6.2 Good Standing Certificates
6.3(b) List of Jurisdictions in which UCC Financing
Statements will be filed
7.9 Consumer Credit Laws
7.12 Litigation
7.16 Pension Plans
7.18 Environmental Matters
7.19 Subsidiaries
7.20 Contingent Obligations
9.1 Indebtedness
9.2 Liens
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(Continued)
EXHIBITS
A FORM OF REQUEST FOR REVOLVING CREDIT ADVANCE
B FORM OF REVOLVING CREDIT NOTE
C FORM OF NOTICE OF LETTERS OF CREDIT
D FORM OF REQUEST FOR SWING LINE ADVANCE
E FORM OF SWING LINE NOTE
F FORM OF SWING LINE PARTICIPATION CERTIFICATE
G PERCENTAGES
H FORM OF COVENANT COMPLIANCE REPORT
I FORM OF ASSIGNMENT AGREEMENT
J FORM OF GUARANTY (including Exhibit "A" - Joinder
Agreement)
K FORM OF BORROWING BASE CERTIFICATE
L FORM OF SECURITY AGREEMENT
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") is made as of the 27th day of
November, 1996, 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, collectively referred to as the
"Banks") Comerica Bank, as agent for the Banks (in such capacity, "Agent"), and
Renters Choice, Inc., a Delaware corporation ("Company").
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 or parties (which shall be Company, individually, or ColorTyme
jointly and severally with Company) named in an application to the Issuing Bank
for the issuance of such Letter of Credit.
"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. 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 Primebased 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.
"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
insurance, 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 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).
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"Banks" shall mean Comerica Bank-Texas ("Comerica") and such other
financial institutions from time to time parties hereto as lenders and shall
include the Revolving Credit Banks and the Swing Line 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 and (b) 50% of the Rental Income Value.
"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 Loan Documents, or otherwise.
"ColorTyme" shall mean ColorTyme, Inc., a Texas corporation.
"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
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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 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(a) 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 8.11 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.
4
"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 (or loss) for such period, PLUS (b) to the extent deducted in the
computation of such net income (or loss), (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.
"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:
(a) 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; and
(b) 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
(c) the related Obligor thereunder is not an Affiliate of the
Company; and
(d) as of the last Saturday 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
(e) 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
(f) subject to repair or replacement thereof by the Company or the
applicable Subsidiary in accordance with the its obligations under the
applicable Rental Contract, the
5
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
(g) 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.
"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.
"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
6
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.
"Existing Credit Agreement" shall mean the Amended and Restated Loan
Agreement dated April 13, 1996 by and between Intrust Bank, N.A. and the
Company.
"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.
"Financial Statements" shall mean all those balance sheets, earnings
statements and other financial data (whether of the Company or the Guarantors)
which have been furnished to the Agent or the Banks for the purposes of, or in
connection with, this Agreement and the transactions contemplated hereby.
"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
7
payable during such period on the Debt of such Person plus (ii) the amount of
all Rental Expenses of such Person during such period, all determined 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.
"Guarantor(s)" shall mean each Subsidiary which guarantees the obligations
of the Company hereunder and under the Loan Documents, and, as of the Effective
Date, shall mean ColorTyme (and "Guarantors" shall not include ColorTyme
Financial Services, Inc. or Colortyme Life Insurance Company).
"Guaranty" shall mean the Guaranty to be made by each of the Guarantors
(whether by execution thereof, or by execution of the Joinder Agreement attached
as "Exhibit A" to the form of such Guaranty) in favor of the Agent for the
ratable benefit of the Banks, substantially in the form of Exhibit J, 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
shall be deemed to be the lower of (a) an amount equal to the stated or
8
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,
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
9
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.
"Interest Period" shall mean (a) with respect to a Eurocurrency-based
Advance, one (1), two (2), three (3) or six (6) 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 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 (Guaranty)" 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 8.21 of this Agreement.
10
"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 sum of (i)aggregate principal amount of
Advances outstanding as of such date PLUS (ii) Letter of Credit
Obligations 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 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.
11
"Loan Documents" shall mean, collectively, this Agreement, the Notes, the
Letter of Credit Agreements, the Letters of Credit, the Security 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 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.
"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.
"Multiemployer Plan" shall mean a Pension Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"Notes" shall mean the Revolving Credit Notes.
"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.
"Percentage" shall mean, with respect to any Bank, its percentage share,
as set forth on Exhibit G hereto, of the Revolving Credit Aggregate Commitment
and Letters of Credit, as 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
12
of or in any Person primarily engaged in the rent-to-own business, conducted in
accordance with the following requirements:
(a) 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, shall be
(i) greater than or equal to Thirty Million Dollars ($30,000,000),
determined as of the date of such acquisition, 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 (with drafts of all
material documents pertaining to such proposed acquisition to be
furnished to Agent not less than thirty (30) days prior to such
date), or
(ii) less than Thirty Million Dollars ($30,000,000) but greater than
or equal to Fifteen Million Dollars ($15,000,000), then not less
than ten (10) Business Days prior to the date each such proposed
acquisition is scheduled to be consummated, the Company provides
written notice thereof to Agent (with drafts of all material
documents pertaining to such proposed acquisition to be furnished to
Agent not less than five (5) days prior to such date),or
(iii) less than Fifteen Million Dollars ($15,000,000), 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 distribute copies of all notices and other materials received
from Company under this subparagraph (a) to each Bank;
(b) (i) together with the documents required by clauses (a)(i) and
(a)(ii) above, the Company shall have also delivered to the Agent the Pro
Forma Projected Financial Information and (ii) the Majority Banks shall
have specifically approved the proposed new acquisition in writing prior
to the date such proposed acquisition is scheduled to be consummated;
13
(c) 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 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;
(d) within thirty (30) days after any such acquisition has been
completed, the Company shall deliver 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 shall
execute or cause to be executed, and provide or cause to be provided to
Agent, for the Banks, any Loan Documents required hereunder and such other
documents and instruments (including without limitation, Joinder
Agreements and the Security Agreement (as required by Section 8.21
hereof), opinions of counsel, amendments, acknowledgments, consents and
evidence of approvals or filings) as reasonably requested by Agent and the
Majority Banks, if any, and otherwise comply with the terms and conditions
of this Agreement; and
(e) both immediately before and after any such acquisition, no Event
of Default, or event, which with the giving of notice or the lapse of time
or both would become an Event of Default (whether or not related to such
acquisition), has occurred and is continuing.
"Permitted Guarantees" shall mean the Company's guaranty of ColorTyme's
obligations under (a) the Portfolio Acquisition Agreement dated May 15, 1996 by
and among STI Credit Corporation, a Nevada corporation, ColorTyme Financial
Services, Inc. and Company (as in effect on the date hereof) and (b) the
Franchise Financing Agreement dated September 23, 1996 by and among STI Credit
Corporation, a Nevada corporation, ColorTyme and Company.
"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 three (3) major grades
as determined by at
14
least one Rating Agency; or secured, as to payments of principal and
interest, by a letter of credit provided by a financial institution or
insurance provided by a bond insurance company which in each case is
itself or its debt is rated in one of the highest three (3) major grades
as determined by at least one Rating Agency;
(c) Banker's acceptances, commercial accounts, demand deposit
accounts, certificates of deposit, or depository receipts issued by or
maintained with any 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 $250,000,000, provided that
such minimum capital and surplus requirement shall not apply to demand
deposit accounts maintained by the Company or any of its Subsidiaries in
the ordinary course of business;
(d) Commercial paper rated at the time of purchase within the two
highest classifications established by not less than two Rating Agencies,
and which matures within 270 days after the date of issue;
(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
(f) Any fund or other pooling arrangement which exclusively
purchases and holds the investments itemized in (a) through (e) above.
"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;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social
15
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 $1,000,000 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.
"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.
"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.
"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
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
16
acquisition and projected statements of income for each of those years,
including sufficient detail to permit calculation of the amounts and the ratios
described in Sections 8.9, 8.10, and 8.11 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.
"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 (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
17
Eligible Rental Contracts, assuming such Eligible Rental Contract 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 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 or the treasurer 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 Ninety Million Dollars
($90,000,000) subject to reduction or termination under Section 2.8 or 10.2
hereof.
"Revolving Credit Banks" shall mean Comerica Bank, and such other
financial institutions from time to time parties hereto as lenders of the
Revolving Credit.
18
"Revolving Credit Commitment Fee" shall mean the fees payable to Agent for
distribution to the Revolving Credit Banks pursuant to Section 2.6 hereof.
"Revolving Credit Maturity Date" shall mean the earlier to occur of (i)
November 27, 1999, 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.
"Security Agreement" shall mean the Security Agreement executed and
delivered by the Company and each Guarantor in favor of the Agent substantially
in the form of Exhibit L, 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 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.
"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.
19
"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 Debt plus
(ii) the amount of all Liens plus (iii) the amount of all Financing Leases, plus
(iv) 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 obligation to repay the outstanding
principal amount of such Advance, all interest
20
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:
(a) each such Request for Revolving Credit Advance shall set forth
the information required on the Request for Revolving Credit Advance
including without limitation:
(i) the proposed date of Revolving Credit Advance,
which must be a Business Day;
(ii) whether the Revolving Credit Advance is a refunding
or conversion of an outstanding Revolving Credit
Advance; and
(iii) 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;
(b) 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;
(c) 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;
(d) the principal amount of such Revolving Credit Advance, plus the
amount of any other outstanding Indebtedness under this Agreement to be
then combined therewith having the same Applicable Interest Rate and
Interest Period, if any, shall be (i) in the case of a Prime-based Advance
at least Two Million Dollars ($2,000,000) or a larger integral multiple of
One Hundred Thousand Dollars ($100,000) and (ii) in the case
21
of a Eurocurrency-based Advance at least Two Million Dollars ($2,000,000)
or a larger integral multiples of One Million Dollars ($1,000,000) and at
any one time there shall not be in effect more than six (6) Interest
Periods;
(e) each Request for Revolving Credit Advance shall constitute and
include a certification by the Company as of the date thereof that:
(i) 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;
(ii) to the best knowledge of Company all conditions to
Advances of the Revolving Credit have been
satisfied;
(iii) there is no Default or Event of Default in
existence, and none will exist upon the making of
the Advance;
(iv) the representations and warranties contained in
this Agreement and the 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
(v) 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.
Agent 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 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 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 Advance form as of the date of such requested Advance.
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2.4 DISBURSEMENT OF REVOLVING CREDIT ADVANCES.
(a) 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.
(b) Subject to submission of an executed Request for Revolving
Credit Advance 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.
(c) 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, 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:
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(i) in the case of such Revolving Credit Bank, the
Federal Funds Effective Rate; or
(ii) 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 January
1, 1997 (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. 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 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 Primebased Advance, if
any.
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 Ten Million Dollars
($10,000,000) 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; (iv) if the termination or reduction of the
Revolving Credit Aggregate Commitment requires the prepayment of a
Eurocurrency-based Advance or Quoted Rate Advance, the termination or reduction
may be made only on the last Business Day of the then current Interest Period
applicable to such Advance and (v) 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 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
25
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.
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 May 1st, but not before April 1st, of fiscal years
1998 and/or 1999, 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 November
27, 2001.
(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.
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
26
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 shall have an expiration date 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 applicable
provisions of U.S. law and regulations, including without limitation, the
Trading With the Enemy Act, Export Administration Act, International Emergency
Economic Powers Act, and the Regulations of the Office of Foreign Assets Control
of the U.S. Department of the Treasury.
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:
(a) the face amount of the Letter of Credit requested, plus the
Letter of Credit Obligations, does not exceed the Letter of Credit Maximum
Amount;
(b) the face amount of the Letter of Credit requested, plus the
aggregate principal amount of all Advances hereunder, plus the Letter of
Credit Obligations, does not exceed the lesser of the then applicable (i)
Revolving Credit Aggregate Commitment and (ii) the Borrowing Base;
(c) the obligations of Company and the Guarantors set forth in this
Agreement and the 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 Loan Documents has not
been disputed by Company or any of the Guarantors;
(d) both immediately before and immediately after
issuance of the Letter of Credit requested, no Default or
Event of Default exists;
(e) the representations and warranties contained in this
Agreement and the Loan Documents are true in all material
respects as if made on such date;
(f) the execution of the Letter of Credit Agreement with
respect to the Letter of Credit requested will not violate the
27
terms and conditions of any material contract, agreement or
other borrowing of Company or any Guarantor;
(g) 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;
(h) 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;
(i) 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
(j) Issuing Bank shall have received the issuance fee required in
connection with the issuance of such Letter of Credit pursuant to Section
3.5 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 (f). 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.
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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:
(a) 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), inclusive of the issuance fee of one-eighth of one
percentage point (1/8%) per annum on the face amount thereof to be paid to
Issuing Bank under Section 3.5 hereof.
(b) 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 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.
29
(c) 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 semi-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 ISSUANCE FEES. In connection with the Letters of Credit, and in
addition to the Letter of Credit Fees (including a letter of credit issuance fee
of one eighth percentage point (1/8%) to be paid by Agent to Issuing Bank for
its own account), 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.
(a) 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, 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.
30
(b) 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.
(c) 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 Primebased 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
31
other Bank to make such pro rata portion available to the Agent for the
account Issuing Bank.
(d) 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:
(a) 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");
(b) 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;
(c) 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;
(d) 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;
(e) 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
32
(f) 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
representations made by, or any act or omission of Company, the applicable
Account Party or any other Person, or
33
(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 strictly comply with the terms of any Letter of Credit
(unless such payment resulted from the gross negligence or willful misconduct of
the Issuing Bank), including failure of any documents to bear any reference or
adequate reference to such 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, that with respect to subparagraphs
34
(a)(i) through (a)(v) hereof, Company and Account Parties shall not be required
to indemnify the Issuing Bank, the other Banks and the Agent and such other
persons, and 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 the Issuing Bank's gross negligence, willful misconduct or
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
documentation strictly complying with the terms and conditions of such Letter of
Credit.
(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. 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, for (i) the
reasonable out-of-pocket costs and expenses of the Issuing Bank to be reimbursed
by Company or any Account Party pursuant to any Letter of Credit Agreement or
any Letter of Credit, to the extent not reimbursed by Company or Account Party
and (ii) any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, fees, expenses or disbursements of any kind
and nature whatsoever which may be imposed on, incurred by or asserted against
Issuing Bank (in its capacity as issuer of any Letter of Credit) in any way
relating to or arising out of this Agreement, any Letter of Credit, any
documentation or any transaction relating thereto, or any Letter of Credit
Agreement, except to the extent that such liabilities, losses, costs or expenses
were incurred by Issuing Bank as a result of Issuing Bank's gross negligence or
willful misconduct or wrongful dishonor of any Letter of Credit.
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
35
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 Two Million
Dollars ($2,000,000) 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:
(a) each such Request for Swing Line Advance shall set forth the
information required on the Request for Swing Line Advance including
without limitation:
(i) the proposed date of Swing Line Advance,
which must be a Business Day;
(ii) whether such Swing Line Advance is to be
a Prime-based Advance or Quoted Rate Advance; and
(iii) the duration of the Interest Period
applicable thereto;
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(b) 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;
(c) 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;
(d) the principal amount of such Swing Line Advance shall be at
least Five Hundred Thousand Dollars ($500,000) or any larger amount in
multiples of One Hundred Thousand Dollars ($100,000);
(e) each Request for Swing Line Advance, once delivered to Swing
Line Bank, shall not be revocable by Company, and shall constitute and
include a certification by the Company as of the date thereof that:
(i) both before and after the Swing Line Advance, the
obligations of the Company and the Guarantors set forth in this
Agreement and the Loan Documents, as applicable, are valid, binding
and enforceable obligations of such parties;
(ii) to the best knowledge of Company all
conditions to Advances have been satisfied;
(iii) there is no Default or Event of Default in
existence, and none shall exist upon the making of the
Swing Line Advance; and
(iv) 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 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
37
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 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.
(a) The Agent, at any time in its sole and absolute discretion, may
(or, upon the request of the Swing Line Bank, shall) on behalf of the
Company (which hereby irrevocably directs the Agent 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, 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 Borrower 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 Agent at a time when no
Default or Event of Default has occurred and is continuing shall not be
subject to Section 5.7. 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
38
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 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.
(b) 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.
(c) 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.
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
39
the Fixed Charge Coverage Ratio, shall be implemented on a
quarterly basis as follows:
(a) Such adjustments shall be given prospective effect only,
effective (i) as to all Prime-based Advances outstanding hereunder, 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
Eurocurrencybased 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.
(b) 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.
(c) Such Margin adjustments under this Section 5.1 shall be made
irrespective of, and in addition to, any other interest rate adjustments
hereunder.
(d) 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 September 30, 1996, the margins and fee percentages shall
be those set forth under the Level II 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 Prime-based Rate, and shall be payable in
immediately
40
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 Primebased 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
Eurocurrencybased Advance outstanding from time to time having a
EurocurrencyInterest 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.
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 Eurocurrencybased Advances calculated on the
bases of the maximum Margins) in respect of each such Advance, plus, in the case
of Eurocurrencybased Advances and Quoted Rate Advances, three percent (3%) per
annum for the remainder of the then existing Interest Period, if
41
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 three percent (3%).
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 Eurocurrencybased 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.
6. CONDITIONS
The obligations of Banks to make Advances 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 or loans hereunder:
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
Revolving Credit Notes, the Swing Line Note, the Loan Documents and this
Agreement shall be in full force and effect.
6.2 CORPORATE AUTHORITY. Agent shall have received, with a
counterpart thereof for each Bank:
(a) In connection with the Company, a certificate of
Responsible Officer as to:
42
i) resolutions of the Board of Directors
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,
ii) the incumbency and signature of the officers of
the Company executing any Loan Document,
iii) a certificate of good standing or continued existence (or
the equivalent thereof) from the State of Delaware, and from every
state or other jurisdiction listed on Schedule 6.2 hereof, and
iv) copies of Company's articles of incorporation
and bylaws or other constitutional documents;
(b) in connection with each Guarantor, a certificate from an
authorized officer of such Guarantor as to:
i) resolutions 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,
ii) the incumbency and signature of the officers of
such Guarantor executing any Loan Document to which such
Guarantor is a party,
iii) 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,
iv) copies of such Guarantor's constitutional
documents, and
v) a certificate of incorporation or comparable
certificate certified as true and complete as of a recent
date by the appropriate official of the jurisdiction of
incorporation of such Guarantor.
6.3 COLLATERAL DOCUMENTS AND GUARANTIES. (a) As security for
all Indebtedness of Company to the Banks hereunder, (i) the Company
shall have executed and delivered to the Agent the Security
Agreement and (ii) each Guarantor shall have executed and delivered
to the Agent the Guaranty and the Security Agreement; and
43
(b) Any documents (including, without limitation, financing statements,
amendments to financing statements and assignments of financing statements)
required to be filed in connection with the Security Agreement to create, in
favor of the Agent (for and on behalf of the Banks), a perfected security
interest in the Collateral thereunder shall have been delivered to the Agent in
a proper form for filing in each office in each jurisdiction listed in Schedule
6.3 and with the United States Patent and Trademark Office, or other office, as
the case may be.
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 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.
6.7 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 and
6.4 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 there
shall have been no material adverse change in the financial condition,
properties, business, results or operations of
44
the Company and its Subsidiaries taken as a whole from September 30, 1996 to the
date of the making of the first borrowing hereunder.
6.8 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.
6.9 ASSIGNMENT OF EXISTING CREDIT AGREEMENT. Intrust Bank, N.A. shall have
executed and delivered to the Agent, for the benefit of the Banks, an Assignment
of the Existing Credit Agreement, acknowledged by the Company and ColorTyme, in
form and substance satisfactory to the Agent and the Banks.
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) under this Agreement shall be subject to the
continuing conditions that:
(a) the Agent shall have received, as required by Section 2.3, with
a counterpart for each Bank, a Request for Revolving Credit Advance, with
appropriate insertions and attachments, satisfactory in form and substance
to the Agent and its counsel, executed and delivered by a Responsible
Officer of the Company; and
(b) the Agent shall have received, with a counterpart for each Bank,
a Borrowing Base Certificate in accordance with Section 8.2, showing the
Borrowing Base as of the end of the calendar month immediately preceding
the date of the requested Advance.
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 Delaware; 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
45
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 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, and all 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.
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, 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.
46
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 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 have been no past,
and 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.
47
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 crossclaim against Company or such
Guarantor has been filed), nor has Company or any of its Guarantors or any of
its or their officers or directors, as the case may be, been 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.
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
48
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. Neither Company nor any of its Guarantors maintains or
contributes to any Pension Plan subject to Title IV of ERISA, except as set
forth on Schedule 7.16 hereto; and there is no accumulated funding deficiency
within the meaning of ERISA, or any existing liability with respect to any of
the Pension Plans owed to the Pension Benefit Guaranty Corporation or any
successor thereto, and no "reportable event" or "prohibited transaction", as
defined in ERISA, has occurred with respect to any Pension Plan, and all such
Pension Plans are in material compliance with the requirements of the Internal
Revenue Code and ERISA.
7.17 CONDITIONS AFFECTING BUSINESS OR PROPERTIES. 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,
49
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) Each of the Company's financial
statements previously furnished to Agent and the Banks prior to the date of this
Agreement, has been prepared in accordance with GAAP and is complete and 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 September 30, 1996 through the Effective Date 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 September
50
30, 1996 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. 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, it will
cause each of its Guarantors, 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, unless the Majority Banks
shall otherwise consent in writing:
8.1 FINANCIAL STATEMENTS. Furnish to the Agent with
sufficient copies for each Bank:
(a) as soon as available, but in any event within 105 days after the
end of each fiscal year of the Company a copy of the audited financial
statements of the Company as at the end of such year and the related
audited statements of income, accumulated earnings, cash flows and cash
basis income 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 60 days
after the end of each of the first three quarterly periods of each fiscal
year of the Company, the unaudited financial statements of the Company as
at the end of such quarter and the related unaudited statements of income,
accumulated earnings, cash flows and cash basis income 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
51
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 Issuing
Bank with sufficient copies for each Bank:
(a) as soon as available, but in any event not later
than fifteen (15) days after the end of each calendar month,
(i) a Borrowing Base Certificate executed by a
Responsible Officer, substantially in the form attached
hereto as Exhibit K; and
(ii) a "BOR Report" (reporting the total number of rental
units under Rental Contract as of the end of such calendar month);
and
(iii) 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
(iv) an "Idle Inventory Report" (showing the amount
of inventory not under Rental Contract as of the end of
such calendar month); and
(vi) a "Delinquency Report" (showing the percentage of Rental
Contracts one day or more past due as of the last Saturday of such
calendar month);
(b) not later than 180 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 cash flow budget of the Company and its
Subsidiaries, covering, on a quarterly basis, the two 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;
(c) together with the financial statements to be delivered pursuant
to Section 8.1, a Covenant Compliance Certificate executed by a
Responsible Officer, substantially in the form attached hereto as Exhibit
H;
52
(d) at the request of the Agent or any Bank, together with the
financial statements to be delivered pursuant to Section 8.1(a), a "Same
Store Sales Report" (which report compares annual sales of the Company for
the fiscal year then ending with annual sales of the Company during the
prior fiscal year on a store by store basis);
(e) 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;
(f) 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
one hundred five (105) 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;
(g) 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
(h) promptly, such additional financial and other information, or
other reports as any Bank may from time to time reasonably request.
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.
53
8.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
(a) Continue to engage solely in the rent-to-own 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 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) if an Event of Default has occurred and is continuing, then at any time and
from time to time at the request of the Majority Banks, to conduct full or
partial collateral audits, with all reasonable costs and expenses of such audits
to be reimbursed by Company; 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
54
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 operations manual of the
Company, or 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) 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.
55
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
(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 MAINTAIN MINIMUM TANGIBLE NET WORTH. Maintain at all times a minimum
Tangible Net Worth of $30,000,000.
8.10 FIXED CHARGE COVERAGE RATIO. Maintain, as of the end of each fiscal
quarter, a Fixed Charge Coverage Ratio of not less than 2.50 : 1.0.
8.11 LEVERAGE RATIO. Maintain, as of the end of each fiscal quarter, a
Leverage Ratio of not more than 0.50 : 1.0.
8.12 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.
8.13 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
56
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.
8.14 COMPLIANCE WITH ERISA. Comply in all material respects with all
requirements imposed by ERISA as presently in effect or hereafter promulgated or
the Internal Revenue Code, including, but not limited to, the minimum funding
requirements of any Pension Plan.
8.15 ERISA NOTICES. Promptly notify Agent upon the occurrence of any of
the following events:
(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 Subsidiary 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 Subsidiary 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.
8.16 OFFICES; FTC. 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, it will
immediately procure a license or advise the Agent of the reason that it is
exempt from such licensing requirement or that no
57
such licensing requirement exists in the jurisdiction of such
location.
8.17 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.
8.18 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.
8.19 POSSESSORY PERFECTION IN CONTRACT COLLATERAL. The Company covenants
that it will, beginning no later than the date 60 days after the Effective Date,
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:
"Renters Choice, Inc. has collaterally assigned its rights in
this Rental Contract to Comerica Bank as agent for itself and
certain other Banks.
8.20 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 Existing Credit Agreement; and the 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.
8.21 SUBSIDIARIES; GUARANTIES.
(a) Cause ColorTyme Financial Services, Inc., a Texas corporation
and a wholly-owned Subsidiary of ColorTyme to be merged into ColorTyme
within forty-five (45) days after the Effective Date.
(b) Not permit ColorTyme Life Insurance Company, an Arizona
corporation and a wholly-owned Subsidiary of ColorTyme, to actively
conduct any business other than the
58
holding of reserves (as required by Arizona state law) for the payment of
its obligations under certain life insurance policies issued by it prior
to the date hereof.
(c) With respect to each Person which becomes a Subsidiary of the
Company subsequent to the Effective Date, within thirty 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), cause such Subsidiary to execute and
deliver to Agent, for and on behalf of each of the Banks, (a) a Joinder
Agreement whereby such Subsidiary becomes obligated as a Guarantor under
the Guaranty and (b) a Security Agreement, together with such financing
statements and other supporting documentation, including without
limitation corporate authority items, certificates and opinions of
counsel, as reasonably required by Agent and the Majority Banks.
8.22 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, without
the prior written consent of the Majority Banks it will not, and will not permit
any of the Guarantors, 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 a Guarantor incurred to
finance the acquisition of motor vehicles (whether pursuant to
59
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 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) 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 a Guarantor arising in connection with
non-competition agreements entered into by the Company or such Guarantor
in connection with Permitted Acquisitions, in an aggregate amount not
exceeding $5,000,000 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 8.12;
(f) current unsecured trade, utility or nonextraordinary accounts
payable arising in the ordinary course of Company's or such Guarantor's
businesses; and
(g) additional Debt not exceeding $2,000,000 in aggregate principal
amount at any one time outstanding, provided that only the principal
component of obligations shall be considered in calculating such
$2,000,000 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(b) 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 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 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
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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) 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, 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. Except as permitted under
Sections 8.21 and 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; and
(c) other property (except any property subject to a Lien pursuant
to the Security Agreement) in an amount not to exceed $400,000 disposed of
during any fiscal year of the Company.
9.6 DIVIDENDS. Declare or pay any dividend or make any distribution on its
capital stock or to its stockholders, or purchase, redeem or otherwise acquire
or retire for value their capital stock, except for dividends and other
distributions by Subsidiaries of the Company or any Guarantor to the Company or
such Guarantor, as the case may be, provided that 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.
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9.7 LIMITATION ON CAPITAL EXPENDITURES. 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 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 during any fiscal year of the Company,
$5,000,000.
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;
(d) investments in the Guarantors in an aggregate amount not to
exceed 25% of the consolidated net worth of the Company, determined in
accordance with GAAP, at any one time outstanding; and
(e) Permitted Acquisitions permitted pursuant to Section 9.4.
In valuing any Investments for the purpose of applying the limitations set forth
in this Section 9.9 (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 Agreement, is in the ordinary
course of the Company's or such Guarantor's business and is upon fair and
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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(b), 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 Permitted Liens and
any other agreements, documents or instruments pursuant to which Liens not
prohibited by the terms of this Agreement are created, entered into, or allow to
exist, 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. 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 five Business Days after notice
from Agent that the same is due and payable;
(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 8.11, 8.20, or 9 (in its
entirety);
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(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 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) the occurrence of a "reportable event", as defined in ERISA,
which is determined to constitute grounds for termination by the Pension
Benefit Guaranty Corporation of any Pension Plan subject to Title IV of
ERISA maintained or contributed to by or on behalf of the Company or any
of its Guarantors for the benefit of any of its employees or for the
appointment by the appropriate United States District Court of a trustee
to administer such Pension Plan and such reportable event is not corrected
and such determination is not revoked within sixty (60) days after notice
thereof has been given to the plan administrator of such Pension Plan
(without limiting
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any of Agent's or any Bank's other rights or remedies hereunder), or the
institution of proceedings by the Pension Benefit Guaranty Corporation to
terminate any such Pension Plan or to appoint a trustee by the appropriate
United States District Court to administer any such Pension Plan, which in
either case could reasonably be expected to have a Material Adverse
Effect;
(j) the Company or any Guarantor shall be dissolved or liquidated
(or any judgment, order or decree therefor shall be entered) or; if a
creditors' committee shall have been appointed for the business of Company
or any Guarantor; or if Company or any Guarantor shall have made a general
assignment for the benefit of creditors or shall have been adjudicated
bankrupt, or shall have filed a voluntary petition in bankruptcy or for
reorganization or to effect a plan or arrangement with creditors or shall
fail to pay its debts generally as such debts become due in the ordinary
course of business (except as contested in good faith and for which
adequate reserves are made in such party's financial statements); or shall
file an answer to a creditor's petition or other petition filed against
it, admitting the material allegations thereof for an adjudication in
bankruptcy or for reorganization; or shall have applied for or permitted
the appointment of a receiver or trustee or custodian for any of its
property or assets; or such receiver, trustee or custodian shall have been
appointed for any of its property or assets (otherwise than upon
application or consent of Company or any of its Guarantors); or if an
order shall be entered approving any petition for reorganization of
Company or any Guarantor; or the Company or any Guarantor shall take any
action (corporate or other) authorizing or in furtherance any of the
actions described above in this subsection;
(k) ▇.▇. ▇▇▇▇▇▇, or trust(s) established for his benefit or the
benefit of ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ and their children, and ▇▇▇▇ ▇. ▇▇▇▇▇▇, or
trust(s) established for his benefit or the benefit of his spouse and
their children, collectively cease to own legal or beneficial title to
twenty percent (20%) or more of the voting stock of Company, or either
▇.▇. ▇▇▇▇▇▇ or ▇▇▇▇ ▇. ▇▇▇▇▇▇ ceases to exercise substantially the same or
greater duties and responsibilities as such individual presently exercises
in connection with the management and operation of the Company and its
Subsidiaries; or
(l) any provision of any Guaranty 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 or
65
the Security Agreement, as the case may be, or the Guaranty 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 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.
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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 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
67
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
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
68
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 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 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 to share the excess payment or other recovery ratably in
accordance with the Percentage with each of
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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,
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.
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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.
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 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
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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:
(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 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
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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 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 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
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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"), 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 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
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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.
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
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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 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. Additionally, Agent may be
removed at any time by the Majority Banks upon the gross negligence or willful
misconduct of Agent, or upon the failure by Agent to comply with the terms and
conditions of this Agreement (but not otherwise). 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
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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.
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.
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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 September 9, 1996, 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 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
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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
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in its capacity as agent) shall be entitled to take any enforcement action of
any kind under any of the Loan Documents.
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.
14.4 INTEREST. In the event the obligation of Company to pay
interest on the principal balance of the Notes is or becomes in
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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
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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).
(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.
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
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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 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
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participant shall execute a confidentiality agreement consistent with the terms
of Section 14.13 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:
(i) each assignment shall cover all of the Notes issued by Company
hereunder to the assigning Bank (and not any particular note
or notes), and shall be for a fixed and not varying percentage
thereof, with the same percentage applicable to each such
Note;
(ii) each assignment shall be in a minimum amount of Ten Million
Dollars ($10,000,000);
(iii) 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
(iv) 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
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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 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 Exhibit G 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
85
hereof), and the right to approve any amendment, modification
or waiver of any provision of this Agreement without the
consent of the participant, 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 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.
86
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
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 (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 signing 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 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
87
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 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
88
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 (which regulates certain revolving credit loan 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
89
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 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, 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
90
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.
91
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK, RENTERS CHOICE, INC.
as Agent
By: Unreadable Signature By: Unreadable Signature
Its: Vice President Its:Chief Executive Officer
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
9th Floor MC 3280 Dallas, Texas 75240
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇. ▇. ▇. ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Copy to: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
SWING LINE BANK: COMERICA BANK - TEXAS
By: Unreadable Signature
Eurocurrency Lending Office:
Comerica Bank Its: Vice President
One Detroit Center ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
9th Floor MC 3289 Attention: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
REVOLVING CREDIT BANKS: COMERICA BANK - TEXAS
By: Unreadable Signature
Eurocurrency Lending Office:
Comerica Bank Its: Vice President
One Detroit Center ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
9th Floor MC 3289 Attention: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
92
THE FIRST NATIONAL BANK OF CHICAGO
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Eurocurrency Lending Office:
One First National Plaza Its:Vice President
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Suite 0088
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
GUARANTY FEDERAL BANK, F.S.B.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇
Eurocurrency Lending Office:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Its:Vice President
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
INTRUST BANK, N.A.
By: Unreadable Signature
Eurocurrency Lending Office:
105 North Main Its:Vice President
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇: Wm. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: Wm. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
93
LASALLE NATIONAL BANK
By: Unreadable Signature
Eurocurrency Lending Office:
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. Its:S.V.P.
Suite 305 ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Suite 305
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
THE SUMITOMO BANK, LIMITED
By:
Eurocurrency Lending Office:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ Its:
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By:
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Its:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
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