EXHIBIT 10.5.1
$40,000,000
REVOLVING CREDIT AGREEMENT
DATED AS OF JUNE 26, 1997
BY AND AMONG
CROSS-CONTINENT AUTO RETAILERS, INC.,
THE OTHER BORROWERS IDENTIFIED HEREIN
(COLLECTIVELY, THE "BORROWERS"),
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
INDIVIDUALLY AND AS AGENT
AND
THE OTHER FINANCIAL INSTITUTIONS LISTED
ON THE SIGNATURE PAGES HEREOF
(COLLECTIVELY, THE "BANKS")
TABLE OF CONTENTS
PAGE
1. CERTAIN DEFINITIONS ................................................ - 1 -
1.1. Accounting Principles ......................................... - 1 -
2. THE LOANS AND LETTERS OF CREDIT .................................... - 2 -
2.1. Loans ....................................................... - 2 -
2.2. Borrowing Procedure ......................................... - 3 -
2.3. Letters of Credit ........................................... - 4 -
2.4. Letter of Credit Requests ................................... - 5 -
2.5. Letters of Credit Participations ........................... - 6 -
2.6. Agreement to Repay Letter of Credit Drawings ................ - 8 -
2.7. Conflict between Applications and Agreement ................ - 10 -
2.8. Increased Costs ............................................ - 10 -
3. INTEREST RATE PROVISIONS .......................................... - 11 -
3.1. Interest Rate Determination ................................ - 11 -
3.2. Additional Interest Rate Provisions ........................ - 12 -
4. PREPAYMENTS AND OTHER PAYMENTS .................................... - 14 -
4.1. Required Prepayments ....................................... - 14 -
4.2. Optional Prepayments ....................................... - 14 -
4.3. Notice of Payments ......................................... - 14 -
4.4. Place of Payment or Prepayment ............................. - 14 -
4.5. No Prepayment Premium or Penalty ........................... - 15 -
4.6. Taxes ...................................................... - 15 -
4.7. Reduction or Termination of the Commitments ................ - 17 -
4.8. Payments on Business Day ................................... - 17 -
5. COMMITMENT FEE AND OTHER FEES ..................................... - 17 -
5.1. Commitment Fee ............................................. - 17 -
5.2. Other Fees ................................................. - 18 -
5.3. Letter of Credit Fees ...................................... - 18 -
5.4. Fees Not Interest; Nonpayment .............................. - 18 -
6. APPLICATION OF PROCEEDS .......................................... - 18 -
7. REPRESENTATIONS AND WARRANTIES .................................... - 18 -
7.1. Organization and Qualification ............................. - 18 -
7.2. Financial Statements ....................................... - 19 -
7.3. Litigation ................................................. - 19 -
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7.4. Default .................................................... - 19 -
7.5. Title to Properties ........................................ - 19 -
7.6. Payment of Taxes ........................................... - 19 -
7.7. Conflicting or Adverse Agreements or Restrictions .......... - 19 -
7.8. Authorization, Validity, Etc. .............................. - 20 -
7.9. Investment Company Act Not Applicable ...................... - 20 -
7.10. Public Utility Holding Company Act Not Applicable .......... - 20 -
7.11. Regulations G, T, U and X .................................. - 20 -
7.12. ERISA ...................................................... - 20 -
7.13. Accuracy of Information .................................... - 21 -
7.14. Approvals, Franchises, Licenses, Etc. ...................... - 21 -
7.15. Line of Business ........................................... - 21 -
7.16. Solvency ................................................... - 21 -
7.17. Material Contracts ......................................... - 22 -
7.18. Indebtedness ............................................... - 22 -
7.19. Investments ................................................ - 22 -
7.20. Insurance .................................................. - 22 -
7.21. Compliance with Laws ....................................... - 22 -
7.22. Hazardous Substances ....................................... - 23 -
7.23. Capital Structure .......................................... - 23 -
7.24. Labor Relations ............................................ - 24 -
8. CONDITIONS ........................................................ - 24 -
8.1. Conditions to Effectiveness of Agreement ................... - 24 -
8.2. Conditions to each Loan and Letter of Credit ............... - 26 -
9. AFFIRMATIVE COVENANTS ............................................. - 27 -
9.1. Financial Statements and Information ....................... - 27 -
9.2. Projections ................................................ - 28 -
9.3. Corporate Existence; Title to Properties ................... - 28 -
9.4. Books and Records .......................................... - 28 -
9.5. Insurance .................................................. - 29 -
9.6. Inspection of Property and Records ......................... - 29 -
9.7. Maintenance of Property .................................... - 29 -
9.8. Notice of Certain Matters .................................. - 29 -
9.10. Material Contracts ......................................... - 30 -
9.11. Patents, Trademarks and Licenses ........................... - 31 -
9.12. Taxes; Obligations ......................................... - 31 -
9.13. Hazardous Substances ....................................... - 31 -
9.14. Management ................................................. - 32 -
10. NEGATIVE COVENANTS ................................................ - 32 -
10.1. Financial Covenants ........................................ - 32 -
10.2. Liens ...................................................... - 33 -
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10.3. Debt ....................................................... - 33 -
10.4 Asset Dispositions ......................................... - 34 -
10.5. Merger, Consolidation ...................................... - 34 -
10.6. Supply and Purchase Contracts .............................. - 34 -
10.7. Discount or Sale of Receivables ............................ - 34 -
10.8. Change in Accounting Method ................................ - 34 -
10.9. Restricted Payments, Investments ........................... - 34 -
10.10. Change in Fiscal Year ...................................... - 35 -
10.11. Nature of Business ......................................... - 35 -
10.12. Transactions with Related Parties .......................... - 35 -
10.13. Stock of Subsidiaries ...................................... - 35 -
10.14. Regulations G, T, U and X .................................. - 35 -
10.15. Status Under Certain Laws .................................. - 35 -
10.16. Charter Documents .......................................... - 36 -
10.17. Material Contracts ......................................... - 36 -
10.18. Compliance with Laws ....................................... - 36 -
10.19. Hazardous Substances ....................................... - 36 -
10.20. Amendment to Floor Plan Financings ......................... - 36 -
10.21. Issuance and Disposition of Shares ......................... - 36 -
10.22. Restrictive Agreements ..................................... - 37 -
11. EVENTS OF DEFAULT; REMEDIES ...................................... - 38 -
11.1. Failure to Pay Principal ................................... - 38 -
11.2. Failure to Pay Other Amounts ............................... - 38 -
11.3. Default under Other Debt ................................... - 38 -
11.4. Misrepresentation or Breach of Warranty .................... - 39 -
11.5. Violation of Covenants ..................................... - 39 -
11.6. Bankruptcy and Other Matters ............................... - 39 -
11.7. Dissolution ................................................ - 40 -
11.8. Judgment ................................................... - 40 -
11.9. Nullity of Loan Documents .................................. - 40 -
11.10. Change of Control .......................................... - 40 -
11.11. ERISA ...................................................... - 40 -
11.12. Other Remedies ............................................. - 40 -
11.13. Collateral Account ......................................... - 41 -
11.14. Remedies Cumulative ........................................ - 41 -
12. THE AGENT ........................................................ - 41 -
12.1. Authorization and Action ................................... - 41 -
12.2. Agent's Reliance, Etc. ..................................... - 42 -
12.3. Defaults ................................................... - 42 -
12.4. Agent and Affiliates ....................................... - 42 -
12.5. Non-Reliance on Agent and Other Banks ...................... - 43 -
12.6. Indemnification ............................................ - 43 -
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12.7. Successor Agent ............................................ - 44 -
12.8. Agent's Reliance ........................................... - 44 -
13. MISCELLANEOUS ..................................................... - 44 -
13.1. Representation by the Banks ................................ - 44 -
13.2. Waivers, Etc. .............................................. - 45 -
13.3. Reimbursement of Expenses .................................. - 45 -
13.4. Notices .................................................... - 46 -
13.5. GOVERNING LAW .............................................. - 46 -
13.6. Survival of Representations, Warranties and Covenants ...... - 46 -
13.7. Counterparts; Execution by Facsimile Transmission .......... - 47 -
13.8. Separability ............................................... - 47 -
13.9. Descriptive Headings ....................................... - 47 -
13.10. Setoff ..................................................... - 47 -
13.11. Successors and Assigns; Participations ..................... - 48 -
13.12. Interest ................................................... - 50 -
13.13. Indemnification ............................................ - 51 -
13.14. Payments Set Aside ......................................... - 53 -
13.15. Loan Agreement Controls .................................... - 53 -
13.16. Obligations Several ........................................ - 54 -
13.17. Pro Rata Treatment ......................................... - 54 -
13.18. SUBMISSION TO JURISDICTION ................................. - 54 -
13.19. WAIVER OF JURY TRIAL ....................................... - 55 -
13.20. Amendments, Etc. ........................................... - 55 -
13.21. Relationship of the Parties ................................ - 56 -
13.22. Extension of Maturity Date ................................. - 56 -
13.23. Confidentiality ............................................ - 57 -
13.24. FINAL AGREEMENT ............................................ - 57 -
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EXHIBIT A .............................. Definitions
EXHIBIT B .............................. Note
EXHIBIT C .............................. Notice of Borrowing
EXHIBIT D .............................. Notice of Rate Change/Continuation
EXHIBIT E .............................. Assignment and Acceptance
EXHIBIT F .............................. Letter of Credit Request
EXHIBIT G .............................. Compliance Certificate
EXHIBIT H .............................. Pledge Agreement
EXHIBIT I .............................. Joinder Agreement
SCHEDULE 1 ............................. Lending Offices
SCHEDULE 7.1 ........................... Jurisdiction of Organization and
Qualification to do Business
SCHEDULE 7.17 .......................... Existing Material Contracts
SCHEDULE 7.18 .......................... Indebtedness
SCHEDULE 7.19 .......................... Investments
SCHEDULE 7.20 .......................... Insurance
SCHEDULE 7.23 .......................... Capital Structure
SCHEDULE 10.2 .......................... Liens
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REVOLVING CREDIT AGREEMENT
Cross-Continent Auto Retailers, Inc., a corporation organized under the
laws of Delaware (the "Parent"), the other Borrowers identified on the
signature pages hereto (collectively, including without limitation the Parent
and each Subsidiary which hereafter becomes a Borrower pursuant to Section
9.9, the "Borrowers"), the financial institutions listed on the signature
pages hereof (collectively, the "Banks" and individually, a "Bank"), Texas
Commerce Bank National Association ("TCB") in its capacity as agent (the
"Agent") for the Banks hereunder, and TCB in its capacity as Issuing Bank
hereunder, hereby agree as follows:
PRELIMINARY STATEMENT
WHEREAS, the Borrowers have requested the Agent and the Banks to make
loans to the Borrowers and issue letters of credit for their account in an
aggregate amount not to exceed $40,000,000 at any time outstanding; and
WHEREAS, pursuant to the terms and conditions hereof the Agent and the
Banks have agreed to such request upon the terms and conditions hereinafter
set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree
as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used in this Agreement and
not otherwise defined herein shall have the meanings given to them in
EXHIBIT A to this Agreement.
1.1. ACCOUNTING PRINCIPLES. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with
those applied in the preparation of the audited financial statements referred
to in Section 9.1 hereof. All financial information delivered to the Agent
pursuant to Section 9.1 hereof shall be prepared in accordance with GAAP
applied on a basis consistent with those reflected by the initial financial
statements delivered to the Agent pursuant to Section 7.2, except (i) where
such principles are inconsistent with the requirements of this Agreement,
(ii) for those changes with which the independent certified public
accountants referred to in Section 9.1(a) hereof concur in rendering
unqualified opinions as to financial statements and as to which changes the
Majority Banks have given prior written consent, which consent shall not be
unreasonably withheld, and (iii), as to the financial statements delivered
pursuant to Section 9.1(b), subject to changes resulting from year-end
adjustments and subject to any non-conformity with GAAP as a result of the
absence of any footnotes required by GAAP.
2. THE LOANS AND LETTERS OF CREDIT.
2.1. LOANS.
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(a) Upon the terms and conditions and relying upon the representations
and warranties herein set forth, each Bank severally agrees to make Loans to
any Borrower on any one (1) or more Business Days prior to the Maturity Date,
up to an aggregate principal amount of Loans not exceeding at any one time
outstanding the amount set opposite such Bank's name on the signature pages
hereof (such amount, as it may be reduced from time to time pursuant to
Section 4.7 and Section 13.11(c) being such Bank's "Commitment"); PROVIDED,
HOWEVER, that after giving effect to any Loan, in no event shall the
outstanding amount of all Loans made hereunder to the Borrowers plus the
Letter of Credit Outstandings at such time exceed the Commitments of all the
Banks. Within such limits and during such period and subject to the terms
and conditions of this Agreement, the Borrowers may borrow, repay and
reborrow hereunder.
(b) The Borrowers shall execute and deliver to the Agent for each Bank
to evidence the Loans made by each Bank, a promissory note (each, as the same
may be amended, modified or extended from time to time, a "Note"), which
shall be (i) initially dated the Closing Date; (ii) in the principal amount
of such Bank's Commitment; and (iii) in substantially the form attached
hereto as EXHIBIT B, with the blanks appropriately filled. The outstanding
principal balance of each Note shall be payable on the Maturity Date. Each
Note shall bear interest on the unpaid principal amount thereof from time to
time outstanding at the rate per annum determined as specified in Sections
3.1(a), 3.2(b) and 3.2(c), payable on each Interest Payment Date and at
maturity, commencing with the first Interest Payment Date following the date
of such Note.
(c) In the case of a proposed Loan comprised of LIBOR Rate Loans, the
Agent shall promptly notify each Bank of the applicable interest rate under
Section 3.1. Each Bank shall, before 11:00 a.m. (Houston time) on the
Borrowing Date, make available for the account of its Applicable Lending
Office to the Agent at the Agent's Domestic Lending Office, in same day
funds, its Pro Rata Percentage of such borrowing. After the Agent's receipt
of such funds and upon fulfillment of the applicable conditions set forth in
Section 8, on the Borrowing Date the Agent shall make the borrowing available
to the Borrowers at its Domestic Lending Office in immediately available
funds. Each Bank may, at its option, post on a schedule attached to its Note
(x) the date and principal amount of each Loan made under such Note; (y) the
rate of interest each such Loan will bear; and (z) each payment of principal
thereon; PROVIDED, HOWEVER, that any failure of such Bank to so ▇▇▇▇ such
Note shall not affect the Borrower's obligations thereunder; and PROVIDED
FURTHER that such Bank's records as to such matters shall be controlling,
absent manifest error, whether or not such Bank has so marked such Note. Any
deposit to a Borrower's demand deposit account by the Agent pursuant to a
request (whether written or oral) believed by the Agent to be an authorized
request by a Borrower for a Loan hereunder shall be deemed to be a Loan
hereunder for all purposes with the same effect as if such Borrower had in
fact requested the Agent to make such Loan.
2.2. BORROWING PROCEDURE.
(a) Each borrowing by a Borrower hereunder shall be (i) in the case of
any LIBOR Rate Loan, in an aggregate amount of not less than $500,000 or an
integral multiple of
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$500,000 in excess thereof; or (ii) in the case of any Base Rate Loan, in an
aggregate amount of not less than $500,000 or an integral multiple of
$500,000 in excess thereof. Each Loan shall be made upon prior written notice
from the Parent, on behalf of the Borrowers, to the Agent in the form of
EXHIBIT C hereto (the "Notice of Borrowing") delivered to the Agent not later
than 11:30 a.m. (Houston time) (i) on the third Business Day prior to the
Borrowing Date, if such borrowing consists of LIBOR Rate Loans; and (ii) on
the Business Day prior to the Borrowing Date, if such borrowing consists of
Base Rate Loans. Each Notice of Borrowing shall be irrevocable and shall
specify (i) the amount of the proposed borrowing and of each Loan comprising
a part thereof; (ii) the Borrowing Date; (iii) the Type of Loan requested;
(iv) with respect to any LIBOR Rate Loan, the Rate Period with respect to
each such Loan and the Expiration Date of each such Rate Period (PROVIDED,
that there shall not be more than five (5) Rate Periods in effect at any one
time under this Agreement); and (v) the demand deposit account of the
Borrowers at the Agent's Domestic Lending Office with which the proceeds of
the borrowing are to be deposited. Promptly upon its receipt of a Notice of
Borrowing, the Agent shall deliver by fax a copy thereof to each Bank. The
Parent may give the Agent telephonic notice by the required time of any
proposed borrowing under this Section 2.2(a); PROVIDED, that such telephonic
notice shall be promptly confirmed in writing by delivery to the Agent of a
Notice of Borrowing. Neither the Agent nor any Bank shall incur any
liability to the Borrowers in acting upon any telephonic notice referred to
above which the Agent believes in good faith to have been given by the Parent
or for otherwise acting in good faith under this Section 2.2(a).
(b) Unless the Agent shall have received notice from a Bank prior to
the date of any borrowing that such Bank will not make available to the Agent
such Bank's Pro Rata Percentage of such borrowing, the Agent may assume that
such Bank has made such portion available to the Agent on the date of such
borrowing in accordance with Section 2.1(c), and the Agent may, in reliance
upon such assumption, make available to the Borrowers on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made its Pro Rata Percentage available to the Agent, such Bank and the
Borrowers (without duplication) severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrowers
until the date such amount is repaid to the Agent, (i) in the case of the
Borrowers, at the interest rate applicable at the time to Loans comprising
such borrowing, and (ii) in the case of such Bank, at the Federal Funds
Effective Rate. If such Bank shall repay to the Agent such corresponding
amount, such amount so repaid shall constitute such Bank's Loan as part of
such borrowing for purposes of this Agreement.
(c) The failure of any Bank to make the Loan to be made by it as part
of any borrowing shall not relieve any other Bank of its obligation, if any,
hereunder to make its Loan on the date of such borrowing, but no Bank shall
be responsible for the failure of any other Bank to make the Loan to be made
by such other Bank on the date of any borrowing.
2.3. LETTERS OF CREDIT.
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(a) Subject to and upon the terms and conditions herein set forth,
including, without limitation, the applicable terms and conditions set forth
in Section 8 hereof, the Issuing Bank agrees that it will, at any time and
from time to time on or after the Closing Date and prior to the date that is
not later than thirty (30) calendar days prior to the scheduled Maturity
Date, following its receipt of a Letter of Credit Request, issue for the
account of any Borrower, one or more irrevocable standby letters of credit
(all such letters of credit collectively, the "Letters of Credit"); PROVIDED,
that the Issuing Bank shall be under no obligation to issue any Letter of
Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain the Issuing
Bank from issuing such Letter of Credit or any requirement of Law
applicable to the Issuing Bank or any request or directive (whether or
not having the force of law) from any governmental authority with
jurisdiction over the Issuing Bank shall prohibit, or request that the
Issuing Bank refrain from, the issuance of letters of credit generally;
or
(ii) the Stated Amount of such Letter of Credit shall be greater
than an amount which when added to the Letter of Credit Outstandings at
such time and the aggregate principal amount of all Loans then
outstanding (after giving effect to the principal amount of all Loans
repaid and all Unpaid Drawings reimbursed prior to or concurrently with
the issuance of such Letter of Credit) would exceed the Commitments of
all the Banks (after giving effect to any reductions to the Commitments
of all the Banks on such date); or
(iii) the Stated Amount of such Letter of Credit shall be greater
than an amount which when added to the Letter of Credit Outstandings at
such time (after giving effect to all Unpaid Drawings reimbursed prior
to or concurrently with the issuance of such Letter of Credit), would
exceed the Letter of Credit Limit; or
(iv) the expiry date, or, in the case of any Letter of Credit
containing an expiry date that is extendible at the option of the
Issuing Bank, the initial expiry date of such Letter of Credit, is a
date that is later than the date twelve (12) months from the issuance
date.
(b) The Issuing Bank shall neither renew nor permit the renewal of any
Letter of Credit if any of the conditions precedent to such renewal set forth
in Section 8 is not satisfied.
(c) In the event any Letter of Credit is issued with an expiry date
after the Maturity Date, on the Maturity Date the Borrowers shall jointly and
severally pay to the Agent an amount in immediately available funds equal to
100% of the then aggregate amount of Letter of Credit Outstandings, which
funds shall be held by the Agent in a collateral account to be maintained by
the Agent. The Borrowers hereby agree to execute and deliver to the Agent
and the Banks such security agreements, pledges or other documents as the
Agent or any of the Banks may, from time to time, reasonably require to
perfect the pledge, lien and security interest
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in and to any such funds provided for in this Section 2.3(c). Upon the
payment or expiry of all Letter of Credit Outstandings, all such Collateral
shall be released to the Borrowers in due form at Borrowers' cost.
2.4. LETTER OF CREDIT REQUESTS.
(a) Whenever a Borrower desires that a Letter of Credit be issued for
its account or that an existing expiry date shall be extended, the Parent, on
behalf of such Borrower, shall deliver to the Agent its prior written request
therefor not later than 11:30 a.m. (Houston time) (i) in the case of a Letter
of Credit to be issued, on at least the fifth (5th) Business Day prior to the
requested issuance date and (ii) in the case of the extension of the existing
expiry date of any Letter of Credit, on at least the fifth (5th) Business Day
prior to the date on which the Issuing Bank must notify the beneficiary
thereof that the Issuing Bank does not intend to extend such existing expiry
date. Each such request shall be executed by the Parent on behalf of such
Borrower and shall be in the form of EXHIBIT F attached hereto (each a
"Letter of Credit Request") and, in the case of the issuance of any Letter of
Credit, shall be accompanied by an Application therefor, completed to the
satisfaction of the Issuing Bank, and such other certificates, documents and
other papers and information as the Issuing Bank or any Bank (through the
Agent) may reasonably request. Each Letter of Credit shall be denominated in
Dollars, shall not be for a Stated Amount less than $50,000, shall expire no
later than the date specified in Section 2.3, shall not be in an amount
greater than is permitted under Section 2.3(a) and shall be in such form as
may be approved from time to time by the Issuing Bank and the applicable
Borrower. Promptly upon its receipt of a Letter of Credit Request, and, if
applicable, the related Application, the Agent shall so notify the other
Banks.
(b) The making of each Letter of Credit Request shall be deemed to be a
joint and several representation and warranty by the Borrowers that such
Letter of Credit may be issued in accordance with, and will not violate the
requirements of, this Agreement. Unless the Issuing Bank has received notice
from the Agent or any Bank before it issues the respective Letter of Credit
or extends the existing expiry date of a Letter of Credit that one or more of
the applicable conditions specified in Section 8 are not then satisfied, or
that the issuance of such Letter of Credit would violate this Agreement, then
the Issuing Bank shall issue the requested Letter of Credit for the account
of the applicable Borrower in accordance with this Agreement and the Issuing
Bank's usual and customary practices; PROVIDED, HOWEVER, that the Issuing
Bank shall not be required to issue any Letter of Credit earlier than five
(5) Business Days after its receipt of the Letter of Credit Request and the
related Application therefor and all other certificates, documents and other
papers and information relating thereto. Upon its issuance of any Letter of
Credit or the extension of the existing expiry date of any Letter of Credit,
as the case may be, the Issuing Bank shall promptly notify the Parent of such
issuance or extension, which notice shall be accompanied by a copy of the
Letter of Credit actually issued or a copy of any amendment extending the
existing expiry date of any Letter of Credit, as the case may be. Promptly
upon its receipt of such documents, the Agent shall notify each Bank of the
issuance of such Letter of Credit or the extension of such expiry date, as
the case may be, and upon the
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request of any Bank shall deliver copies of such documents to such Bank.
2.5. LETTERS OF CREDIT PARTICIPATIONS.
(a) Immediately upon the issuance by the Issuing Bank of each Letter of
Credit, the Issuing Bank shall be deemed to have sold and transferred to each
Bank, and each Bank shall be deemed irrevocably and unconditionally to have
purchased and received from the Issuing Bank, without recourse or warranty,
an undivided interest and participation, to the extent of such Bank's Pro
Rata Percentage, in each such Letter of Credit (including extensions of the
expiry date thereof), each substitute letter of credit, each drawing made
thereunder and the joint and several obligations of the Borrowers under this
Agreement and the other Loan Documents with respect thereto, and any security
therefor or guaranty pertaining thereto.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Bank shall have no obligation relative to the Agent or the Banks
other than to confirm that any documents required to be delivered under such
Letter of Credit appear to have been delivered and that they appear to comply
on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by the Issuing Bank under or in connection with
any Letter of Credit if taken or omitted in the absence of gross negligence
or willful misconduct shall not create for the Issuing Bank any resulting
liability to the Agent or any Bank. It is the intent of the parties hereto
that the Issuing Bank shall have no liability to the Agent or the Banks for
its ordinary sole or contributing negligence.
(c) In the event that the Issuing Bank makes any payment under any
Letter of Credit and the Borrowers shall not have reimbursed such amount in
full to the Issuing Bank pursuant to Section 2.6(a), the Agent shall promptly
notify each Bank of such failure, and each Bank shall promptly and
unconditionally pay to the Agent for the account of the Issuing Bank the
amount of such Bank's Pro Rata Percentage of such unreimbursed payment in
Dollars and in same day funds. If the Agent so notifies, prior to 11:30 a.m.
(Houston time) on any Business Day, any Bank required to fund a payment under
a Letter of Credit, such Bank shall make available to the Agent for the
account of the Issuing Bank such Bank's Pro Rata Percentage of the amount of
such payment on such Business Day in same day funds. If and to the extent
such Bank shall not have so made its Pro Rata Percentage of the amount of
such payment available to the Agent for the account of the Issuing Bank, such
Bank agrees to pay to the Agent for the account of the Issuing Bank,
forthwith on demand such amount, together with interest thereon, for each day
from such date until the date such amount is paid to the Agent for the
account of the Issuing Bank at the Federal Funds Rate. The failure of any
Bank to make available to the Agent for the account of any Issuing Bank its
Pro Rata Percentage of any payment under any Letter of Credit shall not
relieve any other Bank of its obligation hereunder to make available to the
Agent for the account of the Issuing Bank its Pro Rata Percentage of any
payment under any Letter of Credit on the date required, as specified above,
but no Bank shall be responsible for the failure of any other Bank to make
available to the Agent for the account of such Issuing Bank such other Bank's
Pro Rata Percentage of any such payment.
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(d) Whenever the Issuing Bank receives a payment of a reimbursement
obligation as to which the Agent has received for the account of the Issuing
Bank any payments from the Banks pursuant to clause (b) above, the Issuing
Bank shall pay to the Agent, and the Agent shall promptly pay to each Bank
which has paid its Pro Rata Percentage thereof, in Dollars and in same day
funds, an amount equal to such Bank's Pro Rata Percentage thereof.
(e) The obligations of the Banks to make payments to the Agent for the
account of the Issuing Bank with respect to Letters of Credit shall be
absolute and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right
which any Borrower or any other Person may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, the Issuing Bank, any Bank, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transaction between any Borrower or any other Party and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(v) the occurrence of any Default or Event of Default; or
(vi) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Bank (other than the gross
negligence or willful misconduct of the Issuing Bank).
(F) THE BANKS AGREE TO INDEMNIFY THE ISSUING BANK (TO THE EXTENT NOT
REIMBURSED BY THE BORROWERS), RATABLY ACCORDING TO THE RESPECTIVE PRO RATA
PERCENTAGES, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
INCURRED BY, OR ASSERTED AGAINST THE ISSUING BANK IN ANY WAY RELATING
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TO OR ARISING OUT OF THIS AGREEMENT OR ANY LETTER OF CREDIT OR ANY ACTION
TAKEN OR OMITTED BY THE ISSUING BANK UNDER THIS AGREEMENT OR ANY LETTER OF
CREDIT; PROVIDED, THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM THE ISSUING BANK'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
2.6. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS.
(a) Upon the receipt by the Issuing Bank of any Drawing from a
beneficiary under a Letter of Credit, the Issuing Bank promptly will provide
the Parent with telecopy notice thereof. The Borrowers hereby jointly and
severally agree to reimburse the Issuing Bank by making payment to the Agent
in immediately available funds at the Agent's Domestic Lending Office, for
any payment made by the Issuing Bank under any Letter of Credit issued by it
(each such amount so paid until reimbursed, an "Unpaid Drawing") immediately
after, and in any event on the date of, such payment, with interest on the
amount so paid by the Issuing Bank, to the extent not reimbursed prior to
2:00 p.m. (Houston time) on the date of such payment, from and including the
date paid but excluding the date reimbursement is made as provided above, at
a rate per annum equal to the lesser of (x) 3% above the Alternate Base Rate
or (y) the Highest Lawful Rate, such interest to be payable on demand.
Unless otherwise paid by the Borrowers, such Unpaid Drawing may (and, if the
Majority Banks so desire, shall automatically), subject to satisfaction of
the conditions precedent set forth in Sections 2.3 and 8, be paid with the
proceeds of Loans which shall bear interest at an annual rate equal to the
Alternate Base Rate, which rate the Parent may in its discretion continue or
convert pursuant to Section 3.1(a)(ii). After the Maturity Date, such Unpaid
Drawing shall, if not otherwise paid by the Borrowers, be repaid from the
cash collateral account established in connection therewith pursuant to
Section 2.3(c) hereof.
(b) The Borrowers' obligations under this Section 2.6 to reimburse the
Issuing Bank with respect to Unpaid Drawings (including, in each case,
interest thereon) shall be absolute and unconditional under any and all
circumstances (except as provided below with respect to the gross negligence
or willful misconduct of the Issuing Bank) and irrespective of any setoff,
counterclaim or defense to payment which any Borrower may have or have had
against any Bank (including the Issuing Bank in its capacity as the issuer of
a Letter of Credit or any Bank as a participant therein), including any
defense based upon the failure of any drawing under a Letter of Credit (each
a "Drawing") to conform to the terms of the Letter of Credit (other than a
defense based upon the gross negligence or willful misconduct of the Issuing
Bank in determining whether such Drawing conforms to the terms of the Letter
of Credit) or any non-application or misapplication by the beneficiary of the
proceeds of such Drawing, including any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Loan Documents;
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(ii) the existence of any claim, setoff, defense or other right
which any Borrower or any other Person may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, the Issuing Bank, any Bank, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transaction between any Borrower or any other Party and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in
any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(v) the occurrence of any Default or Event of Default; or
(vi) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Borrower (other than the
gross negligence or willful misconduct of the Issuing Bank).
(c) The Borrowers also jointly and severally agree with the Issuing
Bank, the Agent and the Banks that, in the absence of gross negligence or
willful misconduct of the Issuing Bank, the Issuing Bank shall not be
responsible for, and the Borrowers' reimbursement obligations under Section
2.6(a) shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged or any
dispute between or among any Borrower or any other Party and the beneficiary
of any Letter of Credit or any other party to which such Letter of Credit may
be transferred or any claims whatsoever of any Borrower or any other Party
against any beneficiary of such Letter of Credit or any such transferee.
(d) The Issuing Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except
for errors or omissions caused by the Issuing Bank's gross negligence or
willful misconduct. The Borrowers agree that any action taken or omitted by
the Issuing Bank under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in
the Uniform Customs and Practice for Documentary Credits (1994 Revision),
International Chamber of Commerce, Publication No. 500 (and any subsequent
revisions thereof approved by a Congress of the International Chamber of
Commerce and adhered to by such Issuing Bank) and, to the extent not
inconsistent therewith, the Uniform Commercial Code of the State of Texas,
shall not result in any liability of the Issuing Bank to
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any Borrower or any other Party. It is the intent of the parties hereto that
the Issuing Bank shall not have any liability under this Section 2.6 for the
ordinary negligence of the Issuing Bank.
2.7. CONFLICT BETWEEN APPLICATIONS AND AGREEMENT. To the extent that
any provision of any Application related to any Letter of Credit is
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall control.
2.8. INCREASED COSTS.
(a) Notwithstanding any other provision herein, but subject to Section
13.12, if any Law, rule, regulation or guideline adopted pursuant to or
arising out of the July 1988 report of the Base Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards" or the introduction or
effectiveness of any applicable law or regulation or any change in applicable
Law or regulation or in the interpretation or administration thereof, or
compliance by any Bank (or any lending office of such Bank) with any
applicable guideline or request from any central bank or governmental
authority (whether or not having the force of Law) either (i) shall impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against letters of credit issued, or participated in, by any
Bank, or (ii) shall impose on any Bank any other conditions affecting this
Agreement or any Letter of Credit; and the result of any of the foregoing is
to increase the cost to any Bank issuing, maintaining or participating in any
Letter of Credit, or reduce the amount of any sum received or receivable by
any Bank hereunder with respect to Letters of Credit, by an amount deemed by
such Bank to be material, then, from time to time, the Borrowers shall
jointly and severally pay to the Agent for the account of such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction by such Bank. Notwithstanding the foregoing, in no event
shall the compensation payable under this Section 2.8 (to the extent, if any,
constituting interest under applicable laws) together with all amounts
constituting interest under applicable laws and payable in connection with
this Agreement, the Notes and the other Loan Documents, exceed the Highest
Lawful Rate.
(b) Each Bank will notify the Parent through the Agent of any event
which will entitle such Bank to compensation pursuant to paragraph (a) above.
A certificate of a Bank setting forth in reasonable detail such amount or
amounts as shall be necessary to compensate such Bank as specified in
paragraph (a) above may be delivered to the Parent (through the Agent) and
shall be conclusive absent manifest error. The Borrowers shall jointly and
severally pay to the Agent for the account of such Bank the amount shown as
due on any such certificate within fifteen (15) days after its receipt of the
same.
(c) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction
in return on capital with respect to any Letter of Credit shall not
constitute a waiver of such Bank's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction
in return on capital with respect to such Letter of Credit or any other
Letter of Credit.
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3. INTEREST RATE PROVISIONS.
3.1. INTEREST RATE DETERMINATION.
(a) Except as specified in Sections 3.2(b) and 3.2(c), the Loans
shall bear interest on the unpaid principal amount thereof from time to time
outstanding, until maturity, at a rate per annum (calculated based on a year
of 360 days in the case of the LIBOR Rate, and a year of 365 or 366 days, as
the case may be, in the case of the Alternate Base Rate, in each case for the
actual days elapsed) as follows:
(i) The principal balance of the Loans from time to time
outstanding shall bear interest at an annual rate equal to the lesser of
(A) with respect to any LIBOR Rate Loan, the Adjusted LIBOR Rate, and
with respect to any Base Rate Loan, the Alternate Base Rate, as the case
may be, with respect thereto or (B) the Highest Lawful Rate, from the
first day to, but not including, (y) with respect to any Base Rate Loan,
the Maturity Date and (z) with respect to any LIBOR Rate Loan, the
Expiration Date of the Rate Period then in effect with respect thereto.
(ii) So long as no Default or Event of Default has occurred
and is continuing, the Parent, on behalf of the Borrowers, may (y)
change the interest rates to apply to any Loan or (z) elect to continue
all or any part of the outstanding principal balance of any LIBOR Rate
Loan as a Loan of such Type by giving the Agent an irrevocable written
notice in the form of EXHIBIT D hereto (the "Notice of Rate
Change/Continuation") specifying (A) the date on which such Loan was
made; (B) the interest rate then applicable to such Loan; (C) with
respect to any LIBOR Rate Loan, the Rate Period then applicable to each
such Loan; (D) the principal amount of such Loan to remain outstanding;
(E) the Type of Loan; and (F) the requested effective date of the rate
change or continuation (the "Conversion/Continuation Date"). In the
case of the conversion of all or any part of any Base Rate Loan into a
LIBOR Rate Loan or the continuation of any LIBOR Rate Loan as a Loan of
such Type, such notice must be received by the Agent at least three (3)
full Business Days prior to the Conversion/Continuation Date, and
otherwise at least one (1) full Business Day prior thereto. Each rate
so specified shall become effective on the Conversion/Continuation Date
and remain in effect until the expiration of the applicable Rate Period
specified in such Notice of Rate Change/Continuation.
(iii) If the Parent shall fail to choose, as provided in
clause (ii) above, the rate of interest to become effective with respect
to any LIBOR Rate Loan upon the Expiration Date of the Rate Period with
respect thereto, such Loan shall bear interest at the Alternate Base
Rate on and after such Expiration Date until the Parent shall have so
chosen a different rate.
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(iv) Nothing contained herein shall authorize the Parent (A)
to convert any Loan into or continue any Loan as a LIBOR Rate Loan
unless the Expiration Date of the Rate Period for such Loan occurs on or
before the Maturity Date or (B) to continue or change the interest rates
applicable to any LIBOR Rate Loan prior to the Expiration Date of the
Rate Period with respect thereto.
(v) Notwithstanding anything set forth herein to the contrary
(other than Section 13.12), if a Default has occurred and is continuing
each outstanding Loan shall bear interest at a rate per annum which
shall be equal to the lesser of (x) 3% above the interest rate otherwise
applicable thereto or (y) the Highest Lawful Rate, which interest shall
be due and payable on demand.
(b) The Alternate Base Rate for each Base Rate Loan shall be
determined by the Agent on the first day and on each day such Base Rate Loan
shall be outstanding, or if such day is not a Business Day, on the next
succeeding Business Day. The LIBOR Rate for the Rate Period for each LIBOR
Rate Loan shall be determined by the Agent two (2) Business Days before the
first day of such Rate Period.
(c) Each determination of an applicable interest rate by the Agent
shall be conclusive and binding upon the Borrower and the Banks in the
absence of manifest error.
3.2. ADDITIONAL INTEREST RATE PROVISIONS.
(a) The Notes may be held by each Bank for the account of its
respective Domestic Lending Office or its respective LIBOR Lending Office,
and may be transferred from one to the other from time to time as each Bank
may determine.
(b) If the Parent shall have chosen the Adjusted LIBOR Rate in a
Notice of Borrowing or a Notice of Rate Change/Continuation and not later
than 11:00 a.m. (Houston time) one (1) Business Day prior to the Borrowing
Date or Conversion/Continuation Date, as the case may be, any Bank notifies
the Agent that (i) deposits in Dollars in the principal amount of such LIBOR
Rate Loan are not being offered to the LIBOR Lending Office of such Bank in
the interbank market selected by such Bank for the Rate Period applicable
thereto or (ii) adequate and reasonable means do not exist for ascertaining
the chosen LIBOR Rate in respect of such LIBOR Rate Loan or (iii) the
Adjusted LIBOR Rate for any Rate Period for such LIBOR Rate Loan will not
adequately reflect the cost to the Bank of making such LIBOR Rate Loan for
such Rate Period, then the Agent shall forthwith give notice thereof to the
other Banks and to the Parent and such LIBOR Rate shall not become effective
as to such LIBOR Rate Loan on such Borrowing Date or the
Conversion/Continuation Date, as the case may be, or at any time thereafter
until such time thereafter as the Parent receives notice from the Agent that
the circumstances giving rise to such determination no longer apply and such
Loan shall bear interest at the lesser of (i) the Alternate Base Rate or (ii)
the Highest Lawful Rate.
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(c) Anything in this Agreement to the contrary notwithstanding, if
at any time any Bank determines (which determination shall be conclusive
absent manifest error) that the introduction of or any change in any
applicable Law, rule or regulation or any change in the interpretation or
administration thereof by any governmental or other regulatory authority
charged with the interpretation or administration thereof shall make it
unlawful for such Bank (or the LIBOR Lending Office of such Bank) to maintain
or fund any LIBOR Rate Loan or to convert any Loan into, or to continue any
LIBOR Rate Loan as, a LIBOR Rate Loan, hereunder, such Bank shall give notice
thereof to the Agent, which shall promptly give notice thereof to the Parent.
With respect to any LIBOR Rate Loan which is outstanding when the Agent so
notifies the Parent, upon such date as shall be specified in such notice, the
Rate Period shall end and the lesser of (i) the Alternate Base Rate or (ii)
the Highest Lawful Rate shall commence to apply in lieu of the Adjusted LIBOR
Rate in respect of such LIBOR Rate Loan. At least five (5) Business Days
after such specified date, the Borrowers shall jointly and severally pay to
the Agent for the account of such Bank (y) accrued and unpaid interest on
such LIBOR Rate Loan at the Adjusted LIBOR Rate in effect at the time of such
notice to but not including such specified date PLUS (z) such amount or
amounts (to the extent that such amount or amounts would not be usurious
under applicable Law) as may be necessary to compensate such Bank for any
direct or indirect costs and losses incurred by it, but otherwise without
penalty. If notice has been given by such Bank pursuant to the foregoing
provisions of this Section 3.2(c), then, unless and until such Bank notifies
the Agent that the circumstances giving rise to such notice no longer apply,
such Adjusted LIBOR Rate shall not again apply to such Loan or any other Loan
by such Bank and the obligation of such Bank to convert any Loan into, or to
continue any LIBOR Rate Loan as, a LIBOR Rate Loan shall be suspended.
(D) SUBJECT TO SECTION 13.12 HEREOF, THE BORROWERS WILL JOINTLY
AND SEVERALLY INDEMNIFY EACH BANK AGAINST, AND REIMBURSE EACH BANK ON DEMAND
FOR, ANY LOSS, COST OR EXPENSE INCURRED OR SUSTAINED BY SUCH BANK (INCLUDING,
WITHOUT LIMITATION, ANY LOSS OR EXPENSE INCURRED BY REASON OF THE LIQUIDATION
OR REEMPLOYMENT OF DEPOSITS OR OTHER FUNDS ACQUIRED BY SUCH BANK TO FUND OR
MAINTAIN ANY LIBOR RATE LOAN) AS A RESULT OF (I) ANY ADDITIONAL COSTS
INCURRED BY SUCH BANK; (II) ANY PAYMENT, PREPAYMENT OR REPAYMENT (WHETHER
AUTHORIZED OR REQUIRED HEREUNDER OR OTHERWISE) OF ALL OR A PORTION OF ANY
LIBOR RATE LOAN ON A DAY OTHER THAN THE LAST DAY OF A RATE PERIOD FOR SUCH
LOAN; (III) ANY PAYMENT OR PREPAYMENT (WHETHER REQUIRED HEREUNDER OR
OTHERWISE) OF ANY LIBOR RATE LOAN MADE AFTER THE DELIVERY OF A NOTICE OF
BORROWING OR A NOTICE OF RATE CHANGE/CONTINUATION, AS THE CASE MAY BE, BUT
BEFORE THE APPLICABLE BORROWING DATE OR A CONVERSION/CONTINUATION DATE, AS
THE CASE MAY BE, IF SUCH PAYMENT OR PREPAYMENT PREVENTS THE PROPOSED
BORROWING FROM BECOMING FULLY EFFECTIVE; OR (IV) AFTER RECEIPT BY THE AGENT
OF A NOTICE OF BORROWING OR A NOTICE OF RATE CHANGE/CONTINUATION, AS THE CASE
MAY BE, THE FAILURE OF ANY LIBOR RATE LOAN TO BE MADE OR EFFECTED BY SUCH
BANK DUE TO ANY CONDITION PRECEDENT TO A BORROWING NOT BEING SATISFIED BY ANY
BORROWER OR DUE TO ANY OTHER ACTION OR INACTION OF ANY BORROWER.
(e) Without duplication of subsection (c) and (d) above, if, after
the date of
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this Agreement, the adoption of any applicable Law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank with any request or
directive regarding capital adequacy (whether or not having the force of Law)
of any such authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on such Bank's capital as a
consequence of its obligations hereunder to a level below that which such
Bank could have achieved but for such adoption, change or compliance (taking
into consideration such Bank's policies with respect to capital adequacy)
then, subject to Section 13.12 hereof, the Borrowers shall jointly and
severally pay to the Agent for the account of such Bank such additional
amount or amounts as will compensate the Bank for such reduction.
(f) The agreements contained in Sections 3.2(c), (d) and (e) shall
survive the termination of this Agreement and the payment in full of the
Notes and all other amounts payable hereunder.
4. PREPAYMENTS AND OTHER PAYMENTS.
4.1. REQUIRED PREPAYMENTS. The Borrowers jointly and severally
agree that if at any time any Borrower, or the Agent (together with notice to
Parent), determines that the aggregate principal amount of Loans outstanding
plus the Letter of Credit Outstandings exceeds the Commitment, the Borrowers
will make a prepayment of principal in an amount at least equal to such
excess, together with interest accrued thereon to the date of such prepayment
and all amounts due, if any, under Section 3.2(d). Failure to make such
payment when due shall constitute an Event of Default under Section 11.1.
4.2. OPTIONAL PREPAYMENTS. The Borrowers shall have the right at
any time and from time to time to prepay the Notes, in whole or in part;
PROVIDED, that each partial prepayment shall be in an aggregate principal
amount of at least $500,000, together with interest accrued thereon to the
date of such prepayment and all amounts due, if any, under Section 3.2(d).
4.3. NOTICE OF PAYMENTS. The Parent shall give the Agent at least
three (3) Business Days' prior written notice of each prepayment proposed to
be made by the Borrowers pursuant to Section 4.2, specifying the principal
amount of the Loans to be prepaid, the prepayment date and the account of the
Borrowers to be charged if such prepayment is to be so effected. Notice of
such prepayment having been given, the principal amount of the Loans
specified in such notice, together with interest thereon to the date of
prepayment, shall become due and payable on such prepayment date. If the
Borrowers pay or prepay any LIBOR Rate Loan prior to the end of the Rate
Period applicable thereto, such payment shall be subject to Section 3.2(d).
4.4. PLACE OF PAYMENT OR PREPAYMENT. All payments and prepayments
made in accordance with the provisions of this Agreement or of the Notes in
respect of commitment
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fees or of principal or interest on the Notes shall be made to the Agent for
the account of the relevant Bank at its Domestic Lending Office no later than
11:30 a.m. (Houston time) in immediately available funds. Unless the Agent
shall have received notice from the Parent prior to the date on which any
payment is due to the Banks hereunder that the Borrowers will not make any
payment due hereunder in full, the Agent may assume that the Borrowers have
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such
due date an amount equal to the amount then due to such Bank. If and to the
extent the Borrowers shall not have so made such payment in full to the
Agent, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from
the date such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at the Federal Funds Effective Rate. If and
to the extent that the Agent receives any payment or prepayment from the
Borrowers and fails to distribute such payment or prepayment to the Banks
ratably on the basis of their respective Pro Rata Percentage on the day the
Agent receives such payment or prepayment, and such distribution shall not be
so made by the Agent in full on the required day, the Agent shall pay to each
Bank such Bank's Pro Rata Percentage thereof together with interest thereon
at the Federal Funds Effective Rate for each day from the date such amount is
paid to the Agent by the Borrowers until the date the Agent pays such amount
to such Bank. Notwithstanding the Agent's failure to so distribute any such
payment, as between the Borrowers and the Banks, such payment shall be deemed
received and collected.
4.5. NO PREPAYMENT PREMIUM OR PENALTY. Each prepayment pursuant to
Section 4.1 or 4.2 shall be without premium or penalty.
4.6. TAXES.
(a) Subject to Section 13.12, any and all payments by the
Borrowers hereunder or under the Notes shall be made free and clear of and
without deduction for any and all present or future taxes, deductions,
charges or withholdings, and all liabilities with respect thereto, including,
without limitation, such taxes, deductions, charges, withholdings or
liabilities whatsoever (x) imposed, assessed, levied or collected on or in
respect of a Loan solely as a result of the interest rate being determined by
reference to the LIBOR Rate, or the provisions of this Agreement relating to
the LIBOR Rate, or the recording, registration, notarization or other
formalization of any thereof or any payments of principal, interest or other
amounts made on or in respect of a Loan when the interest rate is determined
by reference to the LIBOR Rate, or (y) imposed, assessed, levied or collected
by any jurisdiction (or any political subdivision thereof) of which any
Borrower is a citizen or resident is organized, EXCLUDING, in the case of
each Bank and Agent, taxes imposed on its net income (including penalties and
interest payable in respect thereof), and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Bank or Agent (as the case may
be) is organized or any political subdivision thereof and, in the case of
each Bank, taxes imposed on its net income (including penalties and interest
payable in respect thereof), and franchise taxes imposed on it, by the
jurisdiction of such Bank's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes,
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deductions, charges, withholdings and liabilities being hereinafter referred
to as "Taxes"). In the case of a Bank that is a domestic corporation, within
the meaning of Section 7701 of the Code, the taxes that are imposed by the
United States of America and that are identified in the preceding sentence
are the taxes that are imposed by Section 11, Section 55 and Section 59A of
the Code, or by any comparable provision of future law. Subject to Section
13.12 hereof, if the Borrowers shall be required by Law to deduct any Taxes
from or in respect of any sum payable hereunder or under any Note to any Bank
or Agent (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.6) such Bank or Agent (as the
case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrowers shall make such deductions,
and (iii) the Borrowers shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable Law. If
requested by any Bank, the Parent shall confirm that all applicable Taxes, if
any, imposed on it by virtue of the transactions under this Agreement have
been properly and legally paid by it to the appropriate taxing authorities by
sending either (A) official tax receipts or notarized copies of such receipts
to such Bank within thirty (30) days after payment of any applicable tax or
(B) a certificate executed by an Authorized Officer of the Parent confirming
that such Taxes have been paid, together with evidence of such payment.
(b) In addition, subject to Section 13.12 hereof, the Borrowers
jointly and severally agree to pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter referred to as "Other Taxes").
(C) SUBJECT TO SECTION 13.12 HEREOF, THE BORROWERS WILL JOINTLY
AND SEVERALLY INDEMNIFY EACH BANK AND AGENT FOR THE FULL AMOUNT OF TAXES OR
OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED
BY ANY JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION 4.6) PAID BY SUCH
BANK OR AGENT (ON THEIR BEHALF OR ON BEHALF OF ANY BANK) (AS THE CASE MAY BE)
AND ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND EXPENSES) ARISING
THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES
WERE CORRECTLY OR LEGALLY ASSERTED. THIS INDEMNIFICATION SHALL BE MADE
WITHIN THIRTY (30) DAYS FROM THE DATE SUCH BANK OR AGENT (AS THE CASE MAY BE)
MAKES WRITTEN DEMAND THEREFOR.
(d) Each Bank registered in the Register that is not incorporated
under the laws of the United States of America or a state thereof agrees that
it will deliver to the Parent and the Agent two (2) duly completed copies of
United States Internal Revenue Service Form 1001 or 4224 or successor
applicable form, as the case may be. Each such Bank also agrees to deliver
to the Parent and the Agent two (2) further copies of the said Form 1001 or
4224, or successor applicable forms or other manner of certification, as the
case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Parent, and such extensions or
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renewals thereof as may reasonably be requested by the Parent and the Agent,
unless in any such case an event (including, without limitation, any change
in treaty, Law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required that renders all such forms
inapplicable or that would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank so advises the
Parent and the Agent. Each such Bank hereby certifies that it is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes. In the event that any such Bank fails to
deliver any forms required under this Section 4.6(d), the Borrowers'
obligation to pay additional amounts shall be reduced to the amount that it
would have been obligated to pay had such forms been provided.
(e) Without prejudice to the survival of any other agreement of
the Borrowers hereunder, the agreement and obligations of the Borrowers
contained in this Section 4.6 shall survive the payment in full of principal
and interest hereunder and under the Notes.
4.7. REDUCTION OR TERMINATION OF THE COMMITMENTS. The Parent may
at any time or from time to time reduce or terminate the Commitment by giving
not less than three (3) full Business Days' prior written notice to such
effect to the Agent; PROVIDED, that any partial reduction shall be in an
amount of not less than $5,000,000 or an integral multiple of $5,000,000 in
excess thereof and PROVIDED FURTHER, HOWEVER, that no partial reduction shall
reduce the Commitment to an amount greater than zero and less than
$10,000,000. Promptly after the Agent's receipt of such notice of reduction,
the Agent shall notify each Bank of the proposed reduction and such reduction
shall be effective on the date specified in Parent's notice with respect to
such reduction and shall reduce the Commitment of each Bank proportionately
in accordance with its Pro Rata Percentage. The Commitment of each Bank
shall automatically terminate on the earlier of the Maturity Date or in the
event of acceleration of the maturity date of the Notes. Each reduction of
the Commitments hereunder shall be irrevocable.
4.8. PAYMENTS ON BUSINESS DAY. Whenever any payment or prepayment
hereunder or under any Note shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation
of payment of interest; PROVIDED, HOWEVER, if such extension would cause
payment of interest on or principal of LIBOR Rate Loans to be made in the
next following calendar month, such payment shall be made on the next
preceding Business Day.
4.9 JOINT AND SEVERAL OBLIGATIONS. The Obligations are joint and
several obligations of the Borrowers.
5. COMMITMENT FEE AND OTHER FEES.
5.1. COMMITMENT FEE. The Borrowers jointly and severally agree to
pay to the Agent for the account of each Bank a commitment fee computed on a
daily basis of a year of 360 days from the Closing Date to, but not
including, the Maturity Date, at the rate of the
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Commitment Fee Margin on the daily average amount of such Bank's Unused
Commitment, such commitment fee to be payable quarterly in arrears on (a) the
thirty-first (31st) day following the last day of each quarter, commencing on
October 31, 1997 and (b) on the Maturity Date.
5.2. OTHER FEES. The Borrowers jointly and severally agree to pay
when due the advisory fee, underwriting fee, administration fee and the
arrangement fee set forth in the Fee Letter.
5.3. LETTER OF CREDIT FEES. The Borrowers jointly and severally
agree to pay the Agent for distribution to the Banks (based upon their
respective Pro Rata Percentage) a fee in respect of each Letter of Credit
issued for the account of any Borrower (the "Letter of Credit Fee"), equal to
the greater of (i) amount to be computed at the rate of the Letter of Credit
Margin in effect on the date such Letter of Credit is issued on the initial
Stated Amount of such Letter of Credit and (ii) $500.00. Letter of Credit
Fees due to the Agent and the Issuing Banks pursuant to this Section 5.3
shall be due and payable in arrears on the last day of each fiscal year and
shall be computed on the basis of a year of 360 days.
5.4. FEES NOT INTEREST; NONPAYMENT. The fees described in this
Agreement represent compensation for services rendered and to be rendered
separate and apart from the lending of money or the provision of credit and
do not constitute compensation for the use, detention, or forbearance of
money, and, subject to Section 13.12, the obligation of the Borrowers to pay
each fee described herein shall be in addition to, and not in lieu of, the
obligation of the Borrowers to pay interest, other fees described in this
Agreement, and expenses otherwise described in this Agreement. Fees shall be
payable when due in Dollars and in immediately available funds. Subject to
Section 13.12 hereof, all fees, including, without limitation, the commitment
fee referred to in Section 5.1, shall be non-refundable, and shall, to the
fullest extent permitted by Law, bear interest, if not paid when due, at a
rate per annum equal to the lesser of (a) 3% above the Alternate Base Rate or
(b) the Highest Lawful Rate.
6. APPLICATION OF PROCEEDS. The Borrowers agree that the
proceeds of the Loans shall be used for general corporate needs, including
acquisitions of auto dealerships.
7. REPRESENTATIONS AND WARRANTIES. The Borrowers jointly and
severally represent and warrant that:
7.1. ORGANIZATION AND QUALIFICATION. Each Borrower (a) is duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of organization; (b) has the power to own its properties and to
carry on its business as now conducted; and (c) is duly qualified to do
business and is in good standing in every jurisdiction where such
qualification is necessary and where failure to be so qualified would have a
Material Adverse Effect. SCHEDULE 7.1 accurately sets forth the respective
jurisdictions of each Borrower's organization and the jurisdictions in which
it is qualified as a foreign corporation or foreign partnership to do
business.
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7.2. FINANCIAL STATEMENTS. The Parent has furnished the Banks with
the Annual Report of the Parent on Form 10-K for the fiscal year ended
December 31, 1996 and the Quarterly Report of the Parent on Form 10-Q for the
fiscal quarter ended March 31, 1997. The financial statements set forth in
the reports described above have been prepared in conformity with GAAP. The
statements described above fully and fairly reflect the consolidated
financial condition of the Parent and the results of its operations as at the
dates and for the periods indicated. As of the Closing Date, since March 31,
1997, there has been no event which could reasonably be expected to have a
Material Adverse Effect. As of the Closing Date, there exists no material
contingent liabilities or obligations of the Borrowers which are not fully
disclosed in such financial statements.
7.3. LITIGATION. There is no action or proceeding pending (or, to
the best knowledge of any Borrower, threatened) against any Borrower before
any court, administrative agency or arbitrator which is reasonably expected
to have a Material Adverse Effect. As of the Closing Date, there is no
outstanding judgment, order or decree affecting any Borrower before or by any
Governmental Authority. There is no suit, action, claim, investigation
inquiry, proceeding or demand pending (or, to any Borrower's best knowledge,
threatened) which affects (i) any material Property of any Borrower
(including, without limitation, any which challenges or otherwise pertains to
its title to any material Property) which could reasonably be expected to
have a Material Adverse Effect or (ii) the validity or enforceability of any
Loan Documents.
7.4. DEFAULT. No Borrower is in default under or in violation of
(i) the provisions of any instrument evidencing any Debt or of any agreement
relating thereto; or (ii) any judgment, order, writ, injunction or decree of
any court or any order, regulation or demand of any Governmental Authority,
which default or violation could reasonably be expected to have a Material
Adverse Effect. There is in effect no waiver or waivers with respect to any
loan agreement, indenture, mortgage, security agreement, lease or other
agreement or obligation to which any Borrower is a party which is limited as
to duration or is subject to the fulfillment of any condition.
7.5. TITLE TO PROPERTIES. Each Borrower has good, sufficient and
legal title to, or valid leasehold interest in, its Properties, subject to no
Liens except those permitted in Section 10.2.
7.6. PAYMENT OF TAXES. Each Borrower has filed all material tax
returns, statements and reports required to be filed and has paid or made
adequate provision in accordance with GAAP for the payment of all taxes and
governmental charges shown thereby to be owing. No Borrower is aware of any
pending investigation by any taxing authority or of any claims by any
Governmental Authority for any unpaid taxes in excess of those already paid
which is not being contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP have not been created.
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7.7. CONFLICTING OR ADVERSE AGREEMENTS OR RESTRICTIONS. No
Borrower is a party to any contract or agreement or subject to any
restriction which could reasonably be expected to have a Material Adverse
Effect. Neither the execution and delivery of the Loan Documents nor the
consummation of the transactions contemplated thereby nor fulfillment of and
compliance with the respective terms, conditions and provisions thereof will
conflict with or result in a breach of any of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of,
or result in the creation or imposition of any Lien on any of the Property of
any Borrower pursuant to, (a) the charter or bylaws of any Borrower; (b) any
Law or any regulation of any Governmental Authority; (c) any order, writ,
injunction or decree of any court; or (d) the terms, conditions or provisions
of any contract or agreement to which any Borrower is a party or by which it
is bound or to which it is subject other than such conflicts or breaches
which could not reasonably be expected to have a Material Adverse Effect.
7.8. AUTHORIZATION, VALIDITY, ETC. Each Borrower has the power and
authority to make, execute, deliver and carry out the Loan Documents and the
transactions contemplated therein and to perform its obligations thereunder
and all such action has been duly authorized by all necessary proceedings on
its part. The Loan Documents have been duly and validly executed and
delivered by each Borrower and constitute valid and legally binding
agreements of the Borrowers enforceable in accordance with their respective
terms, except as limited by Debtor Laws.
7.9. INVESTMENT COMPANY ACT NOT APPLICABLE. No Borrower is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
7.10. PUBLIC UTILITY HOLDING COMPANY ACT NOT APPLICABLE. No
Borrower is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company", or an affiliate of a
"subsidiary company" of a "holding company", or a "public utility", as such
terms are defined in the Public Utility Holding Company Act of 1935, as
amended.
7.11. REGULATIONS G, T, U AND X. No Borrower is engaged in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock, and no proceeds of any Loan will be used (a) to purchase or carry any
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock; (b) to reduce or retire any Debt which was
originally incurred to purchase or carry any such Margin Stock; (c) for any
other purpose which might constitute this transaction a "purpose credit"
within the meaning of Regulation G, T, U or X; or (d) to acquire any security
of any Person who is subject to Sections 13 and 14 of the Securities Exchange
Act. No Borrower nor any Person acting on behalf of any Borrower, has taken
or will take any action which might cause any Loan Document to violate
Regulation G, T, U or X or any other regulation of the Board of Governors of
the Federal Reserve System.
7.12. ERISA. With respect to any employee benefit plan
maintained in whole
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or in part for the benefit of employees of any Borrower ("Plan") that is
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and regulations issued pursuant to ERISA, such Borrower is in
compliance in all material respects with the applicable provisions of ERISA;
no Plan or related trust maintained by any Borrower has incurred any
"accumulated funding deficiency" as defined in Section 302 of ERISA or
Section 412 of the Code; no Reportable Event as defined in Section 4043(b) of
ERISA that requires notification of the Pension Benefit Guaranty Corporation
("PBGC") has occurred with respect to any Plan; and no provision of this
Agreement will result in a reportable event or violation of ERISA.
7.13. ACCURACY OF INFORMATION. All information heretofore or
contemporaneously furnished by or on behalf of any Borrower in writing to the
Agent or any Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all other such information hereafter
furnished by or on behalf of any Borrower in writing to the Agent or any Bank
will be, (a) true and accurate in all material respects on the date as of
which such information is dated or certified and (b) taken as a whole with
all such written information provided to the Agent or any Bank, not
incomplete by omitting to state any material fact necessary to make such
information not misleading in light of the circumstances under which such
information was provided. There is no fact known to any Borrower which is
reasonably likely to have a Material Adverse Effect, which has not been
disclosed herein or in such other written documents, information or
certificates furnished to the Agent and the Banks for use in connection with
the transactions contemplated hereby.
7.14. APPROVALS, FRANCHISES, LICENSES, ETC. Each Borrower owns
or has obtained, and is operating in compliance in all material respects
with, all the consents, authorizations, filings, registrations, approvals,
licenses, permits, certificates of authority, leases, patents, trademarks,
service marks, trade names, copyrights, franchises and licenses, Governmental
Requirements, Governmental Approvals, and rights with respect thereto,
required or necessary (i) in connection with the conduct of its business as
presently conducted or as proposed to be conducted and (ii) for the valid
execution, delivery or performance by it of any Loan Document to which it is
a party, and for the validity or enforceability thereof. All applicable
waiting periods, if any, relating to any such required Governmental Approvals
have expired without any adverse action.
7.15. LINE OF BUSINESS. The Borrowers' sole line of business
is new and used automotive retailing and parts and service related thereto
and related financing activities.
7.16. SOLVENCY. Upon giving effect to the issuance of the
Notes and the execution of the Loan Documents by the Borrowers, the following
are true and correct:
(a) The fair saleable value of the assets of all Borrowers
exceeds the amount that will be required to be paid on, or in respect
of, the existing debts and other liabilities (including, without
limitation, pending or overtly threatened litigation in amounts in
excess of effective insurance coverage and all other contingent
liabilities) of Borrowers as
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they mature.
(b) The assets of each Borrower do not constitute
unreasonably small capital for it to carry out its business as now
conducted and as proposed to be conducted including its capital needs,
taking into account the particular capital requirements of the business
conducted by it, and projected capital requirements and capital
availability thereof.
(c) Each Borrower does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing
and amounts of cash to be received by such Borrower and of amounts to be
payable on or in respect of debt of such Borrower).
7.17. MATERIAL CONTRACTS. Attached hereto as SCHEDULE 7.17 is a
complete list, as of the date hereof, of all Material Contracts of the
Borrowers (including, without limitation, the existing Franchise Agreements
and existing Floor Plan Financings), other than the Loan Documents. All of
the Material Contracts are in full force and effect and constitute legal,
valid and binding agreements of the Borrower thereto. No event has occurred
and no condition exists which constitutes a material default under any
Material Contract, whether or not waived, or would, with the passage of time,
the giving of notice or both, constitute a material default thereunder, or
which could permit the revocation or termination of any Material Contract. No
Borrower has assigned or granted any Person any interest in any Material
Contract or any right arising from any Material Contract. None of the
Material Contracts prohibit, or are violated by, the transactions
contemplated under the Loan Documents. The Parent has heretofore delivered
to the Agent a complete and current copy of all such Material Contracts
requested by the Agent (as identified on SCHEDULE 7.17), including any
modifications or supplements thereto, as in effect on the date hereof.
7.18. INDEBTEDNESS. Attached hereto as SCHEDULE 7.18 is a
complete list, as of the date hereof, of all agreements or instruments
evidencing Debt of the Borrowers (other than the Loan Documents). The Debt
of the Borrowers under this Agreement and the Notes ranks not less than
equally and ratably with the Debt of the Borrowers under all other
instruments evidencing Debt of the Borrowers.
7.19. INVESTMENTS. Except as disclosed on SCHEDULE 7.19
attached hereto, as of the date hereof, the Borrowers have not made any
Investments.
7.20. INSURANCE. Each insurance policy currently owned or held
by any Borrower is (a) with an insurance company rated acceptably to the
Agent or otherwise acceptable to the Agent (b) in full force and effect, and
(c) a valid, outstanding and enforceable policy. The insurance policies
currently owned or held by the Borrowers collectively (a) insure against all
risks of the kinds customarily insured against and in amounts customarily
carried by entities in the same or similar type and size of business and
owning similar property in the same general
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area situated similarly to the Borrowers, (b) provide adequate coverage for
the assets, properties, and business of the Borrowers, and (c) are described
in SCHEDULE 7.20.
7.21. COMPLIANCE WITH LAWS. The business and operations of each
Borrower as conducted at all times have been and are in compliance in all
material respects with all applicable Laws.
7.22. HAZARDOUS SUBSTANCES. (A) No Borrower has generated,
stored, used, treated, disposed of or otherwise handled any Hazardous
Substance (as used herein "Hazardous Substance" means any substance which has
been or shall be determined at any time by any agency or court to be a
hazardous or toxic substance regulated by any applicable local, state or
federal law or regulation, whether currently in existence or hereafter
promulgated, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C. Sections 6901
ET SEQ., and regulations promulgated thereunder, and the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901 ET SEQ.,
and regulations promulgated thereunder (collectively, the "Environmental
Laws"), and includes also, without limitation, raw materials, building
components, the products of any manufacturing activities, wastes, petroleum,
and source, special nuclear or by-product material as defined by the Atomic
Energy Act of 1954, as amended, 42 U.S.C. Sections 3011 ET SEQ.), excluding
only such customary amounts of Hazardous Substances as may be commonly and
lawfully generated, stored, used, treated, disposed of, or otherwise handled
or located on or at any facility or other property used in the same or
similar business or businesses as the affected facility or facilities or
other property owned, leased or operated by the Borrower ("Permissible
Amounts"); (b) no Borrower, after due investigation, has knowledge of the
generation, storage, use, treatment, disposal, or release into the
environment of any Hazardous Substance by any other Person on or from any
facility or other property owned, leased or operated by any Borrower other
than in Permissible Amounts; (c) no Hazardous Substance in excess of
Permissible Amounts is presently located on any facility or other property
owned, leased or operated by any Borrower; (d) no property owned, leased or
operated by any Borrower has been listed or proposed for listing on the
National Priorities List established by the United States Environmental
Protection Agency ("EPA"), or on any other list developed or maintained by
any federal state or local governmental entity and purporting to identify
properties posing the threat of pollution or contamination due to the
presence of any Hazardous Substance and no Borrower has been identified by
the EPA or any federal, state or local governmental entity as a potentially
responsible party for environmental cleanup obligations with respect to any
property, site or facility; and (e) all activities, operations and conditions
at or on any facility or other property owned, leased, or operated by each
Borrower are in substantial compliance with all Environmental Laws except to
the extent noncompliance could not reasonably be expected to have a Material
Adverse Effect.
7.23. CAPITAL STRUCTURE.
(a) As of the Closing Date, the authorized and issued shares of
each class of Capital Stock of the Parent are as set forth in SCHEDULE 7.23.
All of the issued and outstanding
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shares of Capital Stock of the Parent are validly issued, fully paid and
non-assessable.
(b) As of the Closing Date, the authorized and outstanding shares
of each class of Capital Stock of each Subsidiary of the Parent are as set
forth on SCHEDULE 7.23. All of the issued and outstanding shares of Capital
Stock of each Subsidiary of the Parent are validly issued, fully paid and
non-assessable and owned of record and beneficially by the Person(s)
indicated on SCHEDULE 7.23. Such Person has good title to all of the shares
of Capital Stock it owns each Subsidiary of the Parent, free and clear in
each case of any Lien.
(c) Except as disclosed in SCHEDULE 7.23, as of the Closing Date,
there are no securities outstanding of the type prohibited by Section 10.21,
nor is any Borrower a party to an agreement to issue any such securities.
(d) As of the Closing Date, no Borrower has any partnership or
joint venture interests in any other Person except as set forth in SCHEDULE
7.23.
(e) Except for the Subsidiary described in SECTION 7.23 or as
otherwise notified to the Agent pursuant to Section 9.9, no Borrower has any
other Subsidiaries.
7.24. LABOR RELATIONS. As of the Closing Date there does not
exist any current or threatened strike or walkout or any other labor dispute
to which the Parent or any of its Subsidiaries is a party or any pending or
threatened unfair labor practice complaints which could reasonably be
expected to have a Material Adverse Effect.
8. CONDITIONS.
8.1. CONDITIONS TO EFFECTIVENESS OF AGREEMENT. THE EFFECTIVENESS
OF THIS AGREEMENT IS SUBJECT TO THE FOLLOWING CONDITIONS:
(a) APPROVALS. Prior to the Closing Date, the Borrowers
shall have obtained all orders, approvals or consents of all Persons
required for the execution, delivery and performance by the Borrowers of
each Loan Document to which it is a party.
(b) COMPLIANCE WITH LAW. The business and operations of the
Borrowers as conducted at all times relevant to the transactions
contemplated by this Agreement to and including the close of business on
the Closing Date shall have been and shall be in compliance (other than
any failure to be in compliance that does not result in a Material
Adverse Effect) with all applicable Laws. No Law shall prohibit, and no
order, judgment or decree of any Governmental Authority shall, and no
litigation shall be pending or, to the best knowledge of any Borrower,
threatened, which in the judgment of the Banks would enjoin, prohibit or
restrain the transactions contemplated by the Loan Documents or have a
Material Adverse Effect.
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(c) FINANCIAL STATEMENTS. On the Closing Date, the Agent
shall have received a certificate dated the Closing Date of the Chief
Financial Officer of the Parent (with a copy thereof for each Bank)
certifying that the consolidated financial position of the Parent as of
the Closing Date is not materially different from that presented in the
most recent balance sheet of the Parent identified in Section 7.2 and
attached to such certificate.
(d) INSURANCE. On the Closing Date, the Agent shall have
received all such information as the Agent shall reasonably request
concerning the insurance maintained by the Borrowers described in
Section 9.5 hereof.
(e) PAYMENT OF FEES AND EXPENSES. Payment of (i) all fees
described in Section 5 hereof and (ii) the reasonable expenses of, or
incurred by, the Agent and counsel, to the extent billed as of the
Closing Date, to and including the Closing Date in connection with the
negotiation and closing of the transactions contemplated herein.
(f) REQUIRED DOCUMENTS AND CERTIFICATES. On the Closing
Date, the Banks shall have received the following, in each case in form,
scope and substance satisfactory to the Banks:
(i) this Agreement;
(ii) the Notes;
(iii) the Pledge Agreements;
(iv) an Officer's Certificate from the Parent dated as
of the Closing Date certifying as to an attached true, correct and
complete copy of each Material Contract;
(v) an Officer's Certificate from each Borrower
dated as of the Closing Date certifying, INTER ALIA, (A) Articles
of Incorporation or Bylaws (or equivalent corporate documents), as
amended and in effect of such Borrower; (B) resolutions duly
adopted by the Board of Directors of such Borrower authorizing the
transactions contemplated by the Loan Documents to which it is a
party and (C) the incumbency and specimen signatures of the
officers of such Borrower executing documents on its behalf;
(vi) a certificate from the appropriate public
official of each jurisdiction in which each Borrower is organized
as to the continued existence and good standing of such Borrower;
(vii) a certificate from the appropriate public
official of each jurisdiction in which each Borrower is authorized
and qualified to do business as
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to the due qualification and good standing of such Borrower unless
failure is not reasonably likely to have a Material Adverse Effect;
(viii) a legal opinion in form, substance and scope
satisfactory to the Agent from counsel for, and issued upon the
express instructions of, the Borrowers;
(ix) certified copies of Requests for Information
of Copies (Form UCC-11), or equivalent reports, listing all
effective financing statements which name any Borrower (under its
present name, any trade names and any previous names) as debtor and
which are filed, together with copies of all such financing
statements;
(x) the Projections prepared with respect to the
fiscal quarter in which the Closing Date occurs; and
(xi) any other documents reasonably requested by the
Agent prior to the Closing Date.
In addition, as of the Closing Date, all legal matters incident to
the transactions herein contemplated shall be satisfactory to counsel for the
Agent and the Banks.
8.2. CONDITIONS TO EACH LOAN AND LETTER OF CREDIT. The obligation
of the Banks to make, continue or convert each Loan or of the Issuing Bank to
issue any Letter of Credit is subject to the following conditions:
(a) REPRESENTATIONS TRUE AND NO DEFAULTS. The Agent shall
have received a certificate from the chief financial officer of the
Parent certifying that: (i) the representations and warranties of the
Borrowers contained in the Loan Documents (other than those
representations and warranties limited by their terms to a specific
date) shall be true and correct in all material respects on and as of
the particular Borrowing Date or the applicable Conversion/Continuation
Date or on the date of issuance of any Letter of Credit, as the case may
be, as though made on and as of such date; (ii) no event has occurred
since the date of the most recent financial statements delivered
pursuant to Section 9.1(a) (or in the case of a borrowing prior to the
delivery of such statements, March 31, 1997), that has caused a Material
Adverse Effect; (iii) no Event of Default or Default shall have occurred
and be continuing; and (iv) the annual Projections most recently
delivered to the Agent remain true and complete, or making any necessary
changes to said Projections.
(b) BORROWING DOCUMENTS. On each Borrowing Date, the Agent
shall have received a Notice of Borrowing in respect of the Loans
delivered in accordance with Section 2.2.
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(c) CONVERSION/CONTINUATION DOCUMENTS. On each
Conversion/Continuation Date, the Agent shall have received a Notice of
Rate Change/Continuation.
(d) LETTER OF CREDIT DOCUMENTS. On the date of the issuance
of any Letter of Credit, the Agent shall have received a Letter of
Credit Request, delivered in accordance with Section 2.5.
9. AFFIRMATIVE COVENANTS. The Borrowers jointly and severally
covenant and agree that, so long as any Borrower may borrow hereunder and
until payment in full of the Obligations, each Borrower will:
9.1. FINANCIAL STATEMENTS AND INFORMATION. Deliver to the Agent,
with a copy thereof for each Bank:
(a) as soon as available, and in any event within one
hundred twenty (120) days after the end of each fiscal year of the
Parent, a copy of the annual consolidated financial statement of the
Parent for such fiscal year containing a balance sheet, statements of
income and stockholders' equity and a cash flow statement, all in
reasonable detail and certified by Price Waterhouse, LLP or another
independent certified public accountant of nationally recognized
standing reasonably satisfactory to the Agent, stating that such
consolidated financial statements fairly present the consolidated
financial position of the Parent as of the date indicated and the
results of its operations and changes in financial position for the
period indicated in conformity with GAAP applied on a consistent basis
and that the audit by such accountants in connection with such financial
statements has been made in accordance with United States generally
accepted auditing standards. The Parent shall obtain from such
accountants and deliver to each Bank at the time said financial
statements are delivered the written statement of the accountants that
in making the examination necessary to said certification they have
obtained no knowledge of any Event of Default or Default, or if such
accountants shall have obtained knowledge of any such Event of Default
or Default, they shall state the nature and period of existence thereof
in such statement; PROVIDED, that such accountants shall not be liable
directly or indirectly to the Banks for failure to obtain knowledge of
any such Event of Default or Default;
(b) as soon as available, and in any event within forty-five
(45) days after the end of the first three quarterly accounting periods
in each fiscal year of the Parent and within sixty (60) days after the
end of the fourth accounting period in each fiscal year of the Parent,
an unaudited consolidated and consolidating financial report of the
Parent as at the end of such quarter and for the period then ended,
containing a balance sheet, statements of income and stockholders'
equity and a cash flow statement, all in reasonable detail and certified
by the chief executive officer, vice president of finance or
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chief financial officer of the Parent as presenting fairly the
consolidated and consolidating financial position of the Parent as of
the date indicated and the results of its operations for the period
indicated in conformity with GAAP applied on a consistent basis, subject
to changes resulting from year-end adjustments and subject to any
non-conformity with GAAP as a result of the absence of any footnotes
required by GAAP;
(c) promptly upon receipt thereof, a copy of each internal
control letter and reportable conditions memorandum submitted to any
Borrower by its independent accountants in connection with any annual,
interim or special audit made by them;
(d) promptly after the sending or filing thereof, copies of
all proxy statements, financial statements, notices and reports as any
Borrower shall send or make available generally to its securityholders,
and copies of all reports and registration statements which any Borrower
files with the Securities and Exchange Commission or any other
securities exchange;
(e) promptly upon an Authorized Officer of any Borrower
learning thereof, of (i) any strike or walkouts or (ii) any labor
dispute to which any Borrower becomes a party, and the expiration or
termination of any labor contract to which any Borrower is a party or by
which any Borrower is bound or of any negotiations with respect thereto
if such labor dispute, expiration, termination or negotiations would
have a Material Adverse Effect;
(f) promptly after becoming available, a copy of each new
Material Contract; and
(g) such additional financial or other information as any
Bank may reasonably request.
All financial statements specified in clauses (a) and (b) above shall be
furnished with comparative figures for the corresponding period in the
preceding year. Together with each delivery of financial statements required
by clauses (a) and (b) above and in connection with any Acquisition pursuant
to Section 10.23, the Parent will deliver to the Agent a Compliance
Certificate in the form of EXHIBIT G attached hereto evidencing its
compliance with Section 10.1 and stating that there exists no Event of
Default or Default, or, if any such Event of Default or Default exists,
stating the nature thereof, the period of existence thereof and what action
the Parent has taken or proposes to take with respect thereto. The Banks are
authorized to deliver a copy of any financial statement delivered to it to
any regulatory body having jurisdiction over it.
9.2. PROJECTIONS. Together with the delivery of the financial
statements identified in Section 9.1(a), the Parent shall prepare and deliver
to the Agent the then current Projections.
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9.3. CORPORATE EXISTENCE; TITLE TO PROPERTIES. (i) Maintain its
separate corporate existence and remain a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
organization (which shall be a State of the United States); (A) have the
power to own its properties and to carry on its business as now conducted;
and (B) remain duly qualified to do business and in good standing in every
jurisdiction where such qualification is necessary and where failure to be so
qualified would have a Material Adverse Effect; (ii) maintain at all times
valid title to, or valid leasehold or right-of-way interest, easement or
license in, all its Properties free and clear of Liens, other than the Liens
permitted by Section 10.2.
9.4. BOOKS AND RECORDS. Maintain complete and accurate books of
record and account in accordance with sound accounting practices in which
true, full and correct entries will be made of all its dealings and business
affairs.
9.5. INSURANCE. At all times maintain insurance with insurance
companies rated acceptably to the Agent or otherwise acceptable to the Agent,
in such amounts and against such risks as are satisfactory to the Agent,
including without limitation casualty and liability insurance and, in any
event, as would be reasonably prudent for entities in the same or similar
type and size of business and owning similar property in the same general
area, and furnish to the Agent, not less frequently than annually a
certificate of insurance as to the insurance carried. If any Borrower shall
at any time or times hereafter fail to obtain or maintain any of the policies
of insurance required herein, or fail to pay any premium in whole or in part
relating to such policies, the Agent may, but shall not be obligated to,
obtain or cause to be maintained insurance coverage, including the Agent's
option, the coverage provided by all or any of the policies of such Borrower
and pay all or any part of the premium therefor, without waiving any default
by such Borrower, and any sums so disbursed by the Agent shall be additional
Loans to the Borrowers by the Banks payable on demand.
9.6. INSPECTION OF PROPERTY AND RECORDS. Permit any Person
designated by the Agent or any Bank, at such Bank's expense and upon
reasonable notice, to visit any Borrower and discuss its affairs and finances
with its officers or, provided that an authorized officer of the applicable
Borrower is present, certified public accountants, all at such times as the
Agent or any Bank may reasonably request. In addition, each Borrower will
permit any officer or employee of, or agent designated by the Agent upon ten
(10) days prior written notice to the Parent, reasonable notice to have
access to, examine and inspect any of the Properties, and copies of books and
financial records of such Borrower and to audit and make copies from such
Borrower's records, files and books of account in order to verify such
Properties, all at such times as the Agent or any Bank may reasonably request.
9.7. MAINTENANCE OF PROPERTY. Cause its material properties used or
useful in its business to be maintained, preserved, protected and kept in
good repair, working order and condition and supplied with all necessary
equipment and cause to be made all reasonably necessary repairs, renewals and
replacements thereof, all in the reasonable judgment of the
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parent as may be reasonably necessary so that the business carried on in
connection therewith may be conducted properly and efficiently.
9.8. NOTICE OF CERTAIN MATTERS. Notify the Agent promptly upon
acquiring knowledge of the occurrence of any of the following events: (a) (i)
the institution of, or threat of, any material action, suit, proceeding,
governmental investigation or arbitration against or affecting any Borrower
or any Property of any of them (including, without limitation, any action,
suit or proceeding for the purpose of revoking a Franchise Agreement), or
(ii) any material development in any such action, suit, proceeding,
governmental investigation or arbitration, (b) the occurrence of any event
which might reasonably be expected to have a Material Adverse Effect; (c) the
occurrence of any Event of Default or any Default; (d) any claim against any
Borrower to collect any account payable in excess of $250,000; (e) the
occurrence of any Reportable Event that requires notification of the PBGC by
any Borrower pursuant to ERISA and regulations thereunder; and (f) any
report, citation, notice demand or other written or oral communication, to or
from any governmental agency or entity empowered to enforce, investigate, or
oversee compliance with any Environmental Law concerning any potential
violation of any Environmental Law by any Borrower or concerning potential
responsibility for environmental cleanup obligations of any Borrower. Each
Borrower will maintain its chief executive office and administrative offices
in the United States and the Parent will notify the Agent in writing at least
thirty (30) days prior to the date that any Borrower changes its name or the
location of its chief executive office or principal place of business or the
place where it keeps its books and records.
9.9. FUTURE SUBSIDIARIES. Promptly upon the acquisition, formation
or creation of any Subsidiary of any Borrower, the Parent shall:
(a) unless such action is contractually prohibited by the
applicable Franchise Agreement (and in such event, the Parent agrees
that it shall request the removal of such restriction), cause the
Borrower owning all of the outstanding capital stock of such Subsidiary
to execute and deliver, to the Agent on behalf of the Banks an
agreement, substantially similar to the Pledge Agreement, with such
changes, as shall be necessary in the circumstances, pursuant to which
all of the outstanding capital stock of such Subsidiary shall be pledged
to the Agent on behalf of the Banks, together with any certificates
representing all shares of such stock so pledged and for each such
certificate a stock power executed in blank;
(b) cause the Borrowers, together with such new Subsidiary as
a co-Borrower, to execute and deliver a new Note in exchange for the
then existing Note;
(c) deliver or cause to be delivered to the Agent on behalf
of the Banks all agreements, documents, instruments and other writings
described in Sections 8.1(f)(v) through (ix) with respect to such
Subsidiary;
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(d) cause such Borrower to execute and deliver a Joinder Agreement
substantially in the form of EXHIBIT I attached hereto; and
(e) deliver or cause to be delivered to the Agent on behalf of the
Banks all such information regarding the condition (financial or
otherwise), business and operations of such Subsidiary as the Agent or any
Bank through the Agent may reasonably request.
It is hereby agreed that neither Performance Nissan, Inc. nor
Performance Dodge, Inc. shall be a "Borrower" or "Subsidiary" under the Loan
Documents; PROVIDED HOWEVER, if the Parent has not sold 100% of its ownership
interest in any such Person by August 15, 1997, such Person shall at such time
become a "Borrower" and "Subsidiary" hereunder, subject to this Section 9.9.
9.10. MATERIAL CONTRACTS. Timely and diligently pursue the
enforcement of each material covenant or obligation of each other party to
each Material Contract. The Parent will promptly notify the Agent in writing
of any material default under any Material Contract or any revocation,
termination, cancellation or expiration thereof, specifying the nature and
period of existence thereof and what action the Borrowers are taking or
proposes to take with respect thereto. Promptly upon becoming available, the
Parent shall deliver to the Agent copies of all notices and other documents
received by any Borrower that describe any event which would materially and
adversely affect (i) the condition (financial or otherwise), operations,
business, or properties of any Borrower or the ability of any Borrower to
perform timely its obligations under any Material Contract or any Loan
Document, or (ii) the ability of any other party to any Material Contract to
perform timely its obligations under any Material Contract to which it is a
party. The Parent shall promptly inform the Agent of any proposed
modification or amendment to any Material Contract and provide to the Agent
copies of any such proposed amendment or modification. Within ten (10)
Business Days of its receipt of any such proposed amendment, the Agent shall
notify the Parent of the Majority Banks' consent or objection thereto. The
Parent will promptly inform the Agent of any adopted material modification or
amendment to any other Material Contract and provide to the Agent copies
thereof.
9.11. PATENTS, TRADEMARKS AND LICENSES. Maintain all assets,
licenses, patents, copyrights, trademarks, service marks, trade names,
permits and other Governmental Approvals necessary to conduct its business.
9.12. TAXES; OBLIGATIONS. Pay and discharge before they become
delinquent, all taxes, assessments, and governmental charges or levies
imposed upon any Borrower or upon the income or any Property of any Borrower
as well as all material claims and obligations of any kind (including,
without limitation, claims for labor, materials, supplies, and rent) which,
if unpaid, might become a Lien upon any Property of any Borrower, except
where being currently contested in good faith by appropriate proceedings
diligently conducted by or on behalf of the Borrowers and subject to the
establishment of adequate reserves in accordance with GAAP.
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9.13. HAZARDOUS SUBSTANCES. (a) All activities, operations and
conditions at or on any facility or other property now or hereafter owned,
leased or operated by any Borrower shall be conducted and maintained in
substantial compliance with all Environmental Laws. The Borrowers shall
perform or have performed at their expense such environmental investigations,
audits, surveys, or tests as the Banks may from time to time reasonably
require. Upon discovery of any Hazardous Substance at or on any facility or
other property now or hereafter owned, leased, or operated by any Borrower in
excess of Permissible Amounts, or upon discovery of the release of any
Hazardous Substance into the environment from any such facility or property
in excess of Permissible Amounts, the Parent shall promptly notify the Agent
thereof. The Borrowers shall promptly take all actions necessary (i) to
comply with laws requiring notification of government agencies concerning
such discovered or released Hazardous Substances, (ii) to remedy or correct
the condition, including, without limitation, any resulting environmental
contamination, and (iii) to remove from the facility or other property all
such discovered or released Hazardous Substances in excess of Permissible
Amounts. The Borrowers shall handle and dispose of such substance in
accordance with Environmental Laws. The Borrowers shall take any and all
actions necessary to obtain reimbursement or compensation from any Person
responsible for the presence or release of such Hazardous Substances. The
Banks shall be subrogated to the Borrowers' rights in all such claims.
(b) Upon ten (10) days prior written notice from the Agent to the
Parent, the Banks or their respective agents shall have the right to enter
and inspect the condition of any facility or other property owned, leased, or
operated by any Borrower at any time and, in the event the Majority Banks in
good faith reasonably believe that there is reason to believe that a Borrower
may be in default of its obligations under Sections 7.22, 9.13 or 10.19, to
conduct such inspection, testing, environmental audit and/or other procedures
as the Banks believe are reasonably necessary to determine current compliance
with the covenants and representations contained in this Section and in
Sections 7.22 and 10.19.
9.14. MANAGEMENT. Maintain in the positions of chief executive
officer and chief financial officer of Parent persons of demonstrated skill
and experience in the duties of such position, and, in the event that any
person holding such a position leaves the employ of or otherwise ceases to
hold such a position with the Parent, the Parent shall promptly notify the
Agent of such vacancy and shall, immediately upon employing a replacement,
and in no event later than five (5) Business Days thereafter, so notify the
Agent.
10. NEGATIVE COVENANTS. So long as any Borrower may borrow
hereunder and until payment in full of the Obligations:
10.1. FINANCIAL COVENANTS.
(a) MINIMUM NET WORTH. The Parent shall not allow the
Stockholders' Equity as of the last day of any fiscal quarter to be less than
an amount equal to the sum of (i) 90% of the Stockholders' Equity as of March
31, 1997 Plus (ii) 75% of its positive Consolidated Net
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Income from December 31, 1996 through the determination date plus (iii) 100%
of the net proceeds (cash or non-cash) received by the Parent from the
issuance of any Capital Stock on or after march 31, 1997; PROVIDED, HOWEVER,
that such amount shall be reduced by an amount not to exceed $9,500,000 if
the Parent sells Performance Dodge and Performance Nissan in exchange for
treasury stock.
(b) LEVERAGE RATIO. The Parent shall not permit the Leverage Ratio
to exceed (i) 2.75 to 1.00 for periods ending prior to or on December 31,
1998 and (ii) 2.50 to 1.00 thereafter, determined in each case on the last
day of each fiscal quarterly period for the four fiscal quarters ended on
such date. The Parent shall furnish to the Agent supporting calculations for
Pro Forma Consolidated EBITDA and such other information as the Agent may
reasonably request to determine the accuracy of such calculation, including,
without limitation, audited financial statements of any Acquisition Target
for the periods to be included in the computation period.
(c) FIXED CHARGE COVERAGE RATIO. The Parent shall not permit the
Consolidated Fixed Charge Coverage Ratio to be less than 1.50 to 1.00,
determined on the last day of each fiscal quarterly period for the four
fiscal quarters ended on such date.
(d) INTEREST COVERAGE RATIO. The Parent shall not permit its
Interest Coverage Ratio to be less than 3.0 to 1.00, determined on the last
day of each fiscal quarterly period for the four fiscal quarters ended on
such date.
(e) CONSOLIDATED WORKING CAPITAL. The Parent shall not permit
Consolidated Working Capital to be less than $0 as of the last day of any
fiscal quarter.
(f) CAPITAL EXPENDITURES. The Parent shall not permit cash
Capital Expenditures for tangible personal property and intangible personal
property to exceed $3 million, determined in each case on the last day of
each fiscal quarterly period for the four fiscal quarters ended on such date,
PROVIDED that any Capital Expenditure which would constitute an Acquisition
shall be governed by Section 10.23 hereof in lieu of this Section 10.2.
10.2. LIENS. No Borrower shall create or permit to exist any Lien
(including the charge upon assets purchased under a conditional sales
agreement, purchase money mortgage, security agreement or other title
retention agreement) upon any of its Properties, whether now owned or
hereafter acquired, or assign or otherwise convey any right to receive
income, or transfer any Property for the purpose of subjecting the same to
the payment of obligations in priority to the payment of its or their general
creditors, or own or acquire or agree to acquire Property of any kind subject
to any Lien, except (i) Permitted Liens, (ii) subject to the prior written
consent of the Majority Banks, Liens securing Debt permitted by Section
10.3(iv) and Section 10.3(viii), (iii) Liens on vehicle inventory securing
Debt permitted by Section 10.3(vi), (iv) Liens created pursuant to the Pledge
Agreements, (v) Liens disclosed in SCHEDULE 10.2, and (vi) Liens on the
assets of ▇▇▇▇▇▇▇ Toyota, Inc. and Toyota West Sales & Service, Inc. Securing
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Debt permitted pursuant to Section 10.3(ix); provided that any Lien permitted
by subclauses (ii), (v) and (vi) shall not (A) extend to any other property
nor (B) extend beyond the debt originally secured thereby.
10.3. DEBT. No Borrower shall, directly or indirectly, create,
assume, incur or permit to exist or otherwise become or be liable in respect
of any Debt, except: (i) Debt set forth on SCHEDULE 7.18, PROVIDED that such
Debt is not increased or assigned AND FURTHER PROVIDED that such debt is not
renewed, extended or permitted to remain outstanding after the stated
maturity thereof at any time when a default under the documents creating such
debt exists or during the existence of a Default or Event of Default; (ii)
the Obligations, (iii) trade accounts payable incurred in the ordinary course
of business; (iv) subject to the prior written consent of the Majority Banks,
pre-existing secured Debt of acquired Persons which become Subsidiaries after
December 31, 1996 provided (A) that such Debt was not incurred in
contemplation of such acquisition, and (B) such Liens encumber only Property
of the Person so acquired, (v) unsecured subordinated Debt on terms and
conditions acceptable to the Banks, (vi) Debt related to the Floor Plan
Financings, which may be secured by vehicle inventory, (vii) additional
unsecured Debt in an aggregate amount not to exceed $10,000,000, (viii)
subject to the prior written consent of the Majority Banks, secured Debt
related to real estate financings, and (ix) Debt of ▇▇▇▇▇▇▇ Toyota, Inc.
related to real estate financings, not to exceed $9,000,000 and Debt of
Toyota West Sales & Service, Inc. related to real estate financings, not to
exceed $13,000,000. Notwithstanding the foregoing, no Debt permitted under
subclauses (iii) through (ix) shall be incurred, created or assumed unless
prior to such incurrence, creation or assumption and after giving effect
thereto, no Default or Event of Default has or will have occurred and be
continuing.
10.4 ASSET DISPOSITIONS. No Borrower will (i) sell, transfer,
lease or otherwise dispose of any assets of any Borrower except: (i) assets
sold, transferred or otherwise disposed of in the ordinary course of
business, including obsolete assets and (ii) other assets sold, transferred,
leased or otherwise disposed of in any year provided that the Fair Market
Value of all such dispositions (on a consolidated basis) is less than the
lesser of (a) 10% of the Consolidated Tangible Assets of the Parent
(determined as of the beginning of such year) or (b) $5 million, PROVIDED,
HOWEVER, that the Parent may at any time prior to September 30, 1997 sell
Performance Nissan and/or Performance Dodge provided that no Default or Event
of Default exists or would be created after giving effect to such transaction.
10.5. MERGER, CONSOLIDATION. No Borrower shall merge or
consolidate with any other Person unless the Parent or another Borrower (if
Parent not a party) is the surviving corporation and no Default or Event of
Default shall exist or be created thereby, PROVIDED FURTHER that any such
merger or consolidation which is an Acquisition shall also be subject to
Section 10.23.
10.6. SUPPLY AND PURCHASE CONTRACTS. No Borrower shall enter into
or be a party to any contract for the purchase of materials, supplies or
other property or services if such contract requires that payment by it shall
be made regardless of whether or not delivery is ever
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tendered of such materials, supplies and other property or services.
10.7. DISCOUNT OR SALE OF RECEIVABLES. No Borrower shall discount
or sell any of its notes receivable, receivables under leases or other
accounts receivable, except in the ordinary course of business.
10.8. CHANGE IN ACCOUNTING METHOD. No Borrower shall make any
change in the method of computing depreciation for either tax or book
purposes or any other material change in accounting method without the
Majority Banks' prior written approval which shall not be unreasonably
withheld, except for any changes required by GAAP or applicable Law.
10.9. RESTRICTED PAYMENTS, INVESTMENTS. No Borrower shall pay or
declare any Dividend Payment or purchase, redeem or otherwise acquire,
directly or indirectly, any of the Capital Stock or similar equity interests
of any Borrower, or any warrant or option to purchase any of such Capital
Stock or similar equity interests (other than any dividend from any
Subsidiary to the Parent) (all of the foregoing being herein called
"Restricted Payments"), or make or have outstanding, directly or indirectly,
any Investment (other than Permitted Investments) unless in each case
immediately after giving effect thereto (i) no Default or Event of Default
has occurred or would result therefrom, (ii) the Leverage Ratio shall be less
than 2.00 to 1.00, and (iii) the aggregate of such Restricted Payments and
Investments would not exceed thirty-three and one-third percent (33.3%) of
Consolidated Net Income since December 31, 1996; PROVIDED, any Investment which
is an Acquisition shall also be subject to Section 10.23. Notwithstanding
the foregoing, the Parent may at any time prior to September 30, 1997 redeem
equity interests as consideration for the sale of Performance Nissan and/or
Performance Dodge provided that no Default or Event of Default exists or
would be created after giving effect to such transaction.
10.10. CHANGE IN FISCAL YEAR. No Borrower shall change its fiscal
year.
10.11. NATURE OF BUSINESS. The Borrowers shall not change their
line of business from that described in Section 7.15 or enter into any
business which is substantially different from the business in which they are
presently engaged.
10.12. TRANSACTIONS WITH RELATED PARTIES. Except for the existing
wholesale deposit arrangement with dealers, whereby officers, directors and
employees of any Borrower may place deposits with dealers, no Borrower will,
directly or indirectly, engage in any transaction with any Affiliate or any
shareholder, officer or director of any Borrower or of any Affiliate,
including, without limitation, the purchase, sale or exchange of assets or
the rendering of any service, except in the ordinary course of business and
pursuant to the reasonable requirements of the business of the Borrowers and
upon fair and reasonable terms that are not less favorable to the Borrowers
than those which might be obtained in an arm's-length transaction at the time
from wholly independent and unrelated sources.
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10.13. STOCK OF SUBSIDIARIES. Except as permitted by Section 10.5,
No Borrower shall sell, transfer or otherwise dispose of any ownership
interest in any subsidiary. the parent shall not fail to own and control,
directly or indirectly, 100% of the Capital Stock of each Subsidiary thereof.
10.14. REGULATIONS G, T, U AND X. No Borrower will take or permit
any action which would involve the Agent or the Banks in a violation of
Regulation G, Regulation T, Regulation U, Regulation X or any other
Regulation of the Board of Governors of the Federal Reserve System or a
violation of the Securities Exchange Act OF 1934, in each case as now or
hereafter in effect.
10.15. STATUS UNDER CERTAIN LAWS. No Borrower shall:
(i) Be or become an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company
Act of 1940, as amended; or
(ii) Be or become a "holding company", or a "subsidiary company" of
a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", or a "public utility" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
10.16. CHARTER DOCUMENTS. No Borrower will modify or amend its
charter documents if such amendment or modification could reasonably be
expected to have a Material Adverse Effect.
10.17. MATERIAL CONTRACTS. No Borrower will cause, or suffer to
exist, any termination, revocation, or cancellation of, or material default
under, any Material Contract, regardless of cause, or cause, or suffer to
exist, any Material Contract to not be in full force and effect or not
constitute the legal, valid and binding obligations of the parties thereto,
or assign or grant to a Person any right or interest arising therefrom and
will not, without the prior written consent of the Majority Banks, materially
modify or amend any Material Contract; provided that the Borrower may
terminate a Floor Plan Financing in accordance with its terms.
10.18. COMPLIANCE WITH LAWS. No Borrower will fail to comply in
all material respect with all Laws.
10.19. HAZARDOUS SUBSTANCES. No Borrower shall allow any
Hazardous Substance in excess of Permissible Amounts to be brought onto,
generated, stored, used, treated, disposed of, transported over, or otherwise
handled or located at any facility or other property owned, leased or
operated by it.
10.20. AMENDMENT TO FLOOR PLAN FINANCINGS. The Parent will not, nor
will it
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permit any Subsidiary to, amend the provisions of any Floor Plan Financing
existing on the Closing Date in a manner that would make the terms of such
Floor Plan Financing materially more restrictive than as approved on Closing
Date, nor will the Parent enter into, or permit any Subsidiary to enter into,
any future Floor Plan Financing with terms materially more restrictive than
those Floor Plan Financings approved on the Closing Date.
10.21. ISSUANCE AND DISPOSITION OF SHARES. The Parent will not,
and will not permit any Subsidiary to, issue, sell or otherwise dispose of
(i) except as permitted by Section 10.5, any shares of any Capital Stock of
any Subsidiary; PROVIDED, HOWEVER, that the Parent may at any time prior to
September 30, 1997 sell Performance Nissan and/or Performance Dodge provided
that no Default or Event of Default exists or would be created after giving
effect to such transaction or (ii) equity securities, or rights, warrants or
options which by their terms require the Parent or any Subsidiary to purchase
or acquire any shares or equity securities, or otherwise purchase redeem or
otherwise acquire any shares or equity securities of the Parent or any
Subsidiary, other than with respect to Preferred Stock of the Parent which is
not by its terms required to be redeemed by the Parent prior to the Maturity
Date. The Parent shall not, and shall not permit any Subsidiary to issue,
sell or otherwise dispose of securities that are convertible into or
exchangeable for any shares of Capital Stock of any Subsidiary of the Parent,
or any rights to subscribe for or purchase, or any options or warrants for
the purchase of, or enter into any agreements (contingent or otherwise)
providing for the issuance of, or any calls, commitments or claims of any
character relating to, any shares of Capital Stock of any Subsidiary of the
Parent or any securities convertible into or exchangeable for any such shares.
10.22. RESTRICTIVE AGREEMENTS. Anything herein or any other Loan
Document to the contrary notwithstanding, no Borrower will enter into, create
or otherwise allow to exist without waiver any agreement or restriction that
(i) prohibits or restricts the creation or assumption of any Lien upon any
Property of any Borrower in favor of the Agent and the Banks, (ii) prohibits
or restricts any Subsidiary from complying with Section 9.9 hereof, (iii)
requires any obligation of any Borrower to be secured by any Property of any
Borrower if any obligation of any Borrower to the Agent or Banks is secured
in favor of another Person, including without limitation any Bank, or (iv)
prohibits or restricts the ability of (A) any Borrower (1) to pay dividends
or make other distributions or contributions or advances to the Parent or any
Subsidiary, (2) to repay loans and other indebtedness owing by it to the
Parent or any Subsidiary, (3) to redeem equity interests held by it by Parent
or any Subsidiary, or (4) to transfer any of its assets to the Parent or any
Subsidiary, or (B) the Parent or any Subsidiary to make any payments required
or permitted under the Loan Documents or otherwise prohibit or restrict
compliance by the Parent and the Subsidiaries thereunder.
10.23. ACQUISITIONS. Without the prior written consent of the
Majority Banks, the Parent will not, and will not permit any Subsidiary to,
acquire by purchase, merger or consolidation (a) the power to direct or cause
the direction of the management and policies of any other Person (the
"Acquisition Target"), directly or indirectly, whether through the ownership
of voting securities or by contract or otherwise or (b) more than 20% of the
Capital
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Stock or other equity interest of any such other Person or all or
substantially all of the assets or Properties of any such other Person (the
events described in clauses (a) and (b) of this Section 10.23 herein referred
to as "Acquisitions"), except that the Parent or any Subsidiary may make such
Acquisitions if:
(i) (A) the aggregate cash consideration paid for any such
Acquisitions plus any assumed Debt (excluding any related Floor Plan
Financings), together with the aggregate cash consideration and assumed
Debt (excluding any related Floor Plan Financings) related to all other
Acquisitions during the preceding four-quarter period, does not exceed
an amount equal to $60,000,000 and (B) the aggregate cash consideration
paid for any single Acquisition plus any assumed Debt (excluding any
related Floor Plan Financings) does not exceed $15,000,000; and
(ii) prior to and immediately after making such Acquisition, no
Default or Event of Default has occurred and is continuing or would exist;
PROVIDED, HOWEVER, that the proposed Acquisitions of Sahara Nissan, Inc. and
JRJ Investments, Inc. shall not be subject to Section 10.23(i).
11. EVENTS OF DEFAULT; REMEDIES. If any of the following events shall
occur, then the Agent shall at the request, or may with the consent, of the
Majority Banks, (i) by notice to the Parent, declare the Commitment of each
Bank and the several obligations of each Bank to make Loans hereunder to be
terminated, whereupon the same shall forthwith terminate, (ii) declare the
Notes and all interest accrued and unpaid thereon, the Unpaid Drawings and
all other amounts payable under the Notes and this Agreement, to be forthwith
due and payable, whereupon the Notes, all such interest and all such other
amounts, shall become and be forthwith due and payable without presentment,
demand, protest, or further notice of any kind (including, without
limitation, notice of default, notice of intent to accelerate and notice of
acceleration), all of which are hereby expressly waived by the Borrowers,
(iii) terminate any Letter of Credit providing for such termination by
sending a notice of termination as provided therein and (iv) direct the
Borrowers to take any action required by Section 11.13; PROVIDED, HOWEVER,
that with respect to any Event of Default described in Section 11.6 or 11.7
hereof, (A) the Commitment of each Bank and the several obligations of each
Bank to make Loans hereunder shall automatically be terminated and (B) the
entire unpaid principal amount of the Notes, all interest accrued and unpaid
thereon, the Unpaid Drawings and all such other amounts payable under the
Notes and this Agreement, shall automatically become immediately due and
payable, without presentment, demand, protest, or any notice of any kind
(including, without limitation, notice of default, notice of intent to
accelerate and notice of acceleration), all of which are hereby expressly
waived by the Borrowers.
11.1. FAILURE TO PAY PRINCIPAL. The Borrowers do not pay, repay or
prepay any principal on any Note when due; or
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11.2. FAILURE TO PAY OTHER AMOUNTS. The Borrowers do not pay any
other obligation or amount payable under this Agreement, the Notes or the
other Loan Documents when due and such default shall continue unremedied for
five (5) days; or
11.3. DEFAULT UNDER OTHER DEBT. (e)(i) any Borrower shall fail to
pay any principal of, premium or interest on or any other amount payable in
respect of Debt of such Person, aggregating for all such Debt of the
Borrowers, at least $1,000,000 (excluding Debt represented by the Notes) when
the same becomes due and payable (whether at scheduled maturity, or by
required prepayment, acceleration, demand or otherwise), and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or (ii) any other event shall
occur or condition shall exist under any agreement or instrument relating to
any such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to permit the acceleration of the maturity of such Indebtedness
(whether or not such acceleration occurs); or (iii) any such Debt shall be
declared to be due and payable or required to be prepaid (other than by a
regularly scheduled required prepayment), redeemed, purchased or defeased, or
an offer to prepay, redeem, purchase or defease such Debt shall be required
to be made, in each case prior to the stated maturity thereof;
11.4. MISREPRESENTATION OR BREACH OF WARRANTY. Any representation,
warranty or statement made by or on behalf of any Borrower or any officer
thereof herein or in any other Loan Document or in any certificate, document
or instrument otherwise furnished to the Agent or the Banks in connection
with this Agreement shall be incorrect, false or misleading in any material
respect when made or when deemed made; or
11.5. VIOLATION OF COVENANTS.
(i) Any Borrower violates any covenant, agreement or condition
contained in Article 10 or Sections 9.3, 9.5, 9.6, 9.8 and 9.9; or
(ii) Any Borrower violates any other covenant, agreement or
condition contained herein or in any other Loan Document and such default
shall continue unremedied for thirty (30) days after the earlier of (A) any
Authorized Officer of any Borrower becomes aware thereof, or (B) written
notice thereof having been given by the Agent to the Parent; or
11.6. BANKRUPTCY AND OTHER MATTERS.
(i) Any Borrower shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or its debts under any Debtor Law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession
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by any such official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or
shall admit in writing its inability to pay its debts generally, or shall
take any corporate action to authorize any of the foregoing; or
(ii) An involuntary case or other proceeding shall be commenced
against any Borrower seeking liquidation, reorganization or other relief
with respect to it or its debts under any Debtor Law or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of sixty (60) days; or an order for relief under U.S. Federal
Bankruptcy Law (or a similar order under other Debtor Law) shall be
entered against any Borrower; or
11.7. DISSOLUTION. Any order is entered in any proceeding against
any Borrower decreeing the dissolution, liquidation, winding-up or split-up
of any Borrower; or
11.8. JUDGMENT. (i) Any final judgment, decree or order, or
judgments, decrees or orders in the aggregate, for the payment of money in
excess of $1,000,000 or (ii) the issuance of any writ of attachment on any of
its assets if the aggregate of all such writs outstanding at any one time is
greater than $1,000,000 shall be rendered against any Borrower, and, in
either case, the same shall remain undischarged for a period of sixty (60)
days during which execution shall not be effectively stayed, released, bonded
or vacated; or
11.9. NULLITY OF LOAN DOCUMENTS. Any Loan Document shall, at any
time after its execution and delivery and for any reason, cease to be in full
force and effect or be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Borrower or any Affiliate
thereof, or any Borrower shall deny that it has any or any further liability
or obligations under any Loan Document to which it is a party; or
11.10. CHANGE OF CONTROL. A Change of Control shall have occurred;
or
11.11. ERISA. Any Reportable Event that requires notification of
the PBGC and which might constitute grounds for the termination of any Plan
covered by Title IV of ERISA or for the appointment by the appropriate United
States District Court of a trustee to administer any such Plan shall have
occurred and be continuing 60 days after written notice to such effect shall
have been given to the Parent by the Agent, or any such Plan shall be
terminated, or a trustee shall be appointed by an appropriate United States
District Court to administer any such Plan, or the PBGC shall institute
proceedings to terminate any such Plan or to appoint a trustee to administer
any such Plan.
11.12. OTHER REMEDIES. In addition to and cumulative of any rights
or remedies expressly provided for in this Section 11, if any one or more
Events of Default shall have
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occurred, the Agent shall at the request, and may with the consent, of the
Majority Banks proceed to protect and enforce the rights of the Banks
hereunder by any appropriate proceedings as the Agent may elect. The Agent
shall at the request, and may with the consent, of the Majority Banks also
proceed either by the specific performance of any covenant or agreement
contained in this Agreement or the other Loan Documents or by enforcing the
payment of the Notes or by enforcing any other legal or equitable right
provided under this Agreement or the other Loan Documents or otherwise
existing under any Law in favor of the holder of the Notes. The Agent shall
not, however, be under any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of the
Borrowers or any other Person or against or in payment of any or all
obligations under any Loan Document.
11.13. COLLATERAL ACCOUNT. The Borrowers hereby agree that in the
event of (i) a prepayment in full of the Loans and the termination of the
Commitments, or (ii) the occurrence of an Event of Default it shall, if
requested by the Agent or the Majority Banks (through the Agent), pay to the
Agent an amount in immediately available funds equal to 100% of the then
aggregate amount of Letter of Credit Outstandings, which funds shall be held
by the Agent in a collateral account to be maintained by the Agent. The
Borrowers hereby agree to execute and deliver to the Agent and the Banks such
security agreements, pledges or other documents as the Agent or any of the
Banks may, from time to time, reasonably require to perfect the pledge, lien
and security interest in and to any such funds provided for in this Section
11.13. Upon the payment or expiry of all Letter of Credit Outstandings, all
such Collateral shall be released to the Borrowers in due form at Borrowers'
cost.
11.14. REMEDIES CUMULATIVE. No remedy, right or power conferred
upon the Banks is intended to be exclusive of any other remedy, right or power
given hereunder or now or hereafter existing at Law, in equity, or otherwise,
and all such remedies, rights and powers shall be cumulative.
12. THE AGENT.
12.1. AUTHORIZATION AND ACTION. Each Bank hereby appoints TCB as
its Agent hereunder and irrevocably authorizes the Agent (subject to Section
12.7) to take such action as such Agent on its behalf and to exercise such
powers under any Loan Document as are delegated to such Agent by the terms
thereof, together with such powers as are reasonably incidental thereto.
Without limitation of the foregoing, each Bank expressly authorizes the Agent
to execute, approve, deliver and perform its obligations under each of the
Loan Documents to which the Agent is a party, and to exercise all rights,
powers, and remedies that such Agent may have thereunder. As to any matters
not expressly provided for by this Agreement (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act, or
to refrain from acting (and shall be fully protected in so acting or
refraining from acting as with regard to its relationship with the Banks),
upon the instructions of the Majority Banks and such instructions shall be
binding upon all the Banks and all holders of any Note; PROVIDED, HOWEVER,
that the
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Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or applicable Law.
Except for action or other matters expressly required of the Agent hereunder,
the Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall (i) receive written instructions from the Majority
Banks specifying the action to be taken, and (ii) be indemnified to its
satisfaction by the Banks against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action.
If a Default has occurred and is continuing, the Agent shall take such action
with respect to such Default as shall be directed by the Majority Banks in the
written instructions (with indemnities) described in this Section 12.1;
PROVIDED THAT, unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default as it shall deem
advisable in the best interests of the Banks. The Agent shall have no duties
or responsibilities except for those expressly stated in this Agreement and
the other Loan Documents.
12.2. AGENT'S RELIANCE, ETC. Neither the Agent nor any of its
directors, officers, agents, or employees shall be liable to any Bank for any
action taken or omitted to be taken by it or them under or in connection with
any Loan Document, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent,
as with regard to its relationship with the Banks; (a) may treat the original
or any successor holder of any Note as the holder thereof until the Agent
receives notice from the Bank which is the payee of such Note concerning the
assignment of such Note; (b) may employ and consult with legal counsel
(including counsel for the Borrowers), accountants, agents, and other experts
selected by it and shall not be liable to any Bank for any action taken, or
omitted to be taken, in good faith by it or them in accordance with the advice
of such counsel, accountants, agents, or experts received in such
consultations and shall not be liable for any negligence or misconduct of any
such counsel, accountants, agents, or other experts; (c) makes no warranty or
representation to any Bank and shall not be responsible to any Bank for any
opinions, certifications, statements, warranties, or representations made in
or in connection with any Loan Document; (d) shall not have any duty to any
Bank to ascertain or to inquire as to the performance or observance of any of
the terms, covenants, or conditions of any Loan Document or any other
instrument or document furnished pursuant thereto or to satisfy itself that
all conditions to and requirements for any Loan have been met or that any
Borrower is entitled to any Loan or to inspect the property (including the
books and records) of any Borrower; (e) shall not be responsible to any Bank
for the due execution, legality, validity, enforceability, genuineness,
sufficiency, or value of any Loan Document or any other instrument or document
furnished pursuant thereto; and (f) shall incur no liability under or in
respect of this Agreement by acting upon any notice, consent, certificate, or
other instrument or writing (which may be by telegram, cable, telex, or
otherwise) believed by it to be genuine and signed or sent by the proper party
or parties.
12.3. DEFAULTS. The Agent shall not be deemed to have knowledge of
the occurrence of a Default (other than the nonpayment of principal of or
interest hereunder or of any fees) unless the Agent has actually received
notice from a Bank or a Borrower specifying such
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Default and stating that such notice is a "Notice of Default". In the event
that the Agent receives such a notice of the occurrence of a Default, the Agent
shall give prompt notice thereof to the Banks (and shall give each Bank prompt
notice of each such nonpayment).
12.4. AGENT AND AFFILIATES. With respect to its Commitments, any
Loan made by it, and the Notes issued to it, the Agent shall have the same
rights and powers under this Agreement as any other Bank and may exercise the
same as though it were not an Agent; and the term "Bank" or "Banks" shall,
unless otherwise expressly indicated, include the Agent, in its individual
capacity. The Agent and its Affiliates may accept deposits from, lend money
to, act as trustee under indentures of, and generally engage in any kind of
business with, the Borrower, any of its Affiliates and any Person who may do
business with or own securities of any Borrower or such Affiliate, all as if
it were not the Agent and without any duty to account therefor to the Banks.
12.5. NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank agrees that
it has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Loan Parties and its decision to enter into the
transactions contemplated by the Loan Documents and that it will,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under any Loan Document. The Agent shall not be required to keep itself
informed as to the performance or observance by any Borrower of any Loan
Document or to inspect the properties or books of any Borrower. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition, or business of any
Borrower (or any of their Affiliates) which may come into the possession of
the Agent or any of its Affiliates.
12.6. INDEMNIFICATION. NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN CONTAINED, WITH RESPECT TO THE BANKS, THE AGENT SHALL BE FULLY
JUSTIFIED IN FAILING OR REFUSING TO TAKE ANY ACTION HEREUNDER UNLESS IT SHALL
FIRST BE INDEMNIFIED TO ITS SATISFACTION BY THE BANKS AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES, AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER
WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF ITS TAKING OR CONTINUING TO TAKE ANY ACTION OR
ITS REFRAINING TO TAKE ANY ACTION. EACH BANK AGREES TO INDEMNIFY THE AGENT
(TO THE EXTENT NOT REIMBURSED BY THE BORROWERS), ACCORDING TO SUCH BANK'S
COMMITMENTS, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
INCURRED BY, OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING
OUT OF: (I) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OTHER DOCUMENTS
CONTEMPLATED BY OR REFERRED TO HEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY,
OR (II) THE ENFORCEMENT OF ANY
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OF THE TERMS OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR OF ANY SUCH OTHER
DOCUMENTS; WHETHER OR NOT ANY OF THE FOREGOING SPECIFIED IN THIS SECTION 12.6
ARISES FROM THE SOLE OR CONCURRENT NEGLIGENCE OF THE AGENT; PROVIDED THAT NO
BANK SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR
DISBURSEMENTS RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
PERSON BEING INDEMNIFIED; AND PROVIDED FURTHER THAT IT IS THE INTENTION OF
EACH BANK TO INDEMNIFY THE AGENT AGAINST THE CONSEQUENCES OF THE AGENT'S OWN
NEGLIGENCE, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT, CONCURRENT, ACTIVE OR
PASSIVE. WITHOUT LIMITATION OF THE FOREGOING, EACH BANK AGREES TO REIMBURSE
THE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA PERCENTAGE OF ANY
OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES) INCURRED BY THE AGENT IN
CONNECTION WITH THE PREPARATION, ADMINISTRATION, OR ENFORCEMENT OF, OR LEGAL
ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, ANY LOAN DOCUMENT, TO
THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWERS.
12.7. SUCCESSOR AGENT. The Agent may resign at any time as Agent
under the Loan Documents by giving written notice thereof to the Banks and the
Parent and may be removed at any time with or without cause by the Majority
Banks. Upon any such resignation or removal, the Majority Banks shall have
the right to appoint a successor Agent. If no successor Agent shall have been
so appointed by the Majority Banks or shall have accepted such appointment
within ten (10) days after the retiring Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a commercial bank having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After the retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Section 12 and Section 13.3
shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
12.8. AGENT'S RELIANCE. The Parent shall notify the Agent in
writing of the names of its officers and employees authorized to request a
Loan on behalf of the Borrowers and shall provide the Agent with a specimen
signature of each such officer or employee. The Agent shall be entitled to
rely conclusively on such officer's or employee's authority to request a Loan
on behalf of the Borrower until the Agent receives written notice from the
Parent to the contrary. The Agent shall have no duty to verify the
authenticity of the signature appearing on any Notice of Borrowing or any
Notice of Rate Change/Continuation, and, with respect to any oral request for
a Loan, the Agent shall have no duty to verify the identity of any Person
representing himself as one of the officers or employees authorized to make
such request on behalf of the Borrowers. Neither Agent nor any Bank shall
incur any liability to the Borrowers in acting upon any telephonic notice
referred to above which the Agent or such Bank believes in good faith to have
been given by a duly authorized officer or other Person authorized to borrow
on behalf of the Borrowers or for otherwise acting in good faith.
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13. MISCELLANEOUS.
13.1. REPRESENTATION BY THE BANKS. Each Bank represents that it
is the present intention of such Bank, as of the date of its acquisition of
the Notes, to acquire the Notes for its account or for the account of its
Affiliates, and not with a view to the distribution or sale thereof, and,
subject to any applicable Laws, the disposition of such Bank's property shall
at all times be within its control. The Notes have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and may not be
transferred, sold or otherwise disposed of EXCEPT (a) in a registered offering
under the Securities Act; (b) pursuant to an exemption from the registration
provisions of the Securities Act; or (c) if the Securities Act shall not apply
to the Notes or the transactions contemplated by the Loan Documents. Nothing
in this Section 13.1 shall affect the characterization of the Loans and the
transactions contemplated hereunder as commercial lending transactions.
13.2. WAIVERS, ETC. No failure or delay on the part of any Bank or
the Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. No course of dealing between the Borrowers and any Bank
or the Agent shall operate as a waiver of any right of any Bank or the Agent.
No modification or waiver of any provision of this Agreement, the Notes or
any other Loan Document nor consent to any departure by the Borrowers
therefrom shall in any event be effective unless the same shall be in writing,
and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Borrowers in any case shall entitle the Borrowers to any other or further
notice or demand in similar or other circumstances.
13.3. REIMBURSEMENT OF EXPENSES. Whether or not the transactions
contemplated by this Agreement shall be consummated, the Borrowers jointly and
severally agree to reimburse the Agent, within ten (10) days after written
demand therefor, for its out-of-pocket expenses, including the reasonable fees
and expenses of counsel to the Agent, in connection with such transactions, or
any of them, or otherwise in connection with this Agreement or any other Loan
Document, including, without limitation, the negotiation, preparation,
execution, administration, modification and enforcement of this Agreement or
any other Loan Document and all fees, including the reasonable fees and
expenses of counsel to the Agent, costs and expenses of the Agent in
connection with audits, due diligence, transportation, computer, duplication,
consultants, search reports, all filing and recording fees, appraisals,
insurance, environmental inspection fees, survey fees and escrow fees.
Subject to Section 13.13, within ten (10) days after written demand therefor,
the Borrowers jointly and severally agree to pay any and all stamp and other
taxes which may be payable or determined to be payable in connection with the
execution and delivery of this Agreement, any Note or any other Loan Document,
and to save any holder of any Note harmless from any and all liabilities with
respect to or resulting from any delay or omission to pay any such taxes. The
obligations of the Borrowers under this Section 13.3 shall survive the
termination of this Agreement and/or the
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payment of the Notes.
13.4. NOTICES. All notices and
other communications provided for herein shall be in writing (including telex,
facsimile, or cable communication) and shall be mailed, couriered, telecopied,
telexed, cabled or delivered addressed as follows:
If to a Borrower, to it at:
Cross-Continent Auto Retailers, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Ext. 106
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
and if to any Bank or the Agent, at its Domestic Lending Office specified
opposite its name on SCHEDULE I attached hereto, (with a copy to ▇▇▇▇▇ & ▇▇▇▇▇,
L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇ ▇▇▇▇, Jr., Telephone: (713)
▇▇▇-▇▇▇▇, Telefax: (▇▇▇) ▇▇▇-▇▇▇▇) or as to the Borrowers, or the Agent, to such
other address as shall be designated by such party in a written notice to the
other party and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Parent and the Agent. All
such notices and communications shall, when mailed, delivered by courier,
telecopied, telexed, transmitted, or cabled, become effective when three (3)
Business Days have elapsed after being deposited in the mail (with first class
postage prepaid and addressed as aforesaid), or when confirmed by telex
answerback, transmitted to the correct telecopier, or delivered to the courier
or the cable company, except that notices and communications from the Borrowers
to the Agent shall not be effective until actually received by the Agent.
13.5. GOVERNING LAW. EACH LOAN DOCUMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE UNITED
STATES OF AMERICA.
13.6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties and covenants contained herein or made in writing
by the Borrowers
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in connection herewith shall survive the execution and delivery of this
Agreement and the Notes, and will bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed
or not, PROVIDED THAT the undertaking of the Banks to make Loans and issue
Letters of Credit to the Borrowers shall not inure to the benefit of any
successor or assign of the Borrowers. No investigation at any time made by or
on behalf of the Banks shall diminish the Banks' right to rely thereon.
13.7. COUNTERPARTS; EXECUTION BY FACSIMILE TRANSMISSION. This
Agreement may be executed in several counterparts, and by the parties hereto
on separate counterparts, and each counterpart, when so executed and
delivered, shall constitute an original instrument, and all such separate
counterparts shall constitute but one and the same instrument. The method of
execution of each Loan Document may be by means of facsimile transmission, and
delivery of such a facsimile transmission shall be deemed an original for
purposes hereof, PROVIDED that each party so delivering a facsimile
transmission shall promptly thereafter deliver the original version thereof.
13.8. SEPARABILITY. Should any clause, sentence, paragraph or
section of this Agreement be judicially declared to be invalid, unenforceable
or void, such decision shall not have the effect of invalidating or voiding
the remainder of this Agreement, and the parties hereto agree that the part or
parts of this Agreement so held to be invalid, unenforceable or void will be
deemed to have been stricken herefrom and the remainder will have the same
force and effectiveness as if such part or parts had never been included
herein. Each covenant contained in this Agreement shall be construed (absent
an express contrary provision herein) as being independent of each other
covenant contained herein, and compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance
with one or more other covenants.
13.9. DESCRIPTIVE HEADINGS. The section headings in this Agreement
have been inserted for convenience only and shall be given no substantive
meaning or significance whatsoever in construing the terms and provisions of
this Agreement.
13.10. SETOFF. Each Borrower hereby gives and confirms to each
Bank a right of setoff of all moneys, securities and other property of such
Borrower (whether special, general or limited) and the proceeds thereof, now
or hereafter delivered to remain with or in transit in any manner to such
Bank, its correspondents or its agents from or for such Borrower, whether for
safekeeping, custody, pledge, transmission, collection or otherwise or coming
into possession of such Bank in any way, and also, any balance of any deposit
accounts and credits of such Borrower with, and any and all claims of security
for the payment of the Notes and of all other liabilities and obligations now
or hereafter owed by such Borrower to such Bank, contracted with or acquired
by the Bank, whether such liabilities and obligations be joint, several,
absolute, contingent, secured, unsecured, matured or unmatured, and each
Borrower hereby authorizes such Bank at any time or times, while there is then
continuing an Event of Default WITHOUT PRIOR NOTICE, to apply such money,
securities, other property, proceeds, balances, credits of claims, or
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any part of the foregoing, to any or all of the Obligations now or
hereafter existing, whether such Obligations be contingent, unmatured or
otherwise, and whether any collateral security therefor is deemed adequate or
not. The rights described herein shall be in addition to any collateral
security described in any separate agreement executed by the Borrowers.
13.11. SUCCESSORS AND ASSIGNS; PARTICIPATIONS. (a) All covenants,
promises and agreements by or on behalf of the Borrowers, the Agent or the
Banks that are contained in this Agreement and the other Loan Documents shall
bind and inure to the benefit of their respective successors and permitted
assigns. No Borrower may assign or transfer any of its rights or obligations
under the Loan Documents without the prior written consent of all the Banks.
(b) Each Bank may sell participations to one or more banks or
other financial institutions in all or a portion of its rights and obligations
under this Agreement and the other Loan Documents (including all or a portion
of its Commitment, the Loans and the Obligations of the Borrower owing to it
and the Notes held by it and participations in Letters of Credit held by it);
PROVIDED, HOWEVER, that (i) the selling Bank's obligations under this
Agreement shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) the Borrowers, the Agent and the other Banks shall continue
to deal solely and directly with the selling Bank in connection with such
Bank's rights and obligations under this Agreement and the other Loan
Documents, and (iv) such Bank will not in any way agree with such participant
to restrict such Bank's voting rights hereunder. No participant shall be a
third party beneficiary of this Agreement and shall not be entitled to enforce
any rights provided to its selling Bank against the Borrowers under this
Agreement.
(c) Subject to the approval of the Agent and, provided that no
Default or Event of Default has occurred, the Parent, (in each case, such
consent not to be unreasonably withheld or delayed), and upon payment by the
assigning Bank to the Agent for its own account an assignment fee of $2,500, a
Bank may assign to one or more banks or other financial institutions
(including any Bank) all or a portion of its interests, rights, and
obligations under this Agreement and the other Loan Documents (including all
or a portion of its Commitment and the same portion of the Loans and other
Obligations of the Borrowers at the time owing to it and the Notes held by it
and participations in Letters of Credit held by it); PROVIDED, HOWEVER, that
(i) each such assignment shall not be less than $5,000,000 and shall be of a
constant, and not a varying, percentage of all the assigning Bank's
Commitment, rights and obligations under this Agreement and (ii) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance substantially in the form of EXHIBIT E hereto (an "Assignment and
Acceptance"), and any Note or Notes subject to such assignment. Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and to the other Loan Documents and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of
a Bank hereunder and under the other Loan Documents and (y) the assignor Bank
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement and the
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other Loan Documents (and, in the case of an Assignment and Acceptance
covering all of the remaining portion of an assigning Bank's rights and
obligations under this Agreement and the other Loan Documents, such Bank shall
cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance,
the Bank assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim known to
such Bank, such Bank assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (ii) such Bank assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower or the performance or observance of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee confirms that it has received
a copy of this Agreement together with copies of the most recent financial
statements delivered pursuant to Sections 9.1(a) and 9.1(b) and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon any Agent, such Bank
assignor or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement and the other Loan
Documents; (v) such assignee appoints and authorizes the Agent to take such
action on behalf of such assignee and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with its
terms all of the obligations which by the terms of this Agreement and the
other Loan Documents are required to be performed by it as a Bank. Upon the
Agent's knowledge of an assignee becoming a Bank hereunder, the Agent shall
give notice thereof to the Parent.
(e) The Agent shall maintain at its Domestic Lending Office a copy
of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Banks and the Commitments of,
and principal amount of the Loans and other Obligations owing to, each Bank
from time to time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Agent and
the Banks may treat each Person whose name is recorded in the Register as a
Bank hereunder for all purposes of this Agreement and the other Loan
Documents. The Register shall be available for inspection by any Borrower,
any Bank or the Agent at any reasonable time and from time to time upon
reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an assignee together with the Notes subject to such
assignment and the
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written consent to such assignment, and upon payment in full of the assignment
fee pursuant to Section 13.11(c), the Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of EXHIBIT E
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Banks and the Borrower. Within five (5) Business Days after receipt of such
notice, the Borrowers shall, at the expense of the assignee, execute and
deliver to the Agent in exchange for the surrendered Notes a new Note to the
order of such assignee in an amount respectively equal to their portion of the
Commitment of the assigning Bank assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Bank has retained any of its Commitments
hereunder, a new Note to the order of the assigning Bank in an amount equal to
the Commitment retained by it hereunder. Such new Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of EXHIBIT B
hereto. Cancelled Notes shall be returned to the Parent.
(g) Notwithstanding any other provision herein, any Bank may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 13.11 disclose to the assignee or
participant or proposed assignee or participant, any information relating to
any Borrower furnished to such Bank by or on behalf of any Borrower.
(h) Anything in this Section 13.11 to the contrary notwithstanding,
any Bank may at any time, without the consent of the Borrowers or the Agent,
assign and pledge all or any portion of its Commitments and the Loans owing to
it to any Federal Reserve Bank or the United States Treasury (and its
transferees) as collateral security pursuant to Regulation A and any Operating
Circular issued by the Federal Reserve System or such Federal Reserve Bank.
No such assignment and/or pledge shall release the assigning and/or pledging
Bank from its obligations hereunder.
(i) All transfers of any interest in any Note hereunder shall be in
compliance with all federal and state securities laws, if applicable.
Notwithstanding the foregoing sentence, however, the parties to this Agreement
do not intend that any transfer under this Section 13.11 be construed as a
"purchase" or "sale" of a "security" within the meaning of any applicable
federal or state securities laws.
(j) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
13.11, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Parent and its Subsidiaries
furnished to such Bank by or on behalf of any Borrower, PROVIDED that such
proposed assignee or participant shall first agree to be bound by Section
13.23.
13.12. INTEREST. All agreements between the Borrowers, the Agent
or any Bank, whether now existing or hereafter arising and whether written or
oral, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of demand being made
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on any Note or otherwise, shall the amount contracted for, charged, reserved
or received by the Agent or any Bank for the use, forbearance, or detention
of the money to be loaned under this Agreement or otherwise or for the
payment or performance of any covenant or obligation contained herein or in
any other Loan Document exceed the Highest Lawful Rate. If, as a result of
any circumstances whatsoever, fulfillment by any Borrower of any provision
hereof or of any of such documents, at the time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed by
applicable usury law or result in the Agent or Bank having or being deemed to
have contracted for, charged, reserved or received interest (or amounts
deemed to be interest) in excess of the maximum lawful rate or amount of
interest allowed by applicable law to be so contracted for, charged, reserved
or received by such Agent or Bank, then, IPSO FACTO, the obligation to be
fulfilled by the Borrowers shall be reduced to the limit of such validity,
and if, from any such circumstance, the Agent or any Bank shall ever receive
interest or anything which might be deemed interest under applicable law
which would exceed the Highest Lawful Rate, such amount which would be
excessive interest shall be refunded to the Borrowers, or, to the extent (i)
permitted by applicable law and (ii) such excessive interest does not exceed
the unpaid principal balance of the Notes and the amounts owing on other
obligations of the Borrowers to the Agent or any Bank under any Loan
Document, applied to the reduction of the principal amount owing on account
of the Notes or the amounts owing on other obligations of the Borrowers to
the Agent or any Bank under any Loan Document and not to the payment of
interest. All sums paid or agreed to be paid to the Agent or any Bank for the
use, forbearance, or detention of the indebtedness of the Borrowers to the
Agent or any Bank shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full of the principal thereof (including the
period of any renewal or extension thereof) so that the interest on account
of such indebtedness shall not exceed the Highest Lawful Rate. The terms and
provisions of this Section 13.12 shall control and supersede every other
provision hereof and of all other agreements between the Borrowers and the
Banks.
13.13. INDEMNIFICATION. The Borrowers jointly and severally agree:
(a) TO INDEMNIFY THE AGENT AND EACH BANK AND EACH OF THEIR
AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS, EMPLOYEES,
SHAREHOLDERS, REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND
EXPERTS ("INDEMNIFIED PARTIES") FROM, HOLD EACH OF THEM HARMLESS AGAINST
AND PROMPTLY UPON DEMAND PAY OR REIMBURSE EACH OF THEM FOR, THE
INDEMNITY MATTERS WHICH MAY BE INCURRED BY OR ASSERTED AGAINST OR
INVOLVE ANY OF THEM (WHETHER OR NOT ANY OF THEM IS DESIGNATED A PARTY
THERETO) AS A RESULT OF, ARISING OUT OF OR IN ANY WAY RELATED TO (I) ANY
ACTUAL OR PROPOSED USE BY THE BORROWERS OF THE PROCEEDS OF THE LOANS,
(II) THE EXECUTION, DELIVERY AND PERFORMANCE OF THE LOAN DOCUMENTS,
(III) THE OPERATIONS OF THE BUSINESS OF THE
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BORROWERS, (IV) THE FAILURE OF ANY BORROWER TO COMPLY WITH THE TERMS OF
ANY LOAN DOCUMENT OR WITH ANY GOVERNMENTAL REQUIREMENT, (V) ANY
INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OF ANY
BORROWER SET FORTH IN ANY OF THE LOAN DOCUMENTS, (VI) ANY ASSERTION THAT
THE BANKS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO
THE LOAN DOCUMENTS OR (VII) ANY OTHER ASPECT OF THE LOAN DOCUMENTS
(EXCLUDING ANY INDEMNIFIED LOSSES OF A BANK CAUSED BY THE FAILURE OF THE
AGENT TO PERFORM ITS OBLIGATIONS TO SUCH BANK HEREUNDER), INCLUDING,
WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL AND
ALL OTHER EXPENSES INCURRED IN CONNECTION WITH INVESTIGATING, DEFENDING
OR PREPARING TO DEFEND ANY SUCH ACTION, SUIT, PROCEEDING (INCLUDING ANY
INVESTIGATIONS, LITIGATIONS OR INQUIRIES) OR CLAIM AND INCLUDING ALL
INDEMNITY MATTERS ARISING BY REASON OF THE ORDINARY NEGLIGENCE OF ANY
INDEMNIFIED PARTY (EXCEPT AS TO THE EXTENT ANY SUCH INDEMNITY MATTERS
HAVE BEEN CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PARTY, IT BEING THE INTENT OF THE PARTIES THAT EACH
INDEMNIFIED PARTY SHALL BE INDEMNIFIED FROM INDEMNITY MATTERS CAUSED BY
THE ORDINARY NEGLIGENCE, WHETHER SOLE OR CONTRIBUTORY, OF SUCH
INDEMNIFIED PARTY); AND
(B) TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE
INDEMNIFIED PARTY FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST
RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND
LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME SUBJECT (I) UNDER ANY
ENVIRONMENTAL LAW APPLICABLE TO ANY BORROWER OR ANY OF ITS PROPERTIES,
INCLUDING, WITHOUT LIMITATION, THE TREATMENT OR DISPOSAL OF HAZARDOUS
SUBSTANCES ON ANY OF ITS PROPERTIES, (II) AS A RESULT OF THE BREACH OR
NON-COMPLIANCE BY ANY BORROWER WITH ANY ENVIRONMENTAL LAW APPLICABLE TO
ANY BORROWER, (III) DUE TO PAST OWNERSHIP BY THE BORROWER OF ANY OF ITS
PROPERTIES OR PAST ACTIVITY ON ANY OF ITS PROPERTIES WHICH, THOUGH
LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (IV) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR
DISPOSAL OF HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR
OPERATED BY ANY BORROWER OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR
SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS.
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(C) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED
PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND
OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN
AFFIRMATIVE ACT OR AN OMISSION, INCLUDING, WITHOUT LIMITATION, ALL TYPES
OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY
IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO
THE EXTENT THAT AN INDEMNIFIED PARTY COMMITTED AN ACT OF GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF
INDEMNIFICATION SHALL CONTINUE BUT SHALL ONLY EXTEND TO THE PORTION OF
THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON OF EVENTS OTHER THAN
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY.
(d) EACH BORROWER AGREES NOT TO ASSERT ANY CLAIM AGAINST THE
AGENT, ANY BANK, ANY OF THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENT'S, AND ADVISERS, ON ANY
THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE
DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN DOCUMENTS, ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF
THE PROCEEDS OF THE LOANS.
(e) The Borrowers' obligations under this Section 13.13 shall
survive any termination of this Agreement and the payment of the
Obligations and shall continue thereafter in full force and effect.
13.14. PAYMENTS SET ASIDE. To the extent any payments on the
Obligations or proceeds of any collateral or the proceeds of such enforcement
or setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other Person under any Debtor Law or equitable
cause, then, to the extent of such recovery, the Obligation or part thereof
originally intended to be satisfied, and all rights and remedies therefor,
shall be revived and shall continue in full force and effect, and the Agent's
and the Banks' rights, powers and remedies under this Agreement and each
other Loan Document shall continue in full force and effect, as if such
payment had not been made or such enforcement or setoff had not occurred. In
such event, each Loan Document shall be automatically reinstated and the
Borrowers shall take such action as may be reasonably requested by the Agent
and the Banks to effect such reinstatement.
13.15. LOAN AGREEMENT CONTROLS. If there are any conflicts or
inconsistencies among this Agreement and any of the other Loan Documents, the
provisions of this Agreement
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shall prevail and control.
13.16. OBLIGATIONS SEVERAL. The obligations of each Bank under each
Loan Document to which it is a party are several, and no Bank shall be
responsible for any obligation or Commitment of any other Bank under any Loan
Document to which it is a party. Nothing contained in any Loan Document to
which it is a party, and no action taken by any Bank pursuant thereto, shall
be deemed to constitute the Banks to be a partnership, an association, a
joint venture, or any other kind of entity.
13.17. PRO RATA TREATMENT. All Loans under, and all payments and
other amounts received in connection with this Agreement (including, without
limitation, amounts received as a result of the exercise by any Bank of any
right of setoff pursuant to Section 13.10 or otherwise) shall be effectively
shared by the Banks ratably in accordance with the respective Pro Rata
Percentages of the Banks. If any Bank shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of the principal of, or interest on, or fees in respect
of, any Note held by it (other than pursuant to Section 3.2(c), 3.2(d) or
3.2(e)) in excess of its Pro Rata Percentage of payments on account of
similar Notes obtained by all the Banks, such Bank shall forthwith purchase
from the other Banks such participations in the Notes or Loans made by them
as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; PROVIDED, HOWEVER, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Bank, such purchase from each Bank shall be rescinded and such Bank shall
repay to the purchasing Bank the purchase price to the extent of such
recovery together with an amount equal to such Bank's ratable share
(according to the proportion of (a) the amount of such Bank's required
repayment to (b) the total amount so recovered from the purchasing Bank) of
any interest or other amount paid or payable by the purchasing Bank in
respect of the total amount so recovered. Disproportionate payments of
interest shall be shared by the purchase of separate participations in unpaid
interest obligations, disproportionate payments of fees shall be shared by
the purchase of separate participations in unpaid fee obligations, and
disproportionate payments of principal shall be shared by the purchase of
separate participations in unpaid principal obligations. The Borrowers agree
that any Bank so purchasing a participation from another Bank pursuant to
this Section 13.17 may, to the fullest extent permitted by law, exercise all
its rights of payment (including the right of setoff) with respect to such
participation as fully as if such Bank were the direct creditor of the
Borrowers in the amount of such participation. Notwithstanding the
foregoing, a Bank may receive and retain an amount in excess of its Pro Rata
Percentage to the extent, but only to the extent, that such excess results
from such Bank's Highest Lawful Rate exceeding another Bank's Highest Lawful
Rate.
13.18. SUBMISSION TO JURISDICTION. (a) ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ FOR THE
SOUTHERN DISTRICT OF TEXAS AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH BORROWER
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HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS WITH
RESPECT TO ANY SUCH ACTION OR PROCEEDING. EACH BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SECTION
13.4, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST ANY BORROWER IN ANY OTHER JURISDICTION.
(B) EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS
OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND
HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
13.19. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH BORROWER HERETO (A) WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED
OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY; AND (B) CERTIFIES THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS.
13.20. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement, any Note or any other Loan Document, nor consent to any
departure by any Borrower herefrom or therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Borrowers, as
to amendments, and by the Majority Banks in all cases, and then, in any case,
such waiver or consent shall be effective only in the specific instance and
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for the specific purpose for which given; PROVIDED, HOWEVER, that no
amendment, waiver or consent shall, unless in writing and signed by 100% of
the Banks, do any of the following: (a) change the definition of "Majority
Banks", "Commitment", "Letter of Credit Limit", or "Pro Rata Percentage", (b)
forgive or reduce or increase the amount of the Commitment of any Bank or
subject any Bank to any additional obligations, (c) forgive or reduce the
principal of, or rate or amount of interest applicable to, any Loan, other
than as provided in this Agreement or forgive or reduce the amount of any
fee, (d) postpone any date fixed for any payment or prepayment of principal
of, or interest on, the Notes, (e) change this Section 13.20, (f) change the
aggregate unpaid principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any action hereunder
or (g) release any security for the Obligations except as required to be
released under this Agreement or other Loan Document; and PROVIDED FURTHER
that no amendment, waiver or consent shall, unless in writing and signed by
the Agent in addition to the Banks required above to take such action, affect
the rights or duties of the Agent under this Agreement, any note or any other
Loan Document.
13.21. RELATIONSHIP OF THE PARTIES. This Agreement provides for the
making of loans by the Banks, in their capacity as lenders, to the Borrowers,
each in its capacity as a borrower, and for the payment of interest and
repayment of principal by the Borrowers to the Banks. the relationship
between the Banks and the Borrowers is limited to that of creditors/secured
parties, on the one hand, and debtor, on the other hand. The provisions
herein for compliance with financial, environmental, and other covenants,
delivery of financial, environmental and other reports, and financial,
environmental and other inspections, investigations, audits, examinations or
tests are intended solely for the benefit of the Banks to protect their
interests as lenders in assuming payments of interest and repayment of
principal and nothing contained in this Agreement or the Notes shall be
construed as permitting or obligating the Banks to act as financial or
business advisors or consultants to the Borrowers, as permitting or
obligating the Banks to control any Borrower or to conduct or operate any
Borrower's operations, as creating any fiduciary obligation on the part of
the Banks to any Borrower, or as creating any joint venture, agency, or other
relationship between the parties other than as explicitly and specifically
stated in this Agreement. Each Borrower acknowledges that it has had the
opportunity to obtain the advice of experienced counsel of its own choosing
in connection with the negotiation and execution of this Agreement and to
obtain the advice of such counsel with respect to all matters contained
herein, including, without limitation, the provision in Section 13.19 for
waiver of trial by jury. Each Borrower further acknowledges that it is
experienced with respect to financial and credit matters and has made its own
independent decision to apply to the Banks for the financial accommodations
provided hereby and to execute and deliver this Agreement.
13.22. EXTENSION OF MATURITY DATE. The Parent may, in its
discretion, deliver a written notice to the Agent requesting that the then
scheduled Maturity Date be extended for an additional 364-day period, such
written request to be delivered not more than one hundred eighty (180) days
and not less than one hundred twenty (120) days prior to the then scheduled
Maturity Date. Upon the Agent's receipt of any such written request, the
Agent shall promptly notify the
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Banks thereof, and each Bank shall notify the Agent in writing at least
ninety (90) days prior to the then scheduled Maturity Date whether such Bank
has agreed, in its sole and absolute discretion, to such request and, if it
has decided to do so, its proposed Commitment. Each Bank's decision as to
whether to agree to any such request shall be within such Bank's sole and
absolute discretion. If any Bank notifies the Agent in writing that it has
agreed to such request then, the Agent shall promptly notify the Parent, and
the Parent, the Agent and, as to its own proposed Commitment, each committing
Bank, shall promptly agree to the allocation of such proposed Commitments.
Effective upon the occurrence of the then scheduled Maturity Date, the
Commitment shall exist in such agreed amounts, and the Maturity Date shall be
extended, for an additional 364-day period. Notwithstanding the foregoing,
any Bank may, without liability to any Borrower, reverse, terminate and
revoke its agreement to extend its proposed Commitment if prior to the then
scheduled Maturity Date: (i) a Default or Event of Default shall have
occurred and be continuing, (ii) such Bank shall believe that there has
occurred or become known a material adverse change in the business, financial
condition, operations, assets, liabilities or prospects of the Parent, on a
consolidated basis or (iii) such Bank shall discover information not
previously fully disclosed to such Bank, which such Bank believes has a
materially negative impact on the business, financial condition, operations,
assets, liabilities or prospects of the Parent, on a consolidated basis.
13.23. CONFIDENTIALITY. Each Bank agrees not to disclose or allow
others to disclose any information delivered or made available by any
Borrower to it to anyone other than Persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving,
structuring or administering the Loan Documents; PROVIDED THAT nothing herein
shall prevent any Bank or the Agent from disclosing such information (a) to
any other Bank or the Agent, (b) to any other Person if reasonably incidental
to the administration of the Loans, (c) upon the order, request or demand of
any Governmental Authority, (d) which has been publicly disclosed, (e) in
connection with any litigation to which the Agent, any Bank, any Borrower or
any of its Subsidiaries or any of their respective Affiliates may be a party,
(f) to the extent reasonably required in connection with the exercise of any
remedy hereunder, (g) to such Bank's legal counsel (including counsel engaged
in connection with the Loan Documents) and independent auditors, and (h)
subject to Section 13.11(j), to any actual or proposed participant or
assignee of all or part of its rights hereunder.
13.24. FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
IN WITNESS WHEREOF, the parties hereto, by their respective officers
thereunto duly authorized, have executed this Agreement effective as of June
26, 1997.
-57-
CROSS-CONTINENT AUTO
RETAILERS, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
QUALITY NISSAN, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
MIDWAY CHEVROLET, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
PLAINS CHEVROLET, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
WESTGATE CHEVROLET, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
-58-
WORKING MAN'S CREDIT PLAN, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
ALLIED 2000 COLLISION CENTER, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
CROSS-COUNTRY DODGE, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
C-CAR AUTO WHOLESALERS, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
-59-
▇▇▇▇▇▇▇ TOYOTA, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
TOYOTA WEST SALES & SERVICE, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
SAHARA IMPORTS, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
-60-
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as a Bank and as Agent
COMMITMENT By:
------------------------------
$40,000,000 Name:
----------------------------
Title:
---------------------------
-61-
SCHEDULE 1
TO
REVOLVING CREDIT AGREEMENT
Dated as of June 26, 1997
APPLICABLE LENDING OFFICES
--------------------------
1. Texas Commerce Bank National Association
DOMESTIC LENDING OFFICE: ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
LIBOR LENDING OFFICE: ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT "A"
CERTAIN DEFINITIONS
As used herein, the following words and terms shall have the respective
meanings indicated opposite each of them:
"ACQUISITION" shall have the meaning set forth in Section 10.23.
"ACQUISITION TARGET" shall have the meaning set forth in Section 10.23.
"ADDITIONAL COSTS" shall mean, with respect to any Rate Period in the
case of any LIBOR Rate Loan, all costs, losses or payments, as reasonably
determined by any Bank in its sole and absolute discretion, that such Bank or
its Domestic Lending Office or its LIBOR Lending Office does, or would, if
such LIBOR Rate Loan were funded during such Rate Period by the Domestic
Lending Office or the LIBOR Lending Office of such Bank, incur, suffer or
make by reason of any increase in the cost to such Bank of agreeing to make
or making, funding or maintaining any LIBOR Rate Loan because of or arising
from (a) the introduction of, or any change (other than any change by way of
imposition or increase of reserve requirements, in the case of any LIBOR Rate
Loan, included in the LIBOR Rate Reserve Percentage) in or in the
interpretation or administration of, any law or regulation or (b) the
compliance with any request from any central bank or other governmental
authority (whether or not having the force of law).
"ADJUSTED INDEBTEDNESS" shall mean, for any date for which the amount
thereof is to be determined, the difference between (i) Debt of the Parent
and its Subsidiaries on a consolidated basis MINUS (ii) 80% of indebtedness
outstanding under Floor Plan Financings.
"ADJUSTED LIBOR RATE" means the LIBOR Rate (Reserve Adjusted) PLUS the
Applicable Margin.
"AFFILIATE" shall mean any Person controlling, controlled by or under
common control with any other Person. For purposes of this definition,
"control" (including "controlled by" and "under common control with") means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise. If any Person shall own,
directly or indirectly, beneficially and of record twenty percent (20%) or
more of the equity (whether outstanding capital stock, partnership interests
or otherwise) of another Person, such Person shall be deemed to be an
Affiliate.
"AGENT" shall have the meaning set forth in the preamble hereto.
"AGREEMENT" shall mean this Revolving Credit Agreement, as the same may
be amended, modified or supplemented from time to time.
"ALTERNATE BASE RATE" shall mean, for any day, a fluctuating rate of
interest per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to (a) the higher of (i) the
-1-
Prime Rate for such day, and (ii) the Federal Funds Effective Rate in effect
on such day plus 0.50% PLUS (b) the Applicable Margin. For purposes hereof,
the term "PRIME RATE" shall mean, as of a particular date, the prime rate
most recently announced by TCB, automatically fluctuating upward and downward
with and at the time specified in each such announcement without notice to
any Borrower or any other Person, which prime rate may not necessarily
represent the lowest or best rate actually charged to a customer. "FEDERAL
FUNDS EFFECTIVE RATE" means, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three (3) federal funds
brokers of recognized standing selected by it. If for any reason the Agent
shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (a)(ii) of
the first sentence of this definition, until the circumstances giving rise to
such inability no longer exist. Any change in the Alternate Base Rate due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"APPLICABLE LENDING OFFICE" shall mean, with respect to each Bank, such
Bank's (a) Domestic Lending Office in the case of a Base Rate Loan and (b)
LIBOR Lending Office in the case of a LIBOR Rate Loan.
"APPLICABLE MARGIN" means, (a) for the period from the Closing Date
until the first redetermination hereunder, 25.0 basis points per annum as to
Base Rate Loans and 200.0 basis points per annum as to LIBOR Rate Loans, and
(b) for each period thereafter (each such period commencing 31 days after the
end of each fiscal quarter of the Parent and ending 31 days after the end of
the next fiscal quarter of the Parent) the applicable basis points per annum
set forth in the table below opposite the Leverage Ratio for the four
immediately preceding fiscal quarterly periods:
APPLICABLE MARGIN
--------------------------------------------------------------------
ALTERNATE BASE
RATE LIBOR LEVERAGE RATIO
--------------------------------------------------------------------
25.0 bps 200.0 bps 2.50 < x < 2.75
-
--------------------------------------------------------------------
0.0 bps 175.0 bps 2.00 < x < 2.50
-
--------------------------------------------------------------------
0.0 bps 150.0 bps 1.50 < x < 2.00
-
--------------------------------------------------------------------
0.0 bps 137.5 bps 1.00 < x < 1.50
-
--------------------------------------------------------------------
--------------------------------------------------------------------
-2-
--------------------------------------------------------------------
0.0 bps 125.0 bps x < 1.00
-
--------------------------------------------------------------------
Each determination of the Applicable Margin shall be determined by the Agent
for each such period after its receipt of the applicable Compliance
Certificate delivered pursuant to Section 9.1. Each change in the Applicable
Margin shall be immediately effective commencing on the 31st day after each
fiscal quarter and as to all Loans then outstanding and the Letter of Credit
Outstandings, and remain effective until the next determination. If the
Parent fails to timely deliver the Compliance Certificate as required by
Section 9.1, the Applicable Margin shall be at the next highest level until
such Compliance Certificate is delivered.
"APPLICATION" shall mean an application, in such form as the Issuing
Bank may specify from time to time, requesting the Issuing Bank to open a
Letter of Credit.
"ASSIGNMENT AND ACCEPTANCE" shall have the meaning set forth in Section
13.11(c).
"AUTHORIZED OFFICER" shall mean, as to any Person, the President, Chief
Executive Officer, Chief Financial Officer, Vice President or other officer
duly authorized by the board of directors of such Person.
"BANK" shall have the meaning specified in the preamble hereto and shall
include the Agent, in its individual capacity.
"BASE RATE LOAN" shall mean any Loan which bears interest at the
Alternate Base Rate.
"BORROWER" shall have the meaning set forth in the preamble hereto.
"BORROWING DATE" shall mean a date upon which the Parent has requested a
Loan to be made in a Notice of Borrowing delivered pursuant to Section 2.
"BUSINESS DAY" shall mean a day when the Agent is open for business,
provided that, if the applicable Business Day relates to any LIBOR Rate Loan,
it shall mean a day when the Agent is open for business and on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London.
"CAPITAL EXPENDITURES" means the expenditures of any Person which are
capitalized on the consolidated balance sheet of such Person in accordance
with GAAP (including that portion of Capitalized Lease Obligations which
should be capitalized on a consolidated balance sheet of such Person in
accordance with GAAP) and which are made in connection with the purchase,
construction or improvement of items properly classified on such balance
sheet as property, plant, equipment or other fixed assets or intangibles.
"CAPITALIZED LEASE" means, as to any Person, a lease of (or other
agreement
-3-
conveying the right to use) real and/or personal Property to such Person as
lessee, with respect to which the obligations of such Person to pay rent or
other amounts are required to be classified and accounted for as a capital
lease on a balance sheet of such Person in accordance with GAAP (including
Statement of Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board), or with respect to which the amount of the asset
and liability thereunder as if so capitalized is required to be disclosed in
a note to such balance sheet.
"CAPITALIZED LEASE OBLIGATIONS" means, as to any Person, the obligation
of such Person to pay rent or other amounts under a Capitalized Lease and,
for purposes of this Agreement, the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with GAAP.
"CAPITAL STOCK" means and includes (i) any and all shares, interests,
participations or other equivalents of or interests in (however designated)
corporate stock, including, without limitation, shares of preferred or
preference stock, (ii) all partnership interests (whether general or limited)
in any Person which is a partnership, (iii) all membership interests or
limited liability company interests in any limited liability company, and
(iv) all equity or ownership interests in any Person of any other type.
"CHANGE IN CONTROL" means (i) any transaction (including a merger or
consolidation) the result of which is that any "Person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) directly or
indirectly becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 50 percent (50%) of the total voting power of all
classes of the voting stock of the Parent or the surviving Person and/or
warrants or options to acquire such voting stock, calculated on a fully
diluted basis (a "Control Person"), other than any such transaction in which
GGFP is a Control Person or (ii) the failure of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇ and ▇▇▇▇ ▇'▇▇▇▇ (either individually or as a group) to directly (or
indirectly through a trust) own and control all interests in GGFP.
"CLOSING DATE" shall mean June 26, 1997.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, as now
or hereafter in effect, together with all regulations, rulings and
interpretations thereof or thereunder issued by the Internal Revenue Service.
"COMMITMENT" shall mean, with respect to each Bank, such Bank's
Commitment, as defined in Section 2.1(a), and "COMMITMENTS" shall mean,
collectively, the Commitments of all of the Banks.
"COMMITMENT FEE MARGIN" means, (a) for the period from the Closing Date
until the first redetermination hereunder, 50.0 basis points per annum, and
(b) for each period thereafter (each such period commencing 31 days after the
end of each fiscal quarter of the Parent and ending 31 days after the end of
the next fiscal quarter of the Parent) the basis points per annum set forth
in the table below opposite the Leverage Ratio for the four immediately
preceding fiscal quarterly periods:
-4-
--------------------------------------------------------------
COMMITMENT FEE LEVERAGE RATIO
--------------------------------------------------------------
50.0 bps 2.50 < x < 2.75
-
--------------------------------------------------------------
45.0 bps 2.00 < x < 2.50
-
--------------------------------------------------------------
37.5 bps 1.50 < x < 2.00
-
--------------------------------------------------------------
25.0 bps x < 1.50
-
--------------------------------------------------------------
Each determination of the Commitment Fee Margin shall be determined by the
Agent for each such period after its receipt of the applicable Compliance
Certificate delivered pursuant to Section 9.1. Each change in the Commitment
Fee Margin shall be immediately effective commencing on the 31st day after
each fiscal quarter and remain effective until the next determination. If
the Parent fails to timely deliver the Compliance Certificate as required by
Section 9.1, the Commitment Fee Margin shall be at the next highest level
until such Compliance Certificate is delivered.
"CONSOLIDATED EBITDA" shall mean, for any period for which the amount
thereof is to be determined, EBITDA for the Parent and its Subsidiaries on a
consolidated basis.
"CONSOLIDATED EARNINGS AVAILABLE FOR FIXED CHARGES" shall mean, for any
period for which the amount thereof is to be determined, Consolidated EBITDA
PLUS Contractual Rent Expense LESS taxes paid, for the Parent and its
Subsidiaries on a consolidated basis, calculated quarterly on a rolling
four-quarter basis.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" shall mean, for any period
for which such ratio is to be determined, the ratio of (i) Consolidated
Earnings Available for Fixed Charges to (ii) Consolidated Fixed Charges.
"CONSOLIDATED FIXED CHARGES" shall mean, for any period for which the
amount thereof is to be determined, the sum of Interest Expense PLUS,
Contractual Rent Expense, PLUS scheduled principal payments in respect of any
Debt permitted under this Agreement (other than the principal portion of Debt
permitted by Section 10.3(vi)) (including the capital portion of lease
payments in respect of Capital Lease Obligations), PLUS Restricted Payments
paid in cash, PLUS Capital Expenditures paid in cash for tangible personal
property and intangible personal property (excluding Capital Expenditures for
Acquisitions), for the Parent and its Subsidiaries on a consolidated basis,
calculated quarterly on a rolling four-quarter basis.
"CONSOLIDATED NET INCOME" shall mean for any period for which the amount
thereof is to be determined, the Net Income (or net losses) of the Parent and
its Subsidiaries on a consolidated basis as determined in accordance with
GAAP.
"CONSOLIDATED TANGIBLE ASSETS" shall mean, as at any date of
determination, the
-5-
aggregate total assets of the Parent and it Subsidiaries determined in
accordance with GAAP, minus all items which in accordance with GAAP would be
classified as "intangible assets," including, without limitation, goodwill,
research and development costs, trademarks, trade names, copyrights,
licenses, patents and franchises, experimental or organizational expense,
unamortized debt discount and expense carried as an asset, all reserves and
any write-up in the book value of assets made after the Closing Date (other
than write-ups of assets of a going concern business made within twelve (12)
months after the acquisition of such business), net of accumulated
amortization.
"CONSOLIDATED WORKING CAPITAL" means, on any date, (a) the total assets
of the Parent and its Subsidiaries that may properly be classified as current
assets in accordance with GAAP on a consolidated basis, after eliminating all
intercompany transactions; PROVIDED that in determining such current assets
(i) notes and accounts receivable shall be included only if good
and collectible and payable on demand or within one year from such date
(and if not by their terms or by the terms of any instrument or
agreement relating thereto directly or indirectly renewable or
extendible at the option of the debtor beyond such year) and shall be
taken by the Parent or a Subsidiary at their face value less reserves
determined to be sufficient in accordance with GAAP,
(ii) life insurance policies (other than the cash surrender value
of unencumbered policies) shall be excluded, and
(iii) Restricted Investment shall be excluded, MINUS,
(b) the total liabilities of the Parent and its Subsidiaries that may
properly be classified as current liabilities in accordance with GAAP on a
consolidated basis, after eliminating all intercompany transactions, but in
any event
(i) including as current liabilities without limitation (except as
provided in clause (ii) below) any portion of the Indebtedness of the
Parent and its Subsidiaries outstanding on such date that by its terms
or the terms of any instrument or agreement relating thereto matures on
demand or within one year from such date (whether by way of any sinking
fund, other required prepayment or final payment at maturity) and is not
directly or indirectly renewable, extendible or refundable, at the
option of the debtor under an agreement or firm commitment in effect on
such date, to a date more than one year from such date, and
(ii) excluding Debt evidenced by the Notes.
"CONTRACTUAL RENT EXPENSE" means, for any period, all payments due under
leases of real property, whether paid or accrued in the applicable period of
calculation (excluding, in any event, all Capitalized Lease Obligations).
-6-
"CONVERSION/CONTINUATION DATE" shall have the meaning set forth in
Section 3.1(a)(ii).
"DEBT" shall mean (without duplication), for any Person.
(a) all indebtedness of such Person for borrowed money or arising
out of any extension of credit to or for the account of such Person
(including, without limitation, extensions of credit in the form of
reimbursement or payment obligations of such Person relating to letters
of credit issued for the account of such Person) or for the deferred
purchase price of property or services, except indebtedness which is
owing to trade creditors in the ordinary course of business;
(b) Debt of the kind described in clause (i) of this definition
which is secured by (or for which the holder of such Debt has any
existing right, contingent or otherwise, to be secured by) any mortgage,
deed of trust, pledge, lien, security interest or other charge or
encumbrance upon or in property (including, without limitation, accounts
and contract rights) owned by such Person, whether or not such Person
has assumed or become liable for the payment of such Indebtedness or
obligations;
(c) all Guaranties or other contingent liabilities (other than
endorsements for collection in the ordinary course of business), direct
or indirect, with respect to Debt (of the kind described in clause (i),
(ii) or (iii) of this definition) of another Person, through an
agreement or otherwise, including, without limitation,
(i) any endorsement not for collection in the ordinary course
of business or discount with recourse or undertaking substantially
equivalent to or having economic effect similar to a Guaranty in
respect of any such Debt;
(ii) any agreement (1) to purchase, or to advance or
supply funds for the payment or purchase of, any such Debt, (2) to
purchase, sell or lease property, products, materials or supplies,
or transportation or services, in order to enable such other Person
to pay any such Debt or to assure the owner thereof against loss
regardless of the delivery or non-delivery of the property,
products, materials or supplies or transportation or services or
(3) to make any loan, advance or capital contribution to or other
Investment in, or to otherwise provide funds to or for, such other
Person in order to enable such Person to satisfy any obligation
(including any liability for a dividend, stock liquidation payment
or expense) or to assure a minimum equity, working capital or other
balance sheet condition in respect of any such obligation;
(iii) obligations of such Person to the counterparty under
any foreign currency exchange contract, currency swap agreement or
other similar agreement or arrangement designed to protect such
Person against fluctuations in currency values and Interest Rate
Agreements (including, without limitation, liquidated damages
specified therein) or any similar arrangement between such Person
and
-7-
others providing for the transfer or mitigation of interest rate or
expense risks either generally or under specific contingency;
(iv) obligations under surety, appeal or customs bonds;
(d) all Capital Lease Obligations of such Person;
(e) Preferred Stock having a mandatory redemption prior to the then
scheduled Maturity Date; and
(f) all indebtedness of such Person under Floor Plan Financings.
"DEBTOR LAWS" shall mean all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency,
reorganization, or similar laws, or general equitable principles from time to
time in effect affecting the rights of creditors generally and general
principles of equity.
"DEFAULT" shall mean any of the events specified in Section 11, whether
or not there has been satisfied any requirement in connection with such event
for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act.
"DIVIDEND PAYMENT" shall mean, with respect to any Person, any dividend,
distribution or other payment in respect of any equity or ownership interest
in such Person (in cash, property or obligations) to any holder or holders of
any equity or ownership interest in such Person, and shall include payments
on account of, or the redemption of, or the setting apart of money for a
sinking or other analogous fund for the purchase, redemption, retirement or
other acquisition of, any shares of any class of capital stock of such
Person, or the exchange or conversion of any shares of any class of capital
stock of such Person for or into any obligations of or shares of any other
class of capital stock of such Person or any other property.
"DOLLARS" and "$" shall mean lawful currency of the United States of
America.
"DOMESTIC LENDING OFFICE" shall mean, with respect to any Bank, the
office of such Bank specified as its "Domestic Lending Office" opposite its
name on SCHEDULE I attached hereto and made a part hereof or such other
office of such Bank as such Bank may from time to time specify to the Parent
and the Agent.
"EBITDA" shall mean, for any period for which the amount thereof is to
be determined, as to any Person, Net Income of such Person for such period,
PLUS, to the extent deducted in the determination of Net Income and without
duplication with items included in the adjustments to GAAP net income in the
determination of Net Income, (i) provisions for income taxes, (ii) Interest
Expense, (iii) depreciation and amortization expenses and (iv) other non-cash
income or expenses.
"ENVIRONMENTAL LAWS" means any and all Governmental Requirements
relating
-8-
to: (1) the environment, which includes, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata; (2)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes into the environment; or (3) otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes.
"ERISA" shall have the meaning set forth in Section 7.2.
"EVENT OF DEFAULT" shall mean any of the events specified in Section 11,
PROVIDED THAT there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening
of any further condition, event or act.
"EXPIRATION DATE" shall mean the last day of a Rate Period.
"FAIR MARKET VALUE" shall mean (i) with respect to any asset (other than
cash) the price at which a willing buyer would buy and a willing seller would
sell, such asset in an arms' length transaction, and (ii) with respect to
cash, the amount of such cash.
"FEDERAL BANKRUPTCY CODE" shall mean the United States Bankruptcy Code
of 1978, as amended, and any successor statute.
"FEDERAL FUNDS EFFECTIVE RATE" has the meaning specified in the
definition of the term "Alternate Base Rate".
"FEE LETTER" shall mean that certain Fee Letter dated as of May 30, 1997
among the Parent, Chase Securities Inc. and the Agent.
"FLOOR PLAN FINANCINGS" shall mean inventory financings of new, used and
program vehicles.
"FRANCHISE AGREEMENTS" .
--------------------------------------------------
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, or in such other
statements by such other entity as may be in general use by significant
segments of the accounting profession, which are applicable to the
circumstances as of the date of determination.
"GGFP" means the ▇▇▇▇▇▇▇▇▇ Group Family Partnership, a Texas general
partnership.
"GOVERNMENTAL APPROVAL" means any authorization, consent, approval,
license or exemption of, registration or filing with, or report or notice to,
any Governmental Authority.
-9-
"GOVERNMENTAL AUTHORITY" means any national, state, county,
municipal or other government, domestic or foreign, any agency, board,
bureau, commission, court, department or other instrumentality of any such
government, or any arbitrator.
"GOVERNMENTAL REQUIREMENT" means any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, writ, edict,
franchise, permit, certificate, license, award, authorization or other
direction, guideline, or requirement of any Governmental Authority,
including, without limitation, any requirement under common law.
"GUARANTY" means, in respect of any Person, any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing
any Debt of another Person, including, without limitation, by means of an
agreement to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or to maintain financial covenants, or to assure the
payment of such Debt by an agreement to make payments in respect of goods or
services regardless of whether delivered, or otherwise, provided that the
term "Guaranty" shall not include endorsements for deposit or collection in
the ordinary course of business; and such term when used as a verb shall have
a correlative meaning.
"HIGHEST LAWFUL RATE" shall mean, with respect to each Bank, the
maximum non-usurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged, or received with
respect to the Notes or on other amounts, if any, due to such Bank pursuant
to this Agreement or any other Loan Document, under laws applicable to such
Bank which are presently in effect, or, to the extent allowed by law, under
such applicable laws which may hereafter be in effect and which allow a
higher maximum non-usurious interest rate than applicable laws now allow. To
the extent required by applicable law in determining the Highest Lawful Rate
with respect to any Bank as of any date, there shall be taken into account
the aggregate amount of all payments and charges theretofore charged,
reserved or received by such Bank hereunder or under the other Loan Documents
which constitute or are deemed to constitute interest under applicable law.
"INCUR" (including the correlative terms "incurred," "incurring,"
"incurs" and "incurrence"), when used with respect to any Debt, shall mean
create, incur, assume, guarantee or in any manner become liable in respect of
such Debt.
"INDEMNIFIED PARTIES" shall have the meaning set forth in Section
13.13.
"INTEREST COVERAGE RATIO" shall mean the ratio of (i) Consolidated
EBITDA to (ii) Interest Expense for the Parent and its Subsidiaries on a
consolidated basis, calculated quarterly on a rolling four-quarter basis.
"INTEREST EXPENSE" shall mean for any period, without duplication,
the aggregate of all interest expense (excluding amounts paid on dealer
wholesale credit accounts to Affiliates, employees, officers and directors),
all prepayment charges and all amortization of debt discount and expense,
including, without limitation, all net amounts payable (or receivable) under
Interest Rate Agreements and all interest expense attributable to Capital
Leases, in each instance
-10-
determined in accordance with GAAP.
"INTEREST PAYMENT DATE" shall mean (a) as to any Base Rate Loan,
the last day of each fiscal quarter, beginning with September 30, 1997 (or if
any such date is not a Business Day, then the next preceding Business Day);
(b) as to any LIBOR Rate Loan in which the Rate Period with respect thereto
is not greater than three (3) months, the date on which such Rate Period
ends; (c) as to any LIBOR Rate Loan in which the Rate Period with respect
thereto is greater than three (3) months, the date on which the third month
of such Rate Period ends, and the date on which each such Rate Period ends;
and (d) as to all Loans, at maturity.
"INTEREST RATE AGREEMENT" shall mean an interest rate swap
agreement, interest rate cap agreement or similar arrangement.
"INVESTMENT" means, as applied to any Person, any direct or
indirect purchase or other acquisition by such Person of stock or other
securities of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, any other item which
would be classified as an "investment" on a balance sheet of such Person
prepared in accordance with GAAP, including any direct or indirect
contribution by such Person of property or assets to a joint venture,
partnership or other business entity in which such Person retains an interest.
"ISSUANCE DATE" shall mean the date the Issuing Bank shall issue a
Letter of Credit hereunder.
"ISSUING BANK" shall mean Texas Commerce Bank National Association,
in its capacity as an issuer of Letters of Credit hereunder.
"LAW" means any federal, state or local law, statute, ordinance,
code, rule, regulation, license, permit, authorization, decision, order,
injunction or decree, domestic or foreign.
"LETTER OF CREDIT" shall have the meaning specified in
Section 2.4(a).
"LETTER OF CREDIT FEE" shall have the meaning specified in
Section 5.3.
"LETTER OF CREDIT LIMIT" shall mean $3,000,000.
"LETTER OF CREDIT MARGIN" as of the date of any determination
thereof, the then current Applicable Margin for LIBOR Rate Loans.
"LETTER OF CREDIT OUTSTANDINGS" shall mean, at any time, the sum
of, without duplication, (a) the aggregate Stated Amount of all outstanding
Letters of Credit and (b) the amount of all Unpaid Drawings in respect of all
Letters of Credit.
"LETTER OF CREDIT REQUEST" shall have the meaning specified in
Section 2.4(a).
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"LEVERAGE RATIO" shall mean, for any period for which such ratio is
to be determined, the ratio of (i) Adjusted Indebtedness to (ii) the
difference between (a) Pro Forma Consolidated EBITDA (calculated quarterly on
a rolling four-quarter basis) MINUS (b) Pro Forma Floor Plan Interest Expense
(calculated quarterly on a rolling four-quarter basis).
"LIBOR LENDING OFFICE" shall mean, with respect to each Bank, the
office specified as such Bank's "LIBOR Lending Office" opposite its name on
SCHEDULE 1 attached hereto and made a part hereof (or, if no such office is
specified, its Domestic Lending Office) or such other office of such Bank as
such Bank may from time to time specify to the Parent and the Agent.
"LIBOR RATE" shall mean, for each Rate Period, the rate of interest
per annum (rounded upwards, if necessary, to the nearest 1/16th of 1%) quoted
by the Agent at or before 10:00 a.m. (Houston, Texas time) (or as soon
thereafter as practicable), on the date two (2) Business Days prior to the
first day of such Rate Period, for the offering to the Agent by prime banks
in the London Eurodollar interbank market, at the time of determination and
in accordance with the then usual practice in such market, of deposits in
Dollars for delivery on the first day of such Rate Period and having a
maturity equal to the length of such Rate Period and in an amount equal (or
as nearly equal as possible) to the LIBOR Rate Loan to which such Rate Period
relates. Each determination by the Agent of the LIBOR Rate shall be
conclusive and binding, absent manifest error, and may be computed using any
reasonable averaging and attribution method.
"LIBOR RATE LOAN" shall mean any Loan which bears interest at the
Adjusted LIBOR Rate.
"LIBOR RATE (RESERVE ADJUSTED)" shall mean, for any Rate Period or
portion thereof, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16th of 1%) equal to the LIBOR Rate divided by the difference
between 1 and the LIBOR Reserve Percentage on the first day of such Rate
Period.
"LIBOR RESERVE PERCENTAGE" shall mean, with respect to any Rate
Period or portion thereof, a percentage (expressed as a decimal) equal to the
percentage in effect on the first day of such Rate Period as prescribed by
the Federal Reserve Board (or any successor thereto) for determining the
maximum reserve requirements applicable to "Eurocurrency Liabilities"
pursuant to Regulation D or any other applicable regulation of the Federal
Reserve Board (or any successor thereto) which prescribes reserve
requirements applicable to "Eurocurrency Liabilities" as currently defined in
Regulation D.
"LIEN" shall mean: (a) any interest in Property (whether real,
personal or mixed and whether tangible or intangible) which secures the
payment of Debt or an obligation owed to, or a claim by, a Person other than
the owner of such Property, whether such interest is based on the common law,
statute or contract, including, without limitation, any such interest arising
from a mortgage, charge, pledge, security agreement, conditional sale,
Capital Lease or trust receipt, or arising from a lease, consignment or
bailment given for security purposes and (b) any exception
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to or defect in the title to or ownership interest in such Property,
including, without limitation, reservations, rights of entry, possibilities
of reverter, encroachments, easements, rights of way and restrictive
covenants (other than minor exceptions to or irregularities in the title or
ownership interest in such Property which do not materially impair the use of
such Property for its intended purpose or the value of such Property). For
purposes of this Agreement, any Person shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale
agreement, Capital Lease or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
"LOAN" or "LOANS" shall mean a loan or loans, as the case may be,
from the Banks to the Borrowers made under this Agreement.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Letters
of Credit, the Applications, the Pledge Agreements, the Fee Letter, and all
instruments, certificates and agreements now or hereafter executed or
delivered to the Agent, the Issuing Bank, or any Bank pursuant to any of the
foregoing and the transactions connected therewith, and all amendments,
modifications, renewals, extensions, increases and rearrangements of, and
substitutions for, any of the foregoing.
"MAJORITY BANKS" shall mean at any time Banks holding at least
66 2/3% of the unpaid principal amounts outstanding under the Notes, or, if no
such amounts are outstanding, 66 2/3% of the Pro Rata Percentages.
"MARGIN STOCK" shall mean "margin securities" and "margin stock"
within the meaning of Regulations G, T, U and X of the Board of Governors of
the Federal Reserve System, 12 C.F.R., Chapter II, as amended from time to
time.
"MATERIAL ADVERSE EFFECT" shall mean any material adverse effect on
(a) the financial condition, business, properties, assets, prospects or
operations of the Parent, on a consolidated basis, (b) the ability of the
Borrowers to jointly repay the Obligations, or the ability of any Borrower to
perform any other obligations under this Agreement or any other Loan Document
to which it is a party on a timely basis, (c) the validity or enforceability
of any Loan Document or (d) the rights and remedies of the Agent or any Bank
under any Loan Document.
"MATERIAL CONTRACTS" shall mean as to any Person, all agreements,
indentures, mortgages, guarantees, instruments or documents to which such
Person is a party or by which its respective assets are bound that are
material to the business, operations and financial condition of such Person
(other than the Loan Documents).
"MATURITY DATE" shall mean, June 26, 2000 and, thereafter, any date
selected pursuant to Section 13.22.
"NET INCOME" shall mean, for any period for which the amount
thereof is to be determined, the net income of a Person and its consolidated
Subsidiaries for such period determined in accordance with GAAP but excluding
in any event:
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(a) net earnings and losses of any Subsidiary of such Person
accrued prior to the date it became a Subsidiary of such Person;
(b) net earnings and losses of any Person (other than a
Subsidiary of such Person), substantially all the assets of which have
been acquired in any manner, realized by such other Person prior to the
date of such acquisition;
(c) net earnings and losses of any Person (other than a
Subsidiary of such Person) with which such Person or any of its
Subsidiaries shall have consolidated or which shall have merged into or
with such Person or any of its Subsidiaries prior to the date of such
consolidation or merger;
(d) net earnings of any Person (other than a Subsidiary of
such Person) in which such Person or any of its Subsidiaries has an
ownership interest, unless such net earnings shall have actually been
received by such Person or any of its Subsidiaries in the form of cash
distributions;
(e) any portion of the net earnings of any Subsidiary of such
Person which for any reason is unavailable for payment of dividends to
its shareholders;
(f) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(g) any deferred or other credit (or amortization of a
deferred credit) representing any excess of the equity in any Person at
the date of acquisition thereof (in any manner) over the amount invested
in such Person;
(h) any gain arising from the acquisition of any Securities
of such Person or any of its Subsidiaries or the acquisition of any debt
securities for a cost less than their respective principal and accrued
interest;
(i) any reversal of contingency reserve;
(j) any gains or losses arising from (1) the sale or other
disposition of any assets not in the ordinary course of business or (2)
extraordinary items or transactions of a nonrecurring or nonoperating
and material nature or related to the discontinuance of operations
(including net operating loss carry-forward credits), and any taxes on
such excluded gains and any tax deductions or credits on account of any
such excluded losses; and
(k) any gains or losses arising from the sale of any capital
assets.
"NOTE" or "NOTES" shall mean a promissory note or promissory notes,
respectively, of the Borrowers, executed and delivered under this Agreement.
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"NOTICE OF BORROWING" shall have the meaning set forth in
Section 2.2.
"NOTICE OF RATE CHANGE/CONTINUATION" shall have the meaning set
forth in Section 3.1(a)(ii).
"OBLIGATIONS" means all of the obligations of the Borrowers now or
hereafter existing under the Loan Documents, whether for principal, Unpaid
Drawings, interest, fees, expenses, indemnification or otherwise.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name
of a Borrower by either its President, one of its Vice Presidents, its Chief
Financial Officer, its Treasurer, or its Secretary.
"OTHER TAXES" shall have the meaning set forth in Section 4.6(b).
"PERMISSIBLE AMOUNTS" shall have the meaning set forth in
Section 7.22.
"PERMITTED INVESTMENTS" shall mean (i) obligations, with a maturity
of less than two years, with the full faith and credit of the United States
of America, (ii) direct obligations of any state of the United States, or
municipality therein, rated in one of the two top classifications by Standard
& Poor's Corporation ("S&P's") or ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's")
and maturing within two years, (iii) certificates of deposit or banker's
acceptances, maturing within two years, issued by U.S. commercial banks
having capital, surplus and undivided profits aggregating not less than $100
million and whose unsecured long-term debt is rated in one of the two top
classifications by S&P or Moody's, (iv) commercial paper of any U.S.
corporation with a maturity of less than 270 days and which is rated in one
of the two top classifications by S&P or Moody's, (v) Investments by the
Parent or any Subsidiary in and to the Parent or any Qualified Subsidiary of
the Parent, including, subject to Sections 10.5, 10.9 and 10.23, any
Investments in a corporation which after giving effect thereto will become a
Qualified Subsidiary, (vi) Investments set forth in SCHEDULE 7.19, and (vii)
investments in money market funds that invest primarily in securities of the
type described in items (i) through (iv) above.
"PERMITTED LIENS" means:
(a) Liens for current taxes, assessments, or other
governmental charges which are not delinquent or remain payable without
any penalty, or the validity or amount of which is contested in good
faith by appropriate proceedings and, if required by GAAP, adequate
reserves with respect thereto are maintained by the applicable Borrower,
as applicable; PROVIDED, HOWEVER, that any right to seizure, levy,
attachment, sequestration, foreclosure, or garnishment with respect to
Property of any Borrower by reason of such Lien has not matured, or has
been, and, continues to be, effectively enjoined or stayed; and
(b) non-consensual Liens imposed by operation of law,
including, without limitation, landlord Liens for rent not yet due and
payable, and Liens for materialmen,
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mechanics, warehousemen, carriers, employees, workmen, repairmen,
current wages, or accounts payable not yet delinquent and arising in the
ordinary course of business; PROVIDED, HOWEVER, that any right to
seizure, levy, attachment, sequestration, foreclosure, or garnishment
with respect to Property of any Borrower by reason of such Lien has not
matured, or has been, and continues to be, effectively enjoined or
stayed;
(c) customary liens incurred or deposits made in the ordinary
course of business in connection with worker's compensation,
unemployment insurance and other types of social security, and to secure
performance of tenders, statutory obligations, surety and appeal bonds,
and similar obligations;
(d) zoning, easements, and restrictions on use of real
property which do not materially impair the use of such property; and
(e) notice filings in connection with any Capitalized Lease
or operating lease.
"PERSON" shall mean an individual, partnership, joint venture,
corporation, joint stock company, bank, trust, unincorporated organization
and/or a government or any department or agency thereof.
"PLAN" shall have the meaning set forth in Section 7.12.
"PLEDGE AGREEMENT" shall mean a Security Agreement-Pledge in favor
of the Agent for the benefit of Banks, in substantially the form annexed
hereto as EXHIBIT H, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"PREFERRED STOCK" means any class or series of Capital Stock of a
Person which is entitled to a preference or priority over any other class or
series of Capital Stock of such Person with respect to any distribution of
such Person's assets, whether with respect to dividends, or upon liquidation
or dissolution, or both.
"PRO FORMA CONSOLIDATED EBITDA" shall mean, for any period for
which the amount thereof is to be determined, Consolidated EBITDA of the
Parent and its Subsidiaries plus (or minus), without duplication, the EBITDA
of any Subsidiary acquired during such period for each full fiscal quarter
included in the applicable computation period prior to such Acquisition
(including the fiscal quarter during which it was acquired), determined on a
consolidated basis. EBITDA of any such acquired Subsidiary shall be adjusted
for those identifiable and quantifiable items of income and expense that will
increase or decrease subsequent to the date of Acquisition, such adjustments
limited to those adjustments set forth in the applicable Compliance
Certificate delivered pursuant to Section 9.1.
"PRO FORMA FLOOR PLAN INTEREST EXPENSE" shall mean the Interest
Expense with respect to the Floor Plan Financings of the Parent and its
Subsidiaries plus (or minus), without duplication, the Interest Expense of
any Subsidiary acquired during such period for each full
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fiscal quarter included in the applicable computation period prior to such
Acquisition (including the fiscal quarter during which it was acquired),
determined on a consolidated basis. Interest Expense of any such acquired
Subsidiary shall be adjusted for those identifiable and quantifiable items of
expense that will increase or decrease subsequent to the date of Acquisition,
such adjustments limited to those adjustments set forth in the applicable
Compliance Certificate delivered pursuant to Section 9.1.
"PRO RATA PERCENTAGE" shall mean with respect to any Bank, a
fraction (expressed as a percentage), the numerator of which shall be the
amount of such Bank's Commitment and the denominator of which shall be the
aggregate amount of all the Commitments of the Banks, as adjusted from time
to time in accordance with Section 4.7.
"PROJECTIONS" shall mean a five-year forecast of the Parent's
consolidated business, including a balance sheet and an income and cash flow
statement.
"PROPERTY or PROPERTIES" shall mean any interest or right in any
kind of property or assets, whether real, personal, or mixed, owned or
leased, tangible or intangible, and whether now held or hereafter acquired.
"QUALIFIED SUBSIDIARY" shall mean any Subsidiary in which the
Parent owns, directly or indirectly, not less than 100% of the equity
interests of such Subsidiary.
"RATE PERIOD" shall mean the period of time for which the LIBOR
Rate shall be in effect as to any LIBOR Rate Loan which shall be a 1, 2, 3 or
6 month period of time, commencing with the Borrowing Date or the Expiration
Date of the immediately preceding Rate Period, as the case may be, applicable
to and ending on the effective date of any rate change or rate continuation
made as provided in Section 3.1(a) as the Parent may specify in the Notice of
Borrowing or the Notice of Rate Change/Continuation, subject, however, to the
early termination provisions of the second sentence of Section 3.2(d)
relating to any LIBOR Rate Loan; PROVIDED, HOWEVER, that: (i) any Rate Period
which would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls
in another calendar month, in which case such Rate Period shall end on the
next preceding Business Day, and (ii) no Rate Period shall extend beyond the
applicable Maturity Date.
"REGISTER" shall have the meaning set forth in Section 13.11(e).
"RESTRICTED INVESTMENT" shall mean any Investment other than a
Permitted Investment.
"RESTRICTED PAYMENTS" shall have the meaning set forth in
Section 10.9.
"SECURITIES ACT" shall have the meaning set forth in Section 13.1.
"STATED AMOUNT" shall mean, as to each Letter of Credit, at any
time, the maximum amount then available to be drawn thereunder (without
regard to whether any
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conditions to drawing could then be met).
"STOCKHOLDERS' EQUITY" shall mean the consolidated stockholders'
equity (including paid-in capital and retained earnings) of the Parent and
its Subsidiaries determined in accordance with GAAP.
"SUBSIDIARY" shall mean, as to any Person, (i) any corporation or
entity which not less than 50% of the stock of every class (except for
directors' qualifying shares) (or, in the case of an entity which is not a
corporation, of the equity interests), at the time as of which any
determination is being made, is owned by such Person either directly or
indirectly through the Subsidiaries; (ii) each partnership of which such
Person is a general partner; and (iii) each limited liability company in
which such Person is a member or manager and owns, directly or indirectly, an
aggregate interest of more than 50%.
"TAXES" shall have the meaning set forth in Section 4.6(a).
"TCB" shall mean Texas Commerce Bank National Association, in its
individual capacity.
"TYPE" shall mean, with respect to any Loan, any Base Rate Loan or
any LIBOR Rate Loan.
"UNPAID DRAWING" shall have the meaning specified in Section 2.6(a).
"UNUSED COMMITMENT" shall mean as of any time of determination and
as to any Bank, such Bank's Commitment at such time LESS the sum of (i) the
then outstanding principal balance of Loans by such Bank and (ii) such Bank's
Pro Rata Percentage of the Letter of Credit Outstandings as of such time.
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