<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1997
----------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---- SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________ to _________
Commission file number 1-11601
NATIONAL AUTO CREDIT, INC.
--------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
-----------------------------------
(State or other jurisdiction of
incorporation or organization)
34-1816760
------------------------------------
(I.R.S. Employer Identification No.)
30000 Aurora Road, Solon, Ohio 44139
------------------------------------
(Address of principal executive offices and zip code)
(216) 349-1000
--------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR IF CHANGED SINCE LAST
REPORT).
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS: Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
------- ------
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: 28,526,944 shares as of May 31, 1997.
<PAGE> 2
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE NUMBER
-----------
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets -
April 30, 1997 and January 31, 1997 1
Consolidated Statements of Income -
Three Months Ended April 30, 1997 and 1996 2
Consolidated Statement of Shareholders'
Equity - Three Months Ended April 30, 1997 3
Consolidated Statements of Cash Flows -
Three Months Ended April 30, 1997 and 1996 4
Notes to Consolidated Financial Statements 5 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 11
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE> 3
National Auto Credit, Inc. and Subsidiaries
Consolidated Balance Sheets
(Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
April 30, January 31,
1997 1997
---------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,754 $ 1,756
Installment notes receivable, net 423,272 417,419
Property and equipment, net of
accumulated depreciation of
$6,546 and $6,264, respectively 9,225 9,224
Other assets 12,787 11,741
Deferred income taxes 12,582 11,641
--------- ---------
$ 459,620 $ 451,781
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Dealer holdbacks, net $ 106,976 $ 101,371
Self-insurance claims 12,113 13,787
Notes payable 13,835 13,354
Operating debt 67,713 66,846
Income taxes payable 7,894 6,777
Other liabilities 17,331 20,098
--------- ---------
225,862 222,233
--------- ---------
Commitments and Contingencies -- --
Stockholders' Equity
Preferred stock - $.05 par value,
authorized 2,000,000 shares,
none issued -- --
Common stock - $.05 par value,
authorized 40,000,000 shares, issued
29,872,917 and 29,845,673 shares,
respectively 1,494 1,492
Additional paid-in capital 165,792 165,605
Retained earnings, including cumulative
foreign currency translation loss
of $1,340 and $1,070, respectively 78,575 74,073
Treasury stock, at cost, 1,345,968 and
1,298,568 shares, respectively (12,103) (11,622)
--------- ---------
233,758 229,548
--------- ---------
$ 459,620 $ 451,781
========= =========
</TABLE>
See notes to consolidated financial statements.
-1-
<PAGE> 4
National Auto Credit, Inc. and Subsidiaries
Consolidated Statements of Income
(Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
-----------------------
1997 1996
-------- --------
<S> <C> <C>
REVENUE
Interest income $16,645 $ 13,366
Fee and other income 2,165 1,567
------- --------
Total 18,810 14,933
COSTS AND EXPENSES
Provision for credit losses 7,311 2,016
Operating 1,671 1,497
General and administrative 1,260 1,100
Interest 1,282 332
------- --------
Total 11,524 4,945
------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 7,286 9,988
Provision for income taxes 2,514 3,696
------- --------
INCOME FROM CONTINUING OPERATIONS 4,772 6,292
LOSS FROM DISCONTINUED OPERATIONS,
NET OF TAX -- (281)
------- --------
NET INCOME $ 4,772 $ 6,011
======= ========
EARNINGS (LOSS) PER SHARE
Continuing operations $ .17 $ .22
Discontinued operations -- (.01)
------- --------
$ .17 $ .21
======= ========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING (000's) 28,530 28,479
======= ========
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE> 5
National Auto Credit, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
Three Months Ended April 30, 1997
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Foreign
-------------------- Additional Currency
Par Paid-In Retained Translation Treasury
Shares Value Capital Earnings Adjustment Stock Total
-------- ------- ---------- -------- ----------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
JANUARY 31, 1997 29,846 $ 1,492 $165,605 $ 75,143 $ (1,070) $(11,622) $229,548
Net income 4,772 4,772
Stock issued under
benefit plans 27 2 187 189
Treasury stock
purchases (481) (481)
Foreign currency
translation (270) (270)
-------- -------- -------- -------- -------- -------- --------
BALANCE,
APRIL 30, 1997 29,873 $ 1,494 $165,792 $ 79,915 $ (1,340) $(12,103) $233,758
======= ======== ======== ======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE> 6
National Auto Credit, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
---------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,772 $ 6,011
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 342 806
Interest income on dealer advances (4,642) (3,085)
Provision for credit losses 7,311 2,016
Deferred income taxes (1,043) 148
Changes in operating assets and liabilities:
Income taxes payable 1,219 (1,154)
Other liabilities (5,597) (1,936)
Self-insurance claims (1,674) (1,930)
Other operating assets and liabilities, net 1,866 1,465
-------- --------
Net cash provided by operating activities 2,554 2,341
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Principal collected on installment notes receivable 41,055 29,162
Proceeds from sale of rental automobiles -- 8,020
Advances to dealers and payment of dealer holdbacks (44,040) (47,063)
Purchase of property and equipment (382) (479)
Other investing activities, net 25 (418)
-------- --------
Net cash used in investing activities (3,342) (10,778)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) on lines of credit (80,152) 8,300
Proceeds from revolving credit facility and
issuance of senior notes 81,500 --
Payments to acquire treasury stock (481) --
Stock issued under benefit plans 189 75
Other financing activities, net (270) 70
-------- --------
Net cash provided by financing activities 786 8,445
-------- --------
Increase (decrease) in cash and cash equivalents (2) 8
Cash and cash equivalents at beginning of period 1,756 1,665
-------- --------
Cash and cash equivalents at end of period $ 1,754 $ 1,673
======== ========
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 1,625 $ 246
======== ========
Income taxes paid $ 2,331 $ 4,525
======== ========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 7
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - Summary of Significant Accounting Policies
------------------------------------------
GENERAL:
The accompanying consolidated financial statements include the accounts
of National Auto Credit, Inc. and its subsidiaries (the "Company").
The unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three-month period ended April 30, 1997 are
not necessarily indicative of the results that may be expected for the
year ended January 31, 1998. For further information, refer to the
financial statements and footnotes thereto included in the Company's
January 31, 1997 Annual Report on Form 10-K.
EARNING PER SHARE:
Earnings per share is computed on the basis of the weighted average
common shares outstanding during the period. Common share equivalents
have been excluded from this computation since they have less than a 3%
dilutive effect. These calculations are made in accordance with
Accounting Principles Board Opinion (APB) No. 15 "Earnings Per Share".
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standard (SFAS) 128, "Earning Per Share" which
supersedes APB No. 15 and is effective for all periods ending after
December 15, 1997, earlier application not being permitted. Earnings
per share determined in accordance with SFAS 128 will not be materially
different than earnings per share determined in accordance with APB No.
15.
RECLASSIFICATIONS:
Certain prior period amounts have been reclassified to conform with the
current period presentation.
-5-
<PAGE> 8
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE B - Installment Notes Receivable, Net
---------------------------------
The components of installment notes receivable, net, are as
follows:
<TABLE>
<CAPTION>
April 30, January 31,
1997 1997
--------- ---------
(in thousands)
<S> <C> <C>
Gross installment notes receivable $ 503,923 $ 496,947
Unearned income (72,333) (72,475)
Allowance for loan losses (8,318) (7,053)
--------- ---------
Installment notes receivable, net $ 423,272 $ 417,419
========= =========
</TABLE>
A summary of changes in gross installment notes receivable is as
follows:
<TABLE>
<CAPTION>
Three Months Ended
April 30,
-------------------------
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
Balance, beginning of period $ 496,947 $ 354,012
Contracts accepted 82,513 89,470
Cash collected (53,261) (40,008)
Charge-offs against:
Dealer holdback (17,148) (8,340)
Unearned income/allowance (5,128) (2,937)
--------- ---------
Balance, end of period $ 503,923 $ 392,197
========= =========
</TABLE>
Installment notes receivable relate to the indirect consumer financing
of used automobiles. These notes generally have initial terms ranging
from 12 to 48 months with an average initial term of 37 months and an
initial gross amount of $9,400. At April 30, 1997 and January 31, 1997,
the average remaining note term was 24 months. The notes are
collateralized by the related vehicles sold. Installment notes
receivable are from customers residing in all 50 states with no
individual state accounting for more than 10% of total installment
notes receivable, except for Texas with 13.2% and North Carolina with
12.1%.
The accrual of interest income is suspended once a note becomes 120
days contractually past due. These non-performing notes are charged-off
against the related dealer's holdback, unearned income and then loan
loss reserves, if necessary. At April 30, 1997 and January 31, 1997,
the percent of installment notes receivable which were greater than 120
days contractually past due was 26.9% and 24.9%, respectively.
Changes in the allowance for loan losses, which is provided primarily
for earned but unpaid finance charges are as follows:
<TABLE>
<CAPTION>
Three Months Ended
April 30,
-------------------------
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
Balance, beginning of period $ 7,053 $ 2,578
Provision for credit losses 2,415 1,005
Net charge-offs (1,150) (547)
--------- ---------
Balance, end of period $ 8,318 $ 3,036
========= =========
</TABLE>
-6-
<PAGE> 9
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE C - Dealer Holdbacks, Net
---------------------
Dealer holdbacks are the amounts payable to member dealers from the
acceptance of retail installment contracts, net of cash advanced. The
dealer holdbacks protect the Company from potential losses associated
with the installment contracts and are not paid unless substantially
all advances including those on non-performing loans related to a
particular dealer have been recovered. The components of dealer
holdbacks, net are as follows:
<TABLE>
<CAPTION>
April 30, January 31,
1997 1997
--------- ---------
(in thousands)
<S> <C> <C>
Dealer holdbacks $ 400,679 $ 392,733
Advances (325,322) (317,766)
--------- ---------
75,357 74,967
Dealer advance reserve 31,619 26,404
--------- ---------
Dealer holdbacks, net $ 106,976 $ 101,371
========= =========
</TABLE>
A summary of changes in dealer holdbacks, net, is as follows:
<TABLE>
<CAPTION>
Three Months Ended
April 30,
--------------------------------
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
Balance, beginning of period $ 101,371 $ 72,803
Additions to holdback 62,139 70,598
Advances disbursed (46,203) (56,230)
Charge-offs of non-performing notes (17,148) (8,340)
Increase in dealer advance reserve
and other 6,817 1,594
--------- ---------
Balance, end of period $ 106,976 $ 80,425
========= =========
</TABLE>
The dealer advance reserve is maintained in the event the holdback of a
particular dealer portfolio is not sufficient to ensure the recovery of
any outstanding advances. The Company assesses fees to dealers for the
purpose of supplementing this reserve. A summary of changes in the
dealer advance reserve is as follows:
<TABLE>
<CAPTION>
Three Months Ended
April 30,
--------------------------------
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
Balance, beginning of period $ 26,404 $ 20,706
Advance reserve fees 2,235 952
Provision for advance losses 4,896 1,011
Net charge-offs (1,916) (207)
Other -- 433
--------- ---------
Balance, end of period $ 31,619 $ 22,895
========= =========
</TABLE>
A summary of the changes in the allowance for credit losses, which includes the
allowance for loan losses and dealer advance reserve, is as follows:
<TABLE>
<CAPTION>
Three Months Ended
April 30,
--------------------------------
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
Balance, beginning of period $ 33,457 $ 23,284
Advance reserve fees 2,235 952
Provision for credit losses 7,311 2,016
Net charge-offs (3,066) (754)
Other -- 433
--------- ---------
Balance, end of period $ 39,937 $ 25,931
========= =========
</TABLE>
These amounts are included in the financial statements as follows:
<TABLE>
<CAPTION>
April 30, January 31,
1997 1997
--------- ---------
(in thousands)
<S> <C> <C>
Allowance for loan loses $ 8,318 $ 7,053
Dealer advance reserve 31,619 26,404
------- -------
$39,937 $33,457
======= =======
</TABLE>
NOTE D - Commitments and Contingencies
-----------------------------
In the normal course of its business, the Company is named as defendant
in legal proceedings. It is the policy of the Company to vigorously
defend litigation and/or enter into settlements of claims where
management deems appropriate.
-7-
<PAGE> 10
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE D - Commitments and Contingencies (cont.)
-----------------------------
In December 1995, the U.S. Department of Labor notified the Company of
its investigation of the Company's pay practices concerning its former
employees during the period from February 1993 through September 1995.
The Department of Labor's investigation is ongoing and potential
liability, if any, cannot be estimated by the Company at this time.
NOTE E - Notes Payable and Operating Debt
--------------------------------
The Company completed its private debt offering during the first
quarter of fiscal 1998. The related $45.0 million principal amount of
7.66 percent unsecured Senior Notes have an average term of five
years. During the first quarter of fiscal 1998, the Company also
entered into an unsecured revolving credit agreement for $97.5 million
with a group of financial institutions. This facility, which
replaced the Company's previous committed facility of $50.0 million,
has $39.0 million with a term of one year and $58.5 million with a
term of three years. The Company also has available $15.1 million of
uncommitted short-term bank lines at April 30, 1997.
Amounts outstanding at April 30, 1997 were $31.5 million from the
private debt facility and $50.0 million from the revolving credit
facility. Borrowings under the revolving credit facility had an average
interest rate of 6.4% at April 30, 1997 and mature at various dates
through October 31, 1997.
-8-
<PAGE> 11
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Overview
--------
National Auto Credit, Inc., (the "Company") had net income from
continuing operations of $4.8 million or $.17 per share for the quarter ended
April 30, 1997, as compared to $6.3 million or $.22 per share for the quarter
ended April 30, 1996.
Revenue for the quarter ended April 30, 1997 was $18.8 million as
compared to $14.9 million for the same quarter of the prior year. Revenue and
earnings benefited in the first quarter of fiscal 1998 from an increase of $7.0
million in gross installment notes receivable to $503.9 million at April 30,
1997 from $496.9 million at January 31, 1997.
The Company anticipates further increases in revenue and earnings
consistent with the planned growth in the receivables portfolio to around $600
million by the end of this fiscal year.
Continuing Operations
---------------------
Revenue
- -------
Interest and fee income generated by the Company increased 26.0% from
$14.9 million for the quarter ended April 30, 1996 to $18.8 million for the
quarter ended April 30, 1997. This revenue growth is primarily attributable to
the growth in the gross installment notes receivable portfolio and in NAC's
enrolled dealer base as follows:
<TABLE>
<CAPTION>
GROSS INSTALLMENT NUMBER OF
NOTES RECEIVABLE NUMBER ENROLLED
(IN MILLIONS) OF CONTRACTS DEALERS
------------- ------------ --------
<S> <C> <C> <C>
January 31, 1994 $ 93.2 12,900 900
April 30, 1994 129.5 17,800 1,100
January 31, 1995 193.5 28,400 1,400
April 30, 1995 220.1 33,100 1,700
January 31, 1996 351.3 53,000 2,300
April 30, 1996 389.5 58,200 2,400
January 31, 1997 496.9 70,000 3,100
April 30, 1997 503.9 73,400 3,400
</TABLE>
The average annualized yield on the portfolio was 15.6% for the quarter
ended April 30, 1997 versus 16.9% for the same period in the prior year. This
change in the average yield is primarily attributable to the increase in
installment notes receivables greater than 120 days contractually past due. The
increase in the level of installment notes receivables greater than 120 days
contractually past due while significant, is mitigated by the Company's policy
to provide for an allowance for credit losses equal to the earned but unpaid
revenue previously recognized.
Fee income includes principally warranty commissions and late fees. Revenue
from these sources increased 38.2% for the three month comparative periods
primarily as the collection of late fees has increased proportionally with the
growth in the loan portfolio.
-9-
<PAGE> 12
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Provision of Credit Losses
- --------------------------
The provision for credit losses was $7.3 million for the three months ended
April 30, 1997 as compared to $2.0 million for the same three month period in
the prior year. The increase in the provision for credit losses is attributable
to both the increase in non-performing installment notes receivable and to the
decline in estimated collectibility on certain dealer advances.
The provision for credit losses together with fees contractually charged to
member dealers is added to either the allowance for loan losses or the dealer
advance reserve. Management continually evaluates these allowances for credit
losses using a variety of criteria to determine their adequacy. However, since
there is no precise method for accurately determining losses they could vary
from current estimates.
Non-performing loans as a percent of the gross installment notes receivable
portfolio are expected to increase as the portfolio matures and the average age
of contracts in the portfolio increases. Because the Company provides advances
to dealers who finance sub- prime rated customers, many of whom have limited
access to financing through traditional sources of consumer credit, the
non-performing percentages are considered by the Company to be reasonable and
also lower than those of its competitors. The risk of loss to the Company is
mitigated by a security interest in the vehicle sold, dealer holdbacks and loan
loss reserves.
Operating Expenses
- ------------------
Operating expenses were $1.7 million for the first quarter of fiscal 1998
as compared to $1.5 million for the same period in fiscal 1997. Operating
expenses as a percent of revenue for the three months ended April 30, 1997 and
1996 decreased to 8.9% from 10.0%, respectively. This is a result of the Company
continuing to benefit from increased efficiencies which have allowed it to
increase revenues with a less than proportional increase in operating expenses.
General and Administrative
- --------------------------
General and administrative expenses for the three months ended April 30,
1997 and 1996 as a percent of total revenue decreased to 6.7% in the current
fiscal year from 7.4% in the prior year. The decrease as a percent of revenue is
primarily due to the fixed nature of these expenses and the benefit derived from
the increased revenue.
Interest
- --------
Interest expense of $.3 million for the three months ended April 30, 1996
increased to $1.3 million for the three months ended April 30, 1997, as average
operating debt increased. There was also an increase in the effective borrowing
rate from 5.7% for the three months ended April 30, 1996 to 6.2% for the same
period in fiscal 1998.
-10-
<PAGE> 13
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Income Taxes
- ------------
The provision for income taxes decreased to $2.5 million in the first
quarter of fiscal 1998 from $3.7 million for the same period in fiscal 1997.
This change is attributable to the decrease in pre-tax income from continuing
operations and to the decrease in the effective tax rate. The effective tax rate
decreased from 37% in the first quarter of fiscal 1997 to 34.5% for the same
period in fiscal 1998, as a result of the changing composition of business
throughout the various state tax jurisdictions.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's primary sources of funds include net cash provided by
operating activities, collections on installment notes receivable, and bank
financing. In fiscal 1997, sources of funds also included proceeds from the
sale of rental automobiles.
Outstanding borrowings at April 30, 1997 totalled $81.5 million and consisted
of $50.0 million from the Company's revolving credit facility and $31.5 million
from its private debt facility. Amounts available under both the revolving
credit and private debt facilities totalled $61.0 million at April 30, 1997. The
Company also had available $15.1 million of uncommitted short-term bank lines at
April 30, 1997.
The Company believes it has sufficient internal and external sources of
funds available to meet its current obligations, to fund current operating and
capital requirements as necessary, and to finance the planned growth of the
receivables portfolio through fiscal 1998.
The ratio of operating debt to total capital was 21.9% at April 30, 1997
and 22.0% at January 31, 1997. It is anticipated that debt levels will increase
through the end of this fiscal year primarily to fund dealer advances associated
with the increased growth in new installment contracts.
-11-
<PAGE> 14
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits
--------
Exhibit Number Description
-------------- -----------
4(d) Short and Long-term Credit Agreements dated
April 21, 1997 between various financial
institutions, and the First National Bank of
Chicago as Agent and the Company, as filed
herewith.
4(e) 7.66% Senior Notes Agreement due April 21,
2004 between various insurance companies and the
Company dated April 21, 1997, as filed
herewith.
27 Financial Data Schedule Electronically filed
with the Securities and Exchange Commission
pursuant to Item 601(c) of Regulation S-K.
b) Reports on Form 8-K
-------------------
On March 11, 1997, a Form 8-K was filed regarding the
restatement of the Company's results of operations
relating to overstated gains recognized in fiscal
1994 through fiscal 1996 on the disposal of retired
rental vehicles.
-12-
<PAGE> 15
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL AUTO CREDIT, INC.
Date: June 12, 1997 By: /s/ Robert J. Bronchetti
----------------------- ------------------------
Robert J. Bronchetti
President and
Chief Executive Officer
and Director
By: /s/ Davida S. Howard
--------------------
Davida S. Howard
Vice President-Finance
and Controller (Principal
Financial and Accounting
Officer)
-13-
<PAGE> 16
INDEX OF EXHIBITS
Exhibit Number Description
-------------- -----------
4(d) Short and Long-term Credit
Agreements dated April 21, 1997 between
various financial institutions, and the
First National Bank of Chicago as Agent
and the Company, as filed herewith.
4(e) 7.66% Senior Notes Agreement due April 21,
2004 between various insurance companies
and the Company dated April 21, 1997, as
filed herewith.
27 Financial Data Schedule
Electronically filed with the Securities and
Exchange Commission pursuant to Item 601(c)
of Regulation S-K.
<PAGE> 1
Exhibit 4(d)
SHORT TERM CREDIT AGREEMENT
---------------------------
THIS SHORT-TERM CREDIT AGREEMENT, dated as of April 21, 1997
(this "Agreement"), is by and among NATIONAL AUTO CREDIT, INC., a Delaware
corporation (the "Borrower"), the Lenders set forth on the signature pages
hereof (collectively, the "Lenders" and individually, a "Lender"), THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as documentation agent for the Lenders (in
such capacity, the "Documentation Agent").
INTRODUCTION
------------
The Borrower desires to obtain a 364-day revolving credit
facility in the aggregate principal amount of $39,000,000, in order to provide
funds for its general corporate purposes and the Lenders are willing to
establish such credit facility in favor of the Borrower on the terms and
conditions herein set forth.
In consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
-----------
1.1 CERTAIN DEFINITIONS. As used herein the following terms
shall have the following respective meanings:
"AFFILIATE", when used with respect to any person shall mean
any other person which, directly or indirectly, controls or is controlled by or
is under common control with such person. For purposes of this definition
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), with respect to any person, shall mean 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 by contract or otherwise. Notwithstanding the foregoing provisions
of this definition, the term "Affiliate" shall not include Sam J. Frankino,
Chairman of the Board and majority shareholder of the Borrower.
"ALTERNATE BASE RATE" shall mean, for any day, the rate of
interest that is equal to the higher of (i) the Corporate Base Rate for such day
and (ii) the sum of the Federal Funds Effective Rate for such day plus 1/2% per
annum.
"APPLICABLE MARGIN" shall mean the following margin based upon
the Leverage Ratio as adjusted on the first Business Day immediately following
the date on which the financial statements and compliance certificate required
pursuant to Section 5.1(d) are delivered to the Lenders and shall remain in
effect until the next change to be effected pursuant to this definition, based
upon such ratio for the four
<PAGE> 2
consecutive fiscal quarters immediately preceding such date; PROVIDED, THAT, the
Eurodollar Rate shall not be adjusted pursuant to the Applicable Margin for any
outstanding Eurodollar Rate Loan until after the end of the Eurodollar Interest
Period for such Eurodollar Rate Loan:
APPLICABLE MARGIN
-----------------
<TABLE>
<CAPTION>
----------------------------------------------------------- ------------------ ---------------- -----------------
Floating
Leverage Ratio Rate Eurodollar Facility Fee
Loan Rate Loan
----------------------------------------------------------- ------------------ ---------------- -----------------
<S> <C> <C> <C>
I. Less than or equal to 0.15:1.0 0.00% 0.50% 0.125%
----------------------------------------------------------- ------------------ ---------------- -----------------
II. Greater than 0.15:1.0 but less than or equal to 0.00% 0.55% 0.15%
0.30:1.0
----------------------------------------------------------- ------------------ ---------------- -----------------
III. Greater than 0.30:1.0 but less than or equal to 0.05% 0.65% 0.20%
0.40:1.0
----------------------------------------------------------- ------------------ ---------------- -----------------
IV. Greater than 0.40:1.0 0.10% 0.75% 0.25%
----------------------------------------------------------- ------------------ ---------------- -----------------
</TABLE>
; PROVIDED, HOWEVER, that, if any financial statements referred to above are not
delivered within the time period specified above, then, until the financial
statements are delivered, the Applicable Margin shall be as set forth in Level
IV.
"BORROWING" shall mean the aggregation of Loans of the Lenders
to be made to the Borrower, or continuations and conversions of such Loans, made
pursuant to Article II on a single date (and with respect to Fixed Rate Loans,
for a single Interest Period), which Borrowings may be classified for purposes
of this Agreement by reference to the type of Loans comprising the related
Borrowing, e.g., a "Eurodollar Rate Borrowing" is a Borrowing comprised of
Eurodollar Rate Loans.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday
or other day on which banks generally are not open in Chicago or New York for
the conduct of substantially all of their commercial lending activities.
"CAPITAL LEASE" of any person shall mean any lease which, in
accordance with Generally Accepted Accounting Principles, is or should be
capitalized on the books of such person.
"CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations thereunder.
"COMMITMENTS" shall mean, with respect to each Lender, the
commitment of such Lender to make Loans pursuant to Section 2.1, in amounts not
exceeding in aggregate principal amount outstanding at any time the commitment
amount for such Lender set forth next to the name of each such Lender on the
signature pages hereof or as subsequently set forth in any Assignment and
Acceptance or Assumption Agreement, as such amount may be reduced or modified
from time to time pursuant to Section 2.2 or Section 8.6; provided, that the
Total Commitments may not exceed $50,000,000.
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<PAGE> 3
"CONSOLIDATED" or "CONSOLIDATED" shall mean, when used with
reference to any financial term in this Agreement, the aggregate for two or more
persons of the amounts signified by such term for all such persons determined on
a consolidated basis in accordance with Generally Accepted Accounting
Principles.
"CONSOLIDATED NET INCOME" means, with reference to any period,
the net income (or loss) of the Borrower and its Subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, after
eliminating all offsetting debits and credits between the Borrower and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Borrower and its
Subsidiaries in accordance with GAAP, provided that there shall be excluded:
(a) the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or a Subsidiary, and the income
(or loss) of any Person, substantially all of the assets of
which have been acquired in any manner, realized by such other
Person prior to the date of acquisition;
(b) the income (or loss) of any Person (other than a
Subsidiary) in which the Borrower or any Subsidiary has an
ownership interest, except to the extent that any such income
has been actually received by the Borrower or such Subsidiary
in the form of cash dividends or similar cash distributions;
(c) the undistributed earnings of any Subsidiary to
the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time
permitted by the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary;
(d) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve
was made out of income accrued during such period;
(e) any aggregate net gain (but not any aggregate net
loss) during such period arising from the sale, conversion,
exchange or other disposition of capital assets (such term to
include, without limitation, (i) all non-current assets and,
without duplication, (ii) the following, whether or not
current: all fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed
assets, and all Securities);
(f) any gains resulting from any write-up of any
assets (but not any loss resulting from any write-down of any
assets);
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<PAGE> 4
(g) any net gain from the collection of the proceeds
of life insurance policies;
(h) any gain arising from the acquisition of any
Security, or the extinguishment, under GAAP, of any
Indebtedness, of the Borrower or any Subsidiary;
(i) any net income or gain (but not any net loss)
during such period from (i) any change in accounting
principles in accordance with GAAP, (ii) any prior period
adjustments resulting from any change in accounting principles
in accordance with GAAP, (iii) any extraordinary items, or
(iv) any discontinued operations or the disposition thereof;
(j) any deferred credit representing the excess of
equity in any Subsidiary at the date of acquisition over the
cost of the investment in such Subsidiary;
(k) in the case of a successor to the Borrower by
consolidation or merger or as a transferee of its assets, any
earnings of the successor corporation prior to such
consolidation, merger or transfer of assets; and
(l) any portion of such net income that cannot be
freely converted into Dollars.
"CONTINGENT LIABILITIES" of any person shall mean, as of any
date, all obligations of such person or of others for which such person is
contingently liable, as obligor, guarantor, surety or in any other capacity, or
in respect of which obligations such person assures a creditor against loss or
agrees to take any action to prevent any such loss (other than endorsements of
negotiable instruments for collection in the ordinary course of business),
including without limitation all reimbursement obligations of such person in
respect of any letters of credit, surety bonds or similar obligations and all
obligations of such person to advance funds to, or to purchase assets, property
or services from, any other person in order to maintain the financial condition
of such other person.
"CONTROLLED GROUP" shall mean a person and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with such person, are treated
as a single employer generally under Section 414(b) or 414(c) of the Code.
"CORPORATE BASE RATE" shall mean a rate per annum equal to the
corporate base rate of interest announced by First Chicago from time to time,
changing when and as said corporate base rate changes.
"CUMULATIVE NET INCOME" of any person shall mean, as of any
date, the net income (after deduction for income and other taxes of such person,
or its shareholders in the case of a corporation that has elected to be taxed as
a Subchapter S corporation under the Code, determined by reference to income or
profits of such person) for the period commencing on February 1, 1997 through
the end of the most
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<PAGE> 5
recently completed fiscal quarter of such person (but without reduction for any
net loss incurred for any fiscal quarter during such period), taken as one
accounting period, all as determined in accordance with Generally Accepted
Accounting Principles.
"DEFAULT" shall mean any of the events or conditions described
in Section 6.1 which might become an Event of Default with notice or lapse of
time or both.
"DISTRIBUTION" means, in respect of any corporation,
association or other business entity:
(a) dividends or other distributions or payments on capital
stock or other equity interest of such corporation, association or other
business entity (except distributions in such stock or other equity interest);
and
(b) the redemption or acquisition of such stock or other
equity interests or of warrants, rights or other options to purchase such stock
or other equity interests (except when solely in exchange for such stock or
other equity interests) unless made, contemporaneously, from the net proceeds of
a sale of such stock or other equity interests.
"DOLLARS" and "$" shall mean the lawful money of the United
States of America.
"EFFECTIVE DATE" shall mean the effective date specified in
the final paragraph of this Agreement.
"ELIGIBLE NET INSTALLMENT RECEIVABLES" of any person shall
mean installment notes receivable, net of unearned income, of such person minus
those receivables, net of unearned income, of such person which are: (i) more
than 120 days contractually past due; (ii) the subject of any foreclosure
proceedings; (iii) held for repossession or resale by such person; (iv)
non-accruing accounts; (v) the amount of installment notes receivable included
in or subject to any Receivables Program; or (vi) otherwise reasonably deemed
ineligible by the Required Lenders.
"ENVIRONMENTAL LAWS" at any date shall mean all provisions of
law, statutes, ordinances, rules, regulations, judgments, writs, injunctions,
decrees, orders, awards and standards promulgated by the government of the
United States of America or any foreign government or by any state, province,
municipality or other political subdivision thereof or therein or by any court,
agency, instrumentality, regulatory authority or commission of any of the
foregoing concerning the protection of, or regulating the discharge of
substances into, the environment.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations thereunder.
"ERISA AFFILIATE" shall mean, with respect to any person, any
trade or business (whether or not incorporated) which, together with such person
or any Subsidiary of such person, would be treated as a single employer under
Section 414 of the Code and the regulations promulgated thereunder.
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<PAGE> 6
"EURODOLLAR BUSINESS DAY" shall mean, with respect to any
Eurodollar Rate Loan, a day which is both a Business Day and a day on which
dealings in Dollar deposits are carried out in the London interbank market.
"EURODOLLAR INTEREST PERIOD" shall mean, with respect to any
Eurodollar Rate Loan, the period commencing on the day such Eurodollar Rate Loan
is made or converted to a Eurodollar Rate Loan and ending on the date one, two,
three or six months thereafter, or, if available to all Lenders, four or five
months thereafter, or, on a one-time only basis in connection with the initial
Eurodollar Rate Borrowing made on or about the Effective Date, 30 or a lesser
number of days thereafter acceptable to the Lenders, as the Borrower may elect
under Section 2.4 or 2.7, and each subsequent period commencing on the last day
of the immediately preceding Eurodollar Interest Period and ending on the date
one, two, three or six months thereafter, or, if available to all Lenders, four
or five months thereafter, as the Borrower may elect under Section 2.4 or 2.7,
PROVIDED, however, that (a) any Eurodollar Interest Period which commences on
the last Eurodollar Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Eurodollar Business Day of the appropriate
subsequent calendar month, (b) each Eurodollar Interest Period which would
otherwise end on a day which is not a Eurodollar Business Day shall end on the
next succeeding Eurodollar Business Day or, if such next succeeding Eurodollar
Business Day falls in the next succeeding calendar month, on the next preceding
Eurodollar Business Day, and (c) no Eurodollar Interest Period which would end
after the Termination Date shall be permitted.
"EURODOLLAR RATE" shall mean, with respect to any Eurodollar
Rate Loan and the related Eurodollar Interest Period, the per annum rate that is
equal to the sum of:
(a) the Applicable Margin,
(b) the rate per annum obtained by dividing (i) the
per annum rate determined by the Administrative Agent to be the rate at which
First Chicago offers to place deposits in the London interbank market, at
approximately 11:00 a.m. London time, on the second Eurodollar Business Day
prior to the first day of such Eurodollar Interest Period, in the approximate
amount of First Chicago's relevant Eurodollar Rate Loan and having a maturity
approximately equal to such Eurodollar Interest Period, by (ii) an amount equal
to one minus the stated maximum rate (expressed as a decimal) of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) that is specified on the first day of
such Eurodollar Interest Period by the Board of Governors of the Federal Reserve
System (or any successor agency thereto) for determining the maximum reserve
requirement with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) maintained by a member
bank of such System;
all as conclusively determined by the Administrative Agent, such sum to be
rounded up, if necessary, to the nearest whole multiple of one one-sixteenth of
one percent (1/16 of 1%).
"EURODOLLAR RATE LOAN" shall mean any Loan which bears
interest at the Eurodollar Rate.
"EVENT OF DEFAULT" shall mean any of the events or conditions
described in Section 6.1.
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<PAGE> 7
"EXISTING CREDIT AGREEMENT" shall mean the Credit Agreement
dated as of June 30, 1995, as amended, among the Borrower, certain affiliates of
the Borrower, the banks named therein and NBD Bank, as agent.
"FAIR MARKET VALUE" means at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"FEDERAL FUNDS RATE" shall mean the per annum rate that is
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately 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 at approximately 10:00 a.m. Chicago
time on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion, all as conclusively determined by
the Administrative Agent, such sum to be rounded up, if necessary, to the
nearest whole multiple of one sixteenth of one percent (1/16 of 1%), which
Federal Funds Rate shall change simultaneously with any change in such announced
rates.
"FIRST CHICAGO" shall mean The First National Bank of Chicago
in its individual capacity, and its successors.
"FIXED CHARGES" means, with respect to any period, the sum of
(a) Interest Charges for such period and (b) Lease Rentals for such period. For
purposes of this definition, "Interest Charges" means, with respect to any
period, the sum (without duplication) of the following (in each case,
eliminating all offsetting debits and credits between the Borrower and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Borrower and its
Subsidiaries in accordance with Generally Accepted Accounting Principles: (a)
all interest in respect of Indebtedness of the Borrower and its Subsidiaries
(including imputed interest on Capital Leases) deducted in determining
Consolidated Operating Net Income for such period, together with all interest
capitalized or deferred during such period and not deducted in determining
Consolidated Operating Net Income for such period, and (b) all debt discount and
expense amortized or required to be amortized in the determination of
Consolidated Operating Net Income for such period. For purposes of this
definition, "Lease Rentals" means, with respect to any period, the sum of the
rental and other obligations required to be paid during such period by the
Borrower or any Subsidiary as lessee under all leases of real or personal
property (other than Capital Leases), excluding any amounts required to be paid
by the lessee (whether or not therein designated as rental or additional rental
) on account of maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges, provided that, if at the date of determination, any
such rental or other obligations (or portion thereof) are contingent or not
otherwise definitely determinable by the terms of the related lease, the amount
of such obligations (or such portion thereof) (i) shall be assumed to be equal
to the amount of such obligations for the period of 12 consecutive calendar
months immediately preceding the date of determination or (ii) if the related
lease was not in effect during such preceding 12 month period, shall be the
amount estimated by a chief financial officer, controller or treasurer of the
Borrower on a reasonable basis and in good faith.
"FIXED RATE LOAN" shall mean any Eurodollar Rate Loan.
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<PAGE> 8
"FLOATING RATE" shall mean the per annum rate equal to the sum
of (a) the Applicable Margin plus (b) the Alternate Base Rate in effect from
time to time, which Floating Rate shall change simultaneously with any change in
such Alternate Base Rate.
"FLOATING RATE LOAN" shall mean any Loan which bears interest
at the Floating Rate.
"FUNDED INDEBTEDNESS" of any person shall mean, as of any
date, all Indebtedness of such person, other than Subordinated Indebtedness.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall
mean Generally Accepted Accounting Principles applied on a basis consistent with
that reflected in the financial statements referred to in Section 4.6.
"GUARANTY" shall mean any Guaranty entered into by any
Guarantor for the benefit of the Administrative Agent and the Lenders pursuant
to this Agreement in substantially the form of Exhibit A hereto, as amended or
modified from time to time.
"GUARANTORS" shall mean NAC, Inc., NAC Investment Co. and any
other person entering into a Guaranty from time to time.
"HAZARDOUS MATERIALS" includes, without limitation, any
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances or related materials defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sections 9601, ET SEQ.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, ET SEQ.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, ET SEQ.) and
in the regulations adopted and publications promulgated pursuant thereto, or any
other federal, state or local government law, ordinance, rule or regulation.
"INDEBTEDNESS" of any person shall mean, as of any date, (a)
all obligations of such person for borrowed money, (b) all obligations of such
person as lessee under any Capital Lease, (c) all obligations which are secured
by any Lien existing on any asset or property of such person whether or not the
obligation secured thereby shall have been assumed by such person, (d) the
unpaid purchase price for goods, property or services acquired by such person,
except for trade accounts payable arising in the ordinary course of business
that are not past due, (e) all obligations of such person to purchase goods,
property or services where payment therefor is required regardless of whether
delivery of such goods or property or the performance of such services is ever
made or tendered (generally referred to as "take or pay contracts"), (f) all
liabilities of such person in respect of Unfunded Benefit Liabilities under any
plan of such person or of any member of a Controlled Group of which such person
is a member, (g) all obligations of such person in respect of any interest rate
or currency swap, rate cap or other similar transaction (valued in an amount
equal to the highest termination payment, if any, that would be payable by such
person upon termination for any reason on the date of determination), and (h)
all obligations of others similar in character to those described in clauses (a)
through (g) of this definition for which such person is contingently liable, as
obligor, guarantor, surety or in any other capacity, or in respect of which
obligations such person assures a creditor against loss or agrees to take any
action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without
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<PAGE> 9
limitation all reimbursement obligations of such person in respect of letters of
credit, surety bonds or similar obligations and all obligations of such person
to advance funds to, or to purchase assets, property or services from, any other
person in order to maintain the financial condition of such other person.
"INTEREST PAYMENT DATE" shall mean (a) with respect to any
Fixed Rate Loan, the last day of each Interest Period with respect to such Fixed
Rate Loan, and, in the case of any Interest Period exceeding three months, those
days that occur during such Interest Period at intervals of three months after
the first day of such Interest Period, and (b) in all other cases, the last
Business Day of each January, April, July and October occurring after the date
hereof, commencing with the first such Business Day occurring after the date of
this Agreement.
"INTEREST PERIOD" shall mean any Eurodollar Interest Period or
Bid-Option Interest Period.
"INVESTMENT" means any investment, made in cash or by delivery
of property, by the Borrower or any of its Subsidiaries (i) in any Person,
whether by acquisition of stock, Indebtedness or other obligation or Security,
or by loan, guaranty, advance, capital contribution or otherwise, or (ii) or in
any property.
"LENDER OBLIGATIONS" shall mean all indebtedness, obligations
and liabilities, whether now owing or hereafter arising, direct or indirect,
contingent or otherwise, of the Borrower to the Administrative Agent or any
Lender pursuant to the Loan Documents.
"LEVERAGE RATIO" of any person shall mean the ratio of (a)
Funded Indebtedness of such person to (b) Eligible Net Installment Receivables
of such person.
"LIEN" shall mean any pledge, assignment, hypothecation,
mortgage, security interest, deposit arrangement, option, conditional sale or
title retaining contract, sale and leaseback transaction, financing statement
filing, lessor's or lessee's interest under any lease, subordination of any
claim or right, or any other type of lien, charge, encumbrance, preferential
arrangement or other claim or right.
"LOAN" shall mean any Revolving Credit Loan. Any such Loan or
portion thereof may also be denominated as a Floating Rate Loan or a Fixed Rate
Loan and such Floating Rate Loans and Fixed Rate Loans are referred to herein as
"types" of Loans.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the
Guaranties and any other agreement, instrument or document executed at any time
in connection with this Agreement.
"LONG-TERM CREDIT AGREEMENT" shall mean the Long-Term Credit
Agreement dated as of the date hereof among the Borrower, the Lenders, the
Documentation Agent and the Administrative Agent, as amended, modified,
extended, restated or supplemental from time to time.
"MULTIEMPLOYER PLAN" shall mean any "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"NET CASH PROCEEDS" shall mean without duplication in
connection with any issuance or sale of any equity securities or debt securities
or instruments or the incurrence of loans, the cash proceeds
-9-
<PAGE> 10
received from such issuance or incurrence, net of investment banking fees,
reasonable and documented attorneys' fees, accountants' fees, underwriting
discounts and commissions and other reasonable and customary fees and expenses
actually incurred in connection therewith.
"NET INCOME AVAILABLE FOR FIXED CHARGES" means, with respect
to any period, Consolidated Net Income for such period plus all amounts deducted
in the computation thereof on account of (a) Fixed Charges during such period
and (b) taxes imposed on or measured by income or excess profits of the Borrower
and its Subsidiaries during such period.
"NOTES" shall mean the Revolving Credit Notes; "NOTE" shall
mean any Revolving Credit Note.
"OVERDUE RATE" shall mean (a) in respect of principal of
Floating Rate Loans, a rate per annum that is equal to the sum of two percent
(2%) per annum plus the Floating Rate, (b) in respect of principal of Fixed Rate
Loans, a rate per annum that is equal to the sum of two percent (2%) per annum
plus the per annum rate in effect thereon until the end of the then current
Interest Period for such Loan and, thereafter, a rate per annum that is equal to
the sum of two percent (2%) per annum plus the Floating Rate, and (c) in respect
of other amounts payable by the Borrower hereunder (other than interest), a per
annum rate that is equal to the sum of two percent (2%) per annum plus the
Floating Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"PERCENTAGE OF TOTAL COMMITMENTS" shall mean, with respect to
each Lender, the amount set forth in the signature page next to the name of such
Lender or as subsequently set forth in any Assignment and Acceptance or
Assumption Agreement.
"PERMITTED LIENS" shall mean Liens permitted by Section 5.2(e)
hereof.
"PERSON" or "PERSON" shall include an individual, a
corporation, an association, a partnership, a trust or estate, a joint stock
company, an unincorporated organization, a joint venture, a trade or business
(whether or not incorporated), a government (foreign or domestic) and any agency
or political subdivision thereof, or any other entity.
"PLAN" shall mean, with respect to any person, any pension
plan (other than a Multiemployer Plan) subject to Title IV of ERISA or to the
minimum funding standards of Section 412 of the Code which has been established
or maintained by such person, any Subsidiary of such person or any ERISA
Affiliate, or by any other person if such person, any Subsidiary of such person
or any ERISA Affiliate could have liability with respect to such pension plan.
"PRIVATE PLACEMENT DEBT" shall mean the debt issued by the
Borrower pursuant to the Private Placement Debt Documents in an aggregate
principal amount not to exceed Forty-Five Million Dollars ($45,000,000).
"PRIVATE PLACEMENT DEBT DOCUMENTS" shall mean that certain
National Auto Credit, Inc. Note Purchase Agreement dated as of April 21, 1997
(7.66% Senior Notes due April 21, 2004), together
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<PAGE> 11
with any and all other documents, instruments and certificates executed and
delivered pursuant thereto, as the same may be amended from time to time and any
and all other documents executed in exchange therefor or replacement or renewal
thereof.
"PROHIBITED TRANSACTION" shall mean any transaction involving
any Plan which is proscribed by Section 406 of ERISA or Section 4975 of the
Code.
"REPORTABLE EVENT" shall mean a reportable event as described
in Section 4043(b) of ERISA including those events as to which the thirty (30)
day notice period is waived under Part 2615 of the regulations promulgated by
the PBGC under ERISA.
"REQUIRED BANKS" shall mean Lenders holding not less than
sixty-seven percent (67%) of the aggregate Commitments or, if the Commitments
have been terminated, Lenders in the aggregate holding not less than sixty-seven
percent (67%) of the aggregate unpaid principal amount of the outstanding Loans.
"RESTRICTED INVESTMENTS" means all Investments except the
following:
(a) property to be used in the ordinary course of business of
the Borrower and its Subsidiaries;
(b) current assets arising from the sale of goods and services
in the ordinary course of business of the Borrower and its Subsidiaries;
(c) Investments in one or more Subsidiaries or any Person that
concurrently with such Investments becomes a Subsidiary;
(d) Investments existing on the date of the Effective Date and
disclosed in Schedule 5.2(h);
(e) Investments in United States Governmental Securities,
provided that such obligations mature within 365 days from the date of
acquisition thereof;
(f) Investments in certificates of deposit or Eurodollar
certificates of deposit (other than Eurodollar certificates of deposit issued in
Italy or France) or banker's acceptances issued by an Acceptable Bank, provided
that such obligations mature within 365 days from the date of acquisition
thereof;
(g) Investments in commercial paper issued by a corporation
organized under the laws of the United States of America or any State thereof
rated A-1 by S&P or P-1 by Moody's and maturing not more than 270 days from the
date of creation thereof; and
(h) Investments in Repurchase Agreements.
As of any date of determination, each Restricted Investment shall be valued at
the greater of:
(x) the amount at which such Restricted Investment is shown on
the books of the Borrower or any of its Subsidiaries (or zero if such Restricted
Investment is not shown on any such books); and
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(y) either
(i) in the case of any guaranty of the obligation of
any Person, the amount which the Borrower or any of its
Subsidiaries has paid on account of such obligation less any
recoupment by the Borrower or such Subsidiary of any such
payments, or
(ii) in the case of any other Restricted Investment,
the excess of (x) the greater of (A) the amount originally
entered on the books of the Borrower or any of its
Subsidiaries with respect thereto and (B) the cost thereof to
the Borrower or its Subsidiary over (y) any return of capital
(after income taxes applicable thereto) upon such Restricted
Investment through the sale or other liquidation thereof or
part thereof or otherwise.
As used in this definition of "Restricted Investments":
"Acceptable Bank" means any bank or trust company (i) which is
organized under the laws of the United States of America or any State
thereof, (ii) which has capital, surplus and undivided profits
aggregating at least $500,000,000 (or $1,000,000,000 in the case of an
Acceptable Bank issuing a Eurodollar certificate of deposit), and (iii)
whose long-term unsecured debt obligations (or the long-term unsecured
debt obligations of the bank holding company owning all of the capital
stock of such bank or trust company) shall have been given a rating of
"A" or better by S&P, "A2" or better by Moody's.
"Acceptable Broker-Dealer" means any Person other than a
natural person (i) which is registered as a broker or dealer pursuant
to the Exchange Act and (ii) whose long-term unsecured debt obligations
shall have been given a rating of "A" or better by S&P, "A2" or better
by Moody's.
"Moody's" means Moody's Investors Service, Inc.
"Repurchase Agreement" means any written agreement
(a) that provides for (i) the transfer of one or more United
States Governmental Securities in an aggregate principal amount at
least equal to the amount of the Transfer Price (defined below) to the
Borrower or any of its Subsidiaries from an Acceptable Bank or an
Acceptable Broker-Dealer against a transfer of funds (the "Transfer
Price") by the Borrower or such Subsidiary to such Acceptable Bank or
acceptable Broker-Dealer, and (ii) a simultaneous agreement by the
Borrower or such Subsidiary, in connection with such transfer of funds,
to transfer to such Acceptable Bank or Acceptable Broker-Dealer the
same or substantially similar United States Governmental Securities for
a price not less than the Transfer Price plus a reasonable return
thereon at a date certain not later than 30 days after such transfer of
funds,
(b) in respect of which the Borrower or such Subsidiary shall
have the right, whether by contract or pursuant to applicable law, to
liquidate such agreement upon the occurrence of any default thereunder,
and
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(c) in connection with which the Borrower or such Subsidiary,
or an agent thereof, shall have taken all action, if any, required by
applicable law or regulations to perfect a Lien in such United States
Governmental Securities.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc.
"RESTRICTED PAYMENTS" means
(a) any Distribution in respect of the Borrower or any
Subsidiary of the Borrower (other than on account of capital stock or
other equity interests of a Subsidiary of the Borrower owned legally
and beneficially by the Borrower or another Subsidiary of the
Borrower), including, without limitation, any Distribution resulting in
the acquisition by the Borrower of Securities which would constitute
treasury stock, and
(b) any payment, repayment, redemption, retirement, repurchase
or other acquisition, direct or indirect, by the Borrower or any
Subsidiary of, on account of, or in respect of, the principal of any
Subordinated Indebtedness (or any installment thereof) prior to the
regularly scheduled maturity date thereof (as in effect on the date
such Subordinated Indebtedness was originally incurred).
For purposes of this Agreement, the amount of any Restricted Payment made in
property shall be the greater of (x) the Fair Market Value of such property (as
determined in good faith by the board of directors (or equivalent governing
body) of the Person making such Restricted Payment) and (y) the net book value
thereof on the books of such Person, in each case determined as of the date on
which such Restricted Payment is made.
"REVOLVING CREDIT LOAN" shall mean any borrowing under Section
2.4 evidenced by the Revolving Credit Note and made pursuant to Section 2.1(a).
"REVOLVING CREDIT NOTE" shall mean any promissory note of the
Borrower evidencing one or more Revolving Credit Loans, in substantially the
form annexed hereto as Exhibit B, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or replacement
therefor.
"SECURITY" has the meaning given such term in Section (2)1 of
the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SUBORDINATED INDEBTEDNESS" of any person shall mean any
Indebtedness of such person the payment of which is subordinated to payment of
the Lender Obligations to the written satisfaction of the Required Lenders.
"SUBSIDIARY" of any person shall mean any other person
(whether now existing or hereafter organized or acquired) in which (other than
directors qualifying shares required by law) at least a majority of the
securities or other ownership interests of each class having ordinary voting
power or analogous right (other than securities or other ownership interests
which have such power or right only by reason of the happening of a
contingency), at the time as of which any determination is being made, are
owned,
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<PAGE> 14
beneficially and of record, by such person or by one or more of the other
Subsidiaries of such person or by any combination thereof. Unless otherwise
specified, reference to "Subsidiary" shall mean a Subsidiary of the Borrower.
"TANGIBLE NET WORTH" of any person shall mean, as of any date,
the excess of (a) Total Assets over (b) Total Liabilities, excluding minority
interests of such person, mandatory redeemable shares of such person and the net
book value of all items of the following character which are included in the
assets of such person: (i) goodwill, including without limitation, the excess of
cost over book value of any asset, (ii) organization or experimental expenses,
(iii) unamortized debt discount and expense, (iv) patents, trademarks, trade
names and copyrights, (v) franchises, licenses and permits, and, (vi) other
assets which are deemed intangible assets under Generally Accepted Accounting
Principles.
"TERMINATION DATE" shall mean the earlier to occur of (a)
April 21, 1998, or such later date to which the Termination Date is extended
pursuant to Section 2.1(c), and (b) the date on which the Commitments shall be
terminated pursuant to Section 2.2 or 6.2.
"TOTAL ASSETS" and "TOTAL LIABILITIES" of any person shall
mean, as of any date, all obligations which, in accordance with Generally
Accepted Accounting Principles, are or should be classified as assets or
liabilities, as the case may be, on a balance sheet of such person.
"TOTAL CAPITALIZATION" of any person shall mean, as of any
date, the sum of (a) Tangible Net Worth of such person plus (b) Indebtedness of
such person.
"TOTAL COMMITMENTS" shall mean the aggregate amount of
Commitments of all Lenders as set forth on the last signature page of this
Agreement, as reduced or modified from time to time pursuant to Section 2.2 or
8.6, PROVIDED, THAT, the Total Commitments may not exceed $50,000,000.
"UNFUNDED BENEFIT LIABILITIES" shall mean, with respect to any
Plan as of any date, the amount of the unfunded benefit liabilities determined
in accordance with Section 4001(a)(18) of ERISA.
"UNITED STATES GOVERNMENTAL SECURITY" means any direct
obligation of, or obligation fully guaranteed by, the United States of America,
or any agency controlled or supervised by or acting as an instrumentality of the
United States of America pursuant to authority granted by the Congress of the
United States of America, so long as such obligation or guarantee shall have the
benefit of the full faith and credit of the United States of America which shall
have been pledged pursuant to authority granted by the Congress of the United
States of America.
1.2 OTHER DEFINITIONS; RULES OF CONSTRUCTION. As used herein,
the terms "Administrative Agent", "Lenders", "Borrower" and "this Agreement"
shall have the respective meanings ascribed thereto in the introductory
paragraph of this Agreement. Such terms, together with the other terms defined
in Section 1.1, shall include both the singular and the plural forms thereof and
shall be construed accordingly. All computations required hereunder and all
financial terms used herein shall be made or construed in accordance with
Generally Accepted Accounting Principles unless such principles are inconsistent
with the express requirements of this Agreement. Use of the terms "herein",
"hereof", and "hereunder" shall be deemed references to this Agreement in its
entirety and not to the Section or clause in
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<PAGE> 15
which such term appears. References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided.
ARTICLE II.
THE COMMITMENTS AND THE ADVANCES
--------------------------------
2.1 Commitment of the Lenders.
-------------------------
(a) REVOLVING CREDIT LOANS. Each Lender agrees, for
itself only, subject to the terms and conditions of this Agreement, to make
Revolving Credit Loans to the Borrower pursuant to Section 2.4, from time to
time from and including the Effective Date to but excluding the Termination
Date, not to exceed in aggregate principal amount at any time outstanding the
amount of its respective Commitment as of the date any such Revolving Credit
Loan is made.
(b) LIMITATION ON AMOUNT OF LOANS. Notwithstanding
anything in this Agreement to the contrary, the aggregate principal amount of
the Revolving Credit Loans made by any Lender at any time outstanding shall not
exceed the amount of its respective Commitment as of the date any such Loan is
made, and the aggregate principal amount of the Loans made by any Lender at any
time outstanding shall not exceed the amount of its respective Commitment as of
the date any such Loan is made.
(c) EXTENSIONS. The Lenders shall consider annual
requests for the extension of Termination Date. The Borrower shall deliver a
notice in writing to the Administrative Agent on or before January 15 of each
year in the event the Borrower chooses to request extension of such Termination
Date for a period of 364 days from the then existing Termination Date. The
Administrative Agent shall provide notice to each of the Lenders within five (5)
business days after receiving such notice. Each of the Lenders agrees to provide
notice in writing to the Administrative Agent of its agreement or refusal to
extend such Termination Date for a period of 364 days on or before February 28
of each year; PROVIDED, HOWEVER, that the failure of any Lender to so
communicate its agreement or refusal shall be deemed to be such Lender's refusal
to so extend the Termination Date. The determination to extend or not to extend
such Termination Date shall be given or withheld by each Lender in its absolute
and sole discretion and any such agreement or refusal once given shall not be
revocable by any Lender prior to the then applicable Termination Date. No
extension of such Termination Date shall in any event be effective until the
Administrative Agent shall have received an agreement to so extend, in the form
of Exhibit C, attached hereto executed by each Lender, which may not be executed
earlier than 20 days prior to the then-existing Termination Date; PROVIDED,
HOWEVER, that if any Lender refuses to extend such Termination Date, the
Administrative Agent shall provide notice to the Borrower and (i) the commitment
of each Lender shall remain unchanged and the Total Commitment and the
Percentage of Total Commitments shall be modified accordingly, or (ii)
additional lenders, as selected by the Borrower, shall be added to this
Agreement.
2.2 TERMINATION AND REDUCTION OF COMMITMENTS. The Borrower
shall have the right to terminate or reduce the Commitments at any time and from
time to time at its option, PROVIDED that (a) the Borrower shall give not less
than five (5) days prior notice of such termination or reduction to the
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<PAGE> 16
Administrative Agent (with sufficient executed copies for each Lender)
specifying the amount and effective date thereof, (b) each partial reduction of
the Commitments shall be in a minimum amount of $5,000,000 and in an integral
multiple of $1,000,000 and shall reduce the Commitments of all of the Lenders
proportionately in accordance with the respective commitment amounts for each
such Lender set forth on the signature pages hereof next to the name of each
such Lender, (c) no such termination or reduction shall be permitted with
respect to any portion of the Commitments as to which a request for a Borrowing
pursuant to Section 2.4 is then pending, and (d) the Commitments may not be
terminated if any Loans are then outstanding and may not be reduced below the
principal amount of Loans then outstanding. The Commitments or any portion
thereof terminated or reduced pursuant to this Section 2.2, whether optional or
mandatory, may not be reinstated.
2.3 FEES. (a) The Borrower agrees to pay to the Administrative
Agent, for the benefit of the Lenders, a facility fee on the entire amount of
each of the Commitments for the period from the Effective Date to but excluding
the Termination Date, at a per annum rate equal to the respective Applicable
Margin. Accrued facility fees shall be payable quarterly in arrears on the last
Business Day of each April, July, October and January, commencing on the first
such Business Day occurring after the date of this Agreement and on the
Termination Date.
(b) The Borrower agrees to pay to the Administrative
Agent an agency fee for its services as Administrative Agent under this
Agreement in such amounts as are mutually agreed upon by the Borrower and the
Administrative Agent.
2.4 DISBURSEMENT OF LOANS. (a) The Borrower shall give the
Administrative Agent notice of its request for each Borrowing in substantially
the form of Exhibit D hereto not later than 10:00 a.m. Chicago time (i) three
Eurodollar Business Days prior to the date such Borrowing is requested to be
made if such Borrowing is to be made as a Eurodollar Rate Borrowing, and (ii) on
the date such Borrowing is requested to be made if such Borrowing is to be made
as a Floating Rate Borrowing, which notice shall specify whether a Eurodollar
Rate Borrowing or Floating Rate Borrowing is requested and, in the case of each
requested Eurodollar Rate Borrowing, the Eurodollar Interest Period to be
initially applicable to such Borrowing. The Administrative Agent, by 1:00 p.m.
Chicago time, on the same day such notice is given, shall provide notice of such
requested Borrowing to each Lender. Subject to the terms and conditions of this
Agreement, the proceeds of each such requested Borrowing shall be made available
to the Borrower in immediately available funds.
(b) Each Lender, on the date any Borrowing is
requested to be made, shall make its pro rata share of such Borrowing available
in immediately available funds at the principal office of the Administrative
Agent for disbursement to the Borrower requesting such Loan. Unless the
Administrative Agent shall have received notice from any Lender prior to the
date such Borrowing is requested to be made under this Section 2.5 that such
Lender will not make available to the Administrative Agent such Lender's pro
rata portion of such Borrowing, the Administrative Agent may assume that such
Lender has made such portion available to the Administrative Agent on the date
such Borrowing is requested to be made in accordance with this Section 2.4. If
and to the extent such Lender shall not have so made such pro rata portion
available to the Administrative Agent, the Administrative Agent may (but shall
not be obligated to) make such amount available to the Borrower requesting such
Loan, and such Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower by
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the Administrative Agent until the date such amount is repaid to the
Administrative Agent, at a rate per annum, if paid by the Borrower, equal to the
interest rate applicable to such Borrowing during such period, and if paid by
such Lender, equal to the Federal Funds Rate. If such Lender shall pay such
amount to the Administrative Agent together with interest, such amount so paid
shall constitute a Loan by such Lender as a part of such related Borrowing for
purposes of this Agreement. The failure of any Lender to make its pro rata
portion of any such Borrowing available to the Administrative Agent shall not
relieve any other Lender of its obligations to make available its pro rata
portion of such Borrowing on the date such Borrowing is requested to be made,
but no Lender shall be responsible for failure of any other Lender to make such
pro rata portion available to the Administrative Agent on the date of any such
Borrowing.
(c) All Loans made under this Section 2.4 shall be
evidenced by the Notes and all such Loans shall be due and payable and bear
interest as provided in Article III. Each Lender is hereby authorized by the
Borrower to record on its books and records, the date, amount and type of each
Loan and the duration of the related Interest Period (if applicable), the amount
of each payment or prepayment of principal thereon, and the other information
provided for on such books and records, which books and records shall constitute
prima facie evidence of the information so recorded, PROVIDED, HOWEVER, that
failure of any Lender to record, or any error in recording, any such information
shall not relieve the Borrower of its obligation to repay the outstanding
principal amount of the Loans, all accrued interest thereon and other amounts
payable with respect thereto in accordance with the terms of the Notes and this
Agreement. Subject to the terms and conditions of this Agreement, the Borrower
may borrow Loans under this Section 2.4, prepay Loans pursuant to Section 3.1
and reborrow Loans under this Section 2.4.
2.5 CONDITIONS FOR FIRST DISBURSEMENT. The obligation of the
Lenders to make the first Loan hereunder is subject to receipt by each Lender
and the Administrative Agent of the following documents and completion of the
following matters, in form and substance satisfactory to each Lender and the
Administrative Agent:
(a) CHARTER DOCUMENTS. Certificates of recent date of
the appropriate authority or official of the Borrower's and each Guarantor's
respective state of incorporation listing all charter documents of the Borrower
and each Guarantor, respectively, on file in that office and certifying as to
the good standing and corporate existence of the Borrower and each Guarantor,
respectively, together with copies of such charter documents of the Borrower and
each Guarantor, certified as of a recent date by such authority or official and
certified as true and correct as of the Effective Date by a duly authorized
officer of the Borrower and each Guarantor, respectively;
(b) BY-LAWS AND CORPORATE AUTHORIZATIONS. Copies of
the by-laws of the Borrower and each Guarantor together with all authorizing
resolutions and evidence of other corporate action taken by the Borrower and
each Guarantor to authorize the execution, delivery and performance by the
Borrower and each Guarantor of this Agreement, the Notes and the Guaranty to
which the Borrower and each Guarantor, respectively, is a party and the
consummation by the Borrower and each Guarantor, respectively of the
transactions contemplated hereby, certified as true and correct as of the
Effective Date by a duly authorized officer of the Borrower and each Guarantor,
respectively;
(c) INCUMBENCY CERTIFICATE. Certificates of
incumbency of the Borrower and each Guarantor containing, and attesting to the
genuineness of, the signatures of those officers authorized to act on behalf of
the Borrower and each Guarantor in connection with this Agreement, the
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Notes and each Guaranty to which the Borrower or each Guarantor is a party and
the consummation by the Borrower and each Guarantor of the transactions
contemplated hereby, certified as true and correct as of the Effective Date by a
duly authorized officer of the Borrower and each Guarantor, respectively;
(d) NOTES. The Notes duly executed on behalf of
Borrower for each Lender;
(e) GUARANTIES. The Guaranties, duly executed on
behalf of the Guarantors;
(f) LEGAL OPINIONS. The favorable written opinion of
counsel for the Borrower and the Guarantors (which counsel may be an employee of
the Borrower or the Guarantors), with respect to each of the matters set forth
in Article IV (other than Sections 4.6, 4.7, 4.11, and 4.12), and as to such
other matters as the Lenders or the Administrative Agent may reasonably request;
(g) CONSENTS, APPROVALS, ETC. Copies of all
governmental and nongovernmental consents, approvals, authorizations,
declarations, registrations or filings, if any, required on the part of the
Borrower or any Guarantor in connection with the execution, delivery and
performance of this Agreement, the Notes, any Guaranty or the transactions
contemplated hereby or as a condition to the legality, validity or
enforceability of this Agreement, the Notes or any Guaranty, certified as true
and correct and in full force and effect as of the Effective Date by a duly
authorized officer of the Borrower, or, if none are required, a certificate of
such officer to that effect;
(h) PRIVATE PLACEMENT DEBT. Evidence satisfactory to
the Administrative Agent and the Lenders that the Borrower has incurred Private
Placement Debt in an amount not less than $45,000,000 in accordance with the
Private Placement Debt Documents and on terms and conditions satisfactory to the
Administrative Agent and the Lenders, all Private Placement Debt Documents shall
have been delivered to the Administrative Agent and the Lenders and approved by
the Administrative Agent and the Lenders and all transactions contemplated
pursuant to the Private Placement Debt Documents shall have been completed; and
(i) RELEASE OF SIGNATURES FROM ESCROW. Written
authorization from the Borrower and each Lender to release from escrow its
respective signatures to this Agreement and all other Loan Documents, which were
delivered to the Administrative Agent in escrow.
2.6 FURTHER CONDITIONS FOR DISBURSEMENT. The obligation of the
Lenders to make any Loan (including the first Loan), or any continuation or
conversion under Section 2.6 is further subject to the satisfaction of the
following conditions precedent:
(a) The representations and warranties contained in
Article IV hereof and in the Guaranty shall be true and correct on and as of the
date such Loan is made (both before and after such Loan is made) as if such
representations and warranties were made on and as of such date;
(b) No Default or Event of Default shall exist or
shall have occurred and be continuing on the date such Loan is made (whether
before or after such Loan is made); and
(c) No material adverse change in the business,
financial condition, or prospects of the Borrower or any Guarantor shall have
occurred.
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The Borrower shall be deemed to have made a representation and warranty to the
Lenders at the time of the making of, and the continuation or conversion of,
each Loan to the effects set forth in clauses (a), (b) and (c) of this Section
2.6. For purposes of this Section 2.6, the representations and warranties
contained in Section 4.6 hereof shall be deemed made with respect to both the
financial statements referred to therein and the most recent financial
statements delivered pursuant to Section 5.1(d)(ii) and (iii).
2.7 SUBSEQUENT ELECTIONS AS TO BORROWINGS. The Borrower may
elect (a) to continue a Eurodollar Rate Borrowing, or a portion thereof, as a
Eurodollar Rate Borrowing, or (b) may elect to convert a Eurodollar Rate
Borrowing, or a portion thereof, to a Floating Rate Borrowing, or (c) elect to
convert a Floating Rate Borrowing, or a portion thereof, to a Eurodollar Rate
Borrowing, in each case by giving notice thereof to the Administrative Agent
(with sufficient executed copies for each Lender) in substantially the form of
Exhibit E hereto not later than 10:00 a.m. Chicago time (i) three Eurodollar
Business Days prior to the date any such continuation of or conversion to a
Eurodollar Rate Borrowing is to be effective, (ii) the date such continuation or
conversion is to be effective in all other cases, PROVIDED that an outstanding
Eurodollar Rate Borrowing may only be converted on the last day of the then
current Eurodollar Interest Period with respect to such Borrowing, and PROVIDED,
FURTHER, if a continuation of a Borrowing as, or a conversion of a Borrowing to,
a Eurodollar Rate Borrowing is requested, such notice shall also specify the
Eurodollar Interest Period to be applicable thereto upon such continuation or
conversion. The Administrative Agent, on the day such notice is given in the
event of an election to convert or continue a Floating Rate Borrowing, and not
later than the Business Day next succeeding the day such notice is given in all
other cases, shall provide notice of such election to the Lenders. If the
Borrower shall not timely deliver such a notice with respect to any outstanding
Eurodollar Rate Borrowing, the Borrower shall be deemed to have elected to
convert such Eurodollar Rate Borrowing to a Floating Rate Borrowing on the last
day of the then current Eurodollar Interest Period with respect to such
Borrowing.
2.8 LIMITATION OF REQUESTS AND ELECTIONS. Notwithstanding any
other provision of this Agreement to the contrary, if, upon receiving a request
for a Eurodollar Rate Borrowing pursuant to Section 2.4, or a request for a
continuation of a Eurodollar Rate Borrowing as a Eurodollar Rate Borrowing, or a
request for a conversion of a Floating Rate Borrowing to a Eurodollar Rate
Borrowing pursuant to Section 2.7, (a) in the case of any Eurodollar Rate
Borrowing, deposits in Dollars for periods comparable to the Eurodollar Interest
Period elected by the Borrower are not available to any Lender in the relevant
interbank secondary market, or (b) the Eurodollar Rate, will not adequately and
fairly reflect the cost to any Lender of making, funding or maintaining the
related Eurodollar Rate Loan, or (c) by reason of national or international
financial, political or economic conditions or by reason of any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect, or the interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof, or
compliance by any Lender with any guideline, request or directive of such
authority (whether or not having the force of law), including without limitation
exchange controls, it is impracticable, unlawful or impossible for any Lender
(i) to make or fund the relevant Eurodollar Rate Borrowing, or (ii) to continue
such Eurodollar Rate Borrowing as a Eurodollar Rate Loan, or (iii) to convert a
Loan to a Eurodollar Rate Loan, then the Borrower shall not be entitled, so long
as such circumstances continue, to request a Eurodollar Rate Borrowing pursuant
to Section 2.4 or a continuation of or conversion to a Eurodollar Rate Borrowing
of the affected type pursuant to Section 2.7. In the event that such
circumstances no longer exist, the Lenders shall again consider requests for
Eurodollar Rate Borrowings of the affected type
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pursuant to Section 2.4, and requests for continuations of and conversions to
Eurodollar Rate Borrowings of the affected type pursuant to Section 2.7.
2.9 MINIMUM AMOUNTS; LIMITATION ON NUMBER OF BORROWINGS. Except
for (a) Borrowings and conversions thereof which exhaust the entire remaining
amount of the Commitments, and (b) conversions or payments required pursuant to
Section 3.7, each Borrowing and each continuation or conversion pursuant to
Section 2.7 and each prepayment thereof shall be in a minimum amount of
$3,000,000 and in an integral multiple of $500,000. The aggregate number of
Eurodollar Rate Borrowings outstanding at any one time under this Agreement
(together with those outstanding under the Long-Term Credit Agreement) may not
exceed ten.
2.10 GUARANTIES. To secure the payment when due of the Notes
and all other obligations of the Borrower under this Agreement to the Lenders
and the Administrative Agent, the Borrower shall cause to be executed and
delivered to the Lenders and the Administrative Agent the Guaranty of each
Guarantor.
ARTICLE III.
PAYMENTS AND PREPAYMENTS
------------------------
3.1 PRINCIPAL PAYMENTS. (a) Unless earlier payment is required
under this Agreement, the Borrower shall pay to the Lenders on the Termination
Date the entire outstanding principal amount of the Loans.
(b) The Borrower may at any time and from time to
time prepay all or a portion of the Loans without premium or penalty, provided
that (i) the Borrower may not prepay any portion of any Loan as to which an
election for continuation of or conversion to a Fixed Rate Loan is pending
pursuant to Section 2.7, and (ii) unless earlier payment is required under this
Agreement, any Fixed Rate Loan may only be prepaid on the last day of the then
current Fixed Interest Period with respect to such Loan.
3.2 INTEREST PAYMENTS. The Borrower shall pay interest to the
Lenders on the unpaid principal amount of each Loan, for the period commencing
on the date such Loan is made until such Loan is paid in full, on each Interest
Payment Date and at maturity (whether at stated maturity, by acceleration or
otherwise), and thereafter on demand, at the following rates per annum:
(a) During such periods that such Loan is a Floating Rate Loan,
the Floating Rate.
(b) During such periods that such Loan is a Eurodollar Rate
Loan, the Eurodollar Rate applicable to such Loan for each related Eurodollar
Interest Period.
Notwithstanding the foregoing paragraphs (a) through (b), the Borrower shall pay
interest on demand at the Overdue Rate on the outstanding principal amount of
any Loan and any other amount payable by the
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Borrower hereunder (other than interest) which is not paid in full when due
(whether at stated maturity, by acceleration or otherwise) for the period
commencing on the due date thereof until the same is paid in full.
3.3 PAYMENT METHOD. (a) All payments to be made by the Borrower
hereunder will be made in Dollars and in immediately available funds to the
Administrative Agent for the account of the Lenders at its address referred to
in Section 8.2 not later than 2:00 p.m. Chicago time on the date on which such
payment shall become due. Payments received after 2:00 p.m. Chicago time shall
be deemed to be payments made prior to 2:00 p.m. Chicago time on the next
succeeding Business Day. The Borrower hereby authorizes the Administrative Agent
to charge its account with the Administrative Agent in order to cause timely
payment of amounts due hereunder to be made (subject to sufficient funds being
available in such account for that purpose).
(b) At the time of making each such payment, the
Borrower shall, subject to the other terms and conditions of this Agreement,
specify to the Administrative Agent that Loan or other obligation of the
Borrower hereunder to which such payment is to be applied. In the event that the
Borrower fails to so specify the relevant obligation or if an Event of Default
shall have occurred and be continuing, the Administrative Agent may apply such
payments as it may determine in its sole discretion.
(c) On the day such payments are deemed received, the
Administrative Agent shall remit to the Lenders their pro rata shares of such
payments in immediately available funds, made by wire transfer, (i) in the case
of payments of principal and interest on any Borrowing, determined with respect
to each such Lender by the ratio which the outstanding principal balance of its
Loan included in such Borrowing bears to the outstanding principal balance of
the Loans of all of the Lenders included in such Borrowing and (ii) in the case
of fees paid pursuant to Section 2.3 and other amounts payable hereunder (other
than the Administrative Agent's fees payable pursuant to Section 2.3(b) and
amounts payable to the Administrative Agent or any Lender under Section 3.6 or
3.8) determined with respect to each such Lender by the ratio which the relevant
Commitment of such Lender bears to the relevant Commitments of all the Lenders.
3.4 NO SETOFF OR DEDUCTION. All payments of principal of and
interest on the Loans and other amounts payable by the Borrower hereunder shall
be made by the Borrower without setoff or counterclaim, and free and clear of,
and without deduction or withholding for, or on account of, any present or
future taxes, levies, imposts, duties, fees, assessments, or other charges of
whatever nature, imposed by any governmental authority, or by any department,
agency or other political subdivision or taxing authority; PROVIDED, HOWEVER,
that this Section 3.4 shall not preclude the Borrower from counterclaiming
against any Lender having its principal office in the United States of America
for (a) income taxes owed to the United States of America by such Lender, which
are paid by the Borrower under a valid garnishment order, or (b) other
obligations of such Lender, unrelated to such taxes, levies, imposts, duties,
fees, assessments, or other charges, which are paid by the Borrower under a
valid garnishment order.
3.5 PAYMENT ON NON-BUSINESS DAY; PAYMENT COMPUTATIONS. Except
as otherwise provided in this Agreement to the contrary, whenever any
installment of principal of, or interest on, any Loan or any other amount due
hereunder becomes due and payable on a day which is not a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and, in
the case of any installment of principal, interest shall be payable thereon at
the rate per annum determined in accordance with this Agreement during such
extension. Computations of interest and other amounts due under this
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<PAGE> 22
Agreement shall be made on the basis of a year of 360 days (or 365 or 366 days,
as the case may be, when determining the Floating Rate) for the actual number of
days elapsed, including the first day but excluding the last day of the relevant
period.
3.6 ADDITIONAL COSTS. (a) In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Lender or the
Administrative Agent, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Lender or the Administrative Agent with any
guideline, request or directive of any such authority (whether or not having the
force of law), shall (a) affect the basis of taxation of payments to any Lender
or the Administrative Agent of any amounts payable by the Borrower under this
Agreement (other than taxes imposed on the overall net income of the Lender or
the Administrative Agent, by the jurisdiction, or by any political subdivision
or taxing authority of any such jurisdiction, in which any Lender or the
Administrative Agent, as the case may be, has its principal office), or (b)
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any Lender, or (c) shall impose any other condition with respect to
this Agreement, the Commitments, the Notes or the Loans, and the result of any
of the foregoing is to increase the cost to any Lender or the Administrative
Agent, as the case may be, of making, funding or maintaining any Eurodollar Rate
Loan or to reduce the amount of any sum receivable by any Lender thereon, then
the Borrower shall pay to such Lender or the Administrative Agent, as the case
may be, from time to time, upon request by such Lender (with a copy of such
request to be provided to the Administrative Agent) or the Administrative Agent,
additional reasonable amounts sufficient to compensate such Lender or the
Administrative Agent, as the case may be, for such increased cost or reduced sum
receivable to the extent, in the case of any Eurodollar Rate Loan, such Lender
is not compensated therefor in the computation of the interest rate applicable
to such Eurodollar Rate Loan. A statement as to the amount of such increased
cost or reduced sum receivable, prepared in good faith and in reasonable detail
by such Lender or the Administrative Agent, as the case may be, and submitted by
such Lender or the Administrative Agent, as the case may be, to the Borrower,
shall be conclusive and binding for all purposes absent manifest error in
computation.
(b) In the event that any applicable law, treaty,
rule or regulation (whether domestic or foreign) now or hereafter in effect and
whether or not presently applicable to any Lender or the Administrative Agent,
or any interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by any
Lender or the Administrative Agent with any guideline, request or directive of
any such authority (whether or not having the force of law), including any
risk-based capital guidelines, affects or would affect the amount of capital
required or expected to be maintained by such Lender or the Administrative Agent
(or any corporation controlling such Lender or the Administrative Agent),
including any change in capital required to be maintained with respect to
commitments for credit of less than 365 days in duration, and such Lender or the
Administrative Agent, as the case may be, determines that the amount of such
capital is increased by or based upon the existence of such Lender's or the
Administrative Agent's obligations hereunder and such increase has the effect of
reducing the rate of return on such Lender's or the Administrative Agent's (or
such controlling corporation's) capital as a consequence of such obligations
hereunder to a level below that which such Lender or the Administrative Agent
(or such controlling corporation) could have achieved but for such circumstances
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Lender or the Administrative Agent to be material, then
the Borrower shall pay to such Lender or the Administrative Agent, as the case
may be, from time to time, upon request by such
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<PAGE> 23
Lender (with a copy of such request to be provided to the Administrative Agent)
or the Administrative Agent, additional amounts sufficient to compensate such
Lender or the Administrative Agent (or such controlling corporation) for any
increase in the amount of capital and reduced rate of return which such Lender
or the Administrative Agent reasonably determines to be allocable to the
existence of such Lender's or the Administrative Agent's obligations hereunder.
A statement as to the amount of such compensation, prepared in good faith and in
reasonable detail by such Lender or the Administrative Agent, as the case may
be, and submitted by such Lender or the Administrative Agent to the Borrower,
shall be conclusive and binding for all purposes absent manifest error in
computation.
3.7 ILLEGALITY AND IMPOSSIBILITY. In the event that any
applicable law, treaty, rule or regulation (whether domestic or foreign) now or
hereafter in effect and whether or not presently applicable to any Lender, or
any interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by any
Lender with any guideline, request or directive of such authority (whether or
not having the force of law), including without limitation exchange controls,
shall make it unlawful or impossible for any Lender to maintain any Fixed Rate
Loan under this Agreement, the Borrower shall upon receipt of notice thereof
from such Lender, repay in full the then outstanding principal amount of each
Fixed Rate Loan so affected, together with all accrued interest thereon to the
date of payment and all amounts owing to such Lender under Section 3.8, (a) on
the last day of the then current Fixed Interest Period applicable to such Loan
if such Lender may lawfully continue to maintain such Loan to such day, or (b)
immediately if such Lender may not continue to maintain such Loan to such day.
3.8 INDEMNIFICATION. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or converts any Fixed Rate Loan on
any other date than the last day of an Fixed Interest Period applicable thereto
(whether pursuant to Section 3.7, Section 6.2 or otherwise), or if the Borrower
fails to borrow any Fixed Rate Loan after notice has been given to the Lenders
in accordance with Section 2.4, or if the Borrower fails to make any payment of
principal or interest in respect of a Fixed Rate Loan when due, the Borrower
shall reimburse each Lender on demand for any resulting loss or expense incurred
by each such Lender, including without limitation any loss incurred in
obtaining, liquidating or employing deposits from third parties, whether or not
such Lender shall have funded or committed to fund such Loan. A statement as to
the amount of such loss or expense, prepared in good faith and in reasonable
detail by such Lender and submitted by such Lender to the Borrower, shall be
conclusive and binding for all purposes absent manifest error in computation.
Calculation of all amounts payable to such Lender under this Section 3.8 shall
be made as though such Lender shall have actually funded or committed to fund
the relevant Fixed Rate Loan through the purchase of an underlying deposit in an
amount equal to the amount of such Loan and having a maturity comparable to the
related Fixed Interest Period; PROVIDED, HOWEVER, that such Lender may fund any
Fixed Rate Loan in any manner it sees fit and the foregoing assumption shall be
utilized only for the purpose of calculation of amounts payable under this
Section 3.8.
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<PAGE> 24
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Administrative
Agent and the Lenders that:
4.1 CORPORATE EXISTENCE AND POWER. The Borrower is a Person
duly organized, validly existing and in good standing under the laws of the
state or other political subdivision of its jurisdiction of incorporation or
organization, as the case may be, and is duly qualified to do business, and is
in good standing, in all additional jurisdictions where such qualification is
necessary under applicable law. The Borrower has all requisite power, corporate
or otherwise, to own or lease the properties used in its business and to carry
on its business as now being conducted and as proposed to be conducted, and to
execute and deliver this Agreement, and the Notes, and to engage in the
transactions contemplated by this Agreement.
4.2 CORPORATE AUTHORITY. The execution, delivery and
performance by the Borrower of this Agreement and the Notes have been duly
authorized by all necessary corporate action and are not in contravention of any
law, rule or regulation, or any judgment, decree, writ, injunction, order or
award of any arbitrator, court or governmental authority, or of the terms of the
Borrower's charter or by-laws, or of any contract or undertaking to which the
Borrower is a party or by which the Borrower or its property may be bound or
affected or result in the imposition of any Lien except for Permitted Liens.
4.3 BINDING EFFECT. This Agreement is, and the Notes when
delivered hereunder will be, legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with its terms.
4.4 SUBSIDIARIES. SCHEDULE 4.4 hereto correctly sets forth the
corporate name, jurisdiction of incorporation and ownership of each Subsidiary
of the Borrower as of the Effective Date. Each such Subsidiary and each
corporation becoming a Subsidiary of the Borrower after the date hereof is and
will be a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and is and will be duly
qualified to do business in each additional jurisdiction where such
qualification is or may be necessary under applicable law. Each Subsidiary of
each Borrower has and will have all requisite corporate power to own or lease
the properties used in its business and to carry on its business as now being
conducted and as proposed to be conducted. All outstanding shares of capital
stock of each class of each Subsidiary of the Borrower have been and will be
validly issued and are and will be fully paid and nonassessable and, except as
otherwise indicated in SCHEDULE 4.4 hereto or consented to by the Required
Lenders from time to time, are and will be owned, beneficially and of record, by
the Borrower or another Subsidiary of the Borrower free and clear of any Liens.
The corporations described in SCHEDULE 4.4 hereto constitute all persons in
which the Borrower or any of its Subsidiaries has an ownership interest as of
the Effective Date.
4.5 LITIGATION. Except as set forth in SCHEDULE 4.5 hereto,
there is no action, suit or proceeding pending or, to the best of the Borrower's
knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries before or by any court, governmental authority or arbitrator, which
if adversely decided might result, either individually or collectively, in any
material adverse change in the business, properties, operations or condition,
financial or otherwise, of the Borrower or any of its
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<PAGE> 25
Subsidiaries or in any material adverse effect on the legality, validity or
enforceability of this Agreement, the Notes or any Guaranty and, to the best of
the Borrower's knowledge, there is no basis for any such action, suit or
proceeding.
4.6 FINANCIAL CONDITION. The consolidated balance sheet of the
Borrower and its Subsidiaries and the consolidated statements of income,
retained earnings, and cash flows of the Borrower and its Subsidiaries for the
fiscal year ended January 31, 1997 and reported on by Deloitte & Touche,
independent certified public accountants, copies of which have been furnished to
the Lenders, fairly present, and the financial statements of the Borrower and
its Subsidiaries delivered pursuant to Section 5.1(d) will fairly present, the
consolidated financial position of the Borrower and its Subsidiaries as at the
respective dates thereof, and the consolidated results of operations of the
Borrower and its Subsidiaries for the respective periods indicated, all in
accordance with Generally Accepted Accounting Principles consistently applied
(subject, in the case of said interim statements, to year-end audit
adjustments). There has been no material adverse change in the business,
properties, operations or condition, financial or otherwise, of the Borrower or
any of its Subsidiaries since January 31, 1997. There is no material Contingent
Liability of the Borrower that is not reflected in such financial statements or
in the notes thereto.
4.7 USE OF LOANS. The Borrower will use the proceeds of the
Loans for its general corporate purposes and the Borrower will not use the
proceeds of the Loans to repurchase the stock of the Borrower or any of its
Subsidiaries. Neither the Borrower nor any of its Subsidiaries extends or
maintains, in the ordinary course of business, credit for the purpose, whether
immediate, incidental, or ultimate, of buying or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan will be used for the purpose,
whether immediate, incidental, or ultimate, of buying or carrying any such
margin stock or maintaining or extending credit to others for such purpose.
After applying the proceeds of each Loan, such margin stock will not constitute
more than 25% of the value of the assets (either of the Borrower alone or of the
Borrower and its Subsidiaries on a consolidated basis) that are subject to any
provisions of this Agreement or any Guaranty that may cause the Loans to be
deemed secured, directly or indirectly, by margin stock.
4.8 CONSENTS, ETC. Except for such consents, approvals,
authorizations, declarations, registrations or filings delivered by the Borrower
pursuant to Section 2.5(g), if any, each of which is in full force and effect,
no consent, approval or authorization of or declaration, registration or filing
with any governmental authority or any nongovernmental person or entity,
including without limitation any creditor, lessor or stockholder of Borrower or
any of its Subsidiaries, is required on the part of the Borrower in connection
with the execution, delivery and performance of this Agreement, or the Notes, or
any Guaranty, or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of this Agreement, the Notes or any
Guaranty.
4.9 TAXES. The Borrower and its Subsidiaries have filed all tax
returns (federal, state and local) required to be filed and have paid all taxes
shown thereon to be due, including interest and penalties, or have established
adequate financial reserves on its books and records for payment thereof.
Neither the Borrower nor any of its Subsidiaries knows of any actual or proposed
tax assessment or any basis therefor, and no extension of time for the
assessment of deficiencies in any federal or state tax has been granted by the
Borrower or any Subsidiary.
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<PAGE> 26
4.10 TITLE TO PROPERTIES. Except as otherwise disclosed in the
latest balance sheet delivered pursuant to Section 4.6 or 5.1(d) of this
Agreement, the Borrower or one or more of its Subsidiaries have good and
marketable fee simple title to all of the real property, and a valid and
indefeasible ownership interest in all of the other properties and assets
reflected in said balance sheet or subsequently acquired by the Borrower or any
Subsidiary. All of such properties and assets are free and clear of any Lien,
except for Permitted Liens.
4.11 ERISA. The Borrower, its Subsidiaries, their ERISA
Affiliates and its Plans are in compliance in all material respects with those
provisions of ERISA and of the Code which are applicable with respect to any
Plan. No Prohibited Transaction and no Reportable Event has occurred with
respect to any such Plan. None of the Borrower, any of its Subsidiaries or any
of their ERISA Affiliates is an employer with respect to any Multiemployer Plan.
The Borrower, its Subsidiaries and their ERISA Affiliates have met the minimum
funding requirements under ERISA and the Code with respect to each of its Plans,
if any, and have not incurred any liability to the PBGC or any Plan. The
execution, delivery and performance of this Agreement, the Notes and the
Guaranties do not constitute a Prohibited Transaction. There is no material
Unfunded Benefit Liability with respect to any Plan of the Borrower, its
Subsidiaries or their ERISA Affiliates.
4.12 ENVIRONMENTAL AND SAFETY MATTERS. The Borrower and each
Subsidiary are in substantial compliance with all federal, state and local laws,
ordinances and regulations relating to safety and industrial hygiene or to the
environmental condition, including without limitation all Environmental Laws in
jurisdictions in which the Borrower or any Subsidiary owns or operates, or has
owned or operated, a facility or site, or arranges or has arranged for disposal
or treatment of hazardous substances, solid waste, or other wastes, accepts or
has accepted for transport any hazardous substances, solid wastes or other
wastes or holds or has held any interest in real property or otherwise, except
as disclosed on Schedule 4.12 hereto, and as to such matters disclosed on such
Schedule, none will have a material adverse effect on the financial condition or
business of the Borrower or any of its Subsidiaries. No demand, claim, notice,
suit, suit in equity, action, administrative action, investigation or inquiry
whether brought by any governmental authority, private person or entity or
otherwise, arising under, relating to or in connection with any Environmental
Laws is pending or threatened against the Borrower or any of its Subsidiaries,
any real property in which the Borrower or any such Subsidiary holds or has held
an interest or any past or present operation of the Borrower or any Subsidiary,
except as disclosed on Schedule 4.12 hereto, and as to such matters disclosed on
such Schedule, none will have a material adverse effect on the financial
condition or business of the Borrower or any of its Subsidiaries. Neither the
Borrower nor any of its Subsidiaries (a) is the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic substances, radioactive materials, hazardous wastes or
related materials into the environment, (b) has received any notice of any toxic
substances, radioactive materials, hazardous waste or related materials in, or
upon any of its properties in violation of any Environmental Laws, or (c) knows
of any basis for any such investigation, notice or violation, except as
disclosed on SCHEDULE 4.12 hereto, and as to such matters disclosed on such
Schedule, none will have an material adverse affect on the financial condition
or business of the Borrower or any of its Subsidiaries. No release, threatened
release or disposal of hazardous waste, solid waste or other wastes is occurring
or has occurred on, under or to any real property in which the Borrower or any
of its Subsidiaries holds any interest or performs any of its operations, in
violation of any Environmental Law, except as disclosed on Schedule 4.12 hereto,
and as to such matters disclosed on such Schedule, none will have a material
adverse effect on the financial condition or business of the Borrower or any of
its Subsidiaries.
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<PAGE> 27
ARTICLE V.
COVENANTS
---------
5.1 AFFIRMATIVE COVENANTS. The Borrower covenants and agrees
that, until the Termination Date and thereafter until payment in full of the
principal of and accrued interest on the Notes and the performance of all other
obligations of the Borrower under this Agreement, unless the Required Lenders
shall otherwise consent in writing, it shall, and shall cause each of its
Subsidiaries to:
(a) PRESERVATION OF CORPORATE EXISTENCE, ETC. Do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence, except to the extent permitted by Section
5.2(e), and its qualification as a foreign corporation in good standing in each
jurisdiction in which such qualification is necessary under applicable law, and
the rights, licenses, permits (including those required under Environmental
Laws), franchises, patents, copyrights, trademarks and trade names material to
the conduct of its businesses; and defend all of the foregoing against all
claims, actions, demands, suits or proceedings at law or in equity or by or
before any governmental instrumentality or other agency or regulatory authority.
(b) COMPLIANCE WITH LAWS, ETC. Comply in all material
respects with all applicable laws, rules, regulations and orders of any
governmental authority, whether federal, state, local or foreign (including
without limitation ERISA, the Code and Environmental Laws), in effect from time
to time; and pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income, revenues or
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
might give rise to Liens upon such properties or any portion thereof, except to
the extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of any the
Borrower or such Subsidiary.
(c) MAINTENANCE OF PROPERTIES; INSURANCE. Maintain,
preserve and protect all property that is material to the conduct of the
business of the Borrower or any of its Subsidiaries and keep such property in
good repair, working order and condition and from time to time make, or cause to
be made all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times in accordance with
customary and prudent business practices for similar businesses; and maintain in
full force and effect insurance with responsible and reputable insurance
companies or associations in such amounts, on such terms and covering such
risks, including fire and other risks insured against by extended coverage, as
is usually carried by companies engaged in similar businesses and owning similar
properties similarly situated and maintain in full force and effect public
liability insurance, insurance against claims for personal injury or death or
property damage occurring in connection with any of its activities or any
properties owned, occupied or controlled by it, in such amount as it shall
reasonably deem necessary, and maintain such other insurance as may be required
by law.
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<PAGE> 28
(d) REPORTING REQUIREMENTS. Furnish to the Lenders
and the Administrative Agent the following:
(i) Promptly and in any event within three
calendar days after becoming aware of the occurrence of (A) any Default, or
Event of Default described in Section 6.1, PROVIDED, HOWEVER, with respect to
any Default described in Section 6.1(k), the Borrower shall furnish notice
immediately, together with a copy of the notice required to be delivered to the
holders of the Private Placement Debt pursuant to Section 8.1(b) of the Note
Purchase Agreement executed in connection with the Private Placement Documents,
(B) the commencement of any material litigation against, by or affecting the
Borrower or any of its Subsidiaries, and any material developments therein, (C)
entering into any material contract or undertaking that is not entered into in
the ordinary course of business, or (D) any development in the business or
affairs of the Borrower or any of its Subsidiaries which has resulted in or
which is likely in the reasonable judgment of the Borrower, to result in a
material adverse change in the business, properties, operations or condition,
financial or otherwise of the Borrower or any of its Subsidiaries, a statement
of the chief financial officer, controller or treasurer of the Borrower setting
forth details of such Default or Event of Default, litigation, development,
contract, or undertaking, and the action which the Borrower or such Subsidiary,
as the case may be, has taken and proposes to take with respect thereto;
(ii) As soon as available and in any event
within 60 days after the end of each of the first three fiscal quarters of the
Borrower, the consolidated balance sheet of the Borrower and its Subsidiaries as
of the end of such quarter, and the related consolidated statements of income,
retained earnings, and cash flows for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the corresponding
date or period of the preceding fiscal year, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief financial officer
of the Borrower as having been prepared in accordance with Generally Accepted
Accounting Principles; together with a certificate of the chief financial
officer, controller or treasurer of the Borrower stating (A) that no Default or
Event of Default has occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a statement setting forth the details
thereof and the action which the Borrower has taken and proposes to take with
respect thereto, and (B) that a computation (which computation shall accompany
such certificate and shall be in reasonable detail) showing compliance with
Section 5.2(a), (b), (c), (d), (f) and (g) hereof is in conformity with the
terms of this Agreement;
(iii) As soon as available and in any event
within 100 days after the end of each fiscal year of the Borrower, a copy of the
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income, retained
earnings, and cash flows of the Borrower and its Subsidiaries for such fiscal
year, with a customary audit report of Deloitte & Touche, or other independent
certified public accountants selected by the Borrower and acceptable to the
Required Lenders, without qualifications unacceptable to the Required Lenders,
together with the consolidating balance sheets and the related consolidating
statements of income of the Borrower and its Subsidiaries for such year;
together with a certificate of the chief financial officer, controller or
treasurer of the Borrower stating (A) that no Default or Event of Default has
occurred and is continuing or, if a Default or Event of Default has occurred and
is continuing, a statement setting forth the details thereof and the action
which the Borrower has taken and proposes to take with respect thereto, and (B)
that a computation (which computation shall accompany such certificate and shall
be in reasonable
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<PAGE> 29
detail) showing compliance with Section 5.2(a), (b), (c), (d), (f) and (g)
hereof is in conformity with the terms of this Agreement;
(iv) Promptly after the sending or filing
thereof, copies of all reports, proxy statements and financial statements which
the Borrower or any of its Subsidiaries sends to or files with any of its
security holders or any securities exchange or the Securities and Exchange
Commission or any successor agency thereof;
(v) Promptly and in any event within 10
calendar days after receiving or becoming aware thereof (A) a copy of any notice
of intent to terminate any Plan of the Borrower, its Subsidiaries or any ERISA
Affiliate filed with the PBGC, (B) a statement of the chief financial officer of
the Borrower setting forth the details of the occurrence of any Reportable Event
with respect to any such Plan, (C) a copy of any notice that the Borrower, any
of its Subsidiaries or any ERISA Affiliate may receive from the PBGC relating to
the intention of the PBGC to terminate any such Plan or to appoint a trustee to
administer any such Plan, or (D) a copy of any notice of failure to make a
required installment or other payment within the meaning of Section 412(n) of
the Code or Section 302(f) of ERISA with respect to any such Plan;
(vi) As soon as available and in any event
within 30 days after the end of each month, a report on loan receivable
portfolio statistics detailing gross receivables in accordance with Generally
Accepted Accounting Principles, less deduction for ineligible receivables,
including an aging of accounts receivable, dealer concentrations and static pool
analysis and any other portfolio information reasonably requested by the
Administrative Agent;
(vii) Within 30 days after the end of each
fiscal year, a claims analysis in the form of Schedule 5.1(d)(vii) attached
hereto;
(viii) Promptly after the end of each
fiscal quarter or the occurrence of a material change in the ownership of stock
or other equity interest by Sam J. Frankino and/or his Affiliates of the
Borrower and/or its Affiliates, a report showing the ownership interest of Sam
J. Frankino and his Affiliates in the Borrower and its Affiliates; and
(ix) Promptly, such other information
respecting the business, properties, operations or condition, financial or
otherwise, of the Borrower or any of its Subsidiaries as any Lender or the
Administrative Agent may from time to time reasonably request.
(e) ACCOUNTING; ACCESS TO RECORDS, BOOKS, ETC.
Maintain a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
accordance with Generally Accepted Accounting Principles and to comply with the
requirements of this Agreement and, at any reasonable time and from time to
time, permit any Lender or the Administrative Agent or any agents or
representatives thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Borrower and
its Subsidiaries, and to discuss the affairs, finances and accounts of such and
its Subsidiaries with its directors, officers, employees and independent
auditors, and by this provision the Borrower does hereby authorize such persons
to discuss such affairs, finances and accounts with any Lender or the
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Administrative Agent and permit the Administrative Agent or any of its agents
and representatives to conduct a comprehensive field audit of its books,
records, properties and assets.
(f) FURTHER ASSURANCES. Will, and will cause each
Guarantor to, execute and deliver within 30 days after request therefor by the
Required Lenders or the Administrative Agent, all further instruments and
documents and take all further action that may be necessary or desirable, or
that the Required Lenders or the Administrative Agent may request, in order to
give effect to, and to aid in the exercise and enforcement of the rights and
remedies of the Lenders and the Administrative Agent under, this Agreement, the
Notes or the Guaranties. In addition, the Borrower agrees to deliver to the
Administrative Agent and the Lenders from time to time upon the acquisition or
creation of any Subsidiary not listed in SCHEDULE 4.4 hereto supplements to
SCHEDULE 4.4 such that such Schedule, together with such supplements, shall at
all times accurately reflect the information provided for thereon.
5.2 NEGATIVE COVENANTS. Until the Termination Date and
thereafter until payment in full of the principal of and accrued interest on the
Notes and the performance of all other obligations of the Borrower under this
Agreement, the Borrower agrees that, unless the Required Lenders shall otherwise
consent in writing it shall not, and shall not permit any of its Subsidiaries
to:
(a) INDEBTEDNESS TO TOTAL CAPITALIZATION. Permit or
suffer the ratio of Consolidated Indebtedness of the Borrower and its
Subsidiaries to Consolidated Total Capitalization of the Borrower and its
Subsidiaries at any time to be greater than .45 to 1.0.
(b) TANGIBLE NET WORTH. Permit or suffer Consolidated
Tangible Net Worth of the Borrower and its Subsidiaries at any time to be less
than the sum of (i) $195,000,000 plus (ii) an amount equal to 50% of
Consolidated Cumulative Net Income (without any reduction for net loss) of the
Borrower and its Subsidiaries for each fiscal quarter of the Borrower commencing
with the fiscal quarter ending April 30, 1997 plus (iii) 75% of the Net Cash
Proceeds from the issuance or sale of any capital stock of the Borrower or any
Subsidiary, plus (iv) 75% of the Net Cash Proceeds of any Subordinated
Indebtedness incurred by the Borrower or any Subsidiary at any time.
(c) FIXED CHARGE COVERAGE RATIO. Permit or suffer the
ratio of (i) Net Income Available for Fixed Charges of the Borrower and its
Subsidiaries to (ii) Fixed Charges of the Borrower and its Subsidiaries to be
less than 3.0 to 1.0 as of the end of each fiscal quarter, calculated for the
four (4) consecutive fiscal quarters then ending.
(d) LEVERAGE RATIO. Permit or suffer the Consolidated
Leverage Ratio of the Borrower and its Subsidiaries at any time to be greater
than .42 to 1.0.
(e) LIENS. Create, incur or suffer to exist any Lien
on any of the assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether now owned or hereafter acquired, of the Borrower
or any of its Subsidiaries, other than:
(i) Liens for taxes not delinquent or for
taxes being contested in good faith by appropriate proceedings and as to which
adequate financial reserves have been established on its books and records;
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(ii) Liens (other than any Lien imposed by
ERISA) created and maintained in the ordinary course of business which do not
secure obligations exceeding $1,000,000 in the aggregate and are not material in
the aggregate, and which would not have a material adverse effect on the
business or operations of the Borrower or any of its Subsidiaries and which
constitute (A) pledges or deposits under worker's compensation laws,
unemployment insurance laws or similar legislation, (B) good faith deposits in
connection with bids, tenders, contracts or leases to which the Borrower or any
of its Subsidiaries is a party for a purpose other than borrowing money or
obtaining credit, including rent security deposits, (C) liens imposed by law,
such as those of carriers, warehousemen and mechanics, if payment of the
obligation secured thereby is not yet due, (D) Liens securing taxes, assessments
or other governmental charges or levies not yet subject to penalties for
nonpayment, and (E) pledges or deposits to secure public or statutory
obligations of the Borrower or any of its Subsidiaries, or surety, customs or
appeal bonds to which the Borrower or any of its Subsidiaries is a party;
(iii) Liens affecting real property which
constitute minor survey exceptions or defects or irregularities in title, minor
encumbrances, easements or reservations of, or rights of others for, rights of
way, sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of such real property,
PROVIDED that all of the foregoing, in the aggregate, do not at any time
materially detract from the value of said properties or materially impair their
use in the operation of the businesses of the Borrower or any of its
Subsidiaries;
(iv) Each Lien described in SCHEDULE 5.2(E)
hereto may be suffered to exist upon the same terms as those existing on the
date hereof, but no extension or renewal (which shall not include the filing of
UCC continuation statements) thereof shall be permitted;
(v) The interest or title of a lessor under
any lease otherwise permitted under this Agreement with respect to the property
subject to such lease to the extent performance of the obligations of the
Borrower or its Subsidiary thereunder are not delinquent; and
(vi) Prior to the disposition of assets
contemplated by Section 5.2(g)(ii), other Liens on assets of the Borrower and
its Subsidiaries, other than accounts or general intangibles, that secure
Indebtedness not exceeding in aggregate amount 50% of the net book value of the
Borrower's motor vehicles comprising its automotive fleet, and which Liens are
granted solely to original equipment manufacturers of motor vehicles to secure
Indebtedness arising pursuant to borrowings under the Borrower's original
equipment manufacturers financing program.
(f) MERGER; ACQUISITIONS; ETC. Purchase or otherwise
acquire, whether in one or a series of transactions, all or a substantial
portion of the business assets, rights, revenues or property, real, personal or
mixed, tangible or intangible, of any person, or all or a substantial portion of
the capital stock of or other ownership interest in any other person; nor merge
or consolidate or amalgamate with any other person or take any other action
having a similar effect, nor enter into any joint venture or similar arrangement
with any other person, PROVIDED, HOWEVER, that this Section 5.2(f) shall not
prohibit any merger or acquisition if (i) it is a merger of a Subsidiary into,
or the acquisition of the assets of a Subsidiary by, the Borrower or a
Subsidiary, where the Borrower or the Subsidiary, as the case may be, is the
surviving or continuing corporation, or (ii) it is an acquisition (A) of a
business or assets that are generally related to the business presently engaged
in by the Borrower, (B) on terms approved in advance by the board of directors
or other governing body of the seller of the business or assets, and (C) the
amount
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of consideration paid or exchanged by the Borrower and all Subsidiaries for all
such acquisitions pursuant to this clause (ii) does not exceed $10,000,000 in
aggregate amount; and in the case of each of clauses (i) and (ii), immediately
after each such merger or acquisition, no Default or Event of Default shall
exist or shall have occurred and be continuing and, prior to the consummation of
each such merger, if the Borrower is a party thereto, and each such acquisition
for consideration of $3,000,000 or more, the Borrower shall have provided to the
Lenders an opinion of counsel and a certificate of the chief financial officer
of the Borrower (attaching computations to demonstrate compliance with all
financial covenants hereunder), each stating that such merger or acquisition
complies with this Section 5.2(f) and that any other conditions under this
Agreement relating to such transaction have been satisfied.
(g) DISPOSITION OF ASSETS; ETC. Notwithstanding any
other provision of this Agreement, sell, lease, license, transfer, assign or
otherwise dispose of any of its business, assets, rights, revenues or property,
real, personal or mixed, tangible or intangible, whether in one or a series of
transactions, other than (1) inventory sold or leased in the ordinary course of
business upon customary credit terms, (2) sales of motor vehicles by the
Borrower to one or more of its Subsidiaries, for fair value, in the ordinary
course of the Borrower's business, (3) sales of scrap or obsolete material or
equipment, (4) transfers between the Guarantors or between the Borrower and the
Guarantors, and (5) transfers in connection with the Receivables Program and
permitted pursuant to Section 5.2(p); PROVIDED, HOWEVER, that this Section
5.2(g) shall not prohibit any such sale, lease, license, transfer, assignment,
liquidation or other disposition: (i) if the aggregate book value (disregarding
any write-downs of such book value other than ordinary depreciation and
amortization) of all of the business, assets, rights, revenues and property
disposed of after the date of this Agreement shall be less than five percent
(5%) in the aggregate for all such dispositions of such aggregate book value of
the total assets of the Borrower or such Subsidiary as of such date, as the case
may be, and if, immediately after such transaction, no Default or Event of
Default shall exist or shall have occurred and be continuing; and (ii) of the
automotive rental fleet and associated assets so long as no Default or Event of
Default shall exist or shall have occurred and be continuing.
(h) Restricted Payments and Restricted Investments.
-----------------------------------------------
(i) Limitation. The Borrower will not, and will
not permit any of its Subsidiaries to, at any time, declare or make, or incur
any liability to declare or make, any Restricted Payment or make or authorize
any Restricted Investment unless immediately after giving effect to such action:
(A) the sum of (x) aggregate amount of
Restricted Payments of the Borrower and its Subsidiaries declared or
made during the period commencing on February 1, 1997, and ending on
the date such Restricted Payment or Restricted Investment is declared
or made, including and (y) the amount of Restricted Investments of the
Borrower and its Subsidiaries (with each Restricted Investment and
Restricted Payment being valued immediately after the making of any
such Restricted Investment or Restricted Payment) would not exceed the
sum of
(I) $2,000,000 plus
(II) 50% of Consolidated Operating
Net Income for the period commencing on February 1, 1997 and
ending at the end of the most recently ended fiscal
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quarter of the Borrower (or minus 100% of Consolidated
Operating Net Income for such period if Consolidated Operating
Net Income for such period is negative);
(B) no Default or Event of Default exists
or would exist after giving effect to such Restricted Payment or
Restricted Investment;
(C) the Borrower would be permitted by the
provisions of Section 10.5 of the Note Purchase Agreement executed in
connection with the Private Placement Debt to incur at least $1.00 of
additional Indebtedness owing to a Person other than a Subsidiary of
the Borrower.
(ii) Time of Payment. The Borrower will not, nor
will it permit any of its Subsidiaries to, authorize a Restricted Payment that
is not payable within 60 days of authorization.
(i) NATURE OF BUSINESS/DEALER HOLDBACK PROGRAM. Make
any substantial change in the nature of its business from that engaged in on the
date of this Agreement, engage in any other businesses other than those in which
it is engaged on the date of this Agreement or make any material change in the
structure or terms of any dealer holdback program which would result in the
subordination of Lender Obligations to the obligations of any such dealer;
PROVIDED, HOWEVER, that this subsection (i) shall not preclude the Borrower or
any Subsidiary from engaging in additional related or ancillary businesses that
are not likely to have a material effect on the Borrower or any Subsidiary,
including without limitation activating a dormant insurance Borrower for the
purpose of providing credit insurance, automobile warranty programs and other
programs or services related or incidental to the Borrower's automobile finance
programs.
(j) NEGATIVE PLEDGE LIMITATION. Enter into any
agreement, with any person, other than the Lenders pursuant hereto and in
connection with the Private Placement Debt, which prohibits or limits the
ability of the Borrower or any Subsidiary to create, incur, assume or suffer to
exist any Lien upon any of its assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, whether now owned or hereafter
acquired.
(k) USE OF PROCEEDS. Use the proceeds of the Loans
for any purpose other than for its general corporate purposes.
(l) SUBORDINATED INDEBTEDNESS. Issue any Subordinated
Indebtedness unless the first principal payment or other required payment or
prepayment of principal with respect to such Subordinated Indebtedness is
scheduled to occur after April 21, 2000.
(m) SUBSIDIARY GUARANTIES. Permit any Subsidiary to
become obligated under any guaranty of the Borrower's obligations under the
Private Placement Debt unless such Subsidiary has guaranteed or concurrently
guarantees the Borrower's obligations under the Loan Documents on the same
terms.
(n) LIMITATION ON SUBSIDIARY INDEBTEDNESS. Permit the
aggregate Indebtedness of all Subsidiaries to exceed at any time 5% of
Consolidated Total Assets of the Borrower and its Subsidiaries.
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(o) PAYMENTS AND MODIFICATIONS OF DEBT. Make, or
permit any Subsidiary to make, any optional payment, defeasance (whether a
covenant defeasance, legal defeasance or other defeasance), prepayment or
redemption of any of its or any of its Subsidiaries' Private Placement Debt or
other Indebtedness or amend or modify, or consent or agree to any amendment or
modification of, any instrument or agreement under which any of its Private
Placement Debt is issued or created or otherwise related thereto, or enter into
any agreement or arrangement providing for any defeasance of any kind of any of
its Private Placement Debt.
(p) RECEIVABLES PROGRAM. Enter into, or permit its
Subsidiaries to enter into, any transaction (such transaction being referred to
herein as a "Receivables Program") involving (i) the sale or other financing by
the Borrower or any of its Subsidiaries of installment notes receivable or other
evidences of indebtedness arising in the ordinary course of business of the
Borrower or any of its Subsidiaries or (ii) the incurrence by the Borrower or
any of its Subsidiaries of Non-Recourse Indebtedness secured by Liens on
installment notes receivable or other evidences of indebtedness arising in the
ordinary course of business of the Borrower or any of its Subsidiaries (in each
case, whether or not such installment notes receivable or evidences of
indebtedness is required to be included on the balance sheet of the Borrower or
such Subsidiary in accordance with GAAP); provided that in any twelve month
period, the Borrower and its Subsidiaries may enter into Receivables Programs if
the aggregate of net book value of all installment notes receivable and other
evidences of indebtedness to be sold or financed in connection with all
Receivables Programs in such twelve month period does not exceed 10% of
Consolidated Total Capitalization as of the last day of the Borrower's most
recently ended fiscal year. "Non-Recourse Indebtedness" means, as applied to any
Receivables Program, Indebtedness under the terms of which no personal recourse
may be had against the Borrower or any of its Subsidiaries for the payment of
the principal of or interest or premium of such Indebtedness solely as a result
of a default by one or more account debtors in the payment of any accounts
receivable included in such Receivables Program.
(q) TRANSACTIONS WITH AFFILIATES. Enter into, or
permit any Subsidiary to enter into, or remain a party to, directly or
indirectly, any transaction (including without limitation the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service),
whether or not in the ordinary course of business with any Affiliate of the
Borrower or any of its Subsidiaries, except pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
be obtained in a comparable arm's-length transaction with a Person not an
Affiliate.
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5.3 ADDITIONAL COVENANTS. If at any time the Borrower shall
enter into or be a party to any instrument or agreement, including all such
instruments or agreements in existence as of the date hereof and all such
instruments or agreements entered into after the date hereof, relating to or
amending any terms or conditions applicable to any of its Indebtedness which
includes covenants, terms, conditions or defaults not substantially provided for
in this Agreement or more favorable to the lender or lenders thereunder than
those provided for in this Agreement, then the Borrower shall promptly so advise
the Administrative Agent and the Lenders. Thereupon, if the Administrative
Agents shall request, upon notice to the Borrower, the Administrative Agent and
the Lenders shall enter into an amendment to this Agreement or an additional
agreement (as the Administrative Agent may request), providing for substantially
the same covenants, terms, conditions and defaults as those provided for in such
instrument or agreement to the extent required and as may be selected by the
Administrative Agent. In addition to the foregoing, any covenants, terms,
conditions or defaults in the Private Placement Debt Documents not substantially
provided for in this Agreement or more favorable to the holders of the Private
Placement Debt issued in connection therewith are hereby incorporated by
reference into this Agreement to the same extent as if set forth fully herein,
and no subsequent amendment, waiver or modification thereof shall effect any
such covenants, terms, conditions or defaults as incorporated herein.
ARTICLE VI.
DEFAULT
-------
6.1 EVENTS OF DEFAULT. The occurrence of any one of the
following events or conditions shall be deemed an "Event of Default" hereunder
unless waived by the Required Lenders pursuant to Section 8.1:
(a) NONPAYMENT. The Borrower shall fail to pay when
due any principal of the Notes or the Borrower shall fail to pay any interest on
any of the Notes or any fees or any other amount payable hereunder, which
failure, with respect to interest, fees or any other amount (other than
principal) continues for a period of five days; or
(b) MISREPRESENTATION. Any representation or warranty
made by the Borrower or any Guarantor in Article IV hereof or in any Guaranty or
any other certificate, report, financial statement or other document furnished
by or on behalf of the Borrower or any Guarantor in connection with this
Agreement, shall prove to have been incorrect in any material respect when made
or deemed made; or
(c) CERTAIN COVENANTS. The Borrower shall fail to
perform or observe any term, covenant or agreement contained in Article V
hereof; or
(d) OTHER DEFAULTS. The Borrower or any Guarantor
shall fail to perform or observe any other term, covenant or agreement contained
in this Agreement or in any Guaranty, and any such failure shall remain
unremedied for 30 calendar days after notice thereof shall have been given to
the Borrower or such Guarantor, as the case may be, by the Administrative Agent
(or such shorter period of time as may be specified in the relevant Guaranty);
or
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(e) CROSS DEFAULT. The Borrower or any of its
Subsidiaries shall fail to pay any part of the principal of, the premium, if
any, or the interest on, or any other payment of money due under any of its
Indebtedness (other than Indebtedness hereunder), beyond any period of grace
provided with respect thereto, which individually or together with other such
Indebtedness as to which any such failure exists has an aggregate outstanding
principal amount in excess of $500,000 (provided that such minimum amount
requirement shall not apply to Indebtedness owing to the Lenders); or if the
Borrower or any of its Subsidiaries fails to perform or observe any other term,
covenant or agreement contained in any agreement, document or instrument
evidencing or securing any such Indebtedness having such aggregate outstanding
principal amount (if applicable), or under which any such Indebtedness was
issued or created, beyond any period of grace, if any, provided with respect
thereto if the effect of such failure is either (i) to cause, or permit the
holders of such Indebtedness (or a trustee on behalf of such holders) to cause,
any payment in respect of such Indebtedness to become due prior to its due date
or (ii) to permit the holders of such Indebtedness (or a trustee on behalf of
such holders) to elect a majority of the board of directors of the Borrower; or
(f) JUDGMENTS. One or more judgments or orders for
the payment of money in an aggregate amount of $1,000,000 or more (which
$1,000,000 amount may not be deemed a material amount) shall be rendered against
the Borrower or any of its Subsidiaries, or any other judgment or order (whether
or not for the payment of money) shall be rendered against or shall affect the
Borrower or any of its Subsidiaries which causes or could cause a material
adverse change in the business, properties, operations or condition, financial
or otherwise, of the Borrower or any of its Subsidiaries or which does or could
have a material adverse effect on the legality, validity or enforceability of
this Agreement, the Notes or any Guaranty, and either (i) such judgment or order
shall have remained unsatisfied and the Borrower or such Subsidiary shall not
have taken action necessary to stay enforcement thereof by reason of pending
appeal or otherwise, prior to the expiration of the applicable period of
limitations for taking such action or, if such action shall have been taken, a
final order denying such stay shall have been rendered, or (ii) enforcement
proceedings shall have been commenced by any creditor upon any such judgment or
order; or
(g) ERISA. The occurrence of a Reportable Event that
results in or could result in liability of the Borrower or any Subsidiary of the
Borrower or their ERISA Affiliates to the PBGC or to any Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or the occurrence of any Reportable Event which could constitute
grounds for termination of any Plan of the Borrower, its Subsidiaries or their
ERISA Affiliates by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer any such Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or the filing by the Borrower, any Subsidiary of the Borrower or any of
their ERISA Affiliates of a notice of intent to terminate a Plan or the
institution of other proceedings to terminate a Plan; or the Borrower, any
Subsidiary of the Borrower or any of their ERISA Affiliates shall fail to pay
when due any liability to the PBGC or to a Plan; or the PBGC shall have
instituted proceedings to terminate, or to cause a trustee to be appointed to
administer, any Plan of the Borrower, its Subsidiaries or their ERISA
Affiliates; or any person engages in a Prohibited Transaction with respect to
any Plan which results in or could result in liability of the Borrower, its
Subsidiary of the Borrower or any of their ERISA Affiliates, any Plan of the
Borrower, its Subsidiaries or their ERISA Affiliates or fiduciary of any such
Plan; or failure by the Borrower, any Subsidiary of the Borrower or any of their
ERISA Affiliates to make a required installment or other payment to any Plan
within the meaning of Section 302(f) of ERISA or Section 412(n) of the Code that
results in or could result in liability of the Borrower, its Subsidiary or any
of their ERISA Affiliates to the PBGC or any Plan; or the
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withdrawal of the Borrower, any of its Subsidiaries or any of their ERISA
Affiliates from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(9a)(2) of ERISA; or the Borrower, any of
its Subsidiaries or any of their ERISA Affiliates becomes an employer with
respect to any Multiemployer Plan without the prior written consent of the
Required Lenders; or
(h) INSOLVENCY, ETC. The Borrower or any of its
Subsidiaries shall be dissolved or liquidated (or any judgment, order or decree
therefor shall be entered), or shall generally not pay its debts as they become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors, or shall
institute, or there shall be instituted against the Borrower or any of its
Subsidiaries, any proceeding or case seeking to adjudicate it a bankrupt or
insolvent or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or protection of
debtors or seeking the entry of an order for relief, or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its assets, rights, revenues or property, and, if such
proceeding is instituted against the Borrower or such Subsidiary and is being
contested by the Borrower or such Subsidiary, as the case may be, in good faith
by appropriate proceedings, such proceeding shall remain undismissed or unstayed
for a period of 60 days; or the Borrower or such Subsidiary shall take any
action (corporate or other) to authorize or further any of the actions described
above in this subsection; or
(i) SECURITY DOCUMENTS. Any event of default
described in any Guaranty shall have occurred and be continuing, or any material
provision of any Guaranty shall at any time for any reason cease to be valid,
binding and enforceable against any obligor thereunder, or the validity, binding
effect or enforceability thereof shall be contested by any person, or any
obligor, shall deny that it has any or further liability or obligation
thereunder, or any Guaranty shall be terminated, invalidated or set aside, or be
declared ineffective or inoperative or in any way cease to give or provide to
the Lenders and the Administrative Agent the benefits purported to be created
thereby; or
(j) CHANGE OF CONTROL. The Borrower shall experience
a Change of Control. For purposes of this Section 6.1(k), a "Change of Control"
shall occur if during any twelve-month period any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership (within the meaning of Rule
13D-3 promulgated by the Securities and Exchange Commission under said Act) of
35% or more in voting power of the voting shares of the Borrower.
6.2 REMEDIES. (a) Upon the occurrence and during the
continuance of any Event of Default, the Administrative Agent, upon being
directed to do so by the Required Lenders, shall by notice to the Borrower (i)
terminate the Commitments or (ii) declare the outstanding principal of, and
accrued interest on, the Notes and all other amounts owing under this Agreement
to be immediately due and payable, or any one or both of the foregoing,
whereupon the Commitments shall terminate forthwith and all such amounts shall
become immediately due and payable, PROVIDED that in the case of any event or
condition described in Section 6.1(h) with respect to the Borrower or any
Subsidiary, the Commitments shall automatically terminate forthwith and all such
amounts shall automatically become immediately due and payable without notice;
in all cases without demand, presentment, protest, diligence, notice of dishonor
or other formality, all of which are hereby expressly waived.
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(b) The Administrative Agent, upon being directed to
do so by the Required Lenders, shall, in addition to the remedies provided in
Section 6.2(a), exercise and enforce any and all other rights and remedies
available to it or the Lenders, whether arising under this Agreement, any Note
or any Guaranty or under applicable law, in any manner deemed appropriate by the
Administrative Agent, with consent of the Required Lenders, including suit in
equity, action at law, or other appropriate proceedings, whether for the
specific performance (to the extent permitted by law) of any covenant or
agreement contained in this Agreement or in any Note or Guaranty, or in aid of
the exercise of any power granted in this Agreement, any Note or any Guaranty.
(c) Upon the occurrence and during the continuance of
any Event of Default, each Lender may at any time and from time to time, without
notice to the Borrower (any requirement for such notice being expressly waived
by the Borrower) set off and apply against any and all of the obligations of the
Borrower now or hereafter existing under this Agreement, whether owing to such
Lender or any other Lender or the Administrative Agent, any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower and any property of the Borrower from time to time in
possession of such Lender, irrespective of whether or not such Lender shall have
made any demand hereunder and although such obligations may be contingent and
unmatured. The Borrower hereby grants to the Lenders and the Administrative
Agent a lien on and security interest in all such deposits, indebtedness and
property as collateral security for the payment and performance of the
obligations of the Borrower under this Agreement. The rights of such Lender
under this Section 6.2(c) are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which such Lender may
have.
ARTICLE VII.
THE AGENT AND THE BANKS
-----------------------
7.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement and the
Notes and the Guaranties as are delegated to the Administrative Agent by the
terms hereof or thereof, together with all such powers as are reasonably
incidental thereto. The provisions of this Article VII are solely for the
benefit of the Administrative Agent and the Lenders, and the Borrower shall not
have any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Administrative
Agent shall act solely as agent of the Lenders and does not assume and shall not
be deemed to have assumed any obligation towards or relationship of agency or
trust with or for the Borrower.
7.2 ADMINISTRATIVE AGENT AND AFFILIATES. First Chicago in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise or refrain from exercising the same as
though it were not the Administrative Agent. First Chicago and its affiliates
may (without having to account therefor to any Lender) accept deposits from,
lend money to, and generally engage in any kind of banking, trust, financial
advisory or other business with the Borrower or any Subsidiary of the Borrower
as if it were not acting as Administrative Agent hereunder, and may accept fees
and other consideration therefor without having to account for the same to the
Lenders.
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7.3 SCOPE OF ADMINISTRATIVE AGENT'S AND DOCUMENTATION AGENT'S
DUTIES. Neither the Administrative Agent nor the Documentation Agent shall have
any duties or responsibilities except those expressly set forth herein, and
neither the Administrative Agent nor the Documentation Agent shall, by reason of
this Agreement, have a fiduciary relationship with any Lender, and no implied
covenants, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or shall otherwise exist against the Administrative Agent or
the Documentation Agent. As to any matters not expressly provided for by this
Agreement (including, without limitation, collection and enforcement actions
under the Notes and the Guaranty), neither the Administrative Agent nor the
Documentation Agent shall be required to exercise any discretion or take any
action, but the Administrative Agent and the Documentation Agent, as the case
may be, shall take such action or omit to take any action pursuant to the
reasonable written instructions of the Required Lenders and may request
instructions from the Required Lenders. The Administrative Agent and the
Documentation Agent shall in all cases be fully protected in acting, or in
refraining from acting, pursuant to the written instructions of the Required
Lenders, which instructions and any action or omission pursuant thereto shall be
binding upon all of the Lenders; PROVIDED, HOWEVER, that neither the
Administrative Agent nor the Documentation Agent shall not be required to act or
omit to act if, in the judgment of the Administrative Agent or the Documentation
Agent, as the case may be, such action or omission may expose the Administrative
Agent or the Documentation Agent to personal liability or is contrary to this
Agreement, the Notes, any Guaranty, or applicable law.
7.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely upon any certificate, notice, document or other
communication (including any cable, telegram, telex, facsimile transmission or
oral communication) believed by it to be genuine and correct and to have been
sent or given by or on behalf of a proper person. The Administrative Agent may
treat the payee of any Note as the holder thereof unless and until the
Administrative Agent receives written notice of the assignment thereof pursuant
to the terms of this Agreement signed by such payee, and the Administrative
Agent receives the written agreement of the assignee that such assignee is bound
hereby to the same extent as if it had been an original party hereto. The
Administrative Agent may employ agents (including without limitation collateral
agents) and may consult with legal counsel (who may be counsel for the
Borrower), independent public accountants and other experts selected by it and
shall not be liable to the Lenders, except as to money or property received by
it or its authorized agents, for the negligence or misconduct of any such agent
selected by it with reasonable care or for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
7.5 DEFAULT. The Administrative Agent shall not be deemed to
have knowledge of the occurrence of any Default or Event of Default, unless the
Administrative Agent has received written notice from a Lender or the Borrower
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give written notice thereof to the
Lenders.
7.6 LIABILITY OF ADMINISTRATIVE AGENT AND DOCUMENTATION AGENT.
Neither the Administrative Agent, the Documentation Agent nor any of their
respective directors, officers, agents, or employees shall be liable to the
Lenders for any action taken or not taken by it or them in connection herewith
with the consent or at the request of the Required Lenders or in the absence of
its or their own gross negligence or willful misconduct. Neither the
Administrative Agent, the Documentation Agent nor any of their respective
directors, officers, agents or employees shall be responsible for or have any
duty to
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ascertain, inquire into or verify (i) any recital, statement, warranty or
representation contained in this Agreement, any Note or any Guaranty, or in any
certificate, report, financial statement or other document furnished in
connection with this Agreement, (ii) the performance or observance of any of the
covenants or agreements of the Borrower or any Guarantor, (iii) the satisfaction
of any condition specified in Article II hereof, or (iv) the validity,
effectiveness, legal enforceability, value or genuineness of this Agreement, any
Note, any Guaranty, or any collateral subject thereto, or any other instrument
or document furnished in connection herewith.
7.7 NONRELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS. Each
Lender acknowledges and agrees that it has, independently and without reliance
on the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decision in taking or not
taking action under this Agreement. The Administrative Agent shall not be
required to keep itself informed as to the performance or observance by the
Borrower or any Guarantor of this Agreement, the Notes, any Guaranty, or any
other documents referred to or provided for herein, or to inspect the properties
or books of the Borrower or any Guarantor and, except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any Lender with any information
concerning the affairs, financial condition or business of the Borrower or any
of its Subsidiaries which may come into the possession of the Administrative
Agent or any of its affiliates.
7.8 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower, but without
limiting any obligation of the Borrower to make such reimbursement), ratably
according to the respective principal amounts of the Loans then outstanding made
by each of them (or if no Loans are at the time outstanding, ratably according
to the respective amounts of their Commitments), from and against any and all
claims, damages, losses, liabilities, costs or expenses of any kind or nature
whatsoever (including, without limitation, fees and disbursements of counsel)
which may be imposed on, incurred by, or asserted against the Administrative
Agent in any way relating to or arising out of this Agreement or the
transactions contemplated hereby or any action taken or omitted by the
Administrative Agent under this Agreement, PROVIDED, HOWEVER, that no Lender
shall be liable for any portion of such claims, damages, losses, liabilities,
costs or expenses resulting from the Administrative Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Administrative Agent promptly upon demand for its ratable share of
any out-of-pocket expenses (including without limitation fees and expenses of
counsel) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that the Administrative Agent is not reimbursed for such expenses
by the Borrower, but without limiting the obligation of the Borrower to make
such reimbursement. Each Lender agrees to reimburse the Administrative Agent
promptly upon demand for its ratable share of any amounts owing to the
Administrative Agent by the Lenders pursuant to this Section. If the indemnity
furnished to the Administrative Agent under this Section shall, in the judgment
of the Administrative Agent, be insufficient or become impaired, the
Administrative Agent may call for additional indemnity from the Lenders and
cease, or not commence, to take any action until such additional indemnity is
furnished.
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7.9 RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative
Agent may resign as such at any time upon thirty days' prior written notice to
the Borrower and the Lenders. In the event of any such resignation, the Required
Lenders shall, by an instrument in writing delivered to the Borrower and the
Administrative Agent, appoint a successor, which shall be a commercial bank
organized under the laws of the United States or any State thereof and having a
combined capital and surplus of at least $500,000,000. If a successor is not so
appointed or does not accept such appointment before the Administrative Agent's
resignation becomes effective, the resigning Administrative Agent may appoint a
temporary successor to act until such appointment by the Required Lenders is
made and accepted or if no such temporary successor is appointed as provided
above by the resigning Administrative Agent, the Required Lenders shall
thereafter perform all the duties of the Administrative Agent hereunder until
such appointment by the Required Lenders is made and accepted. Any successor to
the Administrative Agent shall execute and deliver to the Borrower and the
Lenders an instrument accepting such appointment and thereupon such successor
Administrative Agent, without further act, deed, conveyance or transfer shall
become vested with all of the properties, rights, interests, powers, authorities
and obligations of its predecessor hereunder with like effect as if originally
named as Administrative Agent hereunder. Upon request of such successor
Administrative Agent, the Borrower and the resigning Administrative Agent shall
execute and deliver such instruments of conveyance, assignment and further
assurance and do such other things as may reasonably be required for more fully
and certainly vesting and confirming in such successor Administrative Agent all
such properties, rights, interests, powers, authorities and obligations. The
provisions of this Article VII shall thereafter remain effective for such
resigning Administrative Agent with respect to any actions taken or omitted to
be taken by such Administrative Agent while acting as the Administrative Agent
hereunder.
7.10 SHARING OF PAYMENTS. The Lenders agree among themselves
that, in the event that any Lender shall obtain payment in respect of any Loan
or any other obligation owing to the Lenders under this Agreement through the
exercise of a right of set-off, banker's lien, counterclaim or otherwise in
excess of its ratable share of payments received by all of the Lenders on
account of the Loans and other obligations (or if no Loans are outstanding,
ratably according to the respective amounts of the Commitments), such Lender
shall promptly purchase from the other Lenders participations in such Loans and
other obligations in such amounts, and make such other adjustments from time to
time, as shall be equitable to the end that all of the Lenders share such
payment in accordance with such ratable shares. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of set-off, banker's lien, counterclaim or otherwise as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of
participations theretofore sold, return its share of that benefit to each Lender
whose payment shall have been rescinded or otherwise restored. The Borrower
agrees that any Lender so purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of payment, including set-off,
banker's lien or counterclaim, with respect to such participation as fully as if
such Lender were a holder of such Loan or other obligation in the amount of such
participation. The Lenders further agree among themselves that, in the event
that amounts received by the Lenders and the Administrative Agent hereunder are
insufficient to pay all such obligations or insufficient to pay all such
obligations when due, the fees and other amounts owing to the Administrative
Agent in such capacity shall be paid therefrom before payment of obligations
owing to the Lenders under this Agreement. Except as otherwise expressly
provided in this Agreement, if any Lender or the Administrative Agent shall fail
to remit to the Administrative Agent or any other Lender an amount payable by
such Lender or the Administrative Agent to the Administrative Agent or such
other Lender pursuant to this Agreement on the date when such amount is due,
such payments shall
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be made together with interest thereon for each date from the date such amount
is due until the date such amount is paid to the Administrative Agent or such
other Lender at a rate per annum equal to the rate at which borrowings are
available to the payee in its overnight federal funds market. It is further
understood and agreed among the Lenders and the Administrative Agent that if any
Lender shall engage in any other transactions with the Borrower and shall have
the benefit of any collateral or security therefor which does not expressly
secure the obligations arising under this Agreement except by virtue of a
so-called dragnet clause or comparable provision, such Lender shall be entitled
to apply any proceeds of such collateral or security first in respect of the
obligations arising in connection with such other transaction before application
to the obligations arising under this Agreement.
7.11 DOCUMENTATION AGENT. Morgan Guaranty Trust Company of New
York has been designated by the Borrower as "Documentation Agent" under this
Agreement. Other than its rights and remedies as a Lender hereunder, the
Documentation Agent shall have no administrative or other rights or
responsibilities.
ARTICLE VIII.
MISCELLANEOUS
-------------
8.1 AMENDMENTS, ETC. (a) No amendment, modification,
termination or waiver of any provision of this Agreement nor any consent to any
departure therefrom shall be effective unless the same shall be in writing and
signed by the Required Lenders and the Borrower, and, to the extent any rights
or duties of the Administrative Agent may be affected thereby, the
Administrative Agent, PROVIDED, HOWEVER, that no such amendment, modification,
termination, waiver or consent shall, without the consent of the Administrative
Agent and all of the Lenders, (i) authorize or permit the extension of time for,
or any reduction of the amount of, any payment of the principal of, or interest
on, the Notes, or any fees or other amount payable hereunder, (ii) amend or
terminate the respective Commitments of any Lender set forth on the signature
pages hereof or modify the provisions of this Section regarding the taking of
any action under this Section, or the provisions of Section 7.10, or the
provisions of the first sentence of Section 8.6, or the definition of Required
Lenders, or (iii) provide for the release of any Guarantor.
(b) Any such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
8.2 NOTICES. (a) All notices and other communications hereunder
shall be in writing and shall be delivered or sent to the Borrower, the
Administrative Agent, and the Lenders at the respective addresses or numbers for
notices set forth on the signature pages hereof, or to such other address or
number as may be designated by the Borrower, the Administrative Agent, or any
Lender by notice to the other parties hereto. All notices and other
communications shall be deemed to have been given at the earlier of (i) the time
of actual delivery thereof to such address or number, or (ii) if sent by
certified or registered mail, postage prepaid, to such address, on the third day
after the date of mailing, if deposited prepaid with a nationally recognized
overnight delivery service guaranteeing next day delivery to such address, prior
to the deadline for next day delivery, on the Business Day next following such
deposit, or (iii) if sent by facsimile
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transmission, upon confirmation of receipt by telephone at the number specified
for confirmation, PROVIDED, HOWEVER, that notices to the Administrative Agent
shall not be effective until received.
(b) Notices by the Borrower to the Administrative
Agent with respect to terminations or reductions of the Commitments pursuant to
Section 2.2, requests for Loans pursuant to Section 2.4, requests for
continuations or conversions of Loans pursuant to Section 2.7 and notices of
prepayment pursuant to Section 3.1 shall be irrevocable and binding on the
Borrower.
8.3 NO WAIVER BY CONDUCT; REMEDIES CUMULATIVE. No course of
dealing on the part of the Administrative Agent or any Lender, nor any delay or
failure on the part of the Administrative Agent or any Lender in exercising any
right, power or privilege hereunder shall operate as a waiver of such right,
power or privilege or otherwise prejudice the Administrative Agent's or such
Lender's rights and remedies hereunder; nor shall any single or partial exercise
thereof preclude any further exercise thereof or the exercise of any other
right, power or privilege. No right or remedy conferred upon or reserved to the
Administrative Agent or any Lender under this Agreement, any of the Notes, or
any Guaranty is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy granted thereunder or now or hereafter existing under any applicable law.
Every right and remedy granted by this Agreement, any of the Notes, any
Guaranty, or by applicable law to the Administrative Agent or any Lender may be
exercised from time to time and as often as may be deemed expedient by the
Administrative Agent or any Lender and, unless contrary to the express
provisions of this Agreement, the Notes, or any Guaranty, irrespective of the
occurrence or continuance of any Default or Event of Default.
8.4 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of the Borrower or any
Guarantor made herein or in any Guaranty or in any certificate, report,
financial statement or other document furnished by or on behalf of the Borrower
or any Guarantor in connection with this Agreement or any Guaranty shall be
deemed to be material and to have been relied upon by the Lenders,
notwithstanding any investigation heretofore or hereafter made by any Lender or
on such Lender's behalf, and those covenants and agreements of the Borrower set
forth in Section 3.6, 3.8 and 8.5 hereof shall survive the repayment in full of
the Loans and the termination of the Commitments.
8.5 EXPENSES. (a) The Borrower agrees to pay, or reimburse the
Administrative Agent for the payment of, on demand, (i) the reasonable fees and
expenses of counsel to the Administrative Agent, including without limitation
the fees and expenses of Dickinson, Wright, Moon, Van Dusen & Freeman, in
connection with the preparation, execution, delivery and administration of this
Agreement, the Notes, the Guaranties, and the consummation of the transactions
contemplated hereby, and in connection with advising the Administrative Agent as
to its rights and responsibilities with respect thereto, and in connection with
any amendments, waivers or consents in connection therewith, and (ii) all stamp
and other taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing or recording of this Agreement, the Notes, the
Guaranties and the consummation of the transactions contemplated hereby, and any
and all liabilities with respect to or resulting from any delay in paying or
omitting to pay such taxes or fees, and (iii) all reasonable costs and expenses
of the Administrative Agent and the Lenders (including reasonable fees and
expenses of counsel and whether incurred through negotiations, legal proceedings
or otherwise) in connection with any Default or Event of Default or the
enforcement of, or the exercise or preservation of any rights under, this
Agreement or the Notes or any
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Guaranty, or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement.
(b) The Borrower hereby indemnifies and agrees to
hold harmless the Lenders and the Administrative Agent, and its officers,
directors, employees and agents, from and against any and all claims, damages,
losses, liabilities, costs or expenses of any kind or nature whatsoever
(including reasonable attorneys fees and disbursements incurred in connection
with any investigative, administrative or judicial proceeding whether or not
such person shall be designated as a party thereto) which the Lenders or the
Administrative Agent or any such person may incur or which may be claimed
against any of them by reason of or in connection with entering into this
Agreement or the transactions contemplated hereby, including without limitation
those arising under Environmental Laws; PROVIDED, HOWEVER, that no Borrower
shall be required to indemnify any such Lender and the Administrative Agent or
such other person, to the extent, but only to the extent, that such claim,
damage, loss, liability, cost or expense is attributable to the gross negligence
or willful misconduct of such Lender or the Administrative Agent, as the case
may be.
(c) In consideration of the execution and delivery of
this Agreement by each Lender and the extension of the Commitments, the Borrower
hereby indemnifies, exonerates and holds the Administrative Agent, each Lender
and each of its officers, directors, employees and agents (collectively, the
"INDEMNIFIED PARTIES") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities and damages, and expenses
incurred in connection therewith, including reasonable attorneys' fees and
disbursements (collectively, the "INDEMNIFIED LIABILITIES"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to:
(i) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of any
Loan;
(ii) the entering into and performance of
this Agreement and any other agreement or instrument executed in connection
herewith by any of the Indemnified Parties (including any action brought by or
on behalf of the Borrower as the result of any determination by the Required
Lenders not to fund any Loan);
(iii) any investigation, litigation or
proceeding related to any acquisition or proposed acquisition by the Borrower or
any of its Subsidiaries of any portion of the stock or assets of any person;
(iv) any investigation, litigation or
proceeding related to any environmental cleanup, audit, compliance or other
matter relating to the protection of the environment or the release by the
Borrower or any of its Subsidiaries of any Hazardous Material; or
(v) the presence on or under, or the
escape, seepage, leakage, spillage, discharge, emission, discharging or
releasing from, any real property owned or operated by the Borrower, or any of
its Subsidiaries of any Hazardous Material (including any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the control of,
the Borrower or such Subsidiary, except for any such Indemnified Liabilities
arising for the account of a particular Indemnified Party by reason of the
activities of the
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Indemnified Party on the property of the Borrower conducted subsequent to a
foreclosure on such property by the Lenders or by reason of the relevant
Indemnified Party's gross negligence or willful misconduct or breach of this
Agreement, and if and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Borrower shall be
obligated to indemnify the Indemnified Parties for all Indemnified Liabilities
subject to and pursuant to the foregoing provisions, regardless of whether the
Borrower or any of its Subsidiaries had knowledge of the facts and circumstances
giving rise to such Indemnified Liability.
8.6 SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding
upon and inure to the benefit of the parties hereto and its successors and
assigns, PROVIDED neither the Borrower nor any Guarantor may, without the prior
consent of the Lenders, assign its rights or obligations hereunder, under the
Notes or under any Guaranty and the Lenders shall not be obligated to make any
Loan hereunder to any entity other than the Borrower.
(b) Any Lender may sell to any financial institution
or institutions, and such financial institution or institutions may further
sell, a participation interest (undivided or divided) in, the Loans and such
Lender's rights and benefits under this Agreement, the Notes and the Guaranties,
and to the extent of that participation interest such participant or
participants shall have the same rights and benefits against the Borrower under
Section 3.6, 3.8 and 6.2(c) as it or they would have had if such participant or
participants were the Lender making the Loans to the Borrower hereunder,
PROVIDED, HOWEVER, that (i) such Lender's obligations under this Agreement shall
remain unmodified and fully effective and enforceable against such Lender, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
its Notes for all purposes of this Agreement, (iv) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and (v) such Lender shall not grant to its
participant any rights to consent or withhold consent to any action taken by
such Lender or the Administrative Agent under this Agreement other than action
requiring the consent of all of the Lenders hereunder.
(c) The Administrative Agent from time to time in its
sole discretion may appoint agents for the purpose of servicing and
administering this Agreement and the transactions contemplated hereby and
enforcing or exercising any rights or remedies of the Administrative Agent
provided under this Agreement, the Notes, any Guaranty or otherwise. In
furtherance of such agency, the Administrative Agent may from time to time
direct that the Borrower and the Guarantors provide notices, reports and other
documents contemplated by this Agreement (or duplicates thereof) to such agent.
The Borrower hereby consents to the appointment of such agent and agrees to
provide all such notices, reports and other documents and to otherwise deal with
such agent acting on behalf of the Administrative Agent in the same manner as
would be required if dealing with the Administrative Agent itself.
(d) Each Lender may, with the prior consent of the
Borrower (which consent shall not be unreasonably withheld and may not be
withheld if any Event of Default or Default has occurred and is continuing) and
the prior written consent of the Administrative Agent (which consent shall not
be unreasonably withheld), assign to one or more banks or other entities all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Loans owing to it and the
Note held by it); PROVIDED, HOWEVER, that (i) each such assignment shall be of a
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uniform, and not a varying, percentage of all rights and obligations, (ii)
except in the case of an assignment of all of a Lender's rights and obligations
under this Agreement, (A) the amount of the Commitment of the assigning Lender
being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event
be less than $5,000,000, and in integral multiples of $5,000,000 thereafter, or
such lesser amount as the Borrower and the Administrative Agent may consent to
and (B) after giving effect to each such assignment, the amount of the
Commitment of the assigning Lender shall in no event be less than $5,000,000,
(iii) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance in the form of EXHIBIT F hereto (an "ASSIGNMENT AND
ACCEPTANCE"), together with any Note subject to such assignment and a processing
and recordation fee of $3,000, and (iv) any Lender may without the consent of
the Borrower or the Administrative Agent, and without paying any fee, assign to
any Affiliate of such Lender that is a bank or financial institution all of its
rights and obligations under this Agreement. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in such
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(e) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender 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 or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of their
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.6 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vi) such assignee agrees
that it will perform in accordance with their terms all of the obligations that
by the terms of this Agreement are required to be performed by it as a Lender.
(f) The Administrative Agent shall maintain at its
address designated on the signature pages hereof a copy of each Assignment and
Acceptance delivered to and accepted by it and a
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register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender from time
to time (the "REGISTER"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lenders may treat each person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(g) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee, together with any Note subject
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower. Within five Business Days after its receipt of
such notice, the Borrower, at their own expense, shall execute and deliver to
the Administrative Agent in exchange for the surrendered Note a new Note to the
order of such assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment hereunder, a new Note to the order of the assigning Lender
in an amount equal to the Commitment retained by it hereunder. Such new Note
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
EXHIBIT F hereto.
(h) The Borrower shall not be liable for any costs or
expenses of any Lender in effectuating any participation or assignment under
this Section 8.6.
(i) The Lenders may, in connection with any
assignment, participation or addition or proposed assignment, participation or
addition pursuant to this Section 8.6, disclose to the assignee or participant
or proposed assignee or participant any information relating to the Borrower.
(j) In addition, the Borrower and the Administrative
Agent may from time to time designate additional financial institutions (the
"Additional Lenders") to be parties to this Agreement and to become a Lender
hereunder upon the execution and delivery to the Administrative Agent of an
Assumption Agreement in the form of Exhibit G hereto (an "Assumption
Agreement"). Any Additional Lender shall become a party to this Agreement and be
considered a Lender hereunder for all purposes if (a) it shall execute and
deliver to the Administrative Agent an Assumption Agreement, (b) it shall make
Loans to the Borrower in the principal amount which bears the same ratio to the
amounts of the Loans of the other Lenders then outstanding as the Commitment of
such Additional Bank bears to the then Commitments of such other Lenders, and
(c) a copy of such Assumption Agreement and evidence satisfactory to the
Administrative Agent of the making of such Loans shall be furnished to the
Lenders. In connection with adding Additional Lenders, the aggregate Total
Commitments may be increased to an amount not to exceed $50,000,000 with the
consent of the Borrower and the Administrative Agent and without the consent of
any Lender.
(k) Notwithstanding any other provision set forth in
this Agreement, any Lender may at any time create a security interest in, or
assign, all or any portion of its rights under this Agreement (including,
without limitation, the Loans owing to it and the Note held by it) in favor of
any Federal Reserve Lender in accordance with Regulation A of the Board of
Governors of the Federal Reserve
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<PAGE> 48
System; PROVIDED that such creation of a security interest or assignment shall
not release such Lender from its obligations under this Agreement.
8.7 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.8 GOVERNING LAW. This Agreement is a contract made under, and
shall be governed by and construed in accordance with, the law of the State of
Illinois applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State. The
Borrower and each Lender further agrees that any legal action or proceeding with
respect to this Agreement, any of the Notes, or any Guaranty, or the
transactions contemplated hereby may be brought in any court of the State of
Illinois, or in any court of the United States of America sitting in Illinois,
and the Borrower and each Lender hereby submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to its person and
property, and irrevocably consents to the service of process in connection with
any such action or proceeding by personal delivery to the Borrower or such
Lender, as the case may be, or by the mailing thereof by registered or certified
mail, postage prepaid to the Borrower or such Lender, as the case may be, at
their address referred to in Section 8.2. Nothing in this paragraph shall affect
the right of the Lenders and the Administrative Agent to serve process in any
other manner permitted by law or limit the right of the Lenders or the
Administrative Agent to bring any such action or proceeding against the Borrower
or property in the courts of any other jurisdiction in which property of the
Borrower is located. The Borrower and each Lender hereby irrevocably waives any
objection to the laying of venue of any such suit or proceeding in the above
described courts located or sitting in Illinois.
8.9 TABLE OF CONTENTS AND HEADINGS. The table of contents and
the headings of the various subdivisions hereof are for the convenience of
reference only and shall in no way modify any of the terms or provisions hereof.
8.10 CONSTRUCTION OF CERTAIN PROVISIONS. If any provision of
this Agreement refers to any action to be taken by any person, or which such
person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such person, whether or not
expressly specified in such provision.
8.11 INTEGRATION AND SEVERABILITY. This Agreement embodies the
entire agreement and understanding between the Borrower and the Administrative
Agent and the Lenders, and supersedes all prior agreements and understandings,
relating to the subject matter hereof. In case any one or more of the
obligations of the Borrower under this Agreement, any of the Notes or any
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining obligations of the
Borrower shall not in any way be affected or impaired thereby, and such
invalidity, illegality or unenforceability in one jurisdiction shall not affect
the validity, legality or enforceability of the obligations of the Borrower
under this Agreement, any of the Notes or any Guaranty in any other
jurisdiction.
8.12 INDEPENDENCE OF COVENANTS. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by an
exception to, or would be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or such condition exists.
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<PAGE> 49
8.13 INTEREST RATE LIMITATION. Notwithstanding any provisions
of this Agreement, the Notes or any Guaranty, in no event shall the amount of
interest paid or agreed to be paid by the Borrower exceed an amount computed at
the highest rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Agreement, the
Notes or any Guaranty at the time performance of such provision shall be due,
shall involve exceeding the interest rate limitation validly prescribed by law
which a court of competent jurisdiction may deem applicable hereto, then, IPSO
FACTO, the obligations to be fulfilled shall be reduced to an amount computed at
the highest rate of interest permissible under applicable law, and if for any
reason whatsoever the Lender shall ever receive as interest an amount which
would be deemed unlawful under such applicable law such interest shall be
automatically applied to the payment of principal of the Loans outstanding
hereunder (whether or not then due and payable) and not to the payment of
interest, or shall be refunded to the Borrower if such principal and all other
obligations of the Borrower to the Lenders have been paid in full.
8.14 INDEBTEDNESS UNDER EXISTING CREDIT AGREEMENT. This
Agreement and the Loans made pursuant to Article II are in substitution for the
Existing Credit Agreement and the loans made under the Existing Credit
Agreement, and the Notes delivered to the Lenders hereunder are delivered in
exchange and in substitution for the notes issued pursuant to the Existing
Credit Agreement. The commitments under the Existing Credit Agreement are
superseded and replaced by the Commitments hereunder. The initials Loans
hereunder shall be used to pay all Indebtedness owing under the notes issued
pursuant to the Existing Credit Agreement.
8.15 WAIVER OF JURY TRIAL. The Lenders, the Administrative
Agent and the Borrower, after consulting or having had the opportunity to
consult with counsel, knowingly, voluntarily and intentionally waive any right
any of them may have to a trial by jury in any litigation based upon or arising
out of this Agreement or any related instrument or agreement or any of the
transactions contemplated by this Agreement or any course of conduct, dealing,
statements (whether oral or written) or actions of either of them. None of the
Lenders, the Administrative Agent or the Borrower shall seek to consolidate, by
counterclaim or otherwise, any such action in which a jury trial has been waived
with any other action in which a jury trial cannot be or has not been waived.
These provisions shall not be deemed to have been modified in any respect or
relinquished by any of the Lenders, the Administrative Agent or the Borrower
except by a written instrument executed by all of them.
[The rest of this page intentionally left blank.]
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<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered on the ___ day of April, 1997, which
shall be the Effective Date of this Agreement, notwithstanding the day and year
first above written.
Address for Notices: NATIONAL AUTO CREDIT, INC.
National Auto Credit By:
30000 Aurora Road -----------------------------
Solon, Ohio 44139 Its:
Attention: General Counsel ----------------------------
Telephone No. (216) 349-1000
Facsimile No. (216) 349-0442
Facsimile Confirmation
Number: (216) 349-1000 And:
----------------------------
Its:
----------------------------
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<PAGE> 51
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent and as a
Lender
The First National Bank of Chicago By:
One First National Plaza, Suite 0084 ---------------------------------
Chicago, Illinois 60670 Its:
Attention: Craig Goldsmith --------------------------------
Telephone No.: (312) 732-2822
Facsimile No.: (312) 732-6222
Facsimile Confirmation
Number: (312) 732-2822
Commitment Amount:
$10,000,000
Percentage of Total Commitments: 25.641%
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<PAGE> 52
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Documentation Agent and as a Lender
60 Wall Street By:
New York, New York 10260 --------------------------------
Attention:________________ Its:
Telephone No.: (212) ___-____ -------------------------------
Facsimile No.: (212) ____-____
Facsimile Confirmation
Number: (212) ___-______
Commitment Amount:
$9,000,000
Percentage of Total Commitments: 23.077%
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<PAGE> 53
THE BANK OF NEW YORK
The Bank of New York By:
One Wall Street, 22nd Floor -----------------------------
New York, New York 10286 Its:
Attention: ________________ ----------------------------
Telephone No.: (212) ___-____
Facsimile No.: (212) ___-____
Facsimile Confirmation
Number: (212) ___-____
Commitment Amount:
$8,000,000
Percentage of Total Commitments: 20.513%
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<PAGE> 54
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
One First Union Center By:
Charlotte, North Carolina 28207 -----------------------------
Attention: Mary J. Amatore Its:
Telephone No.: (704) 374-2641 ----------------------------
Facsimile No.: (704) 374-2802
Facsimile Confirmation
Number: (704) 374-4426
Commitment Amount:
$8,000,000
Percentage of Total Commitments: 20.513%
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<PAGE> 55
THE HUNTINGTON NATIONAL BANK
912 Euclid Avenue By:
Cleveland, Ohio -----------------------------
Attention: Christine Gencer Its:
Telephone No.: (216) 515-6090 ----------------------------
Facsimile No.: (216) 515-6082
Facsimile Confirmation
Number: (216) 515-6090
Commitment Amount:
$4,000,000
Percentage of Total Commitments: 10.256%
Total Commitments
$39,000,000
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<PAGE> 56
EXHIBIT A
GUARANTY AGREEMENT
------------------
(________________)
THIS GUARANTY AGREEMENT, dated as of April ___, 1997 (this
"Guaranty"), is made by ____________________, a ________ corporation (the
"Guarantor"), in favor of the lenders which are from time to time parties to the
Credit Agreement hereinafter defined (collectively the "Lenders" and each a
"Lender") and The First National Bank of Chicago, a national banking
association, as administrative agent (in such capacity, the "Administrative
Agent") for the Lenders under the Credit Agreement;
RECITALS
--------
A. National Auto Credit, Inc., a Delaware corporation (the
"Borrower"), has entered into a Short-Term Credit Agreement, dated as of April
___, 1997 (as amended or modified from time to time, the "Credit Agreement"),
with the Lenders, Morgan Guaranty Trust Company of New York, as documentation
agent for the Lenders under the Credit Agreement, and the Administrative Agent
pursuant to which the Lenders may make Loans to the Borrower.
B. As a condition to the effectiveness of the obligations of
the Lenders under the Credit Agreement, the Guarantor is required to guarantee,
among other things, the obligations of the Borrower in respect of the Loans and
other obligations of the Borrower under the Notes and the Credit Agreement.
C. The Guarantor has reviewed the Credit Agreement, the Notes,
and all other documents, agreements, instruments and certificates furnished by
or on behalf of the Borrower in connection therewith (all of the foregoing, as
amended or modified from time to time and together with any agreements or
instruments in replacement thereof, being herein collectively referred to as the
"Operative Documents"), and the Guarantor has determined that it is in its
interest and to its financial benefit that the parties to the Operative
Documents enter into the transactions contemplated thereby.
For valuable consideration, the receipt of which is hereby
acknowledged and as further consideration, and as an inducement to the Lenders
and the Administrative Agent to maintain the credit facilities established by
the Operative Documents, the Guarantor agrees with the Lenders and the
Administrative Agent as follows:
1. GUARANTEE OF OBLIGATIONS. (a) The Guarantor hereby (i)
guarantees to the Lenders the prompt payment of the principal of and any and all
accrued and unpaid interest (including without limitation interest which, but
for the filing of a bankruptcy petition, would have accrued on the principal
amount of the Guaranteed Obligations hereinafter defined) on the Loans, when
due, whether by scheduled maturity, acceleration or otherwise, all in accordance
with the terms of the Notes and the
<PAGE> 57
Credit Agreement, and any and all other amounts which may be payable by the
Borrower to the Lenders, or any one or more of them, in connection with or
pursuant to any of the Operative Documents, including without limitation default
interest, indemnification payments and all costs and expenses incurred by any
Lender or the Administrative Agent in connection with enforcing any obligations
of the Borrower thereunder, including without limitation the reasonable fees and
disbursements of counsel, including without limitation counsel who are employees
of any Lender or the Administrative Agent, and (ii) agrees to make prompt
payment, on demand, of any and all costs and expenses incurred by the Lenders or
the Administrative Agent in connection with enforcing the obligations of the
Guarantor hereunder, including, without limitation, the reasonable fees and
disbursements of counsel, including without limitation counsel who are employees
of any Lender or the Administrative Agent (all of the foregoing being
collectively referred to as the "Guaranteed Obligations").
(a) If for any reason any amount payable under or in
connection with any Operative Document shall not be paid in full when the same
becomes due and payable, the Guarantor undertakes to pay forthwith each such
amount to the Lenders and the Administrative Agent regardless of any defense or
setoff or counterclaim which the Borrower may have or assert, and regardless of
any other condition or contingency.
(b) The date and amount of the Loans and of each
payment of principal and interest thereon and other amounts received, and the
aggregate amount thereof shown upon the books and records of the respective
Lenders or the Administrative Agent or upon the schedules attached to the Notes,
and in any certificate delivered by any Lender or the Administrative Agent to
the Guarantor in respect thereof, shall be prima facie evidence of the amount
due, owing and unpaid on the Loans. The failure to record any such information
on such books and records or upon such schedule shall not, however, limit or
otherwise affect the obligations of the Borrower to repay the amount of the
Loans together with accrued interest thereon or the obligations of the Guarantor
hereunder with respect thereto.
2. NATURE OF GUARANTY. This Guaranty is an absolute and
unconditional and irrevocable guaranty of payment and not a guaranty of
collection and is wholly independent of and in addition to other rights and
remedies of the Lenders and the Administrative Agent and is not contingent upon
the pursuit by the Lenders or the Administrative Agent of any such rights and
remedies, such pursuit being hereby waived by the Guarantor.
3. WAIVERS AND OTHER AGREEMENTS. The Guarantor hereby
unconditionally (a) waives any requirement that the Lenders or the
Administrative Agent, in the event of any default by the Borrower, first make
demand upon, or seek to enforce remedies against, the Borrower before demanding
payment under or seeking to enforce this Guaranty, (b) covenants that this
Guaranty will not be discharged except by complete performance of all
obligations of the Borrower contained in the Operative Documents, (c) agrees
that this Guaranty shall remain in full force and effect without regard
GUARANTY AGREEMENT
------------------
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<PAGE> 58
to, and shall not be affected or impaired, without limitation, by any
invalidity, irregularity or unenforceability in whole or in part of any of the
Operative Documents, or any limitation on the liability of the Borrower
thereunder, or any limitation on the method or terms of payment thereunder which
may now or hereafter be imposed in any manner whatsoever, (d) waives diligence,
presentment and protest with respect to, and any notice of default or dishonor
in the payment of any amount at any time payable by the Borrower under or in
connection with, any of the Operative Documents, and further waives any
requirement of notice of acceptance of, or other formality relating to, this
Guaranty and (e) agrees that the Guaranteed Obligations shall include any
amounts paid by the Borrower which may be required to be returned to the
Borrower, or to its representative or to a trustee, custodian or receiver for
the Borrower.
4. OBLIGATIONS ABSOLUTE. The obligations, covenants,
agreements and duties of the Guarantor under this Guaranty shall not be
released, affected or impaired by any of the following whether or not undertaken
with notice to or consent of the Guarantor: (a) any assignment or transfer, in
whole or in part, of the Loans, or any of the Operative Documents, or (b) any
waiver by the Lenders or the Administrative Agent, or by any other person, of
the performance or observance by the Borrower of any of the agreements,
covenants, terms or conditions contained in any of the Operative Documents, or
(c) any indulgence in or the extension of the time for payment by the Borrower
of any amounts payable under or in connection with any of the Operative
Documents, or of the time for performance by the Borrower of any other
obligations under or arising out of any of the Operative Documents, or the
extension or renewal thereof, whether occurring once or more than once, or (d)
the modification, amendment or waiver (whether material or otherwise) of any
duty, agreement or obligation of the Borrower set forth in any of the Operative
Documents (the modification, amendment or waiver from time to time of the Credit
Agreement or the Notes being expressly authorized without further notice to or
consent of the Guarantor), or (e) the voluntary or involuntary liquidation, sale
or other disposition of all or substantially all of the assets of the Borrower,
or any receivership, insolvency, bankruptcy, reorganization, or other similar
proceedings affecting the Borrower or any of its assets, or (f) the release of
any security, if any, for the obligations of the Borrower under any of the
Operative Documents, or the impairment of or failure to perfect an interest in
any such security, or (g) the merger or consolidation of the Borrower or the
Guarantor with any other person, or (h) the release or discharge of the Borrower
or the Guarantor from the performance or observance of any agreement, covenant,
term or condition contained in any of the Operative Documents by operation of
law, or (i) any other cause whether similar or dissimilar to the foregoing which
would release, affect or impair the obligations, covenants, agreements or duties
of the Guarantor hereunder.
5. REPRESENTATIONS AND WARRANTIES. The Guarantor represents
and warrants that (a) the execution, delivery and performance by the Guarantor
of this Guaranty are within its corporate powers, have been duly authorized by
all necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the articles of
incorporation or other charter documents or bylaws of the Guarantor, or of any
agreement, judgment, injunction, order, decree or other
GUARANTY AGREEMENT
------------------
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<PAGE> 59
instrument binding upon the Guarantor or its property; (b) this Guaranty
constitutes a legal, valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights and except that
the remedy of specific performance and injunctive and other forms of equitable
relief are subject to equitable defenses and to the discretion of the court for
which any proceedings may be brought; and (c) as of the date hereof (both before
and after the execution and delivery of this Guaranty), each of the following is
true and correct for the Guarantor: (i) the fair saleable value and the fair
valuation of the Guarantor's property is greater than the total amount of its
liabilities (including contingent liabilities) and greater than the amount that
would be required to pay its probable aggregate liability on its existing debts
as they become absolute and matured, (ii) the Guarantor's capital is not
unreasonably small in relation to its current and/or contemplated business or
other undertaken transactions, and (iii) the Guarantor does not intend to incur,
or believe that it will incur, debt beyond its ability to pay such debts as they
become due.
6. AMENDMENTS, ETC. This Guaranty may be amended from time to
time and any provision hereof may be waived by the parties hereto. No such
amendment or waiver of any provision of this Guaranty nor consent to any
departure by the Guarantor therefrom shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders and, to the extent
any rights or duties of the Administrative Agent may be affected, the
Administrative Agent, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
7. NOTICES. All notices, demands, requests, consents and other
communications hereunder shall be in writing and shall be delivered or sent to
the Guarantor at the address or number for notices set forth under its name on
the signature page hereof, and to the Lenders and the Administrative Agent at
their respective addresses or numbers for notice set forth in the Credit
Agreement, or to such other address or number as may be designated by the
Guarantor, the Administrative Agent or any Lender by notice to the other parties
hereto. All notices and other communications shall be deemed to have been given
at the earlier of (i) the time of actual delivery thereof to such address or
number, or (ii) if sent by certified or registered mail, postage prepaid, to
such address, on the third day after the date of mailing, if deposited prepaid
with a nationally recognized overnight delivery service guaranteeing next day
delivery to such address, prior to the deadline for next day delivery, on the
Business Day next following such deposit, or if sent by telecopy, upon receipt
of confirmation of delivery to such number by customary means.
8. CONDUCT NO WAIVER; REMEDIES CUMULATIVE. The obligations of
the Guarantor under this Guaranty are continuing obligations and a separate and
independent cause of action shall arise in respect of each enforcement hereunder
and default hereunder or under the Credit Agreement. No course of dealing on the
part of any Lender or the Administrative Agent, nor any delay or failure on the
part of any Lender or the Administrative Agent in exercising any right, power or
privilege hereunder shall operate as a waiver of such right, power or privilege
or otherwise prejudice the rights
GUARANTY AGREEMENT
------------------
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<PAGE> 60
and remedies of any of the Lenders or the Administrative Agent hereunder; nor
shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to the Lenders or the Administrative Agent
under this Guaranty is intended to be exclusive of any other right or remedy,
and every right and remedy shall be cumulative and in addition to every other
right or remedy given hereunder or now or hereafter existing under any
applicable law. Every right and remedy given by this Guaranty or by applicable
law to the Lenders or the Administrative Agent may be exercised from time to
time and as often as may be deemed expedient by them.
9. RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of the Guarantor made
herein or in any certificate or other document delivered pursuant hereto shall
be deemed to be material and to have been relied upon by the Lenders and the
Administrative Agent, notwithstanding any investigation heretofore or hereafter
made by any Lender or the Administrative Agent or on its behalf.
10. SUCCESSORS AND ASSIGNS. The rights and remedies of the
Lenders and the Administrative Agent hereunder shall inure to the benefit of the
Lenders and the Administrative Agent and their respective successors and
assigns, and the duties and obligations of the Guarantor hereunder shall be
binding upon the Guarantor and its successors and assigns.
11. GOVERNING LAW; CONSENT TO JURISDICTION. This Guaranty is a
contract made under, and the rights and obligations of the parties hereunder,
shall be governed by and construed in accordance with, the laws of the State of
Illinois applicable to contracts to be made and to be performed entirely with
such State. The Guarantor further agrees that any legal action or proceeding
brought with respect to this Guaranty or the transactions contemplated hereby
may be brought in any court of the State of Illinois, or any court of the United
States of America sitting in Illinois, and the Guarantor hereby irrevocably
submits to and accepts generally and unconditionally the jurisdiction of those
courts with respect to its person and property.
12. DEFINITIONS; HEADINGS. Terms used but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement. The
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
13. INTEGRATION; SEVERABILITY; ENFORCEABILITY. This Guaranty
embodies the entire agreement and understanding among the Guarantor, the Lenders
and the Administrative Agent, and supersedes all prior agreements and
understandings, relating to the subject matter hereof. If any one or more
provisions of this Guaranty should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected, impaired, prejudiced or
disturbed thereby. If at any time any portion of the obligations of the
Guarantor under this Guaranty shall be determined by a court of competent
jurisdiction to be invalid,
GUARANTY AGREEMENT
------------------
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<PAGE> 61
unenforceable or avoidable, the remaining portion of the obligations of the
Guarantor under this Guaranty shall not in any way be affected, impaired,
prejudiced or disturbed thereby and shall remain valid and enforceable to the
fullest extent permitted by applicable law. If at any time all or any portion of
the obligation of the Guarantor under this Guaranty would otherwise be
determined by a court of competent jurisdiction to be invalid, unenforceable or
avoidable under Section 548 of the federal Bankruptcy Code or under a similar
applicable law of any jurisdiction, then notwithstanding any other provisions of
this Guaranty to the contrary such obligation or portion thereof of the
Guarantor under this Guaranty shall be limited to the greatest of (i) the value
of any quantifiable economic benefits accruing to the Guarantor as a result of
this Guaranty, (ii) an amount equal to 95% of the excess on the date the
relevant Guaranteed Obligations were incurred of the present fair saleable value
of the assets of the Guarantor over the amount of all liabilities of the
Guarantor, contingent or otherwise, and (iii) the maximum amount for which this
Guaranty is determined to be enforceable.
14. REINSTATEMENT. This Guaranty shall remain in full force
and effect and continue to be effective in the event any petition be filed by or
against the Company or the Guarantor for liquidation or reorganization, in the
event the Borrower or the Guarantor becomes insolvent or makes an assignment for
the benefit of creditors or in the event a receiver or trustee be appointed for
all or any significant part of the Borrower's or the Guarantor's assets, and
shall continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Guaranteed Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by the Administrative Agent or any Lender ,
whether as a "voidable preference", "fraudulent conveyance", or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Guaranteed Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
15. SUBROGATION AND CONTRIBUTION. If the Guarantor makes a
payment in respect of the Guaranteed Obligations it shall be subrogated to the
rights of the payee against the Borrower with respect to such payment and shall
have the rights of contribution set forth below against all other Guarantors (as
the term "Guarantors" is defined in the Credit Agreement, which includes all
current Guarantors of the Guaranteed Obligations and any person at any time
becoming a Guarantor of the Guaranteed Obligations), and the Guarantor agrees
that all other Guarantors shall have the rights of contribution against it set
forth below; PROVIDED that the Guarantor shall not enforce its rights to any
payment by way of subrogation or by exercising its right of contribution until
all of the Guaranteed Obligations shall have been paid in full in immediately
available funds and such payment is not subject to any possibility of revocation
or rescission and the Credit Agreement has expired or been terminated. If the
Guarantor makes a payment in respect of the Guaranteed Obligations that is
smaller in proportion to its Payment Share (as hereinafter defined) than such
payments made by the other Guarantors are in proportion to the amounts of their
respective Payment Shares, the Guarantor shall, when permitted by the preceding
sentence, pay to the other Guarantors an amount such that the net payments made
by the Guarantors in respect of the Guaranteed Obligations shall be shared among
the
GUARANTY AGREEMENT
------------------
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<PAGE> 62
Guarantors pro rata in proportion to their respective Payment Shares. If the
Guarantor receives any payment by way of subrogation that is greater in
proportion to the amount of its Payment Share than the payments received by the
other Guarantors are in proportion to the amounts of their respective Payment
Shares, the Guarantor shall, when permitted by the second preceding sentence,
pay to the other Guarantors an amount such that the subrogation payments
received by the Guarantors shall be shared among the Guarantors pro rata in
proportion to their respective Payment Shares. Notwithstanding anything to the
contrary contained in this paragraph or in this Guaranty, the Guarantor shall
have no right of subrogation or contribution whatsoever, whether arising under
this Guaranty or otherwise, and no liability or obligation shall accrue pursuant
to any such rights or shall be paid or shall be deemed owing until all of the
Guaranteed Obligations shall be paid in full in immediately available funds and
not be subject to any possibility of revocation or rescission and the Credit
Agreement has expired or been terminated, and upon any enforcement of this
Guaranty all present and future indebtedness, obligations and liabilities of the
Company to the Guarantor shall be fully junior and subordinate in right and
priority of payment to the Guaranteed Obligations.
For purposes of this Guaranty, the "Payment Share" of the
Guarantor and of each of the other Guarantors, respectively, shall be the sum of
(a) the aggregate proceeds of the Guaranteed Obligations received by such
Guarantor (and, if received subject to a repayment obligation, remaining unpaid
on the Determination Date, as hereinafter defined), plus (b) the product of (i)
the aggregate Guaranteed Obligations remaining unpaid on the date such
Guaranteed Obligations become due and payable in full, whether by stated
maturity, acceleration, or otherwise (the "Determination Date") reduced by the
amount of such Guaranteed Obligations attributed to all of the Guarantors
pursuant to clause (a) above, times (ii) a fraction, the numerator of which is
such Guarantor's net worth on the effective date of this Agreement (determined
as of the end of the immediately preceding fiscal reporting period of the
Guarantor), and the denominator of which is the aggregate net worth of all of
the Guarantors, determined for each Guarantor on the respective effective date
of the Guaranty signed by such Guarantor.
GUARANTY AGREEMENT
------------------
-7-
<PAGE> 63
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be duly executed, delivered, and effective, as of the ______ day of April, 1997,
which shall be deemed the effective date of this Guaranty.
----------------------------
By:
----------------------------------
Its:
--------------------------------
ADDRESS FOR NOTICES:
3000 Aurora Road
Solon, Ohio 44139
Attention:________________
Telephone No.:(216) 349-1000
Facsimile No.: (216) 349-0442
Facsimile Confirmation
Number: (216) 349-1000
GUARANTY AGREEMENT
------------------
-8-
<PAGE> 64
EXHIBIT B
REVOLVING CREDIT NOTE
---------------------
$__________ April ____, 1997
FOR VALUE RECEIVED, NATIONAL AUTO CREDIT, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
__________________________________ (the "Lender"), at the principal banking
office of the Administrative Agent in lawful money of the United States of
America and in immediately available funds, the principal sum of _____ Million
Dollars ($__________), or such lesser amount as is recorded in the books and
records of the Lender, on the Termination Date; and to pay interest on the
unpaid principal balance hereof from time to time outstanding, in like money and
funds, for the period from the date hereof until the Revolving Credit Loans
evidenced hereby shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement referred to below.
The Lender is hereby authorized by the Borrower to record on
its books and records, the date, amount and type of each Loan, the duration of
the related Interest Period (if applicable), the amount of each payment or
prepayment of principal thereon and the other information provided for on such
books and records, which books and records shall constitute prima facie evidence
of the information so recorded, PROVIDED, HOWEVER, that any failure by the
Lender to record any such information shall not relieve the Borrower of its
obligation to repay the outstanding principal amount of such Loans, all accrued
interest thereon and any amount payable with respect thereto in accordance with
the terms of this Note and the Credit Agreement.
The Borrower and each endorser or guarantor hereof waives
demand, presentment, protest, diligence, notice of dishonor and any other
formality in connection with this Note. Should the indebtedness evidenced by
this Note or any part thereof be collected in any proceeding or be placed in the
hands of attorneys for collection, the Borrower agrees to pay, in addition to
the principal, interest and other sums due and payable hereon, all costs of
collecting this Note, including attorneys' fees and expenses.
This Note evidences one or more Revolving Credit Loans made
under a Short-Term Credit Agreement, dated as of April ____, 1997 (the "Credit
Agreement"), by and among the Borrower, the lenders (including the Lender) named
therein, The First National Bank of Chicago, as administrative agent for the
lenders, and Morgan Guaranty Trust Company of New York, as documentation agent
for the lenders, to which reference is hereby made for a statement of the
circumstances under which this Note is subject to prepayment and under which its
due date may be accelerated and for a description of the Guaranties securing
this Note. Capitalized terms used but not defined in this Note shall have the
respective meanings assigned to them in the Credit Agreement.
<PAGE> 65
This Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State and without giving
effect to choice of law principles of such State.
NATIONAL AUTO CREDIT, INC.
By:
------------------------------
Its:
---------------------------
And:
-----------------------------
Its:
---------------------------
REVOLVING CREDIT NOTE
---------------------
-2-
<PAGE> 66
EXHIBIT C
EXTENSION LETTER
----------------
The First National Bank of Chicago, as Administrative Agent
One First National Plaza
Chicago, Illinois 60670
____________, 199__
National Auto Credit, Inc.
30000 Aurora Road
Solon, Ohio 44139
Re: Short-Term Credit Agreement dated as of April ____, 1997 among
National Auto Credit, Inc. (the "Borrower"), the lenders which
are signatories thereto (the "Lenders"), The First National
Bank of Chicago, as Administrative Agent, and Morgan Guaranty
Trust Company of New York, as Documentation Agent, (the
"Credit Agreement")
Ladies and Gentlemen:
You have requested a modification to clause (a)(i) of the definition of
"Termination Date" contained in Section 1.1 of the Credit Agreement. The parties
hereto agree that the definition of Termination Date shall be modified by
deleting the reference in clause (a)(i) therein to "[insert existing Termination
Date]" and inserting "[insert a date 364 days after existing Termination Date]"
in place thereof.
The Borrower and each Guarantor agree that the Credit Agreement and the
other Loan Documents executed by the Borrower or the Guarantors in connection
with the Credit Agreement in favor of the Agent or any Lender are ratified and
confirmed and shall remain in full force and effect and that it has no set off,
counterclaim or defense with respect to any of the foregoing. This letter may be
executed in any number of counterparts and telecopied signatures shall be valid
and enforceable. This letter shall be effective upon receipt by the Agent of
counterparts hereof duly executed by the Borrower, each Guarantor and each
Lender. All capitalized words used in this Agreement shall have the meanings
ascribed to them in the Credit Agreement.
<PAGE> 67
National Auto Credit, Inc.
Page 2
THE FIRST NATIONAL BANK OF CHICAGO, as
Administrative Agent and as a Lender
By:
---------------------------------------
Its:
-----------------------------------
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Documentation Agent and as a
Lender
By:
---------------------------------------
Its:
-----------------------------------
THE BANK OF NEW YORK
By:
---------------------------------------
Its:
-----------------------------------
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:
---------------------------------------
Its:
-----------------------------------
THE HUNTINGTON NATIONAL BANK
By:
---------------------------------------
Its:
-----------------------------------
<PAGE> 68
National Auto Credit, Inc.
Page 3
Agreed and Accepted:
NATIONAL AUTO CREDIT, INC.
By:
------------------------------
Its:
--------------------------
And:
-----------------------------
Its:
--------------------------
NAC, INC.
By:
------------------------------
Its:
--------------------------
NAC INVESTMENT CO.
By:
------------------------------
Its:
--------------------------
<PAGE> 69
EXHIBIT D
REQUEST FOR LOAN
----------------
The First National Bank of Chicago,
as Administrative Agent for the Lenders
One First National Plaza
Chicago, Illinois 60670
Attention: _____________
National Auto Credit, Inc., a Delaware corporation (the
"Borrower") hereby requests an Advance pursuant to Section 2.4 of the Short-Term
Credit Agreement, dated as of April ___, 1997 (as amended or modified from time
to time, the "Credit Agreement"), among the Borrower, the Lenders referenced
therein, Morgan Guaranty Trust Company of New York, as Documentation Agent, and
you, as Administrative Agent for the Lenders.
A Loan is requested to be made in the amount of $_________, to
be made on ____________, 199_ and evidenced by the Borrower's Notes. Such Loan
shall be a [insert Eurodollar Rate Loan or Floating Rate Loan] and the initial
Eurodollar Interest Period, if such requested Loan is a Eurodollar Rate Loan,
shall be [insert permitted Eurodollar Interest Period].
In support of this request, the Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that:
1. The representations and warranties contained in Article IV
of the Credit Agreement are true and correct in all material respects on and as
of the date hereof, and will be true and correct in all material respects on the
date such Loan is made (both before and after such Loan is made), as if such
representations and warranties were made on and as of such dates.
2. No Event of Default or Default has occurred and is
continuing or will exist on the date such Loan is made and such Loan shall not
cause an Event of Default or Default.
Acceptance of the proceeds of such Loan by the Borrower shall be deemed to be a
further representation and warranty that the representations and warranties made
herein are true and correct in all material respects at the time such proceeds
are disbursed.
<PAGE> 70
Capitalized terms used but not defined herein shall have the respective meanings
assigned to them in the Credit Agreement.
NATIONAL AUTO CREDIT, INC.
By:
-------------------------------------
Its:
-------------------------------------
Dated: ________________, 199_
REQUEST FOR LOAN
----------------
-2-
<PAGE> 71
EXHIBIT E
REQUEST FOR CONTINUATION OR
---------------------------
CONVERSION OF LOAN
------------------
[Date]
The First National Bank of Chicago,
as Administrative Agent for the Lenders
One First National Plaza
Chicago, Illinois 60670
Attention: _____________
National Auto Credit, Inc., a Delaware corporation (the
"Borrower"), hereby requests that $____________ of the principal amount of the
Loan originally made on ____________, 19__, which Loan is currently a [insert
type of Loan], be continued as or converted to, as the case may be, a [insert
type of Loan requested] on ______________, 19__. If such Loan is requested to be
converted to a Eurodollar Rate Loan, the Borrower hereby elects a Eurodollar
Interest Period for such Loan of [insert permitted Eurodollar Interest Period].
In support of this request, the Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that:
1. The representations and warranties contained in Article IV
of the Credit Agreement are true and correct in all material respects on and as
of the date hereof, and will be true and correct in all material respects on the
date such Loan is [continued][converted] (both before and after such Loan is
[continued][converted]), as if such representations and warranties were made on
and as of such dates.
2. No Event of Default or Default has occurred and is
continuing or will exist on the date such Loan is [continued[converted] (whether
before or after such Loan is [continued][converted]).
Acceptance of the proceeds of such [continued][converted] Loan by the Borrower
shall be deemed to be a further representation and warranty that the
representations and warranties made herein are true and correct in all material
respects at the time of such [continuation] [conversion].
<PAGE> 72
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE
-------------------------
Reference is made to the Short-Term Credit Agreement dated as
of April ___, 1997 (the "Credit Agreement") among NATIONAL AUTO CREDIT, INC., a
Delaware corporation (the "Borrower"), the lenders named therein (the
"Lenders"), THE FIRST NATIONAL BANK OF CHICAGO, as administrative agent for the
Lenders (the "Administrative Agent") and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as documentation agent for the Lenders. Terms defined in the Credit
Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1
agree as follows:
1. The Assignor hereby sells and assigns (without recourse) to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement as of the date hereof equal to the percentage interest specified on
Schedule 1 of all outstanding rights and obligations under the Credit Agreement.
After giving effect to such sale and assignment, the Assignee's Commitments and
the amounts of the Advances owing to the Assignee will be as set forth on
Schedule 1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; (iii) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or the performance or observance by the Borrower of
any of its obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iv) attaches the Notes held by the
Assignor and requests that the Administrative Agent exchange such Notes for new
Notes payable to the order of the Assignee in an amount equal to the Commitments
assumed by the Assignee pursuant hereto and the Assignor in an amount equal to
the Commitments retained by the Assignor under the Credit Agreement,
respectively, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.6 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) appoints and authorizes the Administrative
Agent to take such action as Administrative Agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to the
Administrative Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; (iv) agrees that it will
<PAGE> 73
perform in accordance with their terms of all of the obligations that by the
terms of the Credit Agreement are required to be performed by it as a Lender;
and (v) if the Assignee is organized under the laws of a jurisdiction outside
the United States, attaches the forms prescribed by the Internal Revenue Service
of the United States certifying as to the Assignee's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement and the Notes or
such other documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax treaty.
4. Following the execution of this Assignment and Acceptance,
it will be delivered to the Administrative Agent for acceptance and recording by
the Administrative Agent. The effective date for this Assignment and Acceptance
(the "Effective Date") shall be the date of acceptance hereof by the
Administrative Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by the Administrative
Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and (ii) the Assignor shall,
to the extent provided in this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Administrative Agent shall make
all payments under the Credit Agreement and the Notes in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments under the Credit
Agreement and the Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Illinois.
8. This Assignment and Acceptance may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.
ASSIGNMENT AND ACCEPTANCE
-------------------------
-2-
<PAGE> 74
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.
[ASSIGNOR]
BY:
------------------------------------
ITS:
----------------------------------
[ASSIGNEE]
-----------------------------------------
BY:
------------------------------------
ITS:
----------------------------------
ASSIGNMENT AND ACCEPTANCE
-------------------------
-3-
<PAGE> 75
EXHIBIT G
ASSUMPTION AGREEMENT
--------------------
Reference is made to the Short-Term Credit Agreement dated as of April
____, 1997 (as now or hereafter amended or modified from time to time, the
"Credit Agreement") among NATIONAL AUTO CREDIT, INC., a Delaware corporation
(the "Borrower"), the Lenders named therein (the "Lenders"), THE FIRST NATIONAL
BANK OF CHICAGO, as administrative agent for the Lenders (the "Administrative
Agent") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as documentation agent
for the Lenders. Terms defined in the Credit Agreement are used herein with the
same meaning.
1. __________________, a _____________________ ("New Lender") has
decided to become a Lender under the Credit Agreement, with its Commitments,
Percentage of Total Commitments and address for notice as described next to its
signature below. The New Lender (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.6 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assumption Agreement; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent or any Lender 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 the Credit Agreement;
(iii) appoints and authorizes the Administrative Agent to take such action as
administrative agent on its behalf and to exercise such powers and discretion
under the Credit Agreement as are delegated to the Administrative Agent by the
terms thereof, together with such powers and discretion as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms of all of the obligations that by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (v) if the New Lender is
organized under the laws of a jurisdiction outside the United States, attaches
the forms prescribed by the Internal Revenue Service of the United States
certifying as to the New Lender's status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to
the New Lender under the Credit Agreement and the Notes or such other documents
as are necessary to indicate that all such payments are subject to such taxes at
a rate reduced by an applicable tax treaty.
1. Following the execution of this Assumption Agreement, it will be
delivered to the Administrative Agent and Borrower for acceptance by the
Administrative Agent and the Borrower and recording by the Administrative Agent.
The effective date for this Assumption Agreement (the "Effective Date") shall be
the date of acceptance hereof by the Administrative Agent and the Borrower.
2. Upon such acceptance by the Administrative Agent and the Borrower
and recording by the Administrative Agent, as of the Effective Date, the New
Lender shall be a party to the Credit Agreement and, to the extent provided in
this Assumption Agreement, have the rights and obligations of a Lender
thereunder. On the Effective Date, the New Lender shall, in fulfillment of its
obligations as a Lender under the Credit Agreement, fund its share of
outstanding Loans in accordance with its
<PAGE> 76
Percentage of Total Commitment by making available such amount to the
Administrative Agent in immediately available funds at the principal office of
the Administrative Agent. The Administrative Agent shall promptly adjust the
balance of outstanding Advances owing to each Lender in accordance with each
Lender's new Percentage of Total Commitment and promptly remit to each Lender
any repayment due such Lender as a result of such adjustment. In the event any
Eurodollar Rate Loans are outstanding on the Effective Date and the repayment of
such Eurodollar Rate Loans prior to the last day of the applicable Eurodollar
Interest Period would result in costs and expenses to any Lender as described in
Section 3.8 of the Credit Agreement, the New Lender shall purchase a
participation interest in any outstanding Eurodollar Rate Loans from each Lender
which would suffer such costs and expenses. The amount of the participation
interest purchased by the New Lender from any Lender under this paragraph shall
be equal to the amount of the repayment such Lender would have received with
respect to such Eurodollar Rate Loan as a result of the adjustment described in
this paragraph.
3. This Assumption Agreement shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
4. This Assumption Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
5. Upon acceptance and recording by the Administrative Agent, the
Administrative Agent shall notify each Lender and the Borrower of the Percentage
of Total Commitments of each Lender, which shall be binding on all parties.
-2-
<PAGE> 77
IN WITNESS WHEREOF, the New Lender has caused this Assumption Agreement
to be executed by its officer thereunto duly authorized as of the date specified
thereon.
__________________________ [NEW LENDER]
__________________________
__________________________
Attention: ___________________ By:
Facsimile No. (___) ___-____ ---------------------------------
Its:
------------------------------
Commitment Amount $___________
Percentage of Total Commitments: ___%
Accepted and Agreed:
THE FIRST NATIONAL BANK OF CHICAGO, as
Administrative Agent
By:
---------------------------------
Its:
----------------------------
NATIONAL AUTO CREDIT, INC.
By:
---------------------------------
Its:
----------------------------
-3-
<PAGE> 78
LONG-TERM CREDIT AGREEMENT
--------------------------
THIS LONG-TERM CREDIT AGREEMENT, dated as of April __, 1997
(this "Agreement"), is by and among NATIONAL AUTO CREDIT, INC., a Delaware
corporation (the "Borrower"), the Lenders set forth on the signature pages
hereof (collectively, the "Lenders" and individually, a "Lender"), THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as documentation agent for the Lenders (in
such capacity, the "Documentation Agent").
INTRODUCTION
------------
The Borrower desires to obtain a three-year revolving credit
facility, including loans and letters of credit, in the aggregate principal
amount of $58,500,000, in order to provide funds for its general corporate
purposes and the Lenders are willing to establish such credit facility in favor
of the Borrower on the terms and conditions herein set forth.
In consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
-----------
1.1 CERTAIN DEFINITIONS. As used herein the following terms
shall have the following respective meanings:
"ADVANCE" shall mean any Loan and any Letter of Credit
Advance.
"AFFILIATE", when used with respect to any person shall mean
any other person which, directly or indirectly, controls or is controlled by or
is under common control with such person. For purposes of this definition
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), with respect to any person, shall mean 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 by contract or otherwise. Notwithstanding the foregoing provisions
of this definition, the term "Affiliate" shall not include Sam J. Frankino,
Chairman of the Board and majority shareholder of the Borrower.
"ALTERNATE BASE RATE" shall mean, for any day, the rate of
interest that is equal to the higher of (i) the Corporate Base Rate for such day
and (ii) the sum of the Federal Funds Effective Rate for such day plus 1/2% per
annum.
<PAGE> 79
"APPLICABLE MARGIN" shall mean the following margin based upon
the Leverage Ratio as adjusted on the first Business Day immediately following
the date on which the financial statements and compliance certificate required
pursuant to Section 5.1(d) are delivered to the Lenders and shall remain in
effect until the next change to be effected pursuant to this definition, based
upon such ratio for the four consecutive fiscal quarters immediately preceding
such date; PROVIDED, THAT, the Eurodollar Rate shall not be adjusted pursuant to
the Applicable Margin for any outstanding Eurodollar Rate Loan until after the
end of the Eurodollar Interest Period for such Eurodollar Rate Loan:
APPLICABLE MARGIN
-----------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Leverage Ratio Floating Eurodollar Letter of
Rate Rate Loan Credit Fee Facility Fee
Loan
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I. Less than 0.00% 0.475% 0.475% 0.15%
or equal to
0.15:1.0
- --------------------------------------------------------------------------------
II. Greater 0.00% 0.525% 0.525% 0.175%
than
0.15:1.0 but
less than or
equal to
0.30:1.0
- --------------------------------------------------------------------------------
III. Greater 0.05% 0.60% 0.60% 0.25%
than 0.30:1.0
but less than
or equal to
0.40:1.0
- --------------------------------------------------------------------------------
IV. Greater 0.10% 0.70% 0.70% 0.30%
than 0.40:1.0
- --------------------------------------------------------------------------------
</TABLE>
; PROVIDED, HOWEVER, that, if any financial statements referred to above are not
delivered within the time period specified above, then, until the financial
statements are delivered, the Applicable Margin shall be as set forth in Level
IV.
"BID-OPTION AUCTION" shall mean a solicitation of Bid-Option
Quotes setting forth Bid-Option Rates pursuant to Section 2.2(b).
"BID-OPTION INTEREST PERIOD" shall mean with respect to each
Bid-Option Borrowing, the period commencing on the date of such Borrowing and
ending on the date elected by the Borrower in the applicable Bid-Option Quote
Request, which date shall be not less than 30 days but not more than 180 days
after the date of such Bid-Option Loan; PROVIDED that:
(i) any such Interest Period that would otherwise
end on a day that is not a Business Day shall be extended to
the next succeeding Business day; and
-2-
<PAGE> 80
(ii) no such Interest Period that would end after
the Termination Date shall be permitted.
"BID-OPTION LOAN" shall mean a Loan which is made by a Lender
pursuant to a Bid-Option Auction.
"BID-OPTION NOTE" shall mean a promissory note of the Borrower
in substantially the form of Exhibit A hereto evidencing the obligation of the
Borrower to repay Bid-Option Loans, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or replacement
therefor.
"BID-OPTION PERCENTAGE" shall mean, with respect to any
Lender, the percentage of the aggregate outstanding principal amount of the
Bid-Option Loans of all the Lenders represented by the outstanding principal
amount of the Bid-Option Loans of such Lender.
"BID-OPTION QUOTE" shall mean an offer by a Lender to make a
Bid-Option Loan in accordance with Section 2.2(d).
"BID-OPTION QUOTE REQUEST" shall have the meaning ascribed
thereto in Section 2.2(b).
"BID-OPTION RATE" shall mean, with respect to any Bid-Option
Loan, the Bid-Option Rate, as defined in Section 2.2(d)(ii)(D), that is offered
for such Loan.
"BORROWING" shall mean the aggregation of Advances of the
Lenders to be made to the Borrower, or continuations and conversions of such
Loans, made pursuant to Article II on a single date (and with respect to Fixed
Rate Loans, for a single Interest Period), which Borrowings may be classified
for purposes of this Agreement by reference to the type of Loans comprising the
related Borrowing, e.g., a "Eurodollar Rate Borrowing" is a Borrowing comprised
of Eurodollar Rate Loans.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday
or other day on which banks generally are not open in Chicago or New York for
the conduct of substantially all of their commercial lending activities.
"CAPITAL LEASE" of any person shall mean any lease which, in
accordance with Generally Accepted Accounting Principles, is or should be
capitalized on the books of such person.
"CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations thereunder.
-3-
<PAGE> 81
"COMMITMENTS" shall mean, with respect to each Lender, the
commitment of such Lender to make Revolving Credit Loans and to participate in
Letter of Credit Advances made through the Administrative Agent pursuant to
Section 2.1(b), in amounts not exceeding in aggregate principal amount
outstanding at any time the commitment amount for such Lender set forth next to
the name of such Lender on the signature pages hereof or as subsequently set
forth in any Assignment and Acceptance or Assumption Agreement, as such amounts
may be reduced or modified from time to time pursuant to Section 2.3(a) or
Section 8.6; provided, that the Total Commitments may not exceed $75,000,000.
"CONSOLIDATED" or "CONSOLIDATED" shall mean, when used with
reference to any financial term in this Agreement, the aggregate for two or more
persons of the amounts signified by such term for all such persons determined on
a consolidated basis in accordance with Generally Accepted Accounting
Principles.
"CONSOLIDATED NET INCOME" means, with reference to any period,
the net income (or loss) of the Borrower and its Subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, after
eliminating all offsetting debits and credits between the Borrower and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Borrower and its
Subsidiaries in accordance with GAAP, provided that there shall be excluded:
(a) the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or a Subsidiary, and the income
(or loss) of any Person, substantially all of the assets of
which have been acquired in any manner, realized by such other
Person prior to the date of acquisition;
(b) the income (or loss) of any Person (other than a
Subsidiary) in which the Borrower or any Subsidiary has an
ownership interest, except to the extent that any such income
has been actually received by the Borrower or such Subsidiary
in the form of cash dividends or similar cash distributions;
(c) the undistributed earnings of any Subsidiary to
the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time
permitted by the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary;
(d) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve
was made out
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of income accrued during such period;
(e) any aggregate net gain (but not any aggregate
net loss) during such period arising from the sale,
conversion, exchange or other disposition of capital assets
(such term to include, without limitation, (i) all non-current
assets and, without duplication, (ii) the following, whether
or not current: all fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the
disposition of fixed assets, and all Securities);
(f) any gains resulting from any write-up of any
assets (but not any loss resulting from any write-down of any
assets);
(g) any net gain from the collection of the proceeds
of life insurance policies;
(h)any gain arising from the acquisition of any
Security, or the extinguishment, under GAAP, of any
Indebtedness, of the Borrower or any Subsidiary;
(i) any net income or gain (but not any net loss)
during such period from (i) any change in accounting
principles in accordance with GAAP, (ii) any prior period
adjustments resulting from any change in accounting principles
in accordance with GAAP, (iii) any extraordinary items, or
(iv) any discontinued operations or the disposition thereof;
(j) any deferred credit representing the excess of
equity in any Subsidiary at the date of acquisition over the
cost of the investment in such Subsidiary;
(k) in the case of a successor to the Borrower by
consolidation or merger or as a transferee of its assets, any
earnings of the successor corporation prior to such
consolidation, merger or transfer of assets; and
(l) any portion of such net income that cannot be
freely converted into Dollars.
"CONTINGENT LIABILITIES" of any person shall mean, as of any
date, all obligations of such person or of others for which such person is
contingently liable, as obligor, guarantor, surety or in any other capacity, or
in respect of which obligations such person assures a creditor against loss or
agrees to take any action to prevent any such loss (other than endorsements of
negotiable
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instruments for collection in the ordinary course of business), including
without limitation all reimbursement obligations of such person in respect of
any letters of credit, surety bonds or similar obligations and all obligations
of such person to advance funds to, or to purchase assets, property or services
from, any other person in order to maintain the financial condition of such
other person.
"CONTROLLED GROUP" shall mean a person and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with such person, are treated
as a single employer generally under Section 414(b) or 414(c) of the Code.
"CORPORATE BASE RATE" shall mean a rate per annum equal to the
corporate base rate of interest announced by First Chicago from time to time,
changing when and as said corporate base rate changes.
"CUMULATIVE NET INCOME" of any person shall mean, as of any
date, the net income (after deduction for income and other taxes of such person,
or its shareholders in the case of a corporation that has elected to be taxed as
a Subchapter S corporation under the Code, determined by reference to income or
profits of such person) for the period commencing on February 1, 1997 through
the end of the most recently completed fiscal quarter of such person (but
without reduction for any net loss incurred for any fiscal quarter during such
period), taken as one accounting period, all as determined in accordance with
Generally Accepted Accounting Principles.
"DEFAULT" shall mean any of the events or conditions described
in Section 6.1 which might become an Event of Default with notice or lapse of
time or both.
"DISTRIBUTION" means, in respect of any corporation,
association or other business entity:
(a) dividends or other distributions or payments on capital
stock or other equity interest of such corporation, association or other
business entity (except distributions in such stock or other equity interest);
and
(b) the redemption or acquisition of such stock or other equity
interests or of warrants, rights or other options to purchase such stock or
other equity interests (except when solely in exchange for such stock or other
equity interests) unless made, contemporaneously, from the net proceeds of a
sale of such stock or other equity interests.
"DOLLARS" and "$" shall mean the lawful money of the United
States of America.
"EFFECTIVE DATE" shall mean the effective date specified in the
final paragraph of this Agreement.
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"ELIGIBLE NET INSTALLMENT RECEIVABLES" of any person shall mean
installment notes receivable, net of unearned income, of such person minus those
receivables, net of unearned income, of such person which are: (i) more than 120
days contractually past due; (ii) the subject of any foreclosure proceedings;
(iii) held for repossession or resale by such person; (iv) non-accruing
accounts; (v) the amount of installment notes receivable included in or subject
to any Receivables Program; or (vi) otherwise reasonably deemed ineligible by
the Required Lenders.
"ENVIRONMENTAL LAWS" at any date shall mean all provisions of
law, statutes, ordinances, rules, regulations, judgments, writs, injunctions,
decrees, orders, awards and standards promulgated by the government of the
United States of America or any foreign government or by any state, province,
municipality or other political subdivision thereof or therein or by any court,
agency, instrumentality, regulatory authority or commission of any of the
foregoing concerning the protection of, or regulating the discharge of
substances into, the environment.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations thereunder.
"ERISA AFFILIATE" shall mean, with respect to any person, any
trade or business (whether or not incorporated) which, together with such person
or any Subsidiary of such person, would be treated as a single employer under
Section 414 of the Code and the regulations promulgated thereunder.
"EURODOLLAR BUSINESS DAY" shall mean, with respect to any
Eurodollar Rate Loan, a day which is both a Business Day and a day on which
dealings in Dollar deposits are carried out in the London interbank market.
"EURODOLLAR INTEREST PERIOD" shall mean, with respect to any
Eurodollar Rate Loan, the period commencing on the day such Eurodollar Rate Loan
is made or converted to a Eurodollar Rate Loan and ending on the date one, two,
three or six months thereafter, or, if available to all Lenders, four or five
months thereafter, or, on a one-time only basis in connection with the initial
Eurodollar Rate Borrowing made on or about the Effective Date, 30 or a lesser
number of days thereafter acceptable to the Lenders, as the Borrower may elect
under Section 2.5 or 2.8, and each subsequent period commencing on the last day
of the immediately preceding Eurodollar Interest Period and ending on the date
one, two, three or six months thereafter, or, if available to all Lenders, four
or five months thereafter, as the Borrower may elect under Section 2.5 or 2.8,
PROVIDED, however, that (a) any Eurodollar Interest Period which commences on
the last Eurodollar Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Eurodollar Business Day of the appropriate
subsequent calendar month, (b) each Eurodollar Interest Period which would
otherwise end on a day which is not a Eurodollar Business Day shall end on the
next succeeding Eurodollar Business Day or, if such next succeeding Eurodollar
Business Day falls in
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the next succeeding calendar month, on the next preceding Eurodollar Business
Day, and (c) no Eurodollar Interest Period which would end after the Termination
Date shall be permitted.
"EURODOLLAR RATE" shall mean, with respect to any Eurodollar
Rate Loan and the related Eurodollar Interest Period, the per annum rate that is
equal to the sum of:
(a) the Applicable Margin,
(b) the rate per annum obtained by dividing (i) the
per annum rate determined by the Administrative Agent to be the rate at which
First Chicago offers to place deposits in the London interbank market, at
approximately 11:00 a.m. London time, on the second Eurodollar Business Day
prior to the first day of such Eurodollar Interest Period, in the approximate
amount of First Chicago's relevant Eurodollar Rate Loan and having a maturity
approximately equal to such Eurodollar Interest Period, by (ii) an amount equal
to one minus the stated maximum rate (expressed as a decimal) of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) that is specified on the first day of
such Eurodollar Interest Period by the Board of Governors of the Federal Reserve
System (or any successor agency thereto) for determining the maximum reserve
requirement with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) maintained by a member
bank of such System;
all as conclusively determined by the Administrative Agent, such sum to be
rounded up, if necessary, to the nearest whole multiple of one one-sixteenth of
one percent (1/16 of 1%).
"EURODOLLAR RATE LOAN" shall mean any Loan which bears interest
at the Eurodollar Rate.
"EVENT OF DEFAULT" shall mean any of the events or conditions
described in Section 6.1.
"EXISTING CREDIT AGREEMENT" shall mean the Credit Agreement
dated as of June 30, 1995, as amended, among the Borrower, certain affiliates of
the Borrower, the banks named therein and NBD Bank, as agent.
"FAIR MARKET VALUE" means at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"FEDERAL FUNDS RATE" shall mean the per annum rate that is
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank
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of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. Chicago
time on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion, all as conclusively determined by
the Administrative Agent, such sum to be rounded up, if necessary, to the
nearest whole multiple of one sixteenth of one percent (1/16 of 1%), which
Federal Funds Rate shall change simultaneously with any change in such announced
rates.
"FIRST CHICAGO" shall mean The First National Bank of Chicago
in its individual capacity, and its successors.
"FIXED CHARGES" means, with respect to any period, the sum of
(a) Interest Charges for such period and (b) Lease Rentals for such period. For
purposes of this definition, "Interest Charges" means, with respect to any
period, the sum (without duplication) of the following (in each case,
eliminating all offsetting debits and credits between the Borrower and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Borrower and its
Subsidiaries in accordance with Generally Accepted Accounting Principles: (a)
all interest in respect of Indebtedness of the Borrower and its Subsidiaries
(including imputed interest on Capital Leases) deducted in determining
Consolidated Operating Net Income for such period, together with all interest
capitalized or deferred during such period and not deducted in determining
Consolidated Operating Net Income for such period, and (b) all debt discount and
expense amortized or required to be amortized in the determination of
Consolidated Operating Net Income for such period. For purposes of this
definition, "Lease Rentals" means, with respect to any period, the sum of the
rental and other obligations required to be paid during such period by the
Borrower or any Subsidiary as lessee under all leases of real or personal
property (other than Capital Leases), excluding any amounts required to be paid
by the lessee (whether or not therein designated as rental or additional rental
) on account of maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges, provided that, if at the date of determination, any
such rental or other obligations (or portion thereof) are contingent or not
otherwise definitely determinable by the terms of the related lease, the amount
of such obligations (or such portion thereof) (i) shall be assumed to be equal
to the amount of such obligations for the period of 12 consecutive calendar
months immediately preceding the date of determination or (ii) if the related
lease was not in effect during such preceding 12 month period, shall be the
amount estimated by a chief financial officer, controller or treasurer of the
Borrower on a reasonable basis and in good faith.
"FIXED RATE LOAN" shall mean any Eurodollar Rate Loan or
Bid-Option Loan.
"FLOATING RATE" shall mean the per annum rate equal to the sum
of (a) the Applicable Margin plus (b) the Alternate Base Rate in effect from
time to time, which Floating Rate shall change simultaneously with any change in
such Alternate Base Rate.
"FLOATING RATE LOAN" shall mean any Loan which bears interest
at the Floating Rate.
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"FUNDED INDEBTEDNESS" of any person shall mean, as of any date,
all Indebtedness of such person, other than Subordinated Indebtedness.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall mean
Generally Accepted Accounting Principles applied on a basis consistent with that
reflected in the financial statements referred to in Section 4.6.
"GUARANTY" shall mean any Guaranty entered into by any
Guarantor for the benefit of the Administrative Agent and the Lenders pursuant
to this Agreement in substantially the form of Exhibit B hereto, as amended or
modified from time to time.
"GUARANTORS" shall mean NAC, Inc., NAC Investment Co. and any
other person entering into a Guaranty from time to time.
"HAZARDOUS MATERIALS" includes, without limitation, any
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances or related materials defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sections 9601, ET SEQ.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, ET SEQ.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, ET SEQ.) and
in the regulations adopted and publications promulgated pursuant thereto, or any
other federal, state or local government law, ordinance, rule or regulation.
"INDEBTEDNESS" of any person shall mean, as of any date, (a)
all obligations of such person for borrowed money, (b) all obligations of such
person as lessee under any Capital Lease, (c) all obligations which are secured
by any Lien existing on any asset or property of such person whether or not the
obligation secured thereby shall have been assumed by such person, (d) the
unpaid purchase price for goods, property or services acquired by such person,
except for trade accounts payable arising in the ordinary course of business
that are not past due, (e) all obligations of such person to purchase goods,
property or services where payment therefor is required regardless of whether
delivery of such goods or property or the performance of such services is ever
made or tendered (generally referred to as "take or pay contracts"), (f) all
liabilities of such person in respect of Unfunded Benefit Liabilities under any
plan of such person or of any member of a Controlled Group of which such person
is a member, (g) all obligations of such person in respect of any interest rate
or currency swap, rate cap or other similar transaction (valued in an amount
equal to the highest termination payment, if any, that would be payable by such
person upon termination for any reason on the date of determination), and (h)
all obligations of others similar in character to those described in clauses (a)
through (g) of this definition for which such person is contingently liable, as
obligor, guarantor, surety or in any other capacity, or in respect of which
obligations such person assures a creditor against loss or agrees to take any
action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without limitation all reimbursement obligations of such
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person in respect of letters of credit, surety bonds or similar obligations and
all obligations of such person to advance funds to, or to purchase assets,
property or services from, any other person in order to maintain the financial
condition of such other person.
"INTEREST PAYMENT DATE" shall mean (a) with respect to any
Fixed Rate Loan, the last day of each Interest Period with respect to such Fixed
Rate Loan, and, in the case of any Interest Period exceeding three months, those
days that occur during such Interest Period at intervals of three months after
the first day of such Interest Period, and (b) in all other cases, the last
Business Day of each January, April, July and October occurring after the date
hereof, commencing with the first such Business Day occurring after the date of
this Agreement.
"INTEREST PERIOD" shall mean any Eurodollar Interest Period or
Bid-Option Interest Period.
"INVESTMENT" means any investment, made in cash or by delivery
of property, by the Borrower or any of its Subsidiaries (i) in any Person,
whether by acquisition of stock, Indebtedness or other obligation or Security,
or by loan, guaranty, advance, capital contribution or otherwise, or (ii) or in
any property.
"INVITATION FOR BID-OPTION QUOTES" shall mean an invitation
for Bid-Option Quotes in the form referred to in Section 2.2(c).
"LENDER OBLIGATIONS" shall mean all indebtedness, obligations
and liabilities, whether now owing or hereafter arising, direct or indirect,
contingent or otherwise, of the Borrower to the Administrative Agent or any
Lender pursuant to the Loan Documents.
"LETTER OF CREDIT" shall mean a standby letter of credit
having a stated expiry date not later than the fifth Business Day before the
Termination Date, issued by the Administrative Agent on behalf of the Lenders
for the account of the Borrower under an application and related documentation
acceptable to the Administrative Agent requiring, among other things, immediate
reimbursement by the Borrower to the Administrative Agent in respect of all
drafts or other demand for payment honored thereunder and all expenses paid or
incurred by the Administrative Agent relative thereto.
"LETTER OF CREDIT ADVANCE" shall mean any issuance of a Letter
of Credit under Section 2.5 made pursuant to Section 2.1 in which each Lender
acquires a pro rata risk participation (based on such Lender's Commitment)
pursuant to Section 2.5(e).
"LETTER OF CREDIT DOCUMENTS" shall have the meaning set forth
in Section 3.3(b)(i).
"LEVERAGE RATIO" of any person shall mean the ratio of (a)
Funded Indebtedness of such person to (b) Eligible Net Installment Receivables
of such person.
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"LIEN" shall mean any pledge, assignment, hypothecation,
mortgage, security interest, deposit arrangement, option, conditional sale or
title retaining contract, sale and leaseback transaction, financing statement
filing, lessor's or lessee's interest under any lease, subordination of any
claim or right, or any other type of lien, charge, encumbrance, preferential
arrangement or other claim or right.
"LOAN" shall mean any Revolving Credit Loan, any Swing Line
Loan and any Bid-Option Loan. Any such Loan or portion thereof may also be
denominated as a Floating Rate Loan or a Fixed Rate Loan and such Floating Rate
Loans and Fixed Rate Loans are referred to herein as "types" of Loans.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the
Letter of Credit Documents, the Guaranties and any other agreement, instrument
or document executed at any time in connection with this Agreement.
"MULTIEMPLOYER PLAN" shall mean any "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"NET CASH PROCEEDS" shall mean without duplication in
connection with any issuance or sale of any equity securities or debt securities
or instruments or the incurrence of loans, the cash proceeds received from such
issuance or incurrence, net of investment banking fees, reasonable and
documented attorneys' fees, accountants' fees, underwriting discounts and
commissions and other reasonable and customary fees and expenses actually
incurred in connection therewith.
"NET INCOME AVAILABLE FOR FIXED CHARGES" means, with respect to
any period, Consolidated Net Income for such period plus all amounts deducted in
the computation thereof on account of (a) Fixed Charges during such period and
(b) taxes imposed on or measured by income or excess profits of the Borrower and
its Subsidiaries during such period.
"NOTES" shall mean the Bid-Option Notes and the Revolving
Credit Notes; "NOTE" shall mean any Bid-Option Note or any Revolving Credit
Note.
"NOTICE OF BID-OPTION LOAN" shall have the meaning set forth in
Section 2.2(f).
"OVERDUE RATE" shall mean (a) in respect of principal of
Floating Rate Loans, a rate per annum that is equal to the sum of two percent
(2%) per annum plus the Floating Rate, (b) in respect of principal of Fixed Rate
Loans, a rate per annum that is equal to the sum of two percent (2%) per annum
plus the per annum rate in effect thereon until the end of the then current
Interest Period for such Loan and, thereafter, a rate per annum that is equal to
the sum of two percent (2%) per annum plus the Floating Rate, and (c) in respect
of other amounts payable by the Borrower hereunder (other than interest), a per
annum rate that is equal to the sum of two percent (2%) per annum plus the
Floating Rate.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"PERCENTAGE OF TOTAL COMMITMENTS" shall mean, with respect to
each Lender, the amount set forth in the signature page next to the name of such
Lender or as subsequently set forth in any Assignment and Acceptance or
Assumption Agreement.
"PERMITTED LIENS" shall mean Liens permitted by Section 5.2(e)
hereof.
"PERSON" or "PERSON" shall include an individual, a
corporation, an association, a partnership, a trust or estate, a joint stock
company, an unincorporated organization, a joint venture, a trade or business
(whether or not incorporated), a government (foreign or domestic) and any agency
or political subdivision thereof, or any other entity.
"PLAN" shall mean, with respect to any person, any pension plan
(other than a Multiemployer Plan) subject to Title IV of ERISA or to the minimum
funding standards of Section 412 of the Code which has been established or
maintained by such person, any Subsidiary of such person or any ERISA Affiliate,
or by any other person if such person, any Subsidiary of such person or any
ERISA Affiliate could have liability with respect to such pension plan.
"PRIVATE PLACEMENT DEBT" shall mean the debt issued by the
Borrower pursuant to the Private Placement Debt Documents in an aggregate
principal amount not to exceed Forty-Five Million Dollars ($45,000,000).
"PRIVATE PLACEMENT DEBT DOCUMENTS" shall mean that certain
National Auto Credit, Inc. Note Purchase Agreement dated as of April ___, 1997
(7.66% Senior Notes due April __, 2004), together with any and all other
documents, instruments and certificates executed and delivered pursuant thereto,
as the same may be amended from time to time and any and all other documents
executed in exchange therefor or replacement or renewal thereof.
"PROHIBITED TRANSACTION" shall mean any transaction involving
any Plan which is proscribed by Section 406 of ERISA or Section 4975 of the
Code.
"REPORTABLE EVENT" shall mean a reportable event as described
in Section 4043(b) of ERISA including those events as to which the thirty (30)
day notice period is waived under Part 2615 of the regulations promulgated by
the PBGC under ERISA.
"REQUIRED BANKS" shall mean Lenders holding not less than
sixty-seven percent (67%) of the aggregate Commitments or, if the Commitments
have been terminated, Lenders in the aggregate holding not less than sixty-seven
percent (67%) of the aggregate unpaid principal amount of the outstanding
Advances.
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"RESTRICTED INVESTMENTS" means all Investments except the
following:
(a) property to be used in the ordinary course of business of
the Borrower and its Subsidiaries;
(b) current assets arising from the sale of goods and services
in the ordinary course of business of the Borrower and its Subsidiaries;
(c) Investments in one or more Subsidiaries or any Person that
concurrently with such Investments becomes a Subsidiary;
(d) Investments existing on the date of the Effective Date and
disclosed in Schedule 5.2(h);
(e) Investments in United States Governmental Securities,
provided that such obligations mature within 365 days from the date of
acquisition thereof;
(f) Investments in certificates of deposit or Eurodollar
certificates of deposit (other than Eurodollar certificates of deposit issued in
Italy or France) or banker's acceptances issued by an Acceptable Bank, provided
that such obligations mature within 365 days from the date of acquisition
thereof;
(g) Investments in commercial paper issued by a corporation
organized under the laws of the United States of America or any State thereof
rated A-1 by S&P or P-1 by Moody's and maturing not more than 270 days from the
date of creation thereof; and
(h) Investments in Repurchase Agreements.
As of any date of determination, each Restricted Investment shall be valued at
the greater of:
(x) the amount at which such Restricted Investment is shown on
the books of the Borrower or any of its Subsidiaries (or zero if such Restricted
Investment is not shown on any such books); and
(y) either
(i) in the case of any guaranty of the obligation of
any Person, the amount which the Borrower or any of its
Subsidiaries has paid on account of such obligation less any
recoupment by the Borrower or such Subsidiary of any such
payments, or
(ii) in the case of any other Restricted Investment,
the excess of (x) the greater of (A) the amount originally
entered on the books of the Borrower or any of its Subsidiaries
with respect thereto and (B) the cost thereof to the Borrower
or its Subsidiary over (y) any return of capital (after income
taxes applicable thereto)
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upon such Restricted Investment through the sale or other
liquidation thereof or part thereof or otherwise.
As used in this definition of "Restricted Investments":
"Acceptable Bank" means any bank or trust company (i) which is
organized under the laws of the United States of America or any State
thereof, (ii) which has capital, surplus and undivided profits
aggregating at least $500,000,000 (or $1,000,000,000 in the case of an
Acceptable Bank issuing a Eurodollar certificate of deposit), and (iii)
whose long-term unsecured debt obligations (or the long-term unsecured
debt obligations of the bank holding company owning all of the capital
stock of such bank or trust company) shall have been given a rating of
"A" or better by S&P, "A2" or better by Moody's.
"Acceptable Broker-Dealer" means any Person other than a
natural person (i) which is registered as a broker or dealer pursuant
to the Exchange Act and (ii) whose long-term unsecured debt obligations
shall have been given a rating of "A" or better by S&P, "A2" or better
by Moody's.
"Moody's" means Moody's Investors Service, Inc.
"Repurchase Agreement" means any written agreement
(a) that provides for (i) the transfer of one or more United
States Governmental Securities in an aggregate principal amount at
least equal to the amount of the Transfer Price (defined below) to the
Borrower or any of its Subsidiaries from an Acceptable Bank or an
Acceptable Broker-Dealer against a transfer of funds (the "Transfer
Price") by the Borrower or such Subsidiary to such Acceptable Bank or
acceptable Broker-Dealer, and (ii) a simultaneous agreement by the
Borrower or such Subsidiary, in connection with such transfer of funds,
to transfer to such Acceptable Bank or Acceptable Broker-Dealer the
same or substantially similar United States Governmental Securities for
a price not less than the Transfer Price plus a reasonable return
thereon at a date certain not later than 30 days after such transfer of
funds,
(b) in respect of which the Borrower or such Subsidiary shall
have the right, whether by contract or pursuant to applicable law, to
liquidate such agreement upon the occurrence of any default thereunder,
and
(c) in connection with which the Borrower or such Subsidiary,
or an agent thereof, shall have taken all action, if any, required by
applicable law or regulations to perfect a Lien in such United States
Governmental Securities.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc.
"RESTRICTED PAYMENTS" means
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(a) any Distribution in respect of the Borrower or any
Subsidiary of the Borrower (other than on account of capital stock or
other equity interests of a Subsidiary of the Borrower owned legally
and beneficially by the Borrower or another Subsidiary of the
Borrower), including, without limitation, any Distribution resulting in
the acquisition by the Borrower of Securities which would constitute
treasury stock, and
(b) any payment, repayment, redemption, retirement, repurchase
or other acquisition, direct or indirect, by the Borrower or any
Subsidiary of, on account of, or in respect of, the principal of any
Subordinated Indebtedness (or any installment thereof) prior to the
regularly scheduled maturity date thereof (as in effect on the date
such Subordinated Indebtedness was originally incurred).
For purposes of this Agreement, the amount of any Restricted Payment made in
property shall be the greater of (x) the Fair Market Value of such property (as
determined in good faith by the board of directors (or equivalent governing
body) of the Person making such Restricted Payment) and (y) the net book value
thereof on the books of such Person, in each case determined as of the date on
which such Restricted Payment is made.
"REVOLVING CREDIT ADVANCE" shall mean any Revolving Credit Loan
and any Letter of Credit Advance.
"REVOLVING CREDIT LOAN" shall mean any borrowing under Section
2.5 evidenced by the Revolving Credit Note and made pursuant to Section 2.1(a).
"REVOLVING CREDIT NOTE" shall mean any promissory note of the
Borrower evidencing one or more Revolving Credit Loans, in substantially the
form annexed hereto as Exhibit C, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or replacement
therefor.
"SECURITY" has the meaning given such term in Section (2)1 of
the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SHORT-TERM CREDIT AGREEMENT" shall mean the Short-Term Credit
Agreement dated as of the date hereof among the Borrower, the Lenders, the
Administrative Agent and the Documentation Agent, as amended, modified,
extended, restated or supplemented from time to time.
"SUBORDINATED INDEBTEDNESS" of any person shall mean any
Indebtedness of such person the payment of which is subordinated to payment of
the Lender Obligations to the written satisfaction of the Required Lenders.
"SUBSIDIARY" of any person shall mean any other person (whether
now existing or
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hereafter organized or acquired) in which (other than directors qualifying
shares required by law) at least a majority of the securities or other ownership
interests of each class having ordinary voting power or analogous right (other
than securities or other ownership interests which have such power or right only
by reason of the happening of a contingency), at the time as of which any
determination is being made, are owned, beneficially and of record, by such
person or by one or more of the other Subsidiaries of such person or by any
combination thereof. Unless otherwise specified, reference to "Subsidiary" shall
mean a Subsidiary of the Borrower.
"SWING LINE FACILITY" shall have the meaning specified in
Section 2.1(b).
"SWING LINE LOAN" shall mean any borrowing under Section
2.1(b) evidenced by a Swing Line Note.
"SWING LINE NOTE" means the promissory note of the Borrower
payable to the order of the Administrative Agent, in substantially the form
annexed hereto as Exhibit D, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or replacement
therefor.
"TANGIBLE NET WORTH" of any person shall mean, as of any date,
the excess of (a) Total Assets over (b) Total Liabilities, excluding minority
interests of such person, mandatory redeemable shares of such person and the net
book value of all items of the following character which are included in the
assets of such person: (i) goodwill, including without limitation, the excess of
cost over book value of any asset, (ii) organization or experimental expenses,
(iii) unamortized debt discount and expense, (iv) patents, trademarks, trade
names and copyrights, (v) franchises, licenses and permits, and, (vi) other
assets which are deemed intangible assets under Generally Accepted Accounting
Principles.
"TERMINATION DATE" shall mean the earlier to occur of (a) April
__, 2000 and (b) the date on which the Commitments shall be terminated pursuant
to Section 2.3(a) or 6.2.
"TOTAL ASSETS" and "TOTAL LIABILITIES" of any person shall
mean, as of any date, all obligations which, in accordance with Generally
Accepted Accounting Principles, are or should be classified as assets or
liabilities, as the case may be, on a balance sheet of such person.
"TOTAL CAPITALIZATION" of any person shall mean, as of any
date, the sum of (a) Tangible Net Worth of such person plus (b) Indebtedness of
such person.
"TOTAL COMMITMENTS" shall mean the aggregate amount of
Commitments of all Lenders as set forth on the last signature page of this
Agreement, as reduced or modified from time to time pursuant to Section 2.3(a)
or 8.6, PROVIDED, THAT, the Total Commitments may not exceed $75,000,000.
"UNFUNDED BENEFIT LIABILITIES" shall mean, with respect to any
Plan as of any date,
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the amount of the unfunded benefit liabilities determined in accordance with
Section 4001(a)(18) of ERISA.
"UNITED STATES GOVERNMENTAL SECURITY" means any direct
obligation of, or obligation fully guaranteed by, the United States of America,
or any agency controlled or supervised by or acting as an instrumentality of the
United States of America pursuant to authority granted by the Congress of the
United States of America, so long as such obligation or guarantee shall have the
benefit of the full faith and credit of the United States of America which shall
have been pledged pursuant to authority granted by the Congress of the United
States of America.
1.2 OTHER DEFINITIONS; RULES OF CONSTRUCTION. As used herein,
the terms "Administrative Agent", "Lenders", "Borrower" and "this Agreement"
shall have the respective meanings ascribed thereto in the introductory
paragraph of this Agreement. Such terms, together with the other terms defined
in Section 1.1, shall include both the singular and the plural forms thereof and
shall be construed accordingly. All computations required hereunder and all
financial terms used herein shall be made or construed in accordance with
Generally Accepted Accounting Principles unless such principles are inconsistent
with the express requirements of this Agreement. Use of the terms "herein",
"hereof", and "hereunder" shall be deemed references to this Agreement in its
entirety and not to the Section or clause in which such term appears. References
to "Sections" and "subsections" shall be to Sections and subsections,
respectively, of this Agreement unless otherwise specifically provided.
ARTICLE II.
THE COMMITMENTS AND THE ADVANCES
--------------------------------
2.1 COMMITMENT OF THE LENDERS.
(a) REVOLVING CREDIT ADVANCES. Each Lender agrees, for itself
only, subject to the terms and conditions of this Agreement, to make Revolving
Credit Loans to the Borrower pursuant to Section 2.5 and to participate in
Letter of Credit Advances to the Borrower pursuant to Section 2.5, from time to
time from and including the Effective Date to but excluding the Termination
Date, not to exceed in aggregate principal amount at any time outstanding the
amount of its respective Commitment as of the date any such Advance is made.
(b) SWING LINE LOAN. (i) The Borrower may request the
Administrative Agent to make, and the Administrative Agent may, in its sole
discretion provided that the requirements of Sections 2.6 and 2.7 are complied
with by the Borrower at the time of such request, make, Swing Line Loans to the
Borrower from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an aggregate principal amount not
to exceed at any date the lesser of (A) $5,000,000 (the "Swing Line Facility")
and (B) the
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aggregate of the unused portions of the Commitments of the Lenders as of such
date. The Administrative Agent may make Swing Line Loans (provided that the
Administrative Agent has received a request in writing from the Borrower no
later than 1:00 p.m. Chicago time) on the Business Day on which such Swing Line
Loan is requested to be made. Each Swing Line Loan shall be payable on demand
and shall bear interest at the Floating Rate. Each Lender's Commitment shall be
deemed utilized by an amount equal to such Lender's pro rata share (based on
such Lender's Commitment) of each Swing Line Loan for purposes of determining
the amount of Revolving Credit Advances required to be made by such Lender.
Within the limits of the Swing Line Facility, so long as the Administrative
Agent, in its sole discretion, elects to make Swing Line Loans, the Borrower may
borrow and reborrow under this Section 2.1(b)(i).
(ii) The Administrative Agent may at any time in its
sole and absolute discretion require that any Swing Line Loan be refunded by a
Revolving Credit Loan which is a Floating Rate Loan, and upon notice thereof by
the Administrative Agent to the Borrower and the Lenders, the Borrower shall be
deemed to have requested a Revolving Credit Loan bearing interest at the
Floating Rate in an amount equal to the amount of any such Swing Line Loan, and
such Revolving Credit Loan shall be made to refund such Swing Line Loan. Each
Lender shall be absolutely and unconditionally obligated (except as set forth in
the first paragraph of Section 2.1(b)(i)) to fund its pro rata share (based on
such Lender's Commitment) of such Revolving Credit Loan and such obligation
shall not be affected by any circumstance, including, without limitation, (i)
any set-off, counterclaim, recoupment, defense or other right which such Lender
or the Borrower or any of its Subsidiaries may have against the Administrative
Agent, the Borrower or any of its Subsidiaries or anyone else for any reason
whatsoever; (ii) the occurrence or continuance of a Default or an Event of
Default; (iii) any adverse change in the condition (financial or otherwise) of
the Borrower or any of its Subsidiaries; (iv) any breach of this Agreement by
the Borrower or any of its Subsidiaries or any other Lender; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing (including the Borrower's failure to satisfy any conditions
contained in Article II or any other provision of this Agreement).
(c) LIMITATION ON AMOUNT OF ADVANCES. Notwithstanding anything
in this Agreement to the contrary, the aggregate principal amount of the
Advances (including such Lender's pro rata share of any outstanding Swing Line
Loans or Letters of Credit) made by any Lender at any time outstanding shall not
exceed the amount of its respective Commitment as of the date any such Advance
is made, PROVIDED, HOWEVER, that the aggregate principal amount of Letter of
Credit Advances outstanding at any time shall not exceed $5,000,000.
2.2 BID-OPTION LOANS.
(a) THE BID-OPTION. From the Effective Date to but excluding
the Termination Date, the Borrower may, as set forth in this Section 2.2,
request the Lenders to make offers to make Bid-Option Loans to the Borrower.
Each Lender may, but shall have no obligation to, make such offers and the
Borrower may, but shall have no obligation to, accept any
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such offers, in the manner set forth in this Section 2.2; furthermore, each
Lender may limit the aggregate amount of Bid-Option Loans when quoting rates for
more than one Bid-Option Interest Period in any Bid-Option Quote, provided that
such limitation shall not be less than the minimum amounts required hereunder
for Bid-Option Loans and the Borrower may choose among the Bid-Option Loans if
such limitation is imposed; PROVIDED, that the aggregate outstanding principal
amount of Bid-Option Loans shall not at any time exceed the excess of (i) the
aggregate amount of the Commitments over (ii) the sum of the aggregate
outstanding principal amount of Advances.
(b) BID-OPTION QUOTE REQUEST. When the Borrower wishes to
request offers to make Bid-Option Loans under this Section 2.2, it shall
transmit to the Administrative Agent by telex or telecopy a Bid-Option Quote
Request substantially in the form of Exhibit E hereto so as to be received no
later than 9:00 a.m. Chicago time on the Business Day next preceding the date of
the Loan proposed therein specifying:
(A) the proposed date of the Bid-Option Loan, which shall
be a Business Day;
(B) the aggregate amount of such Bid-Option Loan, which
shall be a minimum of $3,000,000 or a larger multiple of $500,000; and
(C) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period.
The Borrower may request offers to make Bid-Option Loans for more than one
Bid-Option Interest Period in a single Bid-Option Quote Request.
(c) INVITATION FOR BID-OPTION QUOTES. Promptly upon receipt of
a Bid-Option Quote Request, the Administrative Agent shall send to the Lenders
by telecopy (or telephone promptly confirmed by telecopy) an Invitation for
Bid-Option Quotes substantially in the form of Exhibit F hereto, which shall
constitute an invitation by the Borrower to each Lender to submit Bid-Option
Quotes offering to make the Bid-Option Loans to which such Bid-Option Quote
Request relates in accordance with this Section 2.2.
(d) SUBMISSION AND CONTENTS OF BID-OPTION QUOTES. (i) Each
Lender may submit a Bid-Option Quote containing an offer or offers to make
Bid-Option Loans in response to any Invitation for Bid-Option Quotes. Each
Bid-Option Quote must comply with the requirements of this subsection (d) and
must be submitted to the Administrative Agent by telecopy (or by telephone
promptly confirmed by telecopy) at its office referred to in Section 8.2 not
later than 1:00 p.m. Chicago time on the Business Day preceding the proposed
date of the Borrowing; provided that Bid-Option Quotes submitted by the
Administrative Agent (or any Affiliate of the Administrative Agent) in the
capacity of a Lender may be submitted, and may only be submitted, if the
Administrative Agent or such Affiliate notifies the Borrower of the terms of the
offer or offers contained therein not later than 11:00 a.m. Chicago time on the
Business Day
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preceding the proposed date of such Borrowing. Subject to Article VI, any
Bid-Option Quote so made shall be irrevocable except with the written consent of
the Administrative Agent given on the instructions of the Borrower.
(ii) Each Bid-Option Quote shall be in
substantially the form of Exhibit G hereto, but may be submitted to the
Administrative Agent by telephone with prompt confirmation by delivery to the
Administrative Agent of such written Bid-Option Quote, and shall in any case
specify:
(A) the proposed date of the
Borrowing;
(B) the principal amount of the
Bid-Option Loan for which each such offer is being made, which principal amount
(x) must be in a minimum of $3,000,000 or a larger multiple of $500,000, and (y)
may not exceed the principal amount of the Bid-Option Loans for which offers
were requested;
(C) the Interest Period(s) for which
each such Bid-Option Rate is offered;
(D) the rate of interest per annum
(rounded to the nearest 1/16 of 1%) (the "Bid-Option Rate") offered for each
such Bid-Option Loan;
(E) the identity of the quoting
Lender.
(iii) Any Bid-Option Quote shall be
disregarded if it:
(A) is not substantially in the form
of Exhibit G hereto (or is not submitted by telephone to the Administrative
Agent with prompt written confirmation to follow) or does not specify all of the
information required by clause (ii) of this subsection (d);
(B) contains qualifying, conditional
or similar language;
(C) proposes terms other than or in
addition to those set forth in the applicable Invitation for Bid-Option Quotes;
or
(D) arrives after the time set forth
in Section 2.2(d)(i);
provided that a Bid-Option Quote shall not be disregarded pursuant to clause (B)
or (C) above solely because it contains an indication that an allocation that
might otherwise be made to it pursuant to Section 2.2(g) would be unacceptable.
The Administrative Agent shall notify the Borrower of any disregarded Bid-Option
Quote.
(e) NOTICE TO BORROWER. The Administrative Agent shall promptly
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notify the Borrower of the terms of any Bid-Option Quote submitted by a Lender
that is in accordance with Section 2.2(d). Any Bid-Option Quote not made in
accordance with Section 2.2(d) shall be disregarded by the Administrative Agent.
The Administrative Agent's notice to the Borrower shall specify (i) the
aggregate principal amount of Bid-Option Loans for which offers have been
received for each Bid-Option Interest Period specified in the related Bid-Option
Quote Request, and (ii) the respective principal amounts and respective
Bid-Option Rates so offered.
(f) ACCEPTANCE AND NOTICE BY BORROWER. Not later than 9:00 a.m.
Chicago time on the proposed date of a Borrowing, the Borrower shall notify the
Administrative Agent of the Borrower's acceptance or non-acceptance of the
offers so notified to it pursuant to subsection (e) of this Section and the
Administrative Agent shall, promptly upon receiving such notice from the
Borrower, notify each Lender whose Bid-Option Quote has been accepted. In the
case of acceptance, such notice (a "Notice of Bid-Option Loan") shall specify
the aggregate principal amount of offers for the applicable Interest Period(s)
that have been accepted. The Borrower may accept any Bid-Option Quote in whole
or in part; provided that:
(i) the aggregate principal amount of each
Bid-Option Loan may not exceed the applicable amount set forth in the related
Bid-Option Quote Request for the applicable Bid-Option Interest Period;
(ii) the principal amount of each Bid-Option
Loan must be $3,000,000 or a larger multiple of $500,000;
(iii) acceptance of offers may only be made
on the basis of ascending Bid-Option Rates; and
(iv) the Borrower may not accept any offer
that is described in Section 2.2(d)(iii) or that otherwise fails to comply with
the requirements of this Agreement.
(g) ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made by
two or more Lenders with the same Bid-Option Rates for a greater aggregate
principal amount than the amount in respect of which offers are accepted for the
related Interest Period, the principal amount of Bid-Option Loans in respect of
which such offers are accepted shall be allocated by the Administrative Agent
among such Lenders as nearly as possible (in such multiples, not greater than
$100,000, as the Administrative Agent may deem appropriate) in proportion to the
aggregate principal amount of such offers. Determinations by the Administrative
Agent of the amounts of Bid-Option Loans shall be conclusive in the absence of
manifest error.
2.3 TERMINATION AND REDUCTION OF COMMITMENTS. (a) The Borrower
shall have the right to terminate or reduce the Commitments at any time and from
time to time at its option, PROVIDED that (a) the Borrower shall give not less
than five (5) days prior notice of such termination or reduction to the
Administrative Agent (with sufficient executed copies for each Lender)
specifying the amount and effective date thereof, (b) each partial reduction of
the
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Commitments shall be in a minimum amount of $5,000,000 and in an integral
multiple of $1,000,000 and shall reduce the Commitments of all of the Lenders
proportionately in accordance with the respective commitment amounts for each
such Lender set forth on the signature pages hereof next to the name of each
such Lender, (c) no such termination or reduction shall be permitted with
respect to any portion of the Commitments as to which a request for a Borrowing
pursuant to Section 2.5 is then pending, and (d) the Commitments may not be
terminated if any Advances are then outstanding and may not be reduced below the
principal amount of Advances then outstanding. The Commitments or any portion
thereof terminated or reduced pursuant to this Section 2.3(a), whether optional
or mandatory, may not be reinstated.
(b) For purposes of this Agreement, a Letter of Credit Advance
(i) shall be deemed outstanding in an amount equal to the sum of the maximum
amount available to be drawn under the related Letter of Credit on or after the
date of determination and on or before the stated expiry date thereof plus the
amount of any draws under such Letter of Credit that have not been reimbursed as
provided in Section 3.3 and (ii) shall be deemed outstanding at all times on and
before such stated expiry date or such earlier date on which all amounts
available to be drawn under such Letter of Credit have been fully drawn, and
thereafter until all related reimbursement obligations have been paid pursuant
to Section 3.3. As provided in Section 3.3, upon each payment made by the
Administrative Agent in respect of any draft or other demand for payment under
any Letter of Credit, the amount of any Letter of Credit Advance outstanding
immediately prior to such payment shall be automatically reduced by the amount
of each Revolving Credit Loan deemed advanced in respect of the related
reimbursement obligation of the Borrower.
2.4 FEES. (a) The Borrower agrees to pay to the Administrative
Agent, for the benefit of the Lenders, a facility fee on the entire amount of
the Commitments, for the period from the Effective Date to but excluding the
Termination Date, at a per annum rate equal to the respective Applicable Margin.
Accrued facility fees shall be payable quarterly in arrears on the last Business
Day of each April, July, October and January, commencing on the first such
Business Day occurring after the date of this Agreement and on the Termination
Date.
(b) On or before the date of issuance of any Letter of Credit,
the Borrower agrees (i) to pay to the Lenders a fee computed at the Applicable
Margin of the maximum amount available to be drawn from time to time under such
Letter of Credit for the period from and including the date of issuance of such
Letter of Credit to and including the stated expiry date of such Letter of
Credit, and (ii) to pay an additional fee to the Administrative Agent for its
own account computed at the rate of one-quarter of one percent (1/4 of 1%) per
annum of such maximum amount for such period. Such fees are nonrefundable and
the Borrower shall not be entitled to any rebate of any portion thereof if such
Letter of Credit does not remain outstanding through its stated expiry date or
for any other reason. The Borrower further agrees to pay to the Administrative
Agent, on demand, such other customary administrative fees, charges and expenses
of the Administrative Agent in respect of the issuance, negotiation, acceptance,
amendment, transfer and payment of such Letter of Credit or otherwise payable
pursuant to the application and related documentation under which such Letter of
Credit is issued.
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(c) The Borrower agrees to pay to the Administrative Agent an
agency fee for its services as Administrative Agent under this Agreement in such
amounts as are mutually agreed upon by the Borrower and the Administrative
Agent.
2.5 DISBURSEMENT OF LOANS. (a) Except with respect to Swing
Line Loans and Bid-Option Loans, the Borrower shall give the Administrative
Agent notice of its request for each Borrowing in substantially the form of
Exhibit H hereto not later than 10:00 a.m. Chicago time (i) three Eurodollar
Business Days prior to the date such Borrowing is requested to be made if such
Borrowing is to be made as a Eurodollar Rate Borrowing, (ii) three Business Days
prior to the date any Letter of Credit Advance is requested to be made, and
(iii) on the date such Borrowing is requested to be made if such Borrowing is to
be made as a Floating Rate Borrowing, which notice shall specify whether a
Eurodollar Rate Borrowing, Floating Rate Borrowing or Letter of Credit Advance
is requested and, in the case of each requested Eurodollar Rate Borrowing, the
Eurodollar Interest Period to be initially applicable to such Borrowing. The
Administrative Agent, by 1:00 p.m. Chicago time, on the same day such notice is
given, shall provide notice of such requested Borrowing to each Lender. Subject
to the terms and conditions of this Agreement, the proceeds of each such
requested Borrowing shall be made available to the Borrower in immediately
available funds. Subject to the terms and conditions of this Agreement, the
Administrative Agent shall, on the date any Letter of Credit Advance is
requested to be made, issue the related Letter of Credit on behalf of the Banks
for the account of the Borrower requesting such Letter of Credit.
Notwithstanding anything herein to the contrary, the Administrative Agent may
decline to issue any requested Letter of Credit on the basis that the
beneficiary, the purpose of issuance or the terms or the conditions of drawing
are unacceptable to it in its discretion.
(b) Each Lender, on the date any Borrowing is requested to be
made, shall make its pro rata share of such Borrowing available in immediately
available funds at the principal office of the Administrative Agent for
disbursement to the Borrower requesting such Loan. Unless the Administrative
Agent shall have received notice from any Lender prior to the date such
Borrowing is requested to be made under this Section 2.5 that such Lender will
not make available to the Administrative Agent such Lender's pro rata portion of
such Borrowing, the Administrative Agent may assume that such Lender has made
such portion available to the Administrative Agent on the date such Borrowing is
requested to be made in accordance with this Section 2.5. If and to the extent
such Lender shall not have so made such pro rata portion `available to the
Administrative Agent, the Administrative Agent may (but shall not be obligated
to) make such amount available to the Borrower requesting such Loan, and such
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such amount together with interest thereon, for each day
from the date such amount is made available to the Borrower by the
Administrative Agent until the date such amount is repaid to the Administrative
Agent, at a rate per annum, if paid by the Borrower, equal to the interest rate
applicable to such Borrowing during such period, and if paid by such Lender,
equal to the Federal Funds Rate. If such Lender shall pay such amount to the
Administrative Agent together with interest, such
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amount so paid shall constitute a Loan by such Lender as a part of such related
Borrowing for purposes of this Agreement. The failure of any Lender to make its
pro rata portion of any such Borrowing available to the Administrative Agent
shall not relieve any other Lender of its obligations to make available its pro
rata portion of such Borrowing on the date such Borrowing is requested to be
made, but no Lender shall be responsible for failure of any other Lender to make
such pro rata portion available to the Administrative Agent on the date of any
such Borrowing.
(c) All Loans made under this Section 2.5 shall be evidenced
by the Notes and all such Loans shall be due and payable and bear interest as
provided in Article III. Each Lender is hereby authorized by the Borrower to
record on its books and records, the date, amount and type of each Loan and the
duration of the related Interest Period (if applicable), the amount of each
payment or prepayment of principal thereon, and the other information provided
for on such books and records, which books and records shall constitute prima
facie evidence of the information so recorded, PROVIDED, HOWEVER, that failure
of any Lender to record, or any error in recording, any such information shall
not relieve the Borrower of its obligation to repay the outstanding principal
amount of the Loans, all accrued interest thereon and other amounts payable with
respect thereto in accordance with the terms of the Notes and this Agreement.
Subject to the terms and conditions of this Agreement, the Borrower may borrow
Loans under this Section 2.5, prepay Loans pursuant to Section 3.1 and reborrow
Loans under this Section 2.5.
(d) All Bid-Option Loans shall be disbursed directly by the
Lender making such Bid-Option Loan to the Borrower by 1:30 p.m. Chicago time on
the date such Bid-Option Loan is requested to be made via wire transfer in
immediately available funds to The First National Bank of Chicago, One First
National Plaza, Chicago, Illinois 60670, ABA Number 071-000-013, Attention:
Marilyn Fisher: Reference: National Auto Credit, Inc. Bid-Option, confirm to
Marilyn Fisher, Facsimile No. (312) 732-3246 or as otherwise directed by the
Borrower.
(e) Nothing in this Agreement shall be construed to require or
authorize any Lender to issue any Letter of Credit, it being recognized that the
Administrative Agent has the sole obligation under this Agreement to issue
Letters of Credit on behalf of the Lenders, and the Commitment of each Lender
with respect to Letter of Credit Advances is expressly conditioned upon the
Administrative Agent's performance of such obligations. Upon such issuance by
the Administrative Agent, each Lender shall automatically acquire a pro rata
risk participation interest in such Letter of Credit Advance based on the amount
of its respective Commitment. If the Administrative Agent shall honor a draft or
other demand for payment presented or made under any Letter of Credit, the
Administrative Agent shall provide notice thereof to each Lender on the date
such draft or demand is honored unless the Borrower shall have satisfied its
reimbursement obligation by payment to the Administrative Agent on such date.
Each Lender, on such date, shall make its pro rata share of the amount paid by
the Administrative Agent available in immediately available funds at the
principal office of the Administrative Agent for the account of the
Administrative Agent. If and to the extent such Lender shall not have made such
pro rata portion available to the Administrative Agent, such Lender and the
Borrowers severally agree to pay to
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the Administrative Agent forthwith on demand such amount together with interest
thereon, for each day from the date such amount was paid by the Administrative
Agent until such amount is so made available to the Administrative Agent at a
per annum rate equal to the Federal Funds Rate. If such Lender shall pay such
amount to the Administrative Agent together with such interest, such amount so
paid shall constitute a Revolving Credit Loan by such Lender as part of the
Revolving Credit Borrowing disbursed in respect of the reimbursement obligation
of the Borrower for purposes of this Agreement. The failure of any Lender to
make its pro rata portion of any such amount paid by the Administrative Agent
available to the Administrative Agent shall not relieve any other Lender of its
obligation to make available its pro rata portion of such amount, but no Lender
shall be responsible for failure of any other Lender to make such pro rata
portion available to the Administrative Agent.
2.6 CONDITIONS FOR FIRST DISBURSEMENT. The obligation of the
Lenders to make the first Advance hereunder is subject to receipt by each Lender
and the Administrative Agent of the following documents and completion of the
following matters, in form and substance satisfactory to each Lender and the
Administrative Agent:
(a) CHARTER DOCUMENTS. Certificates of recent date of
the appropriate authority or official of the Borrower's and each Guarantor's
respective state of incorporation listing all charter documents of the Borrower
and each Guarantor, respectively, on file in that office and certifying as to
the good standing and corporate existence of the Borrower and each Guarantor,
respectively, together with copies of such charter documents of the Borrower and
each Guarantor, certified as of a recent date by such authority or official and
certified as true and correct as of the Effective Date by a duly authorized
officer of the Borrower and each Guarantor, respectively;
(b) BY-LAWS AND CORPORATE AUTHORIZATIONS. Copies of
the by-laws of the Borrower and the Guarantor together with all authorizing
resolutions and evidence of other corporate action taken by the Borrower and
each Guarantor to authorize the execution, delivery and performance by the
Borrower and each Guarantor of this Agreement, the Notes and the Guaranty to
which the Borrower and each Guarantor, respectively, is a party and the
consummation by the Borrower and each Guarantor, respectively of the
transactions contemplated hereby, certified as true and correct as of the
Effective Date by a duly authorized officer of the Borrower and each Guarantor,
respectively;
(c) INCUMBENCY CERTIFICATE. Certificates of
incumbency of the Borrower and each Guarantor containing, and attesting to the
genuineness of, the signatures of those officers authorized to act on behalf of
the Borrower and each Guarantor in connection with this Agreement, the Notes and
the Guaranty to which the Borrower or each Guarantor is a party and the
consummation by the Borrower and each Guarantor of the transactions contemplated
hereby, certified as true and correct as of the Effective Date by a duly
authorized officer of the Borrower and each Guarantor, respectively;
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(d) NOTES. The Notes duly executed on behalf of
Borrower for each Lender;
(e) GUARANTIES. The Guaranties, duly executed on
behalf of the Guarantors;
(f) LEGAL OPINIONS. The favorable written opinion of
counsel for the Borrower and the Guarantors (which counsel may be an employee of
the Borrower or the Guarantors), with respect to each of the matters set forth
in Article IV (other than Sections 4.6, 4.7, 4.11, and 4.12), and as to such
other matters as the Lenders or the Administrative Agent may reasonably request;
(g) CONSENTS, APPROVALS, ETC. Copies of all
governmental and nongovernmental consents, approvals, authorizations,
declarations, registrations or filings, if any, required on the part of the
Borrower or any Guarantor in connection with the execution, delivery and
performance of this Agreement, the Notes, any Guaranty or the transactions
contemplated hereby or as a condition to the legality, validity or
enforceability of this Agreement, the Notes or any Guaranty, certified as true
and correct and in full force and effect as of the Effective Date by a duly
authorized officer of the Borrower or, if none are required, a certificate of
such officer to that effect;
(h) PRIVATE PLACEMENT DEBT. Evidence satisfactory to
the Administrative Agent and the Lenders that the Borrower has incurred Private
Placement Debt in an amount not less than $45,000,000 in accordance with the
Private Placement Debt Documents and on terms and conditions satisfactory to the
Administrative Agent and the Lenders, all Private Placement Debt Documents shall
have been delivered to the Administrative Agent and the Lenders and approved by
the Administrative Agent and the Lenders and all transactions contemplated
pursuant to the Private Placement Debt Documents shall have been completed; and
(i) RELEASE OF SIGNATURES FROM ESCROW. Written
authorization from the Borrower and each Lender to release from escrow its
respective signatures to this Agreement and all other Loan Documents, which were
delivered to the Administrative Agent in escrow.
2.7 FURTHER CONDITIONS FOR DISBURSEMENT. The obligation of the
Lenders to make any Advance (including the first Advance), or any continuation
or conversion under Section 2.8, and the obligation and/or right of the
Administrative Agent to make any Swing Line Loan or issue any Letter of Credit,
is further subject to the satisfaction of the following conditions precedent:
(a) The representations and warranties contained in
Article IV hereof and in the Guaranty shall be true and correct on and as of the
date such Advance is made (both before and after such Advance is made) as if
such representations and warranties were made on and as of such date;
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(b) No Default or Event of Default shall exist or
shall have occurred and be continuing on the date such Advance is made (whether
before or after such Advance is made);
(c) No material adverse change in the business,
financial condition, or prospects of the Borrower or any Guarantor shall have
occurred; and
(d) In the case of any Letter of Credit Advance, the
Borrower shall have delivered to the Administrative Agent an application for the
related Letter of Credit and other related documentation requested by and
acceptable to the Administrative Agent appropriately completed and duly executed
on behalf of the Borrower.
The Borrower shall be deemed to have made a representation and warranty to the
Lenders at the time of the making of, and the continuation or conversion of,
each Advance to the effects set forth in clauses (a), (b) and (c) of this
Section 2.7. For purposes of this Section 2.7, the representations and
warranties contained in Section 4.6 hereof shall be deemed made with respect to
both the financial statements referred to therein and the most recent financial
statements delivered pursuant to Section 5.1(d)(ii) and (iii).
2.8 SUBSEQUENT ELECTIONS AS TO BORROWINGS. The Borrower may
elect (a) to continue a Eurodollar Rate Borrowing, or a portion thereof, as a
Eurodollar Rate Borrowing, or (b) may elect to convert a Eurodollar Rate
Borrowing, or a portion thereof, to a Floating Rate Borrowing, or (c) elect to
convert a Floating Rate Borrowing, or a portion thereof, to a Eurodollar Rate
Borrowing, in each case by giving notice thereof to the Administrative Agent
(with sufficient executed copies for each Lender) in substantially the form of
Exhibit I hereto not later than 10:00 a.m. Chicago time (i) three Eurodollar
Business Days prior to the date any such continuation of or conversion to a
Eurodollar Rate Borrowing is to be effective, (ii) the date such continuation or
conversion is to be effective in all other cases, PROVIDED that an outstanding
Eurodollar Rate Borrowing may only be converted on the last day of the then
current Eurodollar Interest Period with respect to such Borrowing, and PROVIDED,
FURTHER, if a continuation of a Borrowing as, or a conversion of a Borrowing to,
a Eurodollar Rate Borrowing is requested, such notice shall also specify the
Eurodollar Interest Period to be applicable thereto upon such continuation or
conversion. The Administrative Agent, on the day such notice is given in the
event of an election to convert or continue a Floating Rate Borrowing, and not
later than the Business Day next succeeding the day such notice is given in all
other cases, shall provide notice of such election to the Lenders. If the
Borrower shall not timely deliver such a notice with respect to any outstanding
Eurodollar Rate Borrowing, the Borrower shall be deemed to have elected to
convert such Eurodollar Rate Borrowing to a Floating Rate Borrowing on the last
day of the then current Eurodollar Interest Period with respect to such
Borrowing.
2.9 LIMITATION OF REQUESTS AND ELECTIONS. Notwithstanding any
other provision of this Agreement to the contrary, if, upon receiving a request
for a Eurodollar Rate Borrowing
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pursuant to Section 2.5, or a request for a continuation of a Eurodollar Rate
Borrowing as a Eurodollar Rate Borrowing, or a request for a conversion of a
Floating Rate Borrowing to a Eurodollar Rate Borrowing pursuant to Section 2.8,
(a) in the case of any Eurodollar Rate Borrowing, deposits in Dollars for
periods comparable to the Eurodollar Interest Period elected by the Borrower are
not available to any Lender in the relevant interbank secondary market, or (b)
the Eurodollar Rate, will not adequately and fairly reflect the cost to any
Lender of making, funding or maintaining the related Eurodollar Rate Loan, or
(c) by reason of national or international financial, political or economic
conditions or by reason of any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect, or the interpretation
or administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Lender with any
guideline, request or directive of such authority (whether or not having the
force of law), including without limitation exchange controls, it is
impracticable, unlawful or impossible for any Lender (i) to make or fund the
relevant Eurodollar Rate Borrowing, or (ii) to continue such Eurodollar Rate
Borrowing as a Eurodollar Rate Loan, or (iii) to convert a Loan to a Eurodollar
Rate Loan, then the Borrower shall not be entitled, so long as such
circumstances continue, to request a Eurodollar Rate Borrowing pursuant to
Section 2.5 or a continuation of or conversion to a Eurodollar Rate Borrowing of
the affected type pursuant to Section 2.8. In the event that such circumstances
no longer exist, the Lenders shall again consider requests for Eurodollar Rate
Borrowings of the affected type pursuant to Section 2.5, and requests for
continuations of and conversions to Eurodollar Rate Borrowings of the affected
type pursuant to Section 2.8.
2.10 MINIMUM AMOUNTS; LIMITATION ON NUMBER OF BORROWINGS.
Except for (a) Borrowings and conversions thereof which exhaust the entire
remaining amount of the Commitments, and (b) conversions or payments required
pursuant to Section 3.8, and (c) Swing Line Loans, each Borrowing and each
continuation or conversion pursuant to Section 2.8 and each prepayment thereof
shall be in a minimum amount of $3,000,000 and in an integral multiple of
$500,000. Each Swing Line Loan shall be in a minimum amount of $500,000 and in
an integral multiple of $100,000. The aggregate number of Eurodollar Rate
Borrowings outstanding at any one time under this Agreement (together with those
outstanding under the Short-Term Credit Agreement) may not exceed ten.
2.11 GUARANTIES. To secure the payment when due of the Notes
and all other obligations of the Borrower under this Agreement to the Lenders
and the Administrative Agent, the Borrower shall cause to be executed and
delivered to the Lenders and the Administrative Agent the Guaranty of each
Guarantor.
ARTICLE III.
PAYMENTS AND PREPAYMENTS
------------------------
3.1 PRINCIPAL PAYMENTS. (a) Unless earlier payment is required
under this
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Agreement, the Borrower shall pay to the Lenders on the Termination Date the
entire outstanding principal amount of the Loans.
(b) The Borrower may at any time and from time to time prepay
all or a portion of the Loans without premium or penalty, provided that (i) the
Borrower may not prepay any portion of any Loan as to which an election for
continuation of or conversion to a Fixed Rate Loan is pending pursuant to
Section 2.8, and (ii) unless earlier payment is required under this Agreement,
any Fixed Rate Loan may only be prepaid on the last day of the then current
Fixed Interest Period with respect to such Loan.
3.2 INTEREST PAYMENTS. The Borrower shall pay interest to the
Lenders on the unpaid principal amount of each Loan, for the period commencing
on the date such Loan is made until such Loan is paid in full, on each Interest
Payment Date and at maturity (whether at stated maturity, by acceleration or
otherwise), and thereafter on demand, at the following rates per annum:
(a) With respect to Revolving Credit Loans:
(i) During such periods that such Loan is a Floating
Rate Loan, the Floating Rate.
(ii) During such periods that such Loan is a
Eurodollar Rate Loan, the Eurodollar Rate applicable to such Loan for each
related Eurodollar Interest Period.
(b) With respect to Bid-Option Loans, the Bid-Option Rate
quoted for such Loan by the Lender making such Loan.
(c) With respect to the Swing Line Loans, the Floating Rate.
Notwithstanding the foregoing paragraphs (a) through (c), the Borrower shall pay
interest on demand at the Overdue Rate on the outstanding principal amount of
any Loan and any other amount payable by the Borrower hereunder (other than
interest) which is not paid in full when due (whether at stated maturity, by
acceleration or otherwise) for the period commencing on the due date thereof
until the same is paid in full.
3.3 LETTER OF CREDIT REIMBURSEMENT PAYMENTS.
(a) (i) The Borrower agrees to pay to the Lenders,
on the day on which the Administrative Agent shall honor a draft or other demand
for payment presented or made under any Letter of Credit, an amount equal to the
amount paid by the Administrative Agent in respect of such draft or other demand
under such Letter of Credit and all expenses paid or incurred by the
Administrative Agent relative thereto. Unless the Borrower shall have made such
payment to the Lenders on such day, upon each such payment by the Administrative
Agent, the
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Administrative Agent shall be deemed to have disbursed to the Borrower, and the
Borrower shall be deemed to have elected to satisfy its reimbursement obligation
by, a Revolving Credit Loan bearing interest at the Floating Rate for the
account of the Lenders in an amount equal to the amount so paid by the
Administrative Agent in respect of such draft or other demand under such Letter
of Credit. Such Revolving Credit Loan shall be disbursed notwithstanding any
failure to satisfy any conditions for disbursement of any Loan set forth in
Article II hereof and, to the extent of the Revolving Credit Loan so disbursed,
the reimbursement obligation of the Borrower under this Section 3.3 shall be
deemed satisfied; PROVIDED, HOWEVER, that nothing in this Section 3.3 shall be
deemed to constitute a waiver of any Default or Event of Default caused by the
failure of any conditions for disbursement or otherwise.
(ii) If, for any reason (including
without limitation as a result of the occurrence of an Event of Default with
respect to the Borrower pursuant to Section 6.1(h)), Floating Rate Loans may not
be made by the Lenders as described in Section 3.3(a)(i), then (A) the Borrower
agrees that each reimbursement amount not paid pursuant to the first sentence of
Section 3.3(a)(i) shall bear interest, payable on demand by the Administrative
Agent, at the interest rate then applicable to Floating Rate Loans, and (B)
effective on the date each such Floating Rate Loan would otherwise have been
made, each Lender severally agrees that it shall unconditionally and
irrevocably, without regard to the occurrence of any Default or Event of
Default, in lieu of deemed disbursement of loans, to the extent of such Lender's
Commitment, purchase a participating interest in each reimbursement amount. Each
Lender will immediately transfer to the Administrative Agent, in same day funds,
the amount of its participation. Each Lender shall share on a pro rata basis
(calculated by reference to its Commitment) in any interest which accrues
thereon and in all repayments thereof. If and to the extent that any Lender
shall not have so made the amount of such participating interest available to
the Administrative Agent, such Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such amount together with interest
thereon, for each day from the date of demand by the Administrative Agent until
the date such amount is paid to the Administrative Agent, at (x) in the case of
the Borrower, the interest rate then applicable to Floating Rate Loans and (y)
in the case of such Lender, the Federal Funds Rate.
(b) The reimbursement obligation of the Borrower under this
Section 3.3 shall be absolute, unconditional and irrevocable and shall remain in
full force and effect until all obligations of the Borrower to the Lenders
hereunder shall have been satisfied, and such obligations of the Borrower shall
not be affected, modified or impaired upon the happening of any event, including
without limitation, any of the following, whether or not with notice to, or the
consent of, the Borrower:
(i) Any lack of validity or enforceability
of any Letter of Credit or any documentation relating to any Letter of Credit or
to any transaction related in any way to such Letter of Credit (the "Letter of
Credit Documents");
(ii) Any amendment, modification, waiver,
consent, or any
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substitution, exchange or release of or failure to perfect any
interest in collateral or security, with respect to any of the Letter of Credit
Documents;
(iii) The existence of any claim, setoff,
defense or other right which the Borrower may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be acting),
the Administrative Agent or any Lender or any other person or entity, whether in
connection with any of the Letter of Credit Documents, the transactions
contemplated herein or therein or any unrelated transactions;
(iv) Any draft or other statement or document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) Payment by the Administrative Agent to
the beneficiary under any Letter of Credit against presentation of documents
which do not comply with the terms of the Letter of Credit, including failure of
any documents to bear any reference or adequate reference to such Letter of
Credit;
(vi) Any failure, omission, delay or lack on
the part of the Administrative Agent or any Lender or any party to any of the
Letter of Credit Documents to enforce, assert or exercise any right, power or
remedy conferred upon the Administrative Agent, any Lender or any such party
under this Agreement or any of the Letter of Credit Documents, or any other acts
or omissions on the part of the Administrative Agent, any Lender or any such
party;
(vii) Any other event or circumstance that
would, in the absence of this clause, result in the release or discharge by
operation of law or otherwise of the Borrower from the performance or observance
of any obligation, covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or
any defense of any kind or nature which the Borrower has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the Borrower
against the Administrative Agent or any Lender. Nothing in this Section 3.3
shall limit the liability, if any, of the Lenders to the Borrower pursuant to
Section 8.5.
3.4 PAYMENT METHOD. (a) All payments to be made by the Borrower
hereunder will be made in Dollars and in immediately available funds to the
Administrative Agent for the account of the Lenders at its address referred to
in Section 8.2 not later than 2:00 p.m. Chicago time on the date on which such
payment shall become due. Payments received after 2:00 p.m. Chicago time shall
be deemed to be payments made prior to 2:00 p.m. Chicago time on the next
succeeding Business Day. The Borrower hereby authorizes the Administrative Agent
to charge
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its account with the Administrative Agent in order to cause timely payment of
amounts due hereunder to be made (subject to sufficient funds being available in
such account for that purpose).
(b) At the time of making each such payment,
the Borrower shall, subject to the other terms and conditions of this Agreement,
specify to the Administrative Agent that Loan or other obligation of the
Borrower hereunder to which such payment is to be applied. In the event that the
Borrower fails to so specify the relevant obligation or if an Event of Default
shall have occurred and be continuing, the Administrative Agent may apply such
payments as it may determine in its sole discretion.
(c) On the day such payments are deemed
received, the Administrative Agent shall remit to the Lenders their pro rata
shares of such payments in immediately available funds, made by wire transfer,
(i) in the case of payments of principal and interest on any Borrowing,
determined with respect to each such Lender by the ratio which the outstanding
principal balance of its Loan included in such Borrowing bears to the
outstanding principal balance of the Loans of all of the Lenders included in
such Borrowing and (ii) in the case of fees paid pursuant to Section 2.4 and
other amounts payable hereunder (other than the Administrative Agent's fees
payable pursuant to Section 2.4(c) and amounts payable to the Administrative
Agent or any Lender under Section 2.4(b), 3.7 or 3.9) determined with respect to
each such Lender by the ratio which the relevant Commitment of such Lender bears
to the relevant Commitments of all the Lenders.
3.5 NO SETOFF OR DEDUCTION. All payments of principal of and
interest on the Loans and other amounts payable by the Borrower hereunder shall
be made by the Borrower without setoff or counterclaim, and free and clear of,
and without deduction or withholding for, or on account of, any present or
future taxes, levies, imposts, duties, fees, assessments, or other charges of
whatever nature, imposed by any governmental authority, or by any department,
agency or other political subdivision or taxing authority; PROVIDED, HOWEVER,
that this Section 3.5 shall not preclude the Borrower from counterclaiming
against any Lender having its principal office in the United States of America
for (a) income taxes owed to the United States of America by such Lender, which
are paid by the Borrower under a valid garnishment order, or (b) other
obligations of such Lender, unrelated to such taxes, levies, imposts, duties,
fees, assessments, or other charges, which are paid by the Borrower under a
valid garnishment order.
3.6 PAYMENT ON NON-BUSINESS DAY; PAYMENT COMPUTATIONS. Except
as otherwise provided in this Agreement to the contrary, whenever any
installment of principal of, or interest on, any Loan or any other amount due
hereunder becomes due and payable on a day which is not a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and, in
the case of any installment of principal, interest shall be payable thereon at
the rate per annum determined in accordance with this Agreement during such
extension. Computations of interest and other amounts due under this Agreement
shall be made on the basis of a year of 360 days (or 365 or 366 days, as the
case may be, when determining the Floating
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Rate) for the actual number of days elapsed, including the first day but
excluding the last day of the relevant period.
3.7 ADDITIONAL COSTS. (a) In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Lender or the
Administrative Agent, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Lender or the Administrative Agent with any
guideline, request or directive of any such authority (whether or not having the
force of law), shall (a) affect the basis of taxation of payments to any Lender
or the Administrative Agent of any amounts payable by the Borrower under this
Agreement (other than taxes imposed on the overall net income of the Lender or
the Administrative Agent, by the jurisdiction, or by any political subdivision
or taxing authority of any such jurisdiction, in which any Lender or the
Administrative Agent, as the case may be, has its principal office), or (b)
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any Lender, or (c) shall impose any other condition with respect to
this Agreement, the Commitments, the Notes or the Loans, and the result of any
of the foregoing is to increase the cost to any Lender or the Administrative
Agent, as the case may be, of making, funding or maintaining any Eurodollar Rate
Loan or to reduce the amount of any sum receivable by any Lender thereon, then
the Borrower shall pay to such Lender or the Administrative Agent, as the case
may be, from time to time, upon request by such Lender (with a copy of such
request to be provided to the Administrative Agent) or the Administrative Agent,
additional reasonable amounts sufficient to compensate such Lender or the
Administrative Agent, as the case may be, for such increased cost or reduced sum
receivable to the extent, in the case of any Eurodollar Rate Loan, such Lender
is not compensated therefor in the computation of the interest rate applicable
to such Eurodollar Rate Loan. A statement as to the amount of such increased
cost or reduced sum receivable, prepared in good faith and in reasonable detail
by such Lender or the Administrative Agent, as the case may be, and submitted by
such Lender or the Administrative Agent, as the case may be, to the Borrower,
shall be conclusive and binding for all purposes absent manifest error in
computation.
(b) In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Lender or the
Administrative Agent, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Lender or the Administrative Agent with any
guideline, request or directive of any such authority (whether or not having the
force of law), including any risk-based capital guidelines, affects or would
affect the amount of capital required or expected to be maintained by such
Lender or the Administrative Agent (or any corporation controlling such Lender
or the Administrative Agent), including any change in capital required to be
maintained with respect to commitments for credit of less than 365 days in
duration, and such Lender or the Administrative Agent, as the case may be,
determines that the amount of such capital is increased by or based upon the
existence of such Lender's or the Administrative Agent's obligations hereunder
and such
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increase has the effect of reducing the rate of return on such Lender's
or the Administrative Agent's (or such controlling corporation's) capital as a
consequence of such obligations hereunder to a level below that which such
Lender or the Administrative Agent (or such controlling corporation) could have
achieved but for such circumstances (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Lender or the
Administrative Agent to be material, then the Borrower shall pay to such Lender
or the Administrative Agent, as the case may be, from time to time, upon request
by such Lender (with a copy of such request to be provided to the Administrative
Agent) or the Administrative Agent, additional amounts sufficient to compensate
such Lender or the Administrative Agent (or such controlling corporation) for
any increase in the amount of capital and reduced rate of return which such
Lender or the Administrative Agent reasonably determines to be allocable to the
existence of such Lender's or the Administrative Agent's obligations hereunder.
A statement as to the amount of such compensation, prepared in good faith and in
reasonable detail by such Lender or the Administrative Agent, as the case may
be, and submitted by such Lender or the Administrative Agent to the Borrower,
shall be conclusive and binding for all purposes absent manifest error in
computation.
3.8 ILLEGALITY AND IMPOSSIBILITY. In the event that any
applicable law, treaty, rule or regulation (whether domestic or foreign) now or
hereafter in effect and whether or not presently applicable to any Lender, or
any interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by any
Lender with any guideline, request or directive of such authority (whether or
not having the force of law), including without limitation exchange controls,
shall make it unlawful or impossible for any Lender to maintain any Fixed Rate
Loan under this Agreement, the Borrower shall upon receipt of notice thereof
from such Lender, repay in full the then outstanding principal amount of each
Fixed Rate Loan so affected, together with all accrued interest thereon to the
date of payment and all amounts owing to such Lender under Section 3.9, (a) on
the last day of the then current Fixed Interest Period applicable to such Loan
if such Lender may lawfully continue to maintain such Loan to such day, or (b)
immediately if such Lender may not continue to maintain such Loan to such day.
3.9 INDEMNIFICATION. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or converts any Fixed Rate Loan on
any other date than the last day of an Fixed Interest Period applicable thereto
(whether pursuant to Section 3.8, Section 6.2 or otherwise), or if the Borrower
fails to borrow any Fixed Rate Loan after notice has been given to the Lenders
in accordance with Section 2.5, or if the Borrower fails to make any payment of
principal or interest in respect of a Fixed Rate Loan when due, the Borrower
shall reimburse each Lender on demand for any resulting loss or expense incurred
by each such Lender, including without limitation any loss incurred in
obtaining, liquidating or employing deposits from third parties, whether or not
such Lender shall have funded or committed to fund such Loan. A statement as to
the amount of such loss or expense, prepared in good faith and in reasonable
detail by such Lender and submitted by such Lender to the Borrower, shall be
conclusive and binding for all purposes absent manifest error in computation.
Calculation of all amounts payable
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to such Lender under this Section 3.9 shall be made as though such Lender shall
have actually funded or committed to fund the relevant Fixed Rate Loan through
the purchase of an underlying deposit in an amount equal to the amount of such
Loan and having a maturity comparable to the related Fixed Interest Period;
PROVIDED, HOWEVER, that such Lender may fund any Fixed Rate Loan in any manner
it sees fit and the foregoing assumption shall be utilized only for the purpose
of calculation of amounts payable under this Section 3.9.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Administrative
Agent and the Lenders that:
4.1 CORPORATE EXISTENCE AND POWER. The Borrower is a Person
duly organized, validly existing and in good standing under the laws of the
state or other political subdivision of its jurisdiction of incorporation or
organization, as the case may be, and is duly qualified to do business, and is
in good standing, in all additional jurisdictions where such qualification is
necessary under applicable law. The Borrower has all requisite power, corporate
or otherwise, to own or lease the properties used in its business and to carry
on its business as now being conducted and as proposed to be conducted, and to
execute and deliver this Agreement, and the Notes, and to engage in the
transactions contemplated by this Agreement.
4.2 CORPORATE AUTHORITY. The execution, delivery and
performance by the Borrower of this Agreement and the Notes have been duly
authorized by all necessary corporate action and are not in contravention of any
law, rule or regulation, or any judgment, decree, writ, injunction, order or
award of any arbitrator, court or governmental authority, or of the terms of the
Borrower's charter or by-laws, or of any contract or undertaking to which the
Borrower is a party or by which the Borrower or its property may be bound or
affected or result in the imposition of any Lien except for Permitted Liens.
4.3 BINDING EFFECT. This Agreement is, and the Notes when
delivered hereunder will be, legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with its terms.
4.4 SUBSIDIARIES. SCHEDULE 4.4 hereto correctly sets forth the
corporate name, jurisdiction of incorporation and ownership of each Subsidiary
of the Borrower as of the Effective Date. Each such Subsidiary and each
corporation becoming a Subsidiary of the Borrower after the date hereof is and
will be a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and is and will be duly
qualified to do business in each additional jurisdiction where such
qualification is or may be necessary under applicable
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law. Each Subsidiary of each Borrower has and will have all requisite corporate
power to own or lease the properties used in its business and to carry on its
business as now being conducted and as proposed to be conducted. All outstanding
shares of capital stock of each class of each Subsidiary of the Borrower have
been and will be validly issued and are and will be fully paid and nonassessable
and, except as otherwise indicated in SCHEDULE 4.4 hereto or consented to by the
Required Lenders from time to time, are and will be owned, beneficially and of
record, by the Borrower or another Subsidiary of the Borrower free and clear of
any Liens. The corporations described in SCHEDULE 4.4 hereto constitute all
persons in which the Borrower or any of its Subsidiaries has an ownership
interest as of the Effective Date.
4.5 LITIGATION. Except as set forth in SCHEDULE 4.5 hereto,
there is no action, suit or proceeding pending or, to the best of the Borrower's
knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries before or by any court, governmental authority or arbitrator, which
if adversely decided might result, either individually or collectively, in any
material adverse change in the business, properties, operations or condition,
financial or otherwise, of the Borrower or any of its Subsidiaries or in any
material adverse effect on the legality, validity or enforceability of this
Agreement, the Notes or any Guaranty and, to the best of the Borrower's
knowledge, there is no basis for any such action, suit or proceeding.
4.6 FINANCIAL CONDITION. The consolidated balance sheet of the
Borrower and its Subsidiaries and the consolidated statements of income,
retained earnings, and cash flows of the Borrower and its Subsidiaries for the
fiscal year ended January 31, 1997 and reported on by Deloitte & Touche,
independent certified public accountants, copies of which have been furnished to
the Lenders, fairly present, and the financial statements of the Borrower and
its Subsidiaries delivered pursuant to Section 5.1(d) will fairly present, the
consolidated financial position of the Borrower and its Subsidiaries as at the
respective dates thereof, and the consolidated results of operations of the
Borrower and its Subsidiaries for the respective periods indicated, all in
accordance with Generally Accepted Accounting Principles consistently applied
(subject, in the case of said interim statements, to year-end audit
adjustments). There has been no material adverse change in the business,
properties, operations or condition, financial or otherwise, of the Borrower or
any of its Subsidiaries since January 31, 1997. There is no material Contingent
Liability of the Borrower that is not reflected in such financial statements or
in the notes thereto.
4.7 USE OF LOANS. The Borrower will use the proceeds of the
Loans for its general corporate purposes and the Borrower will not use the
proceeds of the Loans to repurchase the stock of the Borrower or any of its
Subsidiaries. Neither the Borrower nor any of its Subsidiaries extends or
maintains, in the ordinary course of business, credit for the purpose, whether
immediate, incidental, or ultimate, of buying or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan will be used for the purpose,
whether immediate, incidental, or ultimate, of buying or carrying any such
margin stock or maintaining or extending credit to others for such purpose.
After applying the proceeds of each Loan, such margin stock will not constitute
more than 25% of the value of the assets (either of the Borrower alone or of the
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Borrower and its Subsidiaries on a consolidated basis) that are subject to any
provisions of this Agreement or any Guaranty that may cause the Loans to be
deemed secured, directly or indirectly, by margin stock.
4.8 CONSENTS, ETC. Except for such consents, approvals,
authorizations, declarations, registrations or filings delivered by the Borrower
pursuant to Section 2.5(g), if any, each of which is in full force and effect,
no consent, approval or authorization of or declaration, registration or filing
with any governmental authority or any nongovernmental person or entity,
including without limitation any creditor, lessor or stockholder of Borrower or
any of its Subsidiaries, is required on the part of the Borrower in connection
with the execution, delivery and performance of this Agreement, or the Notes, or
any Guaranty, or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of this Agreement, the Notes or any
Guaranty.
4.9 TAXES. The Borrower and its Subsidiaries have filed all tax
returns (federal, state and local) required to be filed and have paid all taxes
shown thereon to be due, including interest and penalties, or have established
adequate financial reserves on its books and records for payment thereof.
Neither the Borrower nor any of its Subsidiaries knows of any actual or proposed
tax assessment or any basis therefor, and no extension of time for the
assessment of deficiencies in any federal or state tax has been granted by the
Borrower or any Subsidiary.
4.10 TITLE TO PROPERTIES. Except as otherwise disclosed in the
latest balance sheet delivered pursuant to Section 4.6 or 5.1(d) of this
Agreement, the Borrower or one or more of its Subsidiaries have good and
marketable fee simple title to all of the real property, and a valid and
indefeasible ownership interest in all of the other properties and assets
reflected in said balance sheet or subsequently acquired by the Borrower or any
Subsidiary. All of such properties and assets are free and clear of any Lien,
except for Permitted Liens.
4.11 ERISA. The Borrower, its Subsidiaries, their ERISA
Affiliates and its Plans are in compliance in all material respects with those
provisions of ERISA and of the Code which are applicable with respect to any
Plan. No Prohibited Transaction and no Reportable Event has occurred with
respect to any such Plan. None of the Borrower, any of its Subsidiaries or any
of their ERISA Affiliates is an employer with respect to any Multiemployer Plan.
The Borrower, its Subsidiaries and their ERISA Affiliates have met the minimum
funding requirements under ERISA and the Code with respect to each of its Plans,
if any, and have not incurred any liability to the PBGC or any Plan. The
execution, delivery and performance of this Agreement, the Notes and the
Guaranties do not constitute a Prohibited Transaction. There is no material
Unfunded Benefit Liability with respect to any Plan of the Borrower, its
Subsidiaries or their ERISA Affiliates.
4.12 ENVIRONMENTAL AND SAFETY MATTERS. The Borrower and each
Subsidiary are in substantial compliance with all federal, state and local laws,
ordinances and regulations relating to safety and industrial hygiene or to the
environmental condition, including without limitation all
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Environmental Laws in jurisdictions in which the Borrower or any Subsidiary owns
or operates, or has owned or operated, a facility or site, or arranges or has
arranged for disposal or treatment of hazardous substances, solid waste, or
other wastes, accepts or has accepted for transport any hazardous substances,
solid wastes or other wastes or holds or has held any interest in real property
or otherwise, except as disclosed on Schedule 4.12 hereto, and as to such
matters disclosed on such Schedule, none will have a material adverse effect on
the financial condition or business of the Borrower or any of its Subsidiaries.
No demand, claim, notice, suit, suit in equity, action, administrative action,
investigation or inquiry whether brought by any governmental authority, private
person or entity or otherwise, arising under, relating to or in connection with
any Environmental Laws is pending or threatened against the Borrower or any of
its Subsidiaries, any real property in which the Borrower or any such Subsidiary
holds or has held an interest or any past or present operation of the Borrower
or any Subsidiary, except as disclosed on Schedule 4.12 hereto, and as to such
matters disclosed on such Schedule, none will have a material adverse effect on
the financial condition or business of the Borrower or any of its Subsidiaries.
Neither the Borrower nor any of its Subsidiaries (a) is the subject of any
federal or state investigation evaluating whether any remedial action is needed
to respond to a release of any toxic substances, radioactive materials,
hazardous wastes or related materials into the environment, (b) has received any
notice of any toxic substances, radioactive materials, hazardous waste or
related materials in, or upon any of its properties in violation of any
Environmental Laws, or (c) knows of any basis for any such investigation, notice
or violation, except as disclosed on SCHEDULE 4.12 hereto, and as to such
matters disclosed on such Schedule, none will have an material adverse affect on
the financial condition or business of the Borrower or any of its Subsidiaries.
No release, threatened release or disposal of hazardous waste, solid waste or
other wastes is occurring or has occurred on, under or to any real property in
which the Borrower or any of its Subsidiaries holds any interest or performs any
of its operations, in violation of any Environmental Law, except as disclosed on
Schedule 4.12 hereto, and as to such matters disclosed on such Schedule, none
will have a material adverse effect on the financial condition or business of
the Borrower or any of its Subsidiaries.
ARTICLE V.
COVENANTS
---------
5.1 AFFIRMATIVE COVENANTS. The Borrower covenants and agrees
that, until the Termination Date and thereafter until payment in full of the
principal of and accrued interest on the Notes and the performance of all other
obligations of the Borrower under this Agreement, unless the Required Lenders
shall otherwise consent in writing, it shall, and shall cause each of its
Subsidiaries to:
(a) PRESERVATION OF CORPORATE EXISTENCE, ETC.
Do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence,
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except to the extent permitted by Section 5.2(e), and its qualification as a
foreign corporation in good standing in each jurisdiction in which such
qualification is necessary under applicable law, and the rights, licenses,
permits (including those required under Environmental Laws), franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
businesses; and defend all of the foregoing against all claims, actions,
demands, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority.
(b) COMPLIANCE WITH LAWS, ETC. Comply in
all material respects with all applicable laws, rules, regulations and orders of
any governmental authority, whether federal, state, local or foreign (including
without limitation ERISA, the Code and Environmental Laws), in effect from time
to time; and pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income, revenues or
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
might give rise to Liens upon such properties or any portion thereof, except to
the extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of any the
Borrower or such Subsidiary.
(c) MAINTENANCE OF PROPERTIES; INSURANCE.
Maintain, preserve and protect all property that is material to the conduct of
the business of the Borrower or any of its Subsidiaries and keep such property
in good repair, working order and condition and from time to time make, or cause
to be made all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times in accordance with
customary and prudent business practices for similar businesses; and maintain in
full force and effect insurance with responsible and reputable insurance
companies or associations in such amounts, on such terms and covering such
risks, including fire and other risks insured against by extended coverage, as
is usually carried by companies engaged in similar businesses and owning similar
properties similarly situated and maintain in full force and effect public
liability insurance, insurance against claims for personal injury or death or
property damage occurring in connection with any of its activities or any
properties owned, occupied or controlled by it, in such amount as it shall
reasonably deem necessary, and maintain such other insurance as may be required
by law.
(d) REPORTING REQUIREMENTS. Furnish to the
Lenders and the Administrative Agent the following:
(i) Promptly and in any event
within three calendar days after becoming aware of the occurrence of (A) any
Default, or Event of Default described in Section 6.1, PROVIDED, HOWEVER, with
respect to any Default described in Section 6.1(k), the Borrower shall furnish
notice immediately, together with a copy of the notice required to be delivered
to the holders of the Private Placement Debt pursuant to Section 8.1(b) of the
Note Purchase Agreement executed in connection with the Private Placement
Documents, (B) the
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commencement of any material litigation against, by or affecting the Borrower or
any of its Subsidiaries, and any material developments therein, (C) entering
into any material contract or undertaking that is not entered into in the
ordinary course of business, or (D) any development in the business or affairs
of the Borrower or any of its Subsidiaries which has resulted in or which is
likely in the reasonable judgment of the Borrower, to result in a material
adverse change in the business, properties, operations or condition, financial
or otherwise of the Borrower or any of its Subsidiaries, a statement of the
chief financial officer, controller or treasurer of the Borrower setting forth
details of such Default or Event of Default, litigation, development, contract,
or undertaking, and the action which the Borrower or such Subsidiary, as the
case may be, has taken and proposes to take with respect thereto;
(ii) As soon as available and in any
event within 60 days after the end of each of the first three fiscal quarters of
the Borrower, the consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such quarter, and the related consolidated
statements of income, retained earnings, and cash flows for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding date or period of the preceding fiscal year, all
in reasonable detail and duly certified (subject to year-end audit adjustments)
by the chief financial officer of the Borrower as having been prepared in
accordance with Generally Accepted Accounting Principles; together with a
certificate of the chief financial officer, controller or treasurer of the
Borrower stating (A) that no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and is continuing,
a statement setting forth the details thereof and the action which the Borrower
has taken and proposes to take with respect thereto, and (B) that a computation
(which computation shall accompany such certificate and shall be in reasonable
detail) showing compliance with Section 5.2(a), (b), (c), (d), (f) and (g)
hereof is in conformity with the terms of this Agreement;
(iii) As soon as available and in
any event within 100 days after the end of each fiscal year of the Borrower, a
copy of the consolidated balance sheet of the Borrower and its Subsidiaries as
of the end of such fiscal year and the related consolidated statements of
income, retained earnings, and cash flows of the Borrower and its Subsidiaries
for such fiscal year, with a customary audit report of Deloitte & Touche, or
other independent certified public accountants selected by the Borrower and
acceptable to the Required Lenders, without qualifications unacceptable to the
Required Lenders, together with the consolidating balance sheets and the related
consolidating statements of income of the Borrower and its Subsidiaries for such
year; together with a certificate of the chief financial officer, controller or
treasurer of the Borrower stating (A) that no Default or Event of Default has
occurred and is continuing or, if a Default or Event of Default has occurred and
is continuing, a statement setting forth the details thereof and the action
which the Borrower has taken and proposes to take with respect thereto, and (B)
that a computation (which computation shall accompany such certificate and shall
be in reasonable detail) showing compliance with Section 5.2(a), (b), (c), (d),
(f) and (g) hereof is in conformity with the terms of this Agreement;
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(iv) Promptly after the sending
or filing thereof, copies of all reports, proxy statements and financial
statements which the Borrower or any of its Subsidiaries sends to or files with
any of its security holders or any securities exchange or the Securities and
Exchange Commission or any successor agency thereof;
(v) Promptly and in any event within
10 calendar days after receiving or becoming aware thereof (A) a copy of any
notice of intent to terminate any Plan of the Borrower, its Subsidiaries or any
ERISA Affiliate filed with the PBGC, (B) a statement of the chief financial
officer of the Borrower setting forth the details of the occurrence of any
Reportable Event with respect to any such Plan, (C) a copy of any notice that
the Borrower, any of its Subsidiaries or any ERISA Affiliate may receive from
the PBGC relating to the intention of the PBGC to terminate any such Plan or to
appoint a trustee to administer any such Plan, or (D) a copy of any notice of
failure to make a required installment or other payment within the meaning of
Section 412(n) of the Code or Section 302(f) of ERISA with respect to any such
Plan;
(vi) As soon as available and in any
event within 30 days after the end of each month, a report on loan receivable
portfolio statistics detailing gross receivables in accordance with Generally
Accepted Accounting Principles, less deduction for ineligible receivables,
including an aging of accounts receivable, dealer concentrations and static pool
analysis and any other portfolio information reasonably requested by the
Administrative Agent;
(vii) Within 30 days after the end of
each fiscal year, a claims analysis in the form of Schedule 5.1(d)(vii) attached
hereto;
(viii) Promptly after the end of each
fiscal quarter or the occurrence of a material change in the ownership of stock
or other equity interest by Sam J.. Frankino and/or his Affiliates of the
Borrower and/or its Affiliates, a report showing the ownership interest of Sam
J.. Frankino and his Affiliates in the Borrower and its Affiliates; and
(ix) Promptly, such other information
respecting the business, properties, operations or condition, financial or
otherwise, of the Borrower or any of its Subsidiaries as any Lender or the
Administrative Agent may from time to time reasonably request.
(e) ACCOUNTING; ACCESS TO RECORDS, BOOKS, ETC.
Maintain a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
accordance with Generally Accepted Accounting Principles and to comply with the
requirements of this Agreement and, at any reasonable time and from time to
time, permit any Lender or the Administrative Agent or any agents or
representatives thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Borrower and
its Subsidiaries, and to discuss the affairs, finances and accounts of such and
its Subsidiaries with its directors, officers, employees and independent
auditors, and by this provision the Borrower does hereby authorize such persons
to discuss such affairs, finances and accounts with any Lender or the
Administrative Agent and permit the Administrative
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Agent or any of its agents and representatives to conduct a comprehensive field
audit of its books, records, properties and assets.
(f) FURTHER ASSURANCES. Will, and will cause
each Guarantor to, execute and deliver within 30 days after request therefor by
the Required Lenders or the Administrative Agent, all further instruments and
documents and take all further action that may be necessary or desirable, or
that the Required Lenders or the Administrative Agent may request, in order to
give effect to, and to aid in the exercise and enforcement of the rights and
remedies of the Lenders and the Administrative Agent under, this Agreement, the
Notes or the Guaranties. In addition, the Borrower agrees to deliver to the
Administrative Agent and the Lenders from time to time upon the acquisition or
creation of any Subsidiary not listed in SCHEDULE 4.4 hereto supplements to
SCHEDULE 4.4 such that such Schedule, together with such supplements, shall at
all times accurately reflect the information provided for thereon.
5.2 NEGATIVE COVENANTS. Until the Termination Date and
thereafter until payment in full of the principal of and accrued interest on the
Notes and the performance of all other obligations of the Borrower under this
Agreement, the Borrower agrees that, unless the Required Lenders shall otherwise
consent in writing it shall not, and shall not permit any of its Subsidiaries
to:
(a) INDEBTEDNESS TO TOTAL CAPITALIZATION.
Permit or suffer the ratio of Consolidated Indebtedness of the Borrower and its
Subsidiaries to Consolidated Total Capitalization of the Borrower and its
Subsidiaries at any time to be greater than .45 to 1.0.
(b) TANGIBLE NET WORTH. Permit or suffer
Consolidated Tangible Net Worth of the Borrower and its Subsidiaries at any time
to be less than the sum of (i) $195,000,000 plus (ii) an amount equal to 50% of
Consolidated Cumulative Net Income (without any reduction for net loss) of the
Borrower and its Subsidiaries for each fiscal quarter of the Borrower commencing
with the fiscal quarter ending April 30, 1997 plus (iii) 75% of the Net Cash
Proceeds from the issuance or sale of any capital stock of the Borrower or any
Subsidiary, plus (iv) 75% of the Net Cash Proceeds of any Subordinated
Indebtedness incurred by the Borrower or any Subsidiary at any time.
(c) FIXED CHARGE COVERAGE RATIO. Permit or
suffer the ratio of (i) Net Income Available for Fixed Charges of the Borrower
and its Subsidiaries to (ii) Fixed Charges of the Borrower and its Subsidiaries
to be less than 3.0 to 1.0 as of the end of each fiscal quarter, calculated for
the four (4) consecutive fiscal quarters then ending.
(d) LEVERAGE RATIO. Permit or suffer the
Consolidated Leverage Ratio of the Borrower and its Subsidiaries at any time to
be greater than .42 to 1.0.
(e) LIENS. Create, incur or suffer to
exist any Lien on any of the assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, whether now
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owned or hereafter acquired, of the Borrower or any of its Subsidiaries, other
than:
(i) Liens for taxes not delinquent
or for taxes being contested in good faith by appropriate proceedings and as to
which adequate financial reserves have been established on its books and
records;
(ii) Liens (other than any Lien
imposed by ERISA) created and maintained in the ordinary course of business
which do not secure obligations exceeding $1,000,000 in the aggregate and are
not material in the aggregate, and which would not have a material adverse
effect on the business or operations of the Borrower or any of its Subsidiaries
and which constitute (A) pledges or deposits under worker's compensation laws,
unemployment insurance laws or similar legislation, (B) good faith deposits in
connection with bids, tenders, contracts or leases to which the Borrower or any
of its Subsidiaries is a party for a purpose other than borrowing money or
obtaining credit, including rent security deposits, (C) liens imposed by law,
such as those of carriers, warehousemen and mechanics, if payment of the
obligation secured thereby is not yet due, (D) Liens securing taxes, assessments
or other governmental charges or levies not yet subject to penalties for
nonpayment, and (E) pledges or deposits to secure public or statutory
obligations of the Borrower or any of its Subsidiaries, or surety, customs or
appeal bonds to which the Borrower or any of its Subsidiaries is a party;
(iii) Liens affecting real property
which constitute minor survey exceptions or defects or irregularities in title,
minor encumbrances, easements or reservations of, or rights of others for,
rights of way, sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of such real
property, PROVIDED that all of the foregoing, in the aggregate, do not at any
time materially detract from the value of said properties or materially impair
their use in the operation of the businesses of the Borrower or any of its
Subsidiaries;
(iv) Each Lien described in SCHEDULE
5.2(e) hereto may be suffered to exist upon the same terms as those existing on
the date hereof, but no extension or renewal (which shall not include the filing
of UCC continuation statements) thereof shall be permitted;
(v) The interest or title of a
lessor under any lease otherwise permitted under this Agreement with respect to
the property subject to such lease to the extent performance of the obligations
of the Borrower or its Subsidiary thereunder are not delinquent; and
(vi) Prior to the disposition of
assets contemplated by Section 5.2(g)(ii), other Liens on assets of the Borrower
and its Subsidiaries, other than accounts or general intangibles, that secure
Indebtedness not exceeding in aggregate amount 50% of the net book value of the
Borrower's motor vehicles comprising its automotive fleet, and which Liens are
granted solely to original equipment manufacturers of motor vehicles to secure
Indebtedness
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arising pursuant to borrowings under the Borrower's original equipment
manufacturers financing program.
(f) MERGER; ACQUISITIONS; ETC. Purchase or
otherwise acquire, whether in one or a series of transactions, all or a
substantial portion of the business assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, of any person, or all or a
substantial portion of the capital stock of or other ownership interest in any
other person; nor merge or consolidate or amalgamate with any other person or
take any other action having a similar effect, nor enter into any joint venture
or similar arrangement with any other person, PROVIDED, HOWEVER, that this
Section 5.2(f) shall not prohibit any merger or acquisition if (i) it is a
merger of a Subsidiary into, or the acquisition of the assets of a Subsidiary
by, the Borrower or a Subsidiary, where the Borrower or the Subsidiary, as the
case may be, is the surviving or continuing corporation, or (ii) it is an
acquisition (A) of a business or assets that are generally related to the
business presently engaged in by the Borrower, (B) on terms approved in advance
by the board of directors or other governing body of the seller of the business
or assets, and (C) the amount of consideration paid or exchanged by the Borrower
and all Subsidiaries for all such acquisitions pursuant to this clause (ii) does
not exceed $10,000,000 in aggregate amount; and in the case of each of clauses
(i) and (ii), immediately after each such merger or acquisition, no Default or
Event of Default shall exist or shall have occurred and be continuing and, prior
to the consummation of each such merger, if the Borrower is a party thereto, and
each such acquisition for consideration of $3,000,000 or more, the Borrower
shall have provided to the Lenders an opinion of counsel and a certificate of
the chief financial officer of the Borrower (attaching computations to
demonstrate compliance with all financial covenants hereunder), each stating
that such merger or acquisition complies with this Section 5.2(f) and that any
other conditions under this Agreement relating to such transaction have been
satisfied.
(g) DISPOSITION OF ASSETS; ETC. Notwithstanding
any other provision of this Agreement, sell, lease, license, transfer, assign or
otherwise dispose of any of its business, assets, rights, revenues or property,
real, personal or mixed, tangible or intangible, whether in one or a series of
transactions, other than (1) inventory sold or leased in the ordinary course of
business upon customary credit terms, (2) sales of motor vehicles by the
Borrower to one or more of its Subsidiaries, for fair value, in the ordinary
course of the Borrower's business, (3) sales of scrap or obsolete material or
equipment, (4) transfers between the Guarantors or between the Borrower and the
Guarantors and (5) transfers in connection with the Receivables Program and
permitted pursuant to Section 5.2(p); PROVIDED, HOWEVER, that this Section
5.2(g) shall not prohibit any such sale, lease, license, transfer, assignment,
liquidation or other disposition: (i) if the aggregate book value (disregarding
any write-downs of such book value other than ordinary depreciation and
amortization) of all of the business, assets, rights, revenues and property
disposed of after the date of this Agreement shall be less than five percent
(5%) in the aggregate for all such dispositions of such aggregate book value of
the total assets of the Borrower or such Subsidiary as of such date, as the case
may be, and if, immediately after such transaction, no Default or Event of
Default shall exist or shall have occurred and be continuing; and (ii) of the
automotive rental fleet and associated assets so long as no Default or Event of
Default shall exist
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or shall have occurred and be continuing.
(h) RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.
(i) Limitation. The Borrower will not, and will not
permit any of its Subsidiaries to, at any time, declare or make, or incur any
liability to declare or make, any Restricted Payment or make or authorize any
Restricted Investment unless immediately after giving effect to such action:
(A) the sum of (x) aggregate amount of Restricted
Payments of the Borrower and its Subsidiaries declared or made during the
period commencing on February 1, 1997, and ending on the date such
Restricted Payment or Restricted Investment is declared or made, including
and (y) the amount of Restricted Investments of the Borrower and its
Subsidiaries (with each Restricted Investment and Restricted Payment being
valued immediately after the making of any such Restricted Investment or
Restricted Payment) would not exceed the sum of
(I) $2,000,000 plus
(II) 50% of Consolidated Operating Net
Income for the period commencing on February 1, 1997 and ending at the end
of the most recently ended fiscal quarter of the Borrower (or minus 100% of
Consolidated Operating Net Income for such period if Consolidated Operating
Net Income for such period is negative);
(B) no Default or Event of Default exists or would
exist after giving effect to such Restricted Payment or Restricted
Investment;
(C) the Borrower would be permitted by the provisions
of Section 10.5 of the Note Purchase Agreement executed in connection with
the Private Placement Debt to incur at least $1.00 of additional
Indebtedness owing to a Person other than a Subsidiary of the Borrower.
(ii) Time of Payment. The Borrower will not, nor
will it permit any of its Subsidiaries to, authorize a Restricted Payment that
is not payable within 60 days of authorization.
(i) NATURE OF BUSINESS/DEALER HOLDBACK PROGRAM. Make any
substantial change in the nature of its business from that engaged in on the
date of this Agreement, engage in any other businesses other than those in which
it is engaged on the date of this Agreement or make any material change in the
structure or terms of any dealer holdback program which would result in the
subordination of Lender Obligations to the obligations of any such dealer;
PROVIDED, HOWEVER, that this subsection (i) shall not preclude the Borrower or
any Subsidiary from engaging in additional related or ancillary businesses that
are not likely to have a
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material effect on the Borrower or any Subsidiary, including without limitation
activating a dormant insurance Borrower for the purpose of providing credit
insurance, automobile warranty programs and other programs or services related
or incidental to the Borrower's automobile finance programs.
(j) NEGATIVE PLEDGE LIMITATION. Enter into
any agreement, with any person, other than the Lenders pursuant hereto and in
connection with the Private Placement Debt, which prohibits or limits the
ability of the Borrower or any Subsidiary to create, incur, assume or suffer to
exist any Lien upon any of its assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, whether now owned or hereafter
acquired.
(k) USE OF PROCEEDS. Use the proceeds of the
Loans for any purpose other than for its general corporate purposes.
(l) SUBORDINATED INDEBTEDNESS. Issue any
Subordinated Indebtedness unless the first principal payment or other required
payment or prepayment of principal with respect to such Subordinated
Indebtedness is scheduled to occur after April __, 2000.
(m) SUBSIDIARY GUARANTIES. Permit any
Subsidiary to become obligated under any guaranty of the Borrower's obligations
under the Private Placement Debt unless such Subsidiary has guaranteed or
concurrently guarantees the Borrower's obligations under the Loan Documents on
the same terms.
(n) LIMITATION ON SUBSIDIARY INDEBTEDNESS.
Permit the aggregate Indebtedness of all Subsidiaries to exceed at any time 5%
of Consolidated Total Assets of the Borrower and its Subsidiaries.
(o) PAYMENTS AND MODIFICATIONS OF DEBT. Make,
or permit any Subsidiary to make, any optional payment, defeasance (whether a
covenant defeasance, legal defeasance or other defeasance), prepayment or
redemption of any of its or any of its Subsidiaries' Private Placement Debt or
other Indebtedness or amend or modify, or consent or agree to any amendment or
modification of, any instrument or agreement under which any of its Private
Placement Debt is issued or created or otherwise related thereto, or enter into
any agreement or arrangement providing for any defeasance of any kind of any of
its Private Placement Debt.
(p) RECEIVABLES PROGRAM. Enter into, or
permit its Subsidiaries to enter into, any transaction (such transaction being
referred to herein as a "Receivables Program") involving (i) the sale or other
financing by the Borrower or any of its Subsidiaries of installment notes
receivable or other evidences of indebtedness arising in the ordinary course of
business of the Borrower or any of its Subsidiaries or (ii) the incurrence by
the Borrower or any of its Subsidiaries of Non-Recourse Indebtedness secured by
Liens on installment notes receivable or other evidences of indebtedness arising
in the ordinary course of business of the Borrower or any of its Subsidiaries
(in each case, whether or not such installment notes receivable or evidences of
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indebtedness is required to be included on the balance sheet of the Borrower or
such Subsidiary in accordance with GAAP); provided that in any twelve month
period, the Borrower and its Subsidiaries may enter into Receivables Programs if
the aggregate of net book value of all installment notes receivable and other
evidences of indebtedness to be sold or financed in connection with all
Receivables Programs in such twelve month period does not exceed 10% of
Consolidated Total Capitalization as of the last day of the Borrower's most
recently ended fiscal year. "Non-Recourse Indebtedness" means, as applied to any
Receivables Program, Indebtedness under the terms of which no personal recourse
may be had against the Borrower or any of its Subsidiaries for the payment of
the principal of or interest or premium of such Indebtedness solely as a result
of a default by one or more account debtors in the payment of any accounts
receivable included in such Receivables Program.
(q) TRANSACTIONS WITH AFFILIATES. Enter into,
or permit any Subsidiary to enter into, or remain a party to, directly or
indirectly, any transaction (including without limitation the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service),
whether or not in the ordinary course of business with any Affiliate of the
Borrower or any of its Subsidiaries, except pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
be obtained in a comparable arm's-length transaction with a Person not an
Affiliate.
5.3 ADDITIONAL COVENANTS. If at any time the Borrower shall
enter into or be a party to any instrument or agreement, including all such
instruments or agreements in existence as of the date hereof and all such
instruments or agreements entered into after the date hereof, relating to or
amending any terms or conditions applicable to any of its Indebtedness which
includes covenants, terms, conditions or defaults not substantially provided for
in this Agreement or more favorable to the lender or lenders thereunder than
those provided for in this Agreement, then the Borrower shall promptly so advise
the Administrative Agent and the Lenders. Thereupon, if the Administrative
Agents shall request, upon notice to the Borrower, the Administrative Agent and
the Lenders shall enter into an amendment to this Agreement or an additional
agreement (as the Administrative Agent may request), providing for substantially
the same covenants, terms, conditions and defaults as those provided for in such
instrument or agreement to the extent required and as may be selected by the
Administrative Agent. In addition to the foregoing, any covenants, terms,
conditions or defaults in the Private Placement Debt Documents not substantially
provided for in this Agreement or more favorable to the holders of the Private
Placement Debt issued in connection therewith are hereby incorporated by
reference into this Agreement to the same extent as if set forth fully herein,
and no subsequent amendment, waiver or modification thereof shall effect any
such covenants, terms, conditions or defaults as incorporated herein.
ARTICLE VI.
DEFAULT
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6.1 EVENTS OF DEFAULT. The occurrence of any one of the
following events or conditions shall be deemed an "Event of Default" hereunder
unless waived by the Required Lenders pursuant to Section 8.1:
(a) NONPAYMENT. The Borrower shall fail to
pay when due any principal of the Notes or any reimbursement obligation under
Section 3.3 (whether by deemed disbursement of a Revolving Credit Loan or
otherwise) or the Borrower shall fail to pay any interest on any of the Notes or
any fees or any other amount payable hereunder, which failure, with respect to
interest, fees or any other amount (other than principal or any reimbursement
obligation) continues for a period of five days; or
(b) MISREPRESENTATION. Any representation or
warranty made by the Borrower or any Guarantor in Article IV hereof or in any
Guaranty or any other certificate, report, financial statement or other document
furnished by or on behalf of the Borrower or any Guarantor in connection with
this Agreement, shall prove to have been incorrect in any material respect when
made or deemed made; or
(c) CERTAIN COVENANTS. The Borrower shall fail
to perform or observe any term, covenant or agreement contained in Article V
hereof; or
(d) OTHER DEFAULTS. The Borrower or any
Guarantor shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement or in any Guaranty, and any such failure shall
remain unremedied for 30 calendar days after notice thereof shall have been
given to the Borrower or such Guarantor, as the case may be, by the
Administrative Agent (or such shorter period of time as may be specified in the
relevant Guaranty); or
(e) CROSS DEFAULT. The Borrower or any of its
Subsidiaries shall fail to pay any part of the principal of, the premium, if
any, or the interest on, or any other payment of money due under any of its
Indebtedness (other than Indebtedness hereunder), beyond any period of grace
provided with respect thereto, which individually or together with other such
Indebtedness as to which any such failure exists has an aggregate outstanding
principal amount in excess of $500,000 (provided that such minimum amount
requirement shall not apply to Indebtedness owing to the Lenders); or if the
Borrower or any of its Subsidiaries fails to perform or observe any other term,
covenant or agreement contained in any agreement, document or instrument
evidencing or securing any such Indebtedness having such aggregate outstanding
principal amount (if applicable), or under which any such Indebtedness was
issued or created, beyond any period of grace, if any, provided with respect
thereto if the effect of such failure is either (i) to cause, or permit the
holders of such Indebtedness (or a trustee on behalf of such holders) to cause,
any payment in respect of such Indebtedness to become due prior to its due date
or (ii) to permit the holders of such Indebtedness (or a trustee on behalf of
such holders) to
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elect a majority of the board of directors of the Borrower; or
(f) JUDGMENTS. One or more judgments or orders
for the payment of money in an aggregate amount of $1,000,000 or more (which
$1,000,000 amount may not be deemed a material amount) shall be rendered against
the Borrower or any of its Subsidiaries, or any other judgment or order (whether
or not for the payment of money) shall be rendered against or shall affect the
Borrower or any of its Subsidiaries which causes or could cause a material
adverse change in the business, properties, operations or condition, financial
or otherwise, of the Borrower or any of its Subsidiaries or which does or could
have a material adverse effect on the legality, validity or enforceability of
this Agreement, the Notes or any Guaranty, and either (i) such judgment or order
shall have remained unsatisfied and the Borrower or such Subsidiary shall not
have taken action necessary to stay enforcement thereof by reason of pending
appeal or otherwise, prior to the expiration of the applicable period of
limitations for taking such action or, if such action shall have been taken, a
final order denying such stay shall have been rendered, or (ii) enforcement
proceedings shall have been commenced by any creditor upon any such judgment or
order; or
(g) ERISA. The occurrence of a Reportable
Event that results in or could result in liability of the Borrower or any
Subsidiary of the Borrower or their ERISA Affiliates to the PBGC or to any Plan
and such Reportable Event is not corrected within thirty (30) days after the
occurrence thereof; or the occurrence of any Reportable Event which could
constitute grounds for termination of any Plan of the Borrower, its Subsidiaries
or their ERISA Affiliates by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer any such Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or the filing by the Borrower, any Subsidiary of the Borrower or any of
their ERISA Affiliates of a notice of intent to terminate a Plan or the
institution of other proceedings to terminate a Plan; or the Borrower, any
Subsidiary of the Borrower or any of their ERISA Affiliates shall fail to pay
when due any liability to the PBGC or to a Plan; or the PBGC shall have
instituted proceedings to terminate, or to cause a trustee to be appointed to
administer, any Plan of the Borrower, its Subsidiaries or their ERISA
Affiliates; or any person engages in a Prohibited Transaction with respect to
any Plan which results in or could result in liability of the Borrower, its
Subsidiary of the Borrower or any of their ERISA Affiliates, any Plan of the
Borrower, its Subsidiaries or their ERISA Affiliates or fiduciary of any such
Plan; or failure by the Borrower, any Subsidiary of the Borrower or any of their
ERISA Affiliates to make a required installment or other payment to any Plan
within the meaning of Section 302(f) of ERISA or Section 412(n) of the Code that
results in or could result in liability of the Borrower, its Subsidiary or any
of their ERISA Affiliates to the PBGC or any Plan; or the withdrawal of the
Borrower, any of its Subsidiaries or any of their ERISA Affiliates from a Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(9a)(2) of ERISA; or the Borrower, any of its Subsidiaries or any of
their ERISA Affiliates becomes an employer with respect to any Multiemployer
Plan without the prior written consent of the Required Lenders; or
(h) INSOLVENCY, ETC. The Borrower or any of
its Subsidiaries shall be
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dissolved or liquidated (or any judgment, order or decree therefor shall be
entered), or shall generally not pay its debts as they become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors, or shall institute, or there
shall be instituted against the Borrower or any of its Subsidiaries, any
proceeding or case seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief or protection of debtors or seeking the
entry of an order for relief, or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
assets, rights, revenues or property, and, if such proceeding is instituted
against the Borrower or such Subsidiary and is being contested by the Borrower
or such Subsidiary, as the case may be, in good faith by appropriate
proceedings, such proceeding shall remain undismissed or unstayed for a period
of 60 days; or the Borrower or such Subsidiary shall take any action (corporate
or other) to authorize or further any of the actions described above in this
subsection; or
(i) SECURITY DOCUMENTS. Any event of default
described in any Guaranty shall have occurred and be continuing, or any material
provision of any Guaranty shall at any time for any reason cease to be valid,
binding and enforceable against any obligor thereunder, or the validity, binding
effect or enforceability thereof shall be contested by any person, or any
obligor, shall deny that it has any or further liability or obligation
thereunder, or any Guaranty shall be terminated, invalidated or set aside, or be
declared ineffective or inoperative or in any way cease to give or provide to
the Lenders and the Administrative Agent the benefits purported to be created
thereby; or
(j) CHANGE OF CONTROL. The Borrower shall
experience a Change of Control. For purposes of this Section 6.1(k), a "Change
of Control" shall occur if during any twelve-month period any person or group of
persons (within the meaning of Section 13 or 14 of the Securities Exchange Act
of 1934, as amended) shall have acquired beneficial ownership (within the
meaning of Rule 13D-3 promulgated by the Securities and Exchange Commission
under said Act) of 35% or more in voting power of the voting shares of the
Borrower.
6.2 REMEDIES. (a) Upon the occurrence and during the
continuance of any Event of Default, the Administrative Agent, upon being
directed to do so by the Required Lenders, shall by notice to the Borrower (i)
terminate the Commitments or (ii) declare the outstanding principal of, and
accrued interest on, the Notes and all other amounts owing under this Agreement
to be immediately due and payable, or (iii) demand immediate delivery of cash
collateral, and the Borrower agrees to deliver such cash collateral upon demand,
in an amount equal to the maximum amount that may be available to be drawn at
any time prior to the stated expiry date of all outstanding Letters of Credit,
or any one or more of the foregoing, whereupon the Commitments shall terminate
forthwith and all such amounts shall become immediately due and payable,
PROVIDED that in the case of any event or condition described in Section 6.1(h)
with respect to the Borrower or any Subsidiary, the Commitments shall
automatically terminate forthwith and all such amounts shall automatically
become immediately due and payable without
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notice; in all cases without demand, presentment, protest, diligence, notice of
dishonor or other formality, all of which are hereby expressly waived. Such cash
collateral delivered in respect of outstanding Letters of Credit shall be
deposited in a special cash collateral account to be held the Administrative
Agent as collateral security for the payment and performance of the Borrower's
obligations under this Agreement to the Lenders and the Administrative Agent.
(b) The Administrative Agent, upon being
directed to do so by the Required Lenders, shall, in addition to the remedies
provided in Section 6.2(a), exercise and enforce any and all other rights and
remedies available to it or the Lenders, whether arising under this Agreement,
any Note or any Guaranty or under applicable law, in any manner deemed
appropriate by the Administrative Agent, with consent of the Required Lenders,
including suit in equity, action at law, or other appropriate proceedings,
whether for the specific performance (to the extent permitted by law) of any
covenant or agreement contained in this Agreement or in any Note or Guaranty, or
in aid of the exercise of any power granted in this Agreement, any Note or any
Guaranty.
(c) Upon the occurrence and during the
continuance of any Event of Default, each Lender may at any time and from time
to time, without notice to the Borrower (any requirement for such notice being
expressly waived by the Borrower) set off and apply against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement,
whether owing to such Lender or any other Lender or the Administrative Agent,
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower and any property of the Borrower
from time to time in possession of such Lender, irrespective of whether or not
such Lender shall have made any demand hereunder and although such obligations
may be contingent and unmatured. The Borrower hereby grants to the Lenders and
the Administrative Agent a lien on and security interest in all such deposits,
indebtedness and property as collateral security for the payment and performance
of the obligations of the Borrower under this Agreement. The rights of such
Lender under this Section 6.2(c) are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which such Lender may
have.
ARTICLE VII.
THE AGENT AND THE BANKS
-----------------------
7.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement and the
Notes and the Guaranties as are delegated to the Administrative Agent by the
terms hereof or thereof, together with all such powers as are reasonably
incidental thereto. The provisions of this Article VII are solely for the
benefit of the
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Administrative Agent and the Lenders, and the Borrower shall not have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement, the Administrative Agent shall act
solely as agent of the Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for the Borrower.
7.2 ADMINISTRATIVE AGENT AND AFFILIATES. First Chicago in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise or refrain from exercising the same as
though it were not the Administrative Agent. First Chicago and its affiliates
may (without having to account therefor to any Lender) accept deposits from,
lend money to, and generally engage in any kind of banking, trust, financial
advisory or other business with the Borrower or any Subsidiary of the Borrower
as if it were not acting as Administrative Agent hereunder, and may accept fees
and other consideration therefor without having to account for the same to the
Lenders.
7.3 SCOPE OF ADMINISTRATIVE AGENT'S AND DOCUMENTATION AGENT'S
DUTIES. Neither the Administrative Agent nor the Documentation Agent shall have
any duties or responsibilities except those expressly set forth herein, and
neither the Administrative Agent nor the Documentation Agent shall, by reason of
this Agreement, have a fiduciary relationship with any Lender, and no implied
covenants, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or shall otherwise exist against the Administrative Agent or
the Documentation Agent. As to any matters not expressly provided for by this
Agreement (including, without limitation, collection and enforcement actions
under the Notes and the Guaranty), neither the Administrative Agent nor the
Documentation Agent shall be required to exercise any discretion or take any
action, but the Administrative Agent and the Documentation Agent, as the case
may be, shall take such action or omit to take any action pursuant to the
reasonable written instructions of the Required Lenders and may request
instructions from the Required Lenders. The Administrative Agent and the
Documentation Agent shall in all cases be fully protected in acting, or in
refraining from acting, pursuant to the written instructions of the Required
Lenders, which instructions and any action or omission pursuant thereto shall be
binding upon all of the Lenders; PROVIDED, HOWEVER, that neither the
Administrative Agent nor the Documentation Agent shall not be required to act or
omit to act if, in the judgment of the Administrative Agent or the Documentation
Agent, as the case may be, such action or omission may expose the Administrative
Agent or the Documentation Agent to personal liability or is contrary to this
Agreement, the Notes, any Guaranty, or applicable law.
7.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely upon any certificate, notice, document or other
communication (including any cable, telegram, telex, facsimile transmission or
oral communication) believed by it to be genuine and correct and to have been
sent or given by or on behalf of a proper person. The Administrative Agent may
treat the payee of any Note as the holder thereof unless and until the
Administrative Agent receives written notice of the assignment thereof pursuant
to the terms of this Agreement signed by such payee, and the Administrative
Agent receives the written agreement of the
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assignee that such assignee is bound hereby to the same extent as if it had been
an original party hereto. The Administrative Agent may employ agents (including
without limitation collateral agents) and may consult with legal counsel (who
may be counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable to the Lenders, except as to
money or property received by it or its authorized agents, for the negligence or
misconduct of any such agent selected by it with reasonable care or for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
7.5 DEFAULT. The Administrative Agent shall not be deemed to
have knowledge of the occurrence of any Default or Event of Default, unless the
Administrative Agent has received written notice from a Lender or the Borrower
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give written notice thereof to the
Lenders.
7.6 LIABILITY OF ADMINISTRATIVE AGENT AND DOCUMENTATION AGENT.
Neither the Administrative Agent, the Documentation Agent nor any of their
respective directors, officers, agents, or employees shall be liable to the
Lenders for any action taken or not taken by it or them in connection herewith
with the consent or at the request of the Required Lenders or in the absence of
its or their own gross negligence or willful misconduct. Neither the
Administrative Agent, the Documentation Agent nor any of their respective
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any recital, statement, warranty
or representation contained in this Agreement, any Note or any Guaranty, or in
any certificate, report, financial statement or other document furnished in
connection with this Agreement, (ii) the performance or observance of any of the
covenants or agreements of the Borrower or any Guarantor, (iii) the satisfaction
of any condition specified in Article II hereof, or (iv) the validity,
effectiveness, legal enforceability, value or genuineness of this Agreement, any
Note, any Guaranty, or any collateral subject thereto, or any other instrument
or document furnished in connection herewith.
7.7 NONRELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS. Each
Lender acknowledges and agrees that it has, independently and without reliance
on the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decision in taking or not
taking action under this Agreement. The Administrative Agent shall not be
required to keep itself informed as to the performance or observance by the
Borrower or any Guarantor of this Agreement, the Notes, any Guaranty, or any
other documents referred to or provided for herein, or to inspect the properties
or books of the Borrower or any Guarantor and, except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any
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Lender with any information concerning the affairs, financial condition or
business of the Borrower or any of its Subsidiaries which may come into the
possession of the Administrative Agent or any of its affiliates.
7.8 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower, but without
limiting any obligation of the Borrower to make such reimbursement), ratably
according to the respective principal amounts of the Loans then outstanding made
by each of them (or if no Loans are at the time outstanding, ratably according
to the respective amounts of their Commitments), from and against any and all
claims, damages, losses, liabilities, costs or expenses of any kind or nature
whatsoever (including, without limitation, fees and disbursements of counsel)
which may be imposed on, incurred by, or asserted against the Administrative
Agent in any way relating to or arising out of this Agreement or the
transactions contemplated hereby or any action taken or omitted by the
Administrative Agent under this Agreement, PROVIDED, HOWEVER, that no Lender
shall be liable for any portion of such claims, damages, losses, liabilities,
costs or expenses resulting from the Administrative Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Administrative Agent promptly upon demand for its ratable share of
any out-of-pocket expenses (including without limitation fees and expenses of
counsel) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that the Administrative Agent is not reimbursed for such expenses
by the Borrower, but without limiting the obligation of the Borrower to make
such reimbursement. Each Lender agrees to reimburse the Administrative Agent
promptly upon demand for its ratable share of any amounts owing to the
Administrative Agent by the Lenders pursuant to this Section. If the indemnity
furnished to the Administrative Agent under this Section shall, in the judgment
of the Administrative Agent, be insufficient or become impaired, the
Administrative Agent may call for additional indemnity from the Lenders and
cease, or not commence, to take any action until such additional indemnity is
furnished.
7.9 RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative
Agent may resign as such at any time upon thirty days' prior written notice to
the Borrower and the Lenders. In the event of any such resignation, the Required
Lenders shall, by an instrument in writing delivered to the Borrower and the
Administrative Agent, appoint a successor, which shall be a commercial bank
organized under the laws of the United States or any State thereof and having a
combined capital and surplus of at least $500,000,000. If a successor is not so
appointed or does not accept such appointment before the Administrative Agent's
resignation becomes effective, the resigning Administrative Agent may appoint a
temporary successor to act until such appointment by the Required Lenders is
made and accepted or if no such temporary successor is appointed as provided
above by the resigning Administrative Agent, the Required Lenders shall
thereafter perform all the duties of the Administrative Agent hereunder until
such appointment by the Required Lenders is made and accepted. Any successor to
the Administrative Agent shall execute and deliver to the Borrower and the
Lenders an instrument accepting such appointment and
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thereupon such successor Administrative Agent, without further act, deed,
conveyance or transfer shall become vested with all of the properties, rights,
interests, powers, authorities and obligations of its predecessor hereunder with
like effect as if originally named as Administrative Agent hereunder. Upon
request of such successor Administrative Agent, the Borrower and the resigning
Administrative Agent shall execute and deliver such instruments of conveyance,
assignment and further assurance and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in such successor
Administrative Agent all such properties, rights, interests, powers, authorities
and obligations. The provisions of this Article VII shall thereafter remain
effective for such resigning Administrative Agent with respect to any actions
taken or omitted to be taken by such Administrative Agent while acting as the
Administrative Agent hereunder.
7.10 SHARING OF PAYMENTS. The Lenders agree among themselves
that, in the event that any Lender shall obtain payment in respect of any Loan
or any other obligation owing to the Lenders under this Agreement through the
exercise of a right of set-off, banker's lien, counterclaim or otherwise in
excess of its ratable share of payments received by all of the Lenders on
account of the Loans and other obligations (or if no Loans are outstanding,
ratably according to the respective amounts of the Commitments), such Lender
shall promptly purchase from the other Lenders participations in such Loans and
other obligations in such amounts, and make such other adjustments from time to
time, as shall be equitable to the end that all of the Lenders share such
payment in accordance with such ratable shares. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of set-off, banker's lien, counterclaim or otherwise as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of
participations theretofore sold, return its share of that benefit to each Lender
whose payment shall have been rescinded or otherwise restored. The Borrower
agrees that any Lender so purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of payment, including set-off,
banker's lien or counterclaim, with respect to such participation as fully as if
such Lender were a holder of such Loan or other obligation in the amount of such
participation. The Lenders further agree among themselves that, in the event
that amounts received by the Lenders and the Administrative Agent hereunder are
insufficient to pay all such obligations or insufficient to pay all such
obligations when due, the fees and other amounts owing to the Administrative
Agent in such capacity shall be paid therefrom before payment of obligations
owing to the Lenders under this Agreement. Except as otherwise expressly
provided in this Agreement, if any Lender or the Administrative Agent shall fail
to remit to the Administrative Agent or any other Lender an amount payable by
such Lender or the Administrative Agent to the Administrative Agent or such
other Lender pursuant to this Agreement on the date when such amount is due,
such payments shall be made together with interest thereon for each date from
the date such amount is due until the date such amount is paid to the
Administrative Agent or such other Lender at a rate per annum equal to the rate
at which borrowings are available to the payee in its overnight federal funds
market. It is further understood and agreed among the Lenders and the
Administrative Agent that if any Lender shall engage in any other transactions
with the Borrower and shall have the benefit of any collateral or
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security therefor which does not expressly secure the obligations arising under
this Agreement except by virtue of a so-called dragnet clause or comparable
provision, such Lender shall be entitled to apply any proceeds of such
collateral or security first in respect of the obligations arising in connection
with such other transaction before application to the obligations arising under
this Agreement.
7.11 DOCUMENTATION AGENT. Morgan Guaranty Trust Company of New
York has been designated by the Borrower as "Documentation Agent" under this
Agreement. Other than its rights and remedies as a Lender hereunder, the
Documentation Agent shall have no administrative or other rights or
responsibilities.
ARTICLE VIII.
MISCELLANEOUS
-------------
8.1 AMENDMENTS, ETC. (a) No amendment, modification,
termination or waiver of any provision of this Agreement nor any consent to any
departure therefrom shall be effective unless the same shall be in writing and
signed by the Required Lenders and the Borrower, and, to the extent any rights
or duties of the Administrative Agent may be affected thereby, the
Administrative Agent, PROVIDED, HOWEVER, that no such amendment, modification,
termination, waiver or consent shall, without the consent of the Administrative
Agent and all of the Lenders, (i) authorize or permit the extension of time for,
or any reduction of the amount of, any payment of the principal of, or interest
on, the Notes, or any fees or other amount payable hereunder, (ii) amend or
terminate the respective Commitments of any Lender set forth on the signature
pages hereof or modify the provisions of this Section regarding the taking of
any action under this Section, or the provisions of Section 7.10, or the
provisions of the first sentence of Section 8.6, or the definition of Required
Lenders, or (iii) provide for the release of any Guarantor.
(b) Any such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
8.2 NOTICES. (a) All notices and other communications hereunder
shall be in writing and shall be delivered or sent to the Borrower, the
Administrative Agent, and the Lenders at the respective addresses or numbers for
notices set forth on the signature pages hereof, or to such other address or
number as may be designated by the Borrower, the Administrative Agent, or any
Lender by notice to the other parties hereto. All notices and other
communications shall be deemed to have been given at the earlier of (i) the time
of actual delivery thereof to such address or number, or (ii) if sent by
certified or registered mail, postage prepaid, to such address, on the third day
after the date of mailing, if deposited prepaid with a nationally recognized
overnight delivery service guaranteeing next day delivery to such address, prior
to the deadline for next day
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delivery, on the Business Day next following such deposit, or (iii) if sent by
facsimile transmission, upon confirmation of receipt by telephone at the number
specified for confirmation, PROVIDED, HOWEVER, that notices to the
Administrative Agent shall not be effective until received.
(b) Notices by the Borrower to the
Administrative Agent with respect to terminations or reductions of the
Commitments pursuant to Section 2.3(a), requests for Advances pursuant to
Section 2.5, requests for continuations or conversions of Loans pursuant to
Section 2.8 and notices of prepayment pursuant to Section 3.1 shall be
irrevocable and binding on the Borrower.
8.3 NO WAIVER BY CONDUCT; REMEDIES CUMULATIVE. No course of
dealing on the part of the Administrative Agent or any Lender, nor any delay or
failure on the part of the Administrative Agent or any Lender in exercising any
right, power or privilege hereunder shall operate as a waiver of such right,
power or privilege or otherwise prejudice the Administrative Agent's or such
Lender's rights and remedies hereunder; nor shall any single or partial exercise
thereof preclude any further exercise thereof or the exercise of any other
right, power or privilege. No right or remedy conferred upon or reserved to the
Administrative Agent or any Lender under this Agreement, any of the Notes, or
any Guaranty is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy granted thereunder or now or hereafter existing under any applicable law.
Every right and remedy granted by this Agreement, any of the Notes, any
Guaranty, or by applicable law to the Administrative Agent or any Lender may be
exercised from time to time and as often as may be deemed expedient by the
Administrative Agent or any Lender and, unless contrary to the express
provisions of this Agreement, the Notes, or any Guaranty, irrespective of the
occurrence or continuance of any Default or Event of Default.
8.4 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of the Borrower or any
Guarantor made herein or in any Guaranty or in any certificate, report,
financial statement or other document furnished by or on behalf of the Borrower
or any Guarantor in connection with this Agreement or any Guaranty shall be
deemed to be material and to have been relied upon by the Lenders,
notwithstanding any investigation heretofore or hereafter made by any Lender or
on such Lender's behalf, and those covenants and agreements of the Borrower set
forth in Section 3.7, 3.9 and 8.5 hereof shall survive the repayment in full of
the Loans and the termination of the Commitments.
8.5 EXPENSES. (a) The Borrower agrees to pay, or reimburse the
Administrative Agent for the payment of, on demand, (i) the reasonable fees and
expenses of counsel to the Administrative Agent, including without limitation
the fees and expenses of Dickinson, Wright, Moon, Van Dusen & Freeman, in
connection with the preparation, execution, delivery and administration of this
Agreement, the Notes, the Guaranties, and the consummation of the transactions
contemplated hereby, and in connection with advising the Administrative Agent as
to its rights and responsibilities with respect thereto, and in connection with
any amendments, waivers or consents in connection therewith, and (ii) all stamp
and other taxes and
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fees payable or determined to be payable in connection with the execution,
delivery, filing or recording of this Agreement, the Notes, the Guaranties and
the consummation of the transactions contemplated hereby, and any and all
liabilities with respect to or resulting from any delay in paying or omitting to
pay such taxes or fees, and (iii) all reasonable costs and expenses of the
Administrative Agent and the Lenders (including reasonable fees and expenses of
counsel and whether incurred through negotiations, legal proceedings or
otherwise) in connection with any Default or Event of Default or the enforcement
of, or the exercise or preservation of any rights under, this Agreement or the
Notes or any Guaranty, or in connection with any refinancing or restructuring of
the credit arrangements provided under this Agreement.
(b) The Borrower hereby indemnifies and agrees
to hold harmless the Lenders and the Administrative Agent, and its officers,
directors, employees and agents, harmless from and against any and all claims,
damages, losses, liabilities, costs or expenses of any kind or nature whatsoever
which the Lenders or the Administrative Agent or any such person may incur or
which may be claimed against any of them by reason of or in connection with any
Letter of Credit, and neither any Lender nor the Administrative Agent or any of
its officers, directors, employees or agents shall be liable or responsible for:
(i) the use which may be made of any Letter of Credit or for any acts or
omissions of any beneficiary in connection therewith; (ii) the validity,
sufficiency or genuineness of documents or of any endorsement thereon, even if
such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (iii) payment by the Administrative Agent to
the beneficiary under any Letter of Credit against presentation of documents
which do not comply with the terms of any Letter of Credit, including failure of
any documents to bear any reference or adequate reference to such Letter of
Credit; (iv) any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit; or (v) any other event or circumstance
whatsoever arising in connection with any Letter of Credit; PROVIDED, HOWEVER,
that the Borrower shall not be required to indemnify the Lenders and the
Administrative Agent and such other persons, and the Lenders shall be liable to
the Borrower to the extent, but only to the extent, of any direct, as opposed to
consequential or incidental, damages suffered by the Borrower which were caused
by (A) the Administrative Agent's wrongful dishonor of any Letter of Credit
after the presentation to it by the beneficiary thereunder of a draft or other
demand for payment and other documentation strictly complying with the terms and
conditions of such Letter of Credit, or (B) the payment by the Administrative
Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of the Letter of Credit to the
extent, but only to the extent, that such payment constitutes gross negligence
of willful misconduct of the Administrative Agent. It is understood that in
making any payment under a Letter of Credit the Administrative Agent will rely
on documents presented to it under such Letter of Credit as to any and all
matters set forth therein without further investigation and regardless of any
notice or information to the contrary, and such reliance and payment against
documents presented under a Letter of Credit substantially complying with the
terms thereof shall not be deemed gross negligence or willful misconduct of the
Administrative Agent in connection with such payment. It is further acknowledged
and agreed that the Borrower may have rights against the beneficiary or others
in connection with any Letter of Credit with respect to which the
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Lenders are alleged to be liable and it shall be a precondition of the
assertion of any liability of the Lenders under this Section that the Borrower
shall first have exhausted all remedies in respect of the alleged loss against
such beneficiary and any other parties obligated or liable in connection with
such Letter of Credit and any related transactions.
(c) The Borrower hereby indemnifies and agrees
to hold harmless the Lenders and the Administrative Agent, and its officers,
directors, employees and agents, from and against any and all claims, damages,
losses, liabilities, costs or expenses of any kind or nature whatsoever
(including reasonable attorneys fees and disbursements incurred in connection
with any investigative, administrative or judicial proceeding whether or not
such person shall be designated as a party thereto) which the Lenders or the
Administrative Agent or any such person may incur or which may be claimed
against any of them by reason of or in connection with entering into this
Agreement or the transactions contemplated hereby, including without limitation
those arising under Environmental Laws; PROVIDED, HOWEVER, that no Borrower
shall be required to indemnify any such Lender and the Administrative Agent or
such other person, to the extent, but only to the extent, that such claim,
damage, loss, liability, cost or expense is attributable to the gross negligence
or willful misconduct of such Lender or the Administrative Agent, as the case
may be.
(d) In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Administrative Agent,
each Lender and each of its officers, directors, employees and agents
(collectively, the "INDEMNIFIED PARTIES") free and harmless from and against any
and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith, including reasonable
attorneys' fees and disbursements (collectively, the "INDEMNIFIED LIABILITIES"),
incurred by the Indemnified Parties or any of them as a result of, or arising
out of, or relating to:
(i) any transaction financed or to
be financed in whole or in part, directly or indirectly, with the proceeds of
any Loan;
(ii) the entering into and
performance of this Agreement and any other agreement or instrument executed in
connection herewith by any of the Indemnified Parties (including any action
brought by or on behalf of the Borrower as the result of any determination by
the Required Lenders not to fund any Loan);
(iii) any investigation, litigation
or proceeding related to any acquisition or proposed acquisition by the Borrower
or any of its Subsidiaries of any portion of the stock or assets of any person;
(iv) any investigation, litigation
or proceeding related to any environmental cleanup, audit, compliance or other
matter relating to the protection of the environment or the release by the
Borrower or any of its Subsidiaries of any Hazardous Material;
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or
(v) the presence on or under,
or the escape, seepage, leakage, spillage, discharge, emission, discharging or
releasing from, any real property owned or operated by the Borrower, or any of
its Subsidiaries of any Hazardous Material (including any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the control of,
the Borrower or such Subsidiary, except for any such Indemnified Liabilities
arising for the account of a particular Indemnified Party by reason of the
activities of the Indemnified Party on the property of the Borrower conducted
subsequent to a foreclosure on such property by the Lenders or by reason of the
relevant Indemnified Party's gross negligence or willful misconduct or breach of
this Agreement, and if and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Borrower shall be
obligated to indemnify the Indemnified Parties for all Indemnified Liabilities
subject to and pursuant to the foregoing provisions, regardless of whether the
Borrower or any of its Subsidiaries had knowledge of the facts and circumstances
giving rise to such Indemnified Liability.
8.6 SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding
upon and inure to the benefit of the parties hereto and its successors and
assigns, PROVIDED neither the Borrower nor any Guarantor may, without the prior
consent of the Lenders, assign its rights or obligations hereunder, under the
Notes or under any Guaranty and the Lenders shall not be obligated to make any
Loan hereunder to any entity other than the Borrower.
(b) Any Lender may sell to any financial
institution or institutions, and such financial institution or institutions may
further sell, a participation interest (undivided or divided) in, the Loans and
such Lender's rights and benefits under this Agreement, the Notes and the
Guaranties, and to the extent of that participation interest such participant or
participants shall have the same rights and benefits against the Borrower under
Section 3.7, 3.9 and 6.2(c) as it or they would have had if such participant or
participants were the Lender making the Loans to the Borrower hereunder,
PROVIDED, HOWEVER, that (i) such Lender's obligations under this Agreement shall
remain unmodified and fully effective and enforceable against such Lender, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
its Notes for all purposes of this Agreement, (iv) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and (v) such Lender shall not grant to its
participant any rights to consent or withhold consent to any action taken by
such Lender or the Administrative Agent under this Agreement other than action
requiring the consent of all of the Lenders hereunder.
(c) The Administrative Agent from time to
time in its sole discretion may appoint agents for the purpose of servicing and
administering this Agreement and the
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transactions contemplated hereby and enforcing or exercising any rights or
remedies of the Administrative Agent provided under this Agreement, the Notes,
any Guaranty or otherwise. In furtherance of such agency, the Administrative
Agent may from time to time direct that the Borrower and the Guarantors provide
notices, reports and other documents contemplated by this Agreement (or
duplicates thereof) to such agent. The Borrower hereby consents to the
appointment of such agent and agrees to provide all such notices, reports and
other documents and to otherwise deal with such agent acting on behalf of the
Administrative Agent in the same manner as would be required if dealing with the
Administrative Agent itself.
(d) Each Lender may, with the prior consent of
the Borrower (which consent shall not be unreasonably withheld and may not be
withheld if any Event of Default or Default has occurred and is continuing) and
the prior written consent of the Administrative Agent (which consent shall not
be unreasonably withheld), assign to one or more banks or other entities all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Loans owing to it and the
Note held by it); PROVIDED, HOWEVER, that (i) each such assignment shall be of a
uniform, and not a varying, percentage of all rights and obligations, (ii)
except in the case of an assignment of all of a Lender's rights and obligations
under this Agreement, (A) the amount of the Commitment of the assigning Lender
being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event
be less than $5,000,000, and in integral multiples of $5,000,000 thereafter, or
such lesser amount as the Borrower and the Administrative Agent may consent to
and (B) after giving effect to each such assignment, the amount of the
Commitment of the assigning Lender shall in no event be less than $5,000,000,
(iii) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance in the form of EXHIBIT J hereto (an "ASSIGNMENT AND
ACCEPTANCE"), together with any Note subject to such assignment and a processing
and recordation fee of $3,000, and (iv) any Lender may without the consent of
the Borrower or the Administrative Agent, and without paying any fee, assign to
any Affiliate of such Lender that is a bank or financial institution all of its
rights and obligations under this Agreement. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in such
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(e) By executing and delivering an
Assignment and Acceptance, the Lender assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no
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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 or
any other instrument or document furnished pursuant hereto; (ii) such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of their obligations under this Agreement or
any other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.6 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Administrative Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement as are delegated
to the Administrative Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vi) such assignee agrees
that it will perform in accordance with their terms all of the obligations that
by the terms of this Agreement are required to be performed by it as a Lender.
(f) The Administrative Agent shall maintain
at its address designated on the signature pages hereof a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the Commitment of, and
principal amount of the Advances owing to, each Lender from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Administrative Agent and
the Lenders may treat each person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(g) Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee, together with any
Note subject to such assignment, the Administrative Agent shall, if such
Assignment and Acceptance has been completed, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at their own expense, shall
execute and deliver to the Administrative Agent in exchange for the surrendered
Note a new Note to the order of such assignee in an amount equal to the
Commitment assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Commitment hereunder, a new Note to the order of
the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of EXHIBIT J hereto.
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(h) The Borrower shall not be liable for any
costs or expenses of any Lender in effectuating any participation or assignment
under this Section 8.6.
(i) The Lenders may, in connection with
any assignment, participation or addition or proposed assignment, participation
or addition pursuant to this Section 8.6, disclose to the assignee or
participant or proposed assignee or participant any information relating to the
Borrower.
(j) In addition, the Borrower and the
Administrative Agent may from time to time designate additional financial
institutions (the "Additional Lenders") to be parties to this Agreement and to
become a Lender hereunder upon the execution and delivery to the Administrative
Agent of an Assumption Agreement in the form of Exhibit K hereto (an "Assumption
Agreement"). Any Additional Lender shall become a party to this Agreement and be
considered a Lender hereunder for all purposes if (a) it shall execute and
deliver to the Administrative Agent an Assumption Agreement, (b) it shall make
Advances to the Borrower in the principal amount which bears the same ratio to
the amounts of the Advances of the other Lenders then outstanding as the
Commitment of such Additional Bank bears to the then Commitments of such other
Lenders, and (c) a copy of such Assumption Agreement and evidence satisfactory
to the Administrative Agent of the making of such Advances shall be furnished to
the Lenders. In connection with adding Additional Lenders, the aggregate Total
Commitments may be increased to an amount not to exceed $75,000,000 with the
consent of the Borrower and the Administrative Agent and without the consent of
any Lender.
(k) Notwithstanding any other provision set
forth in this Agreement, any Lender may at any time create a security interest
in, or assign, all or any portion of its rights under this Agreement (including,
without limitation, the Loans owing to it and the Note held by it) in favor of
any Federal Reserve Lender in accordance with Regulation A of the Board of
Governors of the Federal Reserve System; PROVIDED that such creation of a
security interest or assignment shall not release such Lender from its
obligations under this Agreement.
8.7 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.8 GOVERNING LAW. This Agreement is a contract made under, and
shall be governed by and construed in accordance with, the law of the State of
Illinois applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State. The
Borrower and each Lender further agrees that any legal action or proceeding with
respect to this Agreement, any of the Notes, or any Guaranty, or the
transactions contemplated hereby may be brought in any court of the State of
Illinois, or in any court of the United States of America sitting in Illinois,
and the Borrower and each Lender hereby submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect
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to its person and property, and irrevocably consents to the service of process
in connection with any such action or proceeding by personal delivery to the
Borrower or such Lender, as the case may be, or by the mailing thereof by
registered or certified mail, postage prepaid to the Borrower or such Lender, as
the case may be, at their address referred to in Section 8.2. Nothing in this
paragraph shall affect the right of the Lenders and the Administrative Agent to
serve process in any other manner permitted by law or limit the right of the
Lenders or the Administrative Agent to bring any such action or proceeding
against the Borrower or property in the courts of any other jurisdiction in
which property of the Borrower is located. The Borrower and each Lender hereby
irrevocably waives any objection to the laying of venue of any such suit or
proceeding in the above described courts located or sitting in Illinois.
8.9 TABLE OF CONTENTS AND HEADINGS. The table of contents and
the headings of the various subdivisions hereof are for the convenience of
reference only and shall in no way modify any of the terms or provisions hereof.
8.10 CONSTRUCTION OF CERTAIN PROVISIONS. If any provision of
this Agreement refers to any action to be taken by any person, or which such
person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such person, whether or not
expressly specified in such provision.
8.11 INTEGRATION AND SEVERABILITY. This Agreement embodies the
entire agreement and understanding between the Borrower and the Administrative
Agent and the Lenders, and supersedes all prior agreements and understandings,
relating to the subject matter hereof. In case any one or more of the
obligations of the Borrower under this Agreement, any of the Notes or any
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining obligations of the
Borrower shall not in any way be affected or impaired thereby, and such
invalidity, illegality or unenforceability in one jurisdiction shall not affect
the validity, legality or enforceability of the obligations of the Borrower
under this Agreement, any of the Notes or any Guaranty in any other
jurisdiction.
8.12 INDEPENDENCE OF COVENANTS. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by an
exception to, or would be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or such condition exists.
8.13 INTEREST RATE LIMITATION. Notwithstanding any provisions
of this Agreement, the Notes or any Guaranty, in no event shall the amount of
interest paid or agreed to be paid by the Borrower exceed an amount computed at
the highest rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Agreement, the
Notes or any Guaranty at the time performance of such provision shall be due,
shall involve exceeding the interest rate limitation validly prescribed by law
which a court of competent jurisdiction may deem applicable hereto, then, IPSO
FACTO, the obligations to be fulfilled
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shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever the Lender
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of the Loans outstanding hereunder (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the
Borrower if such principal and all other obligations of the Borrower to the
Lenders have been paid in full.
8.14 INDEBTEDNESS UNDER EXISTING CREDIT AGREEMENT. This
Agreement and the Loans made pursuant to Article II are in substitution for the
Existing Credit Agreement and the loans made under the Existing Credit
Agreement, and the Notes delivered to the Lenders hereunder are delivered in
exchange and in substitution for the notes issued pursuant to the Existing
Credit Agreement. The commitments under the Existing Credit Agreement are
superseded and replaced by the Commitments hereunder. The initials Loans
hereunder shall be used to pay all Indebtedness owing under the notes issued
pursuant to the Existing Credit Agreement.
8.15 WAIVER OF JURY TRIAL. The Lenders, the Administrative
Agent and the Borrower, after consulting or having had the opportunity to
consult with counsel, knowingly, voluntarily and intentionally waive any right
any of them may have to a trial by jury in any litigation based upon or arising
out of this Agreement or any related instrument or agreement or any of the
transactions contemplated by this Agreement or any course of conduct, dealing,
statements (whether oral or written) or actions of either of them. None of the
Lenders, the Administrative Agent or the Borrower shall seek to consolidate, by
counterclaim or otherwise, any such action in which a jury trial has been waived
with any other action in which a jury trial cannot be or has not been waived.
These provisions shall not be deemed to have been modified in any respect or
relinquished by any of the Lenders, the Administrative Agent or the Borrower
except by a written instrument executed by all of them.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered on the ___ day of April, 1997, which
shall be the Effective Date of this Agreement, notwithstanding the day and year
first above written.
Address for Notices: NATIONAL AUTO CREDIT, INC.
National Auto Credit By:
30000 Aurora Road ------------------------------
Solon, Ohio 44139 Its:
Attention: General Counsel ---------------------------
Telephone No. (216) 349-1000
Facsimile No. (216) 349-0442
Facsimile Confirmation
Number: (216) 349-1000 And:
-----------------------------
Its:
---------------------------
-67-
<PAGE> 145
THE FIRST NATIONAL BANK OF
CHICAGO, as Administrative Agent and as
a Lender
The First National Bank of Chicago By:
One First National Plaza, Suite 0084 -----------------------------------
Chicago, Illinois 60670 Its:
Attention: Craig Goldsmith -------------------------------
Telephone No.: (312) 732-2822
Facsimile No.: (312) 732-6222
Facsimile Confirmation
Number: (312) 732-2822
Commitment Amount:
$15,000,000
Percentage of Total Commitments: 25.641%
-68-
<PAGE> 146
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Documentation Agent and as a Lender
60 Wall Street By:
New York, New York 10260 --------------------------------
Attention: Seija Hurskainen Its:
Telephone No.: (212) ___-____ ----------------------------
Facsimile No.: (212) ____-____
Facsimile Confirmation
Number: (212) ___-______
Commitment Amount:
$13,500,000
Percentage of Total Commitments: 23.077%
-69-
<PAGE> 147
THE BANK OF NEW YORK
The Bank of New York By:
One Wall Street, 22nd Floor ----------------------------
New York, New York 10286 Its:
Attention: ------------------------
-----------------------
Telephone No.: (212) ___-____
Facsimile No.: (212) ___-____
Facsimile Confirmation
Number: (212) ___-____
Commitment Amount:
$12,000,000
Percentage of Total Commitments: 20.513%:
-70-
<PAGE> 148
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
One First Union Center By:
Charlotte, North Carolina 28207 ----------------------------
Attention: Mary J. Amatore Its:
Telephone No.: (704) 374-2641 ------------------------
Facsimile No.: (704) 374-2802
Facsimile Confirmation
Number: (704) 374-4426
Commitment Amount:
$12,000,000
Percentage of Total Commitments: 20.513%
-71-
<PAGE> 149
THE HUNTINGTON NATIONAL BANK
912 Euclid Avenue By:
Cleveland, Ohio ------------------------------
Attention: Christine Gencer Its:
Telephone No.: (216) 515-6090 ---------------------------
Facsimile No.: (216) 515-6082
Facsimile Confirmation
Number: (216) 515-6090
Commitment Amount:
$6,000,000
Percentage of Total Commitments: 10.256%
Total Commitments
$58,500,000
72
<PAGE> 150
EXHIBIT A
BID-OPTION NOTE
---------------
April __, 1997
Chicago, Illinois
For value received, NATIONAL AUTO CREDIT, INC., a Delaware corporation
(the "Borrower"), promises to pay to the order of _____________________ (the
"Lender"), the unpaid principal amount of each Bid-Option Loan made by the
Lender to the Borrower pursuant to the Credit Agreement referred to below, on
the last day of the Interest Period relating to such Loan. The Borrower further
promises to pay interest on the aggregate unpaid principal amount of such
Bid-Option Loans on the dates and at the rates negotiated as provided in the
Credit Agreement. All such payments of principal and interest with respect to
Bid-Option Loans shall be made in Dollars in immediately available funds at the
Administrative Agent's principal office in Chicago, Illinois.
Presentment, demand for payment, notice of non-payment, protest and
further notice or demand of any kind in connection with this Bid-Option Note are
hereby expressly waived by the Borrower and each endorser or guarantor hereof.
This Bid-Option Note evidences one or more Bid-Option Loans made under
the Long-Term Credit Agreement, dated as of April __, 1997, as amended,
supplemented or otherwise modified from time to time (the "Credit Agreement"),
by and among the Borrower, the Lenders (including the Lender) party thereto, The
First National Bank of Chicago, as Administrative Agent, and Morgan Guaranty
Trust Company of New York, as Documentation Agent, to which reference is hereby
made for a statement of the circumstances under which this Bid-Option Note is
subject to prepayment and under which its due date may be accelerated and for a
description of the Guaranties securing this Bid-Option Note. Capitalized terms
used but not defined in this Bid-Option Note shall have the respective meanings
ascribed thereto in the Credit Agreement.
This Bid-Option Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State and without giving
effect to choice of law principles of such State.
NATIONAL AUTO CREDIT, INC.
By: ________________________________
Its: _______________________________
And:________________________________
Its:________________________________
<PAGE> 151
EXHIBIT B
---------
GUARANTY AGREEMENT
------------------
( )
---------------------
THIS GUARANTY AGREEMENT, dated as of April ______, 1997 (this
"Guaranty"), is made by _________________________, a ________ corporation (the
"Guarantor"), in favor of the lenders which are from time to time parties to the
Credit Agreement hereinafter defined (collectively the "Lenders" and each a
"Lender") and The First National Bank of Chicago, a national banking
association, as administrative agent (in such capacity, the "Administrative
Agent") for the Lenders under the Credit Agreement;
RECITALS
--------
A. National Auto Credit, Inc., a Delaware corporation (the
"Borrower"), has entered into a Long-Term Credit Agreement, dated as of April
_____, 1997 (as amended or modified from time to time, the "Credit Agreement"),
with the Lenders, Morgan Guaranty Trust Company of New York, as documentation
agent for the Lenders under the Credit Agreement, and the Administrative Agent
pursuant to which the Lenders may make Advances to the Borrower.
B. As a condition to the effectiveness of the obligations of
the Lenders under the Credit Agreement, the Guarantor is required to guarantee,
among other things, the obligations of the Borrower in respect of the Advances
and other obligations of the Borrower under the Notes and the Credit Agreement.
C. The Guarantor has reviewed the Credit Agreement, the Notes,
and all other documents, agreements, instruments and certificates furnished by
or on behalf of the Borrower in connection therewith (all of the foregoing, as
amended or modified from time to time and together with any agreements or
instruments in replacement thereof, being herein collectively referred to as the
"Operative Documents"), and the Guarantor has determined that it is in its
interest and to its financial benefit that the parties to the Operative
Documents enter into the transactions contemplated thereby.
For valuable consideration, the receipt of which is hereby
acknowledged and as further consideration, and as an inducement to the Lenders
and the Administrative Agent to maintain the credit facilities established by
the Operative Documents, the Guarantor agrees with the Lenders and the
Administrative Agent as follows:
1. Guarantee of Obligations. (a) The Guarantor hereby (i)
guarantees to the Lenders the prompt payment of the principal of and any and all
accrued and unpaid interest (including without limitation interest which, but
for the filing of a bankruptcy petition, would have accrued on the principal
amount of the Guaranteed Obligations hereinafter defined) on the Advances, when
due, whether by scheduled maturity, acceleration or otherwise, all in accordance
with the terms of the Notes
<PAGE> 152
and the Credit Agreement, and any and all other amounts which may be payable by
the Borrower to the Lenders, or any one or more of them, in connection with or
pursuant to any of the Operative Documents, including without limitation default
interest, indemnification payments and all costs and expenses incurred by any
Lender or the Administrative Agent in connection with enforcing any obligations
of the Borrower thereunder, including without limitation the reasonable fees and
disbursements of counsel, including without limitation counsel who are employees
of any Lender or the Administrative Agent, and (ii) agrees to make prompt
payment, on demand, of any and all costs and expenses incurred by the Lenders or
the Administrative Agent in connection with enforcing the obligations of the
Guarantor hereunder, including, without limitation, the reasonable fees and
disbursements of counsel, including without limitation counsel who are employees
of any Lender or the Administrative Agent (all of the foregoing being
collectively referred to as the "Guaranteed Obligations").
(a) If for any reason any amount payable under or in connection
with any Operative Document shall not be paid in full when the same becomes due
and payable, the Guarantor undertakes to pay forthwith each such amount to the
Lenders and the Administrative Agent regardless of any defense or setoff or
counterclaim which the Borrower may have or assert, and regardless of any other
condition or contingency.
(b) The date and amount of the Advances and of each payment of
principal and interest thereon and other amounts received, and the aggregate
amount thereof shown upon the books and records of the respective Lenders or the
Administrative Agent or upon the schedules attached to the Notes, and in any
certificate delivered by any Lender or the Administrative Agent to the Guarantor
in respect thereof, shall be prima facie evidence of the amount due, owing and
unpaid on the Advances. The failure to record any such information on such books
and records or upon such schedule shall not, however, limit or otherwise affect
the obligations of the Borrower to repay the amount of the Advances together
with accrued interest thereon or the obligations of the Guarantor hereunder with
respect thereto.
2. NATURE OF GUARANTY. This Guaranty is an absolute and unconditional
and irrevocable guaranty of payment and not a guaranty of collection and is
wholly independent of and in addition to other rights and remedies of the
Lenders and the Administrative Agent and is not contingent upon the pursuit by
the Lenders or the Administrative Agent of any such rights and remedies, such
pursuit being hereby waived by the Guarantor.
3. WAIVERS AND OTHER AGREEMENTS. The Guarantor hereby unconditionally
(a) waives any requirement that the Lenders or the Administrative Agent, in the
event of any default by the Borrower, first make demand upon, or seek to enforce
remedies against, the Borrower before demanding payment under or seeking to
enforce this Guaranty, (b) covenants that this Guaranty will not be discharged
except by complete performance of all obligations of the Borrower contained in
the Operative Documents, (c) agrees that this Guaranty shall remain in full
force and effect without regard
GUARANTY AGREEMENT
------------------
-2-
<PAGE> 153
to, and shall not be affected or impaired, without limitation, by any
invalidity, irregularity or unenforceability in whole or in part of any of the
Operative Documents, or any limitation on the liability of the Borrower
thereunder, or any limitation on the method or terms of payment thereunder which
may now or hereafter be imposed in any manner whatsoever, (d) waives diligence,
presentment and protest with respect to, and any notice of default or dishonor
in the payment of any amount at any time payable by the Borrower under or in
connection with, any of the Operative Documents, and further waives any
requirement of notice of acceptance of, or other formality relating to, this
Guaranty and (e) agrees that the Guaranteed Obligations shall include any
amounts paid by the Borrower which may be required to be returned to the
Borrower, or to its representative or to a trustee, custodian or receiver for
the Borrower.
4. OBLIGATIONS ABSOLUTE. The obligations, covenants,
agreements and duties of the Guarantor under this Guaranty shall not be
released, affected or impaired by any of the following whether or not undertaken
with notice to or consent of the Guarantor: (a) any assignment or transfer, in
whole or in part, of the Loans, or any of the Operative Documents, or (b) any
waiver by the Lenders or the Administrative Agent, or by any other person, of
the performance or observance by the Borrower of any of the agreements,
covenants, terms or conditions contained in any of the Operative Documents, or
(c) any indulgence in or the extension of the time for payment by the Borrower
of any amounts payable under or in connection with any of the Operative
Documents, or of the time for performance by the Borrower of any other
obligations under or arising out of any of the Operative Documents, or the
extension or renewal thereof, whether occurring once or more than once, or (d)
the modification, amendment or waiver (whether material or otherwise) of any
duty, agreement or obligation of the Borrower set forth in any of the Operative
Documents (the modification, amendment or waiver from time to time of the Credit
Agreement or the Notes being expressly authorized without further notice to or
consent of the Guarantor), or (e) the voluntary or involuntary liquidation, sale
or other disposition of all or substantially all of the assets of the Borrower,
or any receivership, insolvency, bankruptcy, reorganization, or other similar
proceedings affecting the Borrower or any of its assets, or (f) the release of
any security, if any, for the obligations of the Borrower under any of the
Operative Documents, or the impairment of or failure to perfect an interest in
any such security, or (g) the merger or consolidation of the Borrower or the
Guarantor with any other person, or (h) the release or discharge of the Borrower
or the Guarantor from the performance or observance of any agreement, covenant,
term or condition contained in any of the Operative Documents by operation of
law, or (i) any other cause whether similar or dissimilar to the foregoing which
would release, affect or impair the obligations, covenants, agreements or duties
of the Guarantor hereunder.
5. REPRESENTATIONS AND WARRANTIES. The Guarantor represents
and warrants that (a) the execution, delivery and performance by the Guarantor
of this Guaranty are within its corporate powers, have been duly authorized by
all necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the articles of
incorporation or other charter documents or bylaws of the Guarantor, or of any
agreement, judgment, injunction, order, decree or other
GUARANTY AGREEMENT
------------------
-3-
<PAGE> 154
instrument binding upon the Guarantor or its property; (b) this Guaranty
constitutes a legal, valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights and except that
the remedy of specific performance and injunctive and other forms of equitable
relief are subject to equitable defenses and to the discretion of the court for
which any proceedings may be brought; and (c) as of the date hereof (both before
and after the execution and delivery of this Guaranty), each of the following is
true and correct for the Guarantor: (i) the fair saleable value and the fair
valuation of the Guarantor's property is greater than the total amount of its
liabilities (including contingent liabilities) and greater than the amount that
would be required to pay its probable aggregate liability on its existing debts
as they become absolute and matured, (ii) the Guarantor's capital is not
unreasonably small in relation to its current and/or contemplated business or
other undertaken transactions, and (iii) the Guarantor does not intend to incur,
or believe that it will incur, debt beyond its ability to pay such debts as they
become due.
6. AMENDMENTS, ETC. This Guaranty may be amended from time to
time and any provision hereof may be waived by the parties hereto. No such
amendment or waiver of any provision of this Guaranty nor consent to any
departure by the Guarantor therefrom shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders and, to the extent
any rights or duties of the Administrative Agent may be affected, the
Administrative Agent, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
7. NOTICES. All notices, demands, requests, consents and other
communications hereunder shall be in writing and shall be delivered or sent to
the Guarantor at the address or number for notices set forth under its name on
the signature page hereof, and to the Lenders and the Administrative Agent at
their respective addresses or numbers for notice set forth in the Credit
Agreement, or to such other address or number as may be designated by the
Guarantor, the Administrative Agent or any Lender by notice to the other parties
hereto. All notices and other communications shall be deemed to have been given
at the earlier of (i) the time of actual delivery thereof to such address or
number, or (ii) if sent by certified or registered mail, postage prepaid, to
such address, on the third day after the date of mailing, if deposited prepaid
with a nationally recognized overnight delivery service guaranteeing next day
delivery to such address, prior to the deadline for next day delivery, on the
Business Day next following such deposit, or if sent by telecopy, upon receipt
of confirmation of delivery to such number by customary means.
8. CONDUCT NO WAIVER; REMEDIES CUMULATIVE. The obligations of
the Guarantor under this Guaranty are continuing obligations and a separate and
independent cause of action shall arise in respect of each enforcement hereunder
and default hereunder or under the Credit Agreement. No course of dealing on the
part of any Lender or the Administrative Agent, nor any delay or failure on the
part of any Lender or the Administrative Agent in exercising any right, power or
privilege hereunder shall operate as a waiver of such right, power or privilege
or otherwise prejudice the rights
GUARANTY AGREEMENT
------------------
-4-
<PAGE> 155
and remedies of any of the Lenders or the Administrative Agent hereunder; nor
shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to the Lenders or the Administrative Agent
under this Guaranty is intended to be exclusive of any other right or remedy,
and every right and remedy shall be cumulative and in addition to every other
right or remedy given hereunder or now or hereafter existing under any
applicable law. Every right and remedy given by this Guaranty or by applicable
law to the Lenders or the Administrative Agent may be exercised from time to
time and as often as may be deemed expedient by them.
9. RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of the Guarantor made
herein or in any certificate or other document delivered pursuant hereto shall
be deemed to be material and to have been relied upon by the Lenders and the
Administrative Agent, notwithstanding any investigation heretofore or hereafter
made by any Lender or the Administrative Agent or on its behalf.
10. SUCCESSORS AND ASSIGNS. The rights and remedies of the
Lenders and the Administrative Agent hereunder shall inure to the benefit of the
Lenders and the Administrative Agent and their respective successors and
assigns, and the duties and obligations of the Guarantor hereunder shall be
binding upon the Guarantor and its successors and assigns.
11. GOVERNING LAW; CONSENT TO JURISDICTION. This Guaranty is a
contract made under, and the rights and obligations of the parties hereunder,
shall be governed by and construed in accordance with, the laws of the State of
Illinois applicable to contracts to be made and to be performed entirely with
such State. The Guarantor further agrees that any legal action or proceeding
brought with respect to this Guaranty or the transactions contemplated hereby
may be brought in any court of the State of Illinois, or any court of the United
States of America sitting in Illinois, and the Guarantor hereby irrevocably
submits to and accepts generally and unconditionally the jurisdiction of those
courts with respect to its person and property.
12. DEFINITIONS; HEADINGS. Terms used but not defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement. The headings of the various subdivisions hereof are for convenience
of reference only and shall in no way modify any of the terms or provisions
hereof.
13. INTEGRATION; SEVERABILITY; ENFORCEABILITY. This Guaranty
embodies the entire agreement and understanding among the Guarantor, the Lenders
and the Administrative Agent, and supersedes all prior agreements and
understandings, relating to the subject matter hereof. If any one or more
provisions of this Guaranty should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected, impaired, prejudiced or
disturbed thereby. If at any time any portion of the obligations of the
Guarantor under this Guaranty shall be determined by a court of competent
jurisdiction to be invalid,
GUARANTY AGREEMENT
------------------
-5-
<PAGE> 156
unenforceable or avoidable, the remaining portion of the obligations of the
Guarantor under this Guaranty shall not in any way be affected, impaired,
prejudiced or disturbed thereby and shall remain valid and enforceable to the
fullest extent permitted by applicable law. If at any time all or any portion of
the obligation of the Guarantor under this Guaranty would otherwise be
determined by a court of competent jurisdiction to be invalid, unenforceable or
avoidable under Section 548 of the federal Bankruptcy Code or under a similar
applicable law of any jurisdiction, then notwithstanding any other provisions of
this Guaranty to the contrary such obligation or portion thereof of the
Guarantor under this Guaranty shall be limited to the greatest of (i) the value
of any quantifiable economic benefits accruing to the Guarantor as a result of
this Guaranty, (ii) an amount equal to 95% of the excess on the date the
relevant Guaranteed Obligations were incurred of the present fair saleable value
of the assets of the Guarantor over the amount of all liabilities of the
Guarantor, contingent or otherwise, and (iii) the maximum amount for which this
Guaranty is determined to be enforceable.
14. REINSTATEMENT. This Guaranty shall remain in full force
and effect and continue to be effective in the event any petition be filed by or
against the Company or the Guarantor for liquidation or reorganization, in the
event the Borrower or the Guarantor becomes insolvent or makes an assignment for
the benefit of creditors or in the event a receiver or trustee be appointed for
all or any significant part of the Borrower's or the Guarantor's assets, and
shall continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Guaranteed Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by the Administrative Agent or any Lender ,
whether as a "voidable preference", "fraudulent conveyance", or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Guaranteed Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
15. SUBROGATION AND CONTRIBUTION. If the Guarantor makes a
payment in respect of the Guaranteed Obligations it shall be subrogated to the
rights of the payee against the Borrower with respect to such payment and shall
have the rights of contribution set forth below against all other Guarantors (as
the term "Guarantors" is defined in the Credit Agreement, which includes all
current Guarantors of the Guaranteed Obligations and any person at any time
becoming a Guarantor of the Guaranteed Obligations), and the Guarantor agrees
that all other Guarantors shall have the rights of contribution against it set
forth below; provided that the Guarantor shall not enforce its rights to any
payment by way of subrogation or by exercising its right of contribution until
all of the Guaranteed Obligations shall have been paid in full in immediately
available funds and such payment is not subject to any possibility of revocation
or rescission and the Credit Agreement has expired or been terminated. If the
Guarantor makes a payment in respect of the Guaranteed Obligations that is
smaller in proportion to its Payment Share (as hereinafter defined) than such
payments made by the other Guarantors are in proportion to the amounts of their
respective Payment Shares, the Guarantor shall, when permitted by the preceding
sentence, pay to the other Guarantors an amount such that the net payments made
by the Guarantors in respect of the Guaranteed Obligations shall be shared among
the
GUARANTY AGREEMENT
------------------
-6-
<PAGE> 157
Guarantors pro rata in proportion to their respective Payment Shares. If the
Guarantor receives any payment by way of subrogation that is greater in
proportion to the amount of its Payment Share than the payments received by the
other Guarantors are in proportion to the amounts of their respective Payment
Shares, the Guarantor shall, when permitted by the second preceding sentence,
pay to the other Guarantors an amount such that the subrogation payments
received by the Guarantors shall be shared among the Guarantors pro rata in
proportion to their respective Payment Shares. Notwithstanding anything to the
contrary contained in this paragraph or in this Guaranty, the Guarantor shall
have no right of subrogation or contribution whatsoever, whether arising under
this Guaranty or otherwise, and no liability or obligation shall accrue pursuant
to any such rights or shall be paid or shall be deemed owing until all of the
Guaranteed Obligations shall be paid in full in immediately available funds and
not be subject to any possibility of revocation or rescission and the Credit
Agreement has expired or been terminated, and upon any enforcement of this
Guaranty all present and future indebtedness, obligations and liabilities of the
Company to the Guarantor shall be fully junior and subordinate in right and
priority of payment to the Guaranteed Obligations.
For purposes of this Guaranty, the "Payment Share" of the
Guarantor and of each of the other Guarantors, respectively, shall be the sum of
(a) the aggregate proceeds of the Guaranteed Obligations received by such
Guarantor (and, if received subject to a repayment obligation, remaining unpaid
on the Determination Date, as hereinafter defined), plus (b) the product of (i)
the aggregate Guaranteed Obligations remaining unpaid on the date such
Guaranteed Obligations become due and payable in full, whether by stated
maturity, acceleration, or otherwise (the "Determination Date") reduced by the
amount of such Guaranteed Obligations attributed to all of the Guarantors
pursuant to clause (a) above, times (ii) a fraction, the numerator of which is
such Guarantor's net worth on the effective date of this Agreement (determined
as of the end of the immediately preceding fiscal reporting period of the
Guarantor), and the denominator of which is the aggregate net worth of all of
the Guarantors, determined for each Guarantor on the respective effective date
of the Guaranty signed by such Guarantor.
GUARANTY AGREEMENT
------------------
-7-
<PAGE> 158
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be duly executed, delivered, and effective, as of the ______ day of April, 1997,
which shall be deemed the effective date of this Guaranty.
----------------------------------
By:
-------------------------------
Its:
----------------------------
ADDRESS FOR NOTICES:
3000 Aurora Road
Solon, Ohio 44139
Attention:________________
Telephone No.:(216) 349-1000
Facsimile No.: (216) 349-0442
Facsimile Confirmation
Number: (216) 349-1000
GUARANTY AGREEMENT
------------------
-8-
<PAGE> 159
EXHIBIT C
REVOLVING CREDIT NOTE
---------------------
$__________ April ____, 1997
FOR VALUE RECEIVED, NATIONAL AUTO CREDIT, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
__________________________________ (the "Lender"), at the principal banking
office of the Administrative Agent in lawful money of the United States of
America and in immediately available funds, the principal sum of _____ Million
Dollars ($__________), or such lesser amount as is recorded in the books and
records of the Lender, on the Termination Date; and to pay interest on the
unpaid principal balance hereof from time to time outstanding, in like money and
funds, for the period from the date hereof until the Revolving Credit Loans
evidenced hereby shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement referred to below.
The Lender is hereby authorized by the Borrower to record on
its books and records, the date, amount and type of each Loan, the duration of
the related Interest Period (if applicable), the amount of each payment or
prepayment of principal thereon and the other information provided for on such
books and records, which books and records shall constitute prima facie evidence
of the information so recorded, provided, however, that any failure by the
Lender to record any such information shall not relieve the Borrower of its
obligation to repay the outstanding principal amount of such Loans, all accrued
interest thereon and any amount payable with respect thereto in accordance with
the terms of this Note and the Credit Agreement.
The Borrower and each endorser or guarantor hereof waives
demand, presentment, protest, diligence, notice of dishonor and any other
formality in connection with this Note. Should the indebtedness evidenced by
this Note or any part thereof be collected in any proceeding or be placed in the
hands of attorneys for collection, the Borrower agrees to pay, in addition to
the principal, interest and other sums due and payable hereon, all costs of
collecting this Note, including attorneys' fees and expenses.
This Note evidences one or more Revolving Credit Loans made
under a Long-Term Credit Agreement, dated as of April ____, 1997 (the "Credit
Agreement"), by and among the Borrower, the lenders (including the Lender) named
therein, The First National Bank of Chicago, as administrative agent for the
lenders, and Morgan Guaranty Trust Company of New York, as documentation agent
for the lenders, to which reference is hereby made for a statement of the
circumstances under which this Note is subject to prepayment and under which its
due date may be accelerated and for a description of the Guaranties securing
this Note. Capitalized terms used but not defined in this Note shall have the
respective meanings assigned to them in the Credit Agreement.
<PAGE> 160
This Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State and without giving
effect to choice of law principles of such State.
NATIONAL AUTO CREDIT, INC.
By:
-------------------------------------
Its:
--------------------------------
And:
------------------------------------
Its:
--------------------------------
REVOLVING CREDIT NOTE
---------------------
-2-
<PAGE> 161
EXHIBIT D
SWING LINE NOTE
---------------
April __, 1997
Chicago, Illinois
FOR VALUE RECEIVED, NATIONAL AUTO CREDIT, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of THE FIRST NATIONAL BANK OF CHICAGO (the "Lender"), at the principal
banking office of the Administrative Agent in lawful money of the United States
of America and in immediately available funds, the unpaid principal amount of
the Swing Line Loans as evidenced by the books and records of the Lender, on the
Termination Date or such earlier date as the Lender may require under the Credit
Agreement referred to below, when the entire outstanding principal amount of the
Swing Line Loans evidenced hereby, and all accrued interest thereon, shall be
due and payable; and to pay interest on the unpaid principal balance hereof from
time to time outstanding, in like money and funds, for the period from the date
hereof until the Swing Line Loans evidenced hereby shall be paid in full, at the
rates per annum on and the dates provided in the Credit Agreement referred to
below.
The Lender is hereby authorized by the Borrower to record on
its books and records the date and the amount of each Swing Line Loan, the
applicable interest rate, the amount of each payment or prepayment of principal
thereon, and the other information provided for in such books and records, which
books and records shall constitute prime facie evidence of the information so
recorded, provided, however, that any failure by the Lender to record any such
notation shall not relieve the Borrower of its obligation to repay the
outstanding principal amount of this Swing Line Note, all accrued interest
hereon and any amount payable with respect hereto in accordance with the terms
of this Swing Line Note and the Credit Agreement.
The Borrower and each endorser or guarantor hereof waive
presentment, protest, notice of dishonor and any other formality in connection
with this Swing Line Note. Should the indebtedness evidenced by this Swing Line
Note or any part thereof be collected in any proceeding or be placed in the
hands of attorneys for collection, the Borrower agrees to pay, in addition to
the principal, interest and other sums due and payable hereon, all costs of
collecting this Swing Line Note, including attorneys' fees and expenses.
This Swing Line Note evidences Swing Line Loans made under a
Long-Term Credit Agreement, dated as of April __, 1997 (as amended or modified
from time to time, the "Credit Agreement"), by and among National Auto Credit,
Inc., the lenders (including the Lender) named therein, The First National Bank
of Chicago, as administrative agent for the Lenders, and Morgan Guaranty Trust
Company of New York, as documentation agent for the Lenders, to which reference
is hereby made for a statement of the circumstances under which this Swing Line
Note is subject to prepayment and under which its due date may be accelerated
and a description of the Guaranties securing this Swing Line Note. Capitalized
terms used but not defined in this Swing Line Note shall
<PAGE> 162
have the respective meanings assigned to them in the Credit Agreement.
This Swing Line Note is made under, and shall be governed by
and construed in accordance with, the laws of the State of Illinois in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
NATIONAL AUTO CREDIT, INC.
By: ___________________________________
Its: ______________________________
And: __________________________________
Its: ______________________________
SWING LINE NOTE
---------------
-2-
<PAGE> 163
EXHIBIT E
BID-OPTION QUOTE REQUEST
------------------------
[Date]
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attention: _____________
National Auto Credit, Inc., a Delaware corporation (the "Borrower"),
hereby requests offers to make Bid-Option Loans comprising the Bid-Option
Borrowing(s) described below pursuant to Section 2.2(b) of the Long-Term Credit
Agreement, dated as of April ___, 1997, as amended, supplemented or otherwise
modified (the "Credit Agreement"), by and among the Borrower, the Lenders, The
First National Bank of Chicago, as Administrative Agent, and Morgan Guaranty
Trust Company of New York, as Documentation Agent. Capitalized terms used but
not defined herein shall have the respective meanings ascribed thereto in the
Credit Agreement.
Date of Bid-Option Borrowing(s): ________, 19__
Aggregate Amount of each Bid-Option Borrowing: (a) _______________*
(b) ______________
(c) ______________
Interest Period: (a) ______________**
(b) ______________
(c) ______________
NATIONAL AUTO CREDIT, INC.
By:__________________________
Its:_________________________
*Must be (a) $3,000,000 or a larger multiple of $500,000.
**Must comply with the definition of the term "Bid-Option Interest Period."
<PAGE> 164
EXHIBIT F
INVITATION FOR BID-OPTION QUOTES
--------------------------------
[Date]
To: [Name of Bank]
Attention: ____________________
Reference is made to the Long-Term Credit Agreement, dated as of April
____, 1997, as amended, supplemented or otherwise modified (the "Credit
Agreement"), by and among NATIONAL AUTO CREDIT, INC., a Delaware corporation
(the "Borrower"), the Lenders, THE FIRST NATIONAL BANK OF CHICAGO, as
Administrative Agent and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Documentation Agent. Capitalized terms used but not defined herein shall have
the respective meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 2.2(c) of the Credit Agreement, The First National
Bank of Chicago, as Administrative Agent, is pleased on behalf of the Borrower
to invite you to submit Bid-Option Quotes to the Borrower for the Bid-Option
Borrowing(s) described below.
Date of Bid-Option Borrowing(s): ________, 19__
Aggregate Amount of Each
Bid-Option Borrowing: Interest Period:
--------------------- ----------------
(a) ____________________ (a) ________________
(b) ____________________ (b) ________________
(c) ____________________ (c) ________________
Please respond to this invitation by no later than 1:00 p.m.
(Chicago time) on _________________, 19__.*
THE FIRST NATIONAL BANK OF CHICAGO, as
Administrative Agent
By: _________________________________
Its: ____________________________
* Insert date of Bid-Option Borrowing
<PAGE> 165
EXHIBIT G
BID-OPTION QUOTE
----------------
[Date]
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attention: _____________
Reference is made to the Long-Term Credit Agreement, dated as of April
___, 1997, as amended, supplemented or otherwise modified (the "Credit
Agreement"), by and among NATIONAL AUTO CREDIT, INC., a Delaware corporation
(the "Borrower"), the Lenders, The First National Bank of Chicago, as
Administrative Agent, and Morgan Guaranty Trust Company of New York, as
Documentation Agent. Capitalized terms used but not defined herein shall have
the respective meanings ascribed thereto in the Credit Agreement.
In response to your Invitation for Bid-Option Quotes dated _____, 19__,
_________________________ (the "Lender"), hereby makes the following offer[s] to
make [a] Bid-Option Loan[s]:
1. Quoting Lender: ____________________________
Contact Person: _________________________
2. Date of proposed Borrowing: __________, 19__*
3. Quotes:
<PAGE> 166
<TABLE>
<CAPTION>
Principal Bid-Option Interest
Amount** Rate*** Period ****
-------- ------- -----------
<S> <C> <C> <C>
(a) _________ ___________ ___________
(b) _________ ___________ ___________
(c) _________ ___________ ___________
</TABLE>
4. The aggregate amount of Bid-Option Loans which may be accepted by
the Borrower pursuant to this Bid-Option Quote shall not exceed $_____________.
The Lender acknowledges and agrees that this Bid-Option Quote (a) is
irrevocable and (b), subject to the terms and conditions of the Credit
Agreement, obligates it to make a Bid-Option Loan for which any quote is
accepted, in whole or in part.
[Name of Lender]
By: ____________________________________
Its: _______________________________
* As specified in the related Invitation for Bid-Option Quotes.
** The principal amount (a) must be $3,000,000 or a larger multiple of
$500,000 and (b) may not exceed the aggregate amount of the related
Bid-Option Borrowing specified in the related Invitation for Bid-Option
Quotes.
*** Specify rate of interest per annum (rounded up to the nearest 1/100th
of 1%) or applicable margin, which may be positive or negative,
expressed as a percentage (rounded up to the nearest 1/100th of 1%), as
the case may be.
**** As specified in the related Invitation for Bid-Option Quotes.
<PAGE> 167
EXHIBIT H
REQUEST FOR ADVANCE
-------------------
The First National Bank of Chicago,
as Administrative Agent for the Lenders
One First National Plaza
Chicago, Illinois 60670
Attention: _____________
National Auto Credit, Inc., a Delaware corporation (the
"Borrower") hereby requests an Advance pursuant to Section 2.5 of the Long-Term
Credit Agreement, dated as of April ___, 1997 (as amended or modified from time
to time, the "Credit Agreement"), among the Borrower, the Lenders referenced
therein, Morgan Guaranty Trust Company of New York, as Documentation Agent, and
you, as Administrative Agent for the Lenders.
[A Loan is requested to be made in the amount of $_________,
to be made on ____________, 199_ and evidenced by the Borrower's Notes. Such
Loan shall be a [insert Eurodollar Rate Loan or Floating Rate Loan] and the
initial Eurodollar Interest Period, if such requested Loan is a Eurodollar Rate
Loan, shall be [insert permitted Eurodollar Interest Period].]
[Such Letter of Credit Advance shall be made by the issuance
by the Administrative Agent of its Letter of Credit for the account of the
Borrower in the maximum stated amount of $___________ to and for the benefit of
________________ with a stated expiry date of _________________, 199__, and
containing the further terms and conditions set forth in the attached letter of
credit application to the Administrative Agent.]
In support of this request, the Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that:
1. The representations and warranties contained in Article IV
of the Credit Agreement are true and correct in all material respects on and as
of the date hereof, and will be true and correct in all material respects on the
date such Advance is made (both before and after such Advance is made), as if
such representations and warranties were made on and as of such dates.
2. No Event of Default or Default has occurred and is
continuing or will exist on the date such Advance is made and such Advance shall
not cause an Event of Default or Default.
Acceptance of the proceeds of such Advance by the Borrower shall be deemed to be
a further representation and warranty that the representations and warranties
made herein are true and correct in all material respects at the time such
proceeds are disbursed.
<PAGE> 168
Capitalized terms used but not defined herein shall have the respective meanings
assigned to them in the Credit Agreement.
NATIONAL AUTO CREDIT, INC.
By: ____________________________
Its: _________________________
Dated: ________________, 199_
REQUEST FOR ADVANCE
-------------------
-2-
<PAGE> 169
EXHIBIT I
REQUEST FOR CONTINUATION OR
---------------------------
CONVERSION OF LOAN
------------------
[Date]
The First National Bank of Chicago,
as Administrative Agent for the Lenders
One First National Plaza
Chicago, Illinois 60670
Attention: _____________
National Auto Credit, Inc., a Delaware corporation (the
"Borrower"), hereby requests that $____________ of the principal amount of the
Loan originally made on ____________, 19__, which Loan is currently a [insert
type of Loan], be continued as or converted to, as the case may be, a [insert
type of Loan requested] on ______________, 19__. If such Loan is requested to be
converted to a Eurodollar Rate Loan, the Borrower hereby elects a Eurodollar
Interest Period for such Loan of [insert permitted Eurodollar Interest Period].
In support of this request, the Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that:
1. The representations and warranties contained in Article IV
of the Credit Agreement are true and correct in all material respects on and as
of the date hereof, and will be true and correct in all material respects on the
date such Loan is [continued][converted] (both before and after such Loan is
[continued][converted]), as if such representations and warranties were made on
and as of such dates.
2. No Event of Default or Default has occurred and is
continuing or will exist on the date such Loan is [continued[converted] (whether
before or after such Loan is [continued][converted]).
Acceptance of the proceeds of such [continued][converted] Loan by the Borrower
shall be deemed to be a further representation and warranty that the
representations and warranties made herein are true and correct in all material
respects at the time of such [continuation] [conversion].
<PAGE> 170
Capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Credit Agreement, dated as of April
___, 1997 among the Borrower, the lenders named therein, Morgan Guaranty Trust
Company of New York, as documentation agent for the lenders, and you as
administrative agent for the lenders.
NATIONAL AUTO CREDIT, INC.
By: __________________________________
Its: _____________________________
REQUEST FOR CONTINUATION OR
---------------------------
CONVERSION OF LOAN
------------------
- 2 -
<PAGE> 171
EXHIBIT J
ASSIGNMENT AND ACCEPTANCE
-------------------------
Reference is made to the Long-Term Credit Agreement dated as
of April ___, 1997 (the "Credit Agreement") among NATIONAL AUTO CREDIT, INC., a
Delaware corporation (the "Borrower"), the lenders named therein (the
"Lenders"), THE FIRST NATIONAL BANK OF CHICAGO, as administrative agent for the
Lenders (the "Administrative Agent") and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as documentation agent for the Lenders. Terms defined in the Credit
Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1
agree as follows:
1. The Assignor hereby sells and assigns (without recourse) to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement as of the date hereof equal to the percentage interest specified on
Schedule 1 of all outstanding rights and obligations under the Credit Agreement.
After giving effect to such sale and assignment, the Assignee's Commitments and
the amounts of the Advances owing to the Assignee will be as set forth on
Schedule 1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; (iii) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or the performance or observance by the Borrower of
any of its obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iv) attaches the Notes held by the
Assignor and requests that the Administrative Agent exchange such Notes for new
Notes payable to the order of the Assignee in an amount equal to the Commitments
assumed by the Assignee pursuant hereto and the Assignor in an amount equal to
the Commitments retained by the Assignor under the Credit Agreement,
respectively, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.6 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) appoints and authorizes the Administrative
Agent to take such action as Administrative Agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to the
Administrative Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; (iv) agrees that it will
<PAGE> 172
perform in accordance with their terms of all of the obligations that by the
terms of the Credit Agreement are required to be performed by it as a Lender;
and (v) if the Assignee is organized under the laws of a jurisdiction outside
the United States, attaches the forms prescribed by the Internal Revenue Service
of the United States certifying as to the Assignee's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement and the Notes or
such other documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax treaty.
4. Following the execution of this Assignment and Acceptance,
it will be delivered to the Administrative Agent for acceptance and recording by
the Administrative Agent. The effective date for this Assignment and Acceptance
(the "Effective Date") shall be the date of acceptance hereof by the
Administrative Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by the Administrative
Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and (ii) the Assignor shall,
to the extent provided in this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Administrative Agent shall make
all payments under the Credit Agreement and the Notes in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments under the Credit
Agreement and the Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Illinois.
8. This Assignment and Acceptance may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.
ASSIGNMENT AND ACCEPTANCE
-------------------------
-2-
<PAGE> 173
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.
[ASSIGNOR]
BY:
---------------------------------------
ITS:
-----------------------------------
[ASSIGNEE]
---------------------------------------
BY:
---------------------------------------
ITS:
-----------------------------------
ASSIGNMENT AND ACCEPTANCE
-------------------------
-3-
<PAGE> 174
EXHIBIT K
ASSUMPTION AGREEMENT
--------------------
Reference is made to the Long Term Credit Agreement dated as of April
____, 1997 (as now or hereafter amended or modified from time to time, the
"Credit Agreement") among NATIONAL AUTO CREDIT, INC., a Delaware corporation
(the "Borrower"), the Lenders named therein (the "Lenders"), THE FIRST NATIONAL
BANK OF CHICAGO, as administrative agent for the Lenders (the "Administrative
Agent") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as documentation agent
for the Lenders. Terms defined in the Credit Agreement are used herein with the
same meaning.
1. __________________, a _____________________ ("New Lender") has
decided to become a Lender under the Credit Agreement, with its Commitments,
Percentage of Total Commitments and address for notice as described next to its
signature below. The New Lender (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.6 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assumption Agreement; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent or any Lender 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 the Credit Agreement;
(iii) appoints and authorizes the Administrative Agent to take such action as
administrative agent on its behalf and to exercise such powers and discretion
under the Credit Agreement as are delegated to the Administrative Agent by the
terms thereof, together with such powers and discretion as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms of all of the obligations that by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (v) if the New Lender is
organized under the laws of a jurisdiction outside the United States, attaches
the forms prescribed by the Internal Revenue Service of the United States
certifying as to the New Lender's status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to
the New Lender under the Credit Agreement and the Notes or such other documents
as are necessary to indicate that all such payments are subject to such taxes at
a rate reduced by an applicable tax treaty.
1. Following the execution of this Assumption Agreement, it will be
delivered to the Administrative Agent and Borrower for acceptance by the
Administrative Agent and the Borrower and recording by the Administrative Agent.
The effective date for this Assumption Agreement (the "Effective Date") shall be
the date of acceptance hereof by the Administrative Agent and the Borrower.
2. Upon such acceptance by the Administrative Agent and the Borrower
and recording by the Administrative Agent, as of the Effective Date, the New
Lender shall be a party to the Credit Agreement and, to the extent provided in
this Assumption Agreement, have the rights and obligations of a Lender
thereunder. On the Effective Date, the New Lender shall, in fulfillment of its
obligations as a Lender under the Credit Agreement, fund its share of
outstanding Loans in accordance with its
<PAGE> 175
Percentage of Total Commitment by making available such amount to the
Administrative Agent in immediately available funds at the principal office of
the Administrative Agent. The Administrative Agent shall promptly adjust the
balance of outstanding Advances owing to each Lender in accordance with each
Lender's new Percentage of Total Commitment and promptly remit to each Lender
any repayment due such Lender as a result of such adjustment. In the event any
Eurodollar Rate Loans are outstanding on the Effective Date and the repayment of
such Eurodollar Rate Loans prior to the last day of the applicable Eurodollar
Interest Period would result in costs and expenses to any Lender as described in
Section 3.8 of the Credit Agreement, the New Lender shall purchase a
participation interest in any outstanding Eurodollar Rate Loans from each Lender
which would suffer such costs and expenses. The amount of the participation
interest purchased by the New Lender from any Lender under this paragraph shall
be equal to the amount of the repayment such Lender would have received with
respect to such Eurodollar Rate Loan as a result of the adjustment described in
this paragraph.
3. This Assumption Agreement shall be governed by, and construed
in accordance with, the laws of the State of Illinois.
4. This Assumption Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
5. Upon acceptance and recording by the Administrative Agent, the
Administrative Agent shall notify each Lender and the Borrower of the Percentage
of Total Commitments of each Lender, which shall be binding on all parties.
-2-
<PAGE> 176
IN WITNESS WHEREOF, the New Lender has caused this Assumption Agreement
to be executed by its officer thereunto duly authorized as of the date specified
thereon.
[NEW LENDER]
- --------------------------------
- --------------------------------
- --------------------------------
Attention: By:
---------------------- -----------------------------
Facsimile No. (___) ___-____ Its:
-------------------------
Commitment Amount $___________
Percentage of Total Commitments: ___%
Accepted and Agreed:
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
By:
---------------------------------
Its:
-----------------------------
NATIONAL AUTO CREDIT, INC.
By:
---------------------------------
Its:
-----------------------------
-3-
<PAGE> 1
Exhibit 4(e)
- --------------------------------------------------------------------------------
NATIONAL AUTO CREDIT, INC.
$45,000,000
7.66% Senior Notes due April 21, 2004
---------------------
NOTE PURCHASE AGREEMENT
---------------------
Dated April 21, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section Page
- ------- ----
<S> <C> <C>
1. AUTHORIZATION OF NOTES....................................................................... 1
2. SALE AND PURCHASE OF NOTES................................................................... 1
3. INITIAL CLOSING, SECOND CLOSING AND THIRD CLOSING............................................ 2
3.1. Initial Closing...................................................................... 2
3.2. Second Closing....................................................................... 2
3.3. Third Closing........................................................................ 3
4. CONDITIONS TO INITIAL CLOSING, SECOND CLOSING AND THIRD CLOSING.............................. 3
4.1. Initial Closing...................................................................... 3
4.2. Second Closing....................................................................... 6
4.3. Third Closing........................................................................ 8
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................ 9
5.1. Organization; Power and Authority.................................................... 10
5.2. Authorization, etc................................................................... 10
5.3. Disclosure........................................................................... 10
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates..................... 11
5.5. Financial Statements................................................................. 11
5.6. Compliance with Laws, Other Instruments, etc......................................... 12
5.7. Governmental Authorizations, etc..................................................... 12
5.8. Litigation; Observance of Agreements, Statutes and Orders............................ 12
5.9. Taxes................................................................................ 13
5.10. Title to Property; Leases............................................................ 13
5.11. Licenses, Permits, etc............................................................... 13
5.12. Compliance with ERISA................................................................ 14
5.13. Private Offering by the Company...................................................... 15
5.14. Use of Proceeds; Margin Regulations.................................................. 15
5.15. Existing Debt; Future Liens.......................................................... 15
5.16. Foreign Assets Control Regulations, etc.............................................. 16
5.17. Status under Certain Statutes........................................................ 16
5.18. Environmental Matters................................................................ 16
5.19. Event of Default..................................................................... 17
5.20. Rank of Debt......................................................................... 17
6. REPRESENTATIONS OF THE PURCHASER............................................................. 17
6.1. Purchase for Investment.............................................................. 17
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
6.2. Source of Funds...................................................................... 18
7. INFORMATION AS TO COMPANY.................................................................... 19
7.1. Financial and Business Information................................................... 19
7.2. Officer's Certificate................................................................ 23
7.3. Inspection........................................................................... 23
8. PREPAYMENT OF THE NOTES...................................................................... 24
8.1. Required Prepayments................................................................. 24
8.2. Optional Prepayments with Make-Whole Amount.......................................... 25
8.3. Allocation of Partial Prepayments.................................................... 25
8.4. Maturity; Surrender, etc............................................................. 26
8.5. Purchase of Notes.................................................................... 26
8.6. Make-Whole Amount.................................................................... 26
9. AFFIRMATIVE COVENANTS........................................................................ 28
9.1. Compliance with Law.................................................................. 28
9.2. Insurance............................................................................ 28
9.3. Maintenance of Properties............................................................ 28
9.4. Payment of Taxes and Claims.......................................................... 28
9.5. Corporate Existence, etc............................................................. 29
9.6. Keeping of Records and Books of Account.............................................. 29
10. NEGATIVE COVENANTS........................................................................... 29
10.1. Transactions with Affiliates......................................................... 29
10.2. Merger, Consolidation, Sale of Assets, Transfers, etc................................ 29
10.3. Liens................................................................................ 31
10.4. Restricted Payments and Restricted Investments....................................... 33
10.5. Financial Covenants.................................................................. 33
10.6. Subordinated Debt.................................................................... 34
10.7. Line of Business..................................................................... 34
10.8. Receivables Programs................................................................. 34
10.9. Guaranty by Subsidiaries............................................................. 35
10.10. Negative Pledge Limitation........................................................... 35
10.11. Payments and Modifications of Debt................................................... 35
10.12. Additional Covenants................................................................. 36
11. EVENTS OF DEFAULT............................................................................ 36
12. REMEDIES ON DEFAULT, ETC..................................................................... 39
12.1. Acceleration......................................................................... 39
12.2. Other Remedies....................................................................... 40
12.3. Rescission........................................................................... 40
12.4. No Waivers or Election of Remedies, Expenses, etc.................................... 40
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES................................................ 40
13.1. Registration of Notes................................................................ 40
13.2. Transfer and Exchange of Notes....................................................... 41
13.3. Replacement of Notes................................................................. 41
14. PAYMENTS ON NOTES............................................................................ 42
14.1. Place of Payment..................................................................... 42
14.2. Home Office Payment.................................................................. 42
15. EXPENSES, ETC................................................................................ 42
15.1. Transaction Expenses................................................................. 42
15.2. Survival............................................................................. 43
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT................................. 43
17. AMENDMENT AND WAIVER......................................................................... 43
17.1. Requirements......................................................................... 43
17.2. Solicitation of Holders of Notes..................................................... 44
17.3. Binding Effect, etc.................................................................. 44
17.4. Notes held by Company, etc........................................................... 44
18. NOTICES...................................................................................... 45
19. REPRODUCTION OF DOCUMENTS.................................................................... 45
20. CONFIDENTIAL INFORMATION..................................................................... 46
21. SUBSTITUTION OF PURCHASER.................................................................... 46
22. MISCELLANEOUS................................................................................ 47
22.1. Successors and Assigns............................................................... 47
22.2. Payments Due on Non-Business Days.................................................... 47
22.3. Severability......................................................................... 47
22.4. Construction......................................................................... 47
22.5. Counterparts......................................................................... 48
22.6. Governing Law........................................................................ 48
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 4.1(i) -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Licenses, Permits, etc.
SCHEDULE 5.15 -- Existing Debt
SCHEDULE 5.18 -- Environmental Matters
SCHEDULE B-1 -- Existing Investments
EXHIBIT 1 -- Form of 7.66% Senior Note due April 21, 2004
EXHIBIT 4.1(k) -- Form of Subsidiary Guaranty
EXHIBIT 4.1(d)(i) -- Form of Opinion of Special Counsel to the Company
EXHIBIT 4.1(d)(ii) -- Form of Opinion of Special Counsel to the Purchasers
EXHIBIT 7.1(i) -- Form of Presentation of Loan Receivables Portfolio Statistics,
Static Pool Results, etc.
</TABLE>
iv
<PAGE> 6
NATIONAL AUTO CREDIT, INC.
30000 Aurora Road
Solon, Ohio 44139
7.66% Senior Notes due April 21, 2004
April 21, 1997
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
National Auto Credit, Inc., a Delaware corporation (the
"COMPANY"), agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $45,000,000
aggregate principal amount of its 7.66% Senior Notes due April 21, 2004 (the
"NOTES," such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement or the Other Agreements (as hereinafter
defined)), $18,000,000 aggregate principal amount of such Notes to be issued on
the date of the Initial Closing (as hereinafter defined), $13,500,000 aggregate
principal amount of such Notes to be issued on the date of the Second Closing
(as hereinafter defined) and the remaining $13,500,000 aggregate principal
amount of such Notes to be issued on the date of the Third Closing (as
hereinafter defined). The Notes shall be substantially in the form set out in
Exhibit 1, with such changes therefrom, if any, as may be approved by you and
the Company. Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the
Company will issue and sell to you and you will purchase from the Company, at
each of the Initial Closing, the Second Closing and the Third Closing provided
for in Section 3, Notes in the principal amounts specified opposite your name in
Schedule A at the purchase price of 100% of the principal amounts thereof.
Contemporaneously with entering into this Agreement, the Company is entering
into separate Note Purchase Agreements (the "OTHER AGREEMENTS") identical with
this Agreement with each of the other purchasers named in Schedule A (the "OTHER
PURCHASERS"), providing for the sale at such Initial Closing, Second Closing and
Third Closing to each of the Other Purchasers of Notes in the
1
<PAGE> 7
principal amounts specified opposite its name in Schedule A. Your obligation
hereunder and the obligations of the Other Purchasers under the Other Agreements
are several and not joint obligations and you shall have no obligation under any
Other Agreement and no liability to any Person for the performance or
non-performance by any Other Purchaser thereunder.
3. INITIAL CLOSING, SECOND CLOSING AND THIRD CLOSING.
3.1. INITIAL CLOSING.
The sale and purchase of the initial $18,000,000 aggregate
principal amount of the Notes to be purchased by you and the Other Purchasers
shall occur at the offices of O'Melveny & Myers LLP, Citicorp Center, 153 East
53rd Street, New York, New York 10022 at 10:00 a.m., New York time, at a closing
(the "INITIAL CLOSING") on April 21, 1997. At the Initial Closing the Company
will deliver to you the Notes to be purchased by you in the amounts set forth on
Schedule A dated the date of the Initial Closing and registered in your name (or
in the name of your nominee), against delivery by you to the Company or its
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company to account number 2393370 at National City Bank, 1900 East Ninth Street,
Cleveland, Ohio 44114, ABA 041000124. If at the Initial Closing the Company
shall fail to tender such Notes to you as provided above in this Section 3.1, or
any of the conditions specified in Section 4 shall not have been fulfilled to
your satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
3.2. SECOND CLOSING.
The sale and purchase of $13,500,000 aggregate principal
amount of the Notes to be purchased by you and the Other Purchasers shall occur
at the offices of O'Melveny & Myers LLP, Citicorp Center, 153 East 53rd Street,
New York, New York 10022 at 10:00 a.m., New York time, at a closing (the "SECOND
CLOSING") on April 30, 1997. At the Second Closing the Company will deliver to
you the Notes to be purchased by you in the amounts set forth on Schedule A
dated the date of the Second Closing and registered in your name (or in the name
of your nominee), against delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to
account number 2393370 at National City Bank, 1900 East Ninth Street, Cleveland,
Ohio 44114, ABA 041000124. If at the Second Closing the Company shall fail to
tender such Notes to you as provided above in this Section 3.2, or any of the
conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
2
<PAGE> 8
3.3. THIRD CLOSING.
The sale and purchase of $13,500,000 aggregate principal
amount of the Notes to be purchased by you and the Other Purchasers shall occur
at the offices of O'Melveny & Myers LLP, Citicorp Center, 153 East 53rd Street,
New York, New York 10022 at 10:00 a.m., New York time, at a closing (the "THIRD
CLOSING") on June 30, 1997. At the Third Closing the Company will deliver to you
the Notes to be purchased by you in the amounts set forth on Schedule A dated
the date of the Third Closing and registered in your name (or in the name of
your nominee), against delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to
account number 2393370 at National City Bank, 1900 East Ninth Street, Cleveland,
Ohio 44114, ABA 041000124. If at the Third Closing the Company shall fail to
tender such Notes to you as provided above in this Section 3.3, or any of the
conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4 CONDITIONS TO INITIAL CLOSING, SECOND CLOSING AND THIRD CLOSING.
4.1. INITIAL CLOSING.
Your obligation to purchase and pay for the Notes to be sold
to you at the Initial Closing is subject to the fulfillment to your
satisfaction, prior to or at the Initial Closing, of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the Initial Closing.
(B) PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or at the Initial Closing and after giving
effect to the issue and sale of the Notes to be issued and sold at the Initial
Closing (and the application of the proceeds thereof as contemplated in Section
5.14) no Default or Event of Default shall have occurred and be continuing.
Neither the Company nor any Subsidiary shall have entered into any transaction
since the date of the Memorandum that would have been prohibited by Section 10
hereof had such Section applied since such date.
3
<PAGE> 9
(C) COMPLIANCE CERTIFICATES.
(i) OFFICER'S CERTIFICATE. The Company shall have delivered
to you an Officer's Certificate, dated the date of the Initial Closing,
certifying that the conditions specified in Sections 4.1(a), 4.1(b) and 4.1(i)
have been fulfilled.
(ii) SECRETARY'S CERTIFICATE. The Company shall have
delivered to you a certificate certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization, execution and
delivery of the Notes and the Agreements.
(D) OPINIONS OF COUNSEL.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Initial Closing (I) from David R.
Posteraro, Esq., counsel for the Company, covering the matters set forth in
Exhibit 4.1(d)(i) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the
Company hereby instructs its counsel to deliver such opinion to you) and (II)
from O'Melveny & Myers LLP, your special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.1(d)(ii) and
covering such other matters incident to such transactions as you may reasonably
request.
(E) PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Initial Closing your purchase of Notes
shall (I) be permitted by the laws and regulations of each jurisdiction to which
you are subject, without recourse to provisions (such as Section 1405(a)(8) of
the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment,
(II) not violate any applicable law or regulation (including, without
limitation, Regulation G, T or X of the Board of Governors of the Federal
Reserve System) and (III) not subject you to any tax, penalty or liability under
or pursuant to any applicable law or regulation, which law or regulation was not
in effect on the date hereof. If requested by you, you shall have received an
Officer's Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.
(F) SALE OF OTHER NOTES.
Contemporaneously with the Initial Closing the Company shall
sell to the Other Purchasers and the Other Purchasers shall purchase the Notes
to be purchased by them at the Initial Closing as specified in Schedule A.
(G) PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the Company
shall have paid on or before the Initial Closing the fees, charges and
disbursements of your special counsel, referred to in
4
<PAGE> 10
Section 4.1(d) to the extent reflected in a statement of such counsel rendered
to the Company at least one Business Day prior to the Initial Closing.
(H) PRIVATE PLACEMENT NUMBER.
A Private Placement number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Notes.
(I) CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.1(i), the Company shall not
have changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
(J) PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
(K) SUBSIDIARY GUARANTY.
The Subsidiary Guaranty, in substantially the form attached
hereto as Exhibit 4.1(k), shall have been duly executed and delivered by NAC,
Inc. and NAC Investment Company, such document shall be in full force and effect
and no term or condition thereof shall have been amended, modified or waived and
the Company shall have delivered to you and the Other Purchasers true, correct,
complete and original copies of the Subsidiary Guaranty.
(L) BANK CREDIT AGREEMENT.
The Company shall have executed and delivered the Bank Credit
Agreement, the Bank Credit Agreement shall be in full force and effect and no
term or condition thereof shall have been amended, modified or waived and the
Company shall have delivered to you and each Other Purchaser true, correct and
complete copies of the Bank Credit Agreement and each other Loan Document (as
defined in the Bank Credit Agreement).
5
<PAGE> 11
4.2. SECOND CLOSING.
Your obligation to purchase and pay for the Notes to be sold
to you at the Second Closing is subject to the fulfillment to your satisfaction,
prior to or at the Second Closing, of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this
Agreement shall be correct when made, at the time of the Initial Closing and at
the time of the Second Closing.
(B) PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or at the Second Closing and after giving effect
to the issue and sale of the Notes to be issued and sold at the Second Closing
(and the application of the proceeds thereof as contemplated in Section 5.14) no
Default or Event of Default shall have occurred and be continuing. Neither the
Company nor any Subsidiary shall have entered into any transaction since the
date of the Memorandum that would have been prohibited by Section 10 hereof had
such Section applied since such date.
(C) COMPLIANCE CERTIFICATES.
(i) OFFICER'S CERTIFICATE. The Company shall have delivered
to you an Officer's Certificate, dated the date of the Second Closing,
certifying that the conditions specified in Sections 4.2(a), (b) and (h) have
been fulfilled.
(ii) SECRETARY'S CERTIFICATE. The Company shall have delivered
to you a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and the Agreements.
(D) OPINIONS OF COUNSEL.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Second Closing (I) from David R.
Posteraro, Esq., counsel for the Company, covering the matters set forth in
Exhibit 4.1(d)(i) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the
Company hereby instructs its counsel to deliver such opinion to you) and (II)
from O'Melveny & Myers LLP, your special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.1(d)(ii) and
covering such other matters incident to such transactions as you may reasonably
request.
6
<PAGE> 12
(E) PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Second Closing your purchase of Notes shall
(I) be permitted by the laws and regulations of each jurisdiction to which you
are subject, without recourse to provisions (such as Section 1405(a)(8) of the
New York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (II) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (III) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
(F) SALE OF OTHER NOTES.
Contemporaneously with the Second Closing the Company shall
sell to the Other Purchasers and the Other Purchasers shall purchase the Notes
to be purchased by them at the Second Closing as specified in Schedule A.
(G) PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the Company
shall have paid on or before the Second Closing the fees, charges and
disbursements of O'Melveny & Myers LLP, your special counsel to the extent
reflected in a statement of such counsel rendered to the Company at least one
Business Day prior to the Second Closing.
(H) CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.1(i) (and, after the date of
the Initial Closing, as permitted in Section 10.2), the Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
(I) PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
7
<PAGE> 13
4.3. THIRD CLOSING.
Your obligation to purchase and pay for the Notes to be sold
to you at the Third Closing is subject to the fulfillment to your satisfaction,
prior to or at the Third Closing, of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this
Agreement shall be correct when made, at the time of the Initial Closing, at the
time of the Second Closing and at the time of the Third Closing.
(B) PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or at the Third Closing and after giving effect
to the issue and sale of the Notes to be issued and sold at the Third Closing
(and the application of the proceeds thereof as contemplated in Section 5.14) no
Default or Event of Default shall have occurred and be continuing. Neither the
Company nor any Subsidiary shall have entered into any transaction since the
date of the Memorandum that would have been prohibited by Section 10 hereof had
such Section applied since such date.
(C) COMPLIANCE CERTIFICATES.
(i) OFFICER'S CERTIFICATE. The Company shall have delivered
to you an Officer's Certificate, dated the date of the Third Closing, certifying
that the conditions specified in Sections 4.3(a), (b) and (h) have been
fulfilled.
(ii) SECRETARY'S CERTIFICATE. The Company shall have
delivered to you a certificate certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization, execution and
delivery of the Notes and the Agreements.
(D) OPINIONS OF COUNSEL.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Third Closing (I) from David R.
Posteraro, Esq., counsel for the Company, covering the matters set forth in
Exhibit 4.1(d)(i) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the
Company hereby instructs its counsel to deliver such opinion to you) and (II)
from O'Melveny & Myers LLP, your special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.1(d)(ii) and
covering such other matters incident to such transactions as you may reasonably
request.
8
<PAGE> 14
(E) PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Third Closing your purchase of Notes shall
(I) be permitted by the laws and regulations of each jurisdiction to which you
are subject, without recourse to provisions (such as Section 1405(a)(8) of the
New York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (II) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (III) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
(F) SALE OF OTHER NOTES.
Contemporaneously with the Third Closing the Company shall
sell to the Other Purchasers and the Other Purchasers shall purchase the Notes
to be purchased by them at the Third Closing as specified in Schedule A.
(G) PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the Company
shall have paid on or before the Third Closing the fees, charges and
disbursements of O'Melveny & Myers LLP, your special counsel to the extent
reflected in a statement of such counsel rendered to the Company at least one
Business Day prior to the Third Closing.
(H) CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.1(i) (and, after the date of
the Initial Closing, as permitted in Section 10.2), the Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
(I) PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
9
<PAGE> 15
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and is
duly qualified as a foreign corporation and is in good standing in all
additional jurisdictions where such qualification is necessary under applicable
law. The Company has the corporate power and authority to own or hold under
lease the properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver this
Agreement, the Other Agreements, the other Transaction Documents to which it is
a party and the Notes and to perform the provisions hereof and thereof.
5.2. AUTHORIZATION, ETC.
This Agreement, the Other Agreements and the Notes have been
duly authorized by all necessary corporate action on the part of the Company,
and this Agreement constitutes, and upon execution and delivery thereof each
Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
The Transaction Documents to which it is a party have been
duly authorized by all necessary corporate action on the part of each Restricted
Subsidiary, and such Transaction Documents constitute the legal, valid and
binding obligations of each Restricted Subsidiary party thereto enforceable
against such Restricted Subsidiary in accordance with its terms.
5.3. DISCLOSURE.
The Company, through its agent, Prudential Securities
Incorporated, has delivered to you and each Other Purchaser a copy of a Private
Placement Memorandum, dated January 1997 (the "MEMORANDUM"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Subsidiaries. Except as disclosed in Schedule 5.3, this
Agreement, the Memorandum, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection with the
transactions contemplated hereby and the financial statements listed in Schedule
5.5, taken as a whole, do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Except as
disclosed in the Memorandum or as expressly described in Schedule 5.3, or in one
of the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since January 31, 1997, there has
been no change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that individually or
in the aggregate could not reasonably be
10
<PAGE> 16
expected to have a Material Adverse Effect. There is no fact known to the
Company that could reasonably be expected to have a Material Adverse Effect that
has not been set forth herein or in the Memorandum or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (II) of
the Company's Affiliates, other than Subsidiaries, and (III) of the Company's
directors and senior officers. All of such Subsidiaries are Restricted
Subsidiaries.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Restricted Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each additional jurisdiction where such qualification is necessary under
applicable law. Each such Restricted Subsidiary has the corporate or other power
and authority to own or hold under lease the properties it purports to own or
hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver the Transaction Documents to which it is a
party and to perform the provisions thereof.
(d) No Restricted Subsidiary is a party to, or otherwise subject
to any legal restriction or any agreement (other than this Agreement, the
agreements listed on Schedule 5.4 and customary limitations imposed by corporate
law statutes) restricting the ability of such Restricted Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
the Company or any of its Restricted Subsidiaries that owns outstanding shares
of capital stock or similar equity interests of such Restricted Subsidiary.
5.5. FINANCIAL STATEMENTS.
The Company has delivered to each Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments). There is no material adverse change
in the business,
11
<PAGE> 17
properties, operations or condition, financial or otherwise, of the Company or
any of its Subsidiaries since January 31, 1997. There is no Material Contingent
Liability of the Company that is not reflected in such financial statements or
in the notes thereto.
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company and
each Restricted Subsidiary of this Agreement, the Other Agreements, the other
Transaction Documents and the Notes, as applicable, will not (i) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of the Company or any Restricted
Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which the Company or any Restricted Subsidiary is bound or by
which the Company or any Restricted Subsidiary or any of their respective
properties may be bound or affected, (II) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable to the
Company or any Restricted Subsidiary or (III) violate any provision of any
statute or other rule or regulation of any Governmental Authority applicable to
the Company or any Restricted Subsidiary.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority or any nongovernmental
Person or entity, including, without limitation, any creditor, lessor or
stockholder of the Company or any of its Subsidiaries is required in connection
with the execution, delivery or performance by the Company or any Restricted
Subsidiary of this Agreement, the Other Agreements, the other Transaction
Documents or the Notes or the transactions contemplated hereby or thereby or as
a condition to the legality, validity or enforceability of this Agreement, the
Other Agreements, the other Transaction Documents or the Notes.
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings (including, without limitation, arbitration and
administrative proceedings) pending or, to the knowledge of the Company or any
officer of the Company, threatened against or affecting the Company or any
Restricted Subsidiary or any property of the Company or any Restricted
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect, and, to the best knowledge
of the Company or any officer of the Company, there is no basis for any such
action, suit or proceeding.
(b) Neither the Company nor any Restricted Subsidiary is in
default under any term of any agreement or instrument to which it is a party or
by which it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of
12
<PAGE> 18
any applicable law, ordinance, rule or regulation of any Governmental Authority
(including without limitation (i) Environmental Laws, (ii) the Occupational
Safety and Health Act of 1970, (iii) ERISA, (iv) all Federal securities laws and
state "blue sky" laws relating to the offering of the Notes and all other
Securities of the Company and its Restricted Subsidiaries and (v) Rule 10b-5,
which default or violation, individually or in the aggregate, would have a
Material Adverse Effect.
5.9. TAXES.
The Company and its Restricted Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Restricted
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. Neither the Company nor any of its Restricted Subsidiaries knows of
any actual or proposed tax assessment or any basis therefor, and no extension of
time for the assessment of deficiencies in any Federal or State tax has been
granted by to the Company or any Restricted Subsidiary. The charges, accruals
and reserves on the books of the Company and its Restricted Subsidiaries in
respect of Federal, state or other taxes for all fiscal periods are adequate.
The Federal income tax liabilities of the Company and its Subsidiaries have been
determined by the Internal Revenue Service and paid for all fiscal years up to
and including the fiscal year ended January 31, 1992.
5.10. TITLE TO PROPERTY; LEASES.
The Company and its Restricted Subsidiaries have good and
sufficient title to their respective properties that individually or in the
aggregate are Material, including all such properties reflected in the most
recent audited balance sheet referred to in Section 5.5 or purported to have
been acquired by the Company or any Restricted Subsidiary after said date
(except as sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.
5.11. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11,
(a) the Company and its Restricted Subsidiaries own or possess
all licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict
with the rights of others;
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(b) to the best knowledge of the Company, no product of the
Company or any Restricted Subsidiary infringes in any material respect
any license, permit, franchise, authorization, patent, copyright,
service mark, trademark, trade name or other right owned by any other
Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Restricted Subsidiaries with respect to any patent, copyright, service
mark, trademark, trade name or other right owned or used by the Company
or any of its Restricted Subsidiaries.
5.12. COMPLIANCE WITH ERISA.
(a) The Company, each Restricted Subsidiary and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
None of the Company, any Restricted Subsidiary or any ERISA Affiliate has
incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company, any Restricted Subsidiary or any ERISA Affiliate, or
in the imposition of any Lien on any of the rights, properties or assets of the
Company, any Restricted Subsidiary or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) As of the date of this Agreement, the Company has no
Plans.
(c) None of the Company, any Restricted Subsidiary or any
ERISA Affiliate has incurred withdrawal liabilities (and are not subject to
contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in
respect of Multiemployer Plans that individually or in the aggregate are
Material.
(d) The expected post-retirement benefit obligation
(determined as of the last day of the Company's most recently ended fiscal year
in accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement, the Other
Agreements and the other Transaction Documents and the issuance and sale of the
Notes hereunder will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by
the Company in the first sentence of this Section 5.12(e) is made in reliance
upon
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<PAGE> 20
and subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by you.
5.13. PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has
offered the Notes or any similar securities for sale to, or solicited any offer
to buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any Person other than you, the Other Purchasers and not more than
90 other Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither the Company nor anyone acting on its behalf
has taken, or will take, any action that would subject the issuance or sale of
the Notes to the registration requirements of Section 5 of the Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes
to refinance Debt of the Company existing immediately prior to the date of the
Initial Closing and for general working capital purposes. No part of the
proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, (i) for the purpose of buying or carrying any margin stock within
the meaning of Regulation G of the Board of Governors of the Federal Reserve
System (12 CFR 207), (ii) for the purpose of buying or carrying or trading in
any securities under such circumstances as to involve the Company in a violation
of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in
a violation of Regulation T of said Board (12 CFR 220), (iii) for the purpose of
reducing or retiring any Debt that was originally incurred to purchase any
margin stock within the meaning of Regulation G, Regulation U or Regulation X,
or (iv) for any other purpose which might constitute any of the Notes or the
loans evidenced thereby a "purpose credit" under Regulation G, Regulation U or
Regulation X. The Company and its Subsidiaries do not own any margin stock and
the Company does not have any present intention of acquiring margin stock. As
used in this Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR
CARRYING" shall have the meanings assigned to them in said Regulation G.
5.15. EXISTING DEBT; FUTURE LIENS.
(a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Debt of the Company and its
Subsidiaries as of the date of the Initial Closing, since which date there has
been no Material change in the amounts, interest rates, sinking funds,
instalment payments or maturities of the Debt of the Company or its
Subsidiaries. Neither the Company nor any Subsidiary is in default and no waiver
of default is currently in effect, in the payment of any principal or interest
on any Debt of the Company or such Subsidiary and no event or condition exists
with respect to any Debt of the Company or any Subsidiary that would permit (or
that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Debt to become due and payable before its stated maturity
or before its regularly scheduled dates of payment.
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(b) Except as disclosed in Schedule 5.15, neither the Company
nor any Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 10.3.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its
use of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
(a) Neither the Company nor any Subsidiary is (i) an
"investment company" or an "affiliated person" of or "promoter" or "principal
underwriter" for an "investment company" (as each such term is defined in the
Investment Company Act), (ii) directly or indirectly controlled by an
"investment company" (as such term is defined in the Investment Company Act) or
(iii) otherwise subject to regulation under the Investment Company Act.
(b) Neither the Company nor any Subsidiary is (i) a "holding
company" or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" (as each such term is defined in the Public Utility
Holding Company Act) or (ii) otherwise subject to regulation under the Public
Utility Holding Company Act.
(c) Neither the Company nor any Subsidiary is subject to
regulation under the Interstate Commerce Act, as amended.
(d) Neither the Company nor any Subsidiary is subject to
regulation under the Federal Power Act, as amended.
(e) Neither the Company nor any Subsidiary is subject to any
statute or regulation that regulates the incurrence of Debt by the Company or
any Subsidiary, other than Federal or State securities laws.
5.18. ENVIRONMENTAL MATTERS.
The Company and each Restricted Subsidiary are in substantial
compliance with all federal, state and local laws, ordinances and regulations
relating to safety and industrial hygiene or to the environmental condition,
including, without limitation, all Environmental Laws in jurisdictions in which
the Company or any Restricted Subsidiary owns or operates, or has owned or
operated, a facility or site, or arranges or has arranged for disposal or
treatment of Hazardous Materials, hazardous substances, solid waste, or other
wastes, accepts or has accepted for transport any Hazardous Materials, hazardous
substances, solid wastes or other wastes or holds or has held
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any interest in real property or otherwise, except as disclosed on Schedule 5.18
hereto, and as to such matters disclosed on such Schedule, none will have,
individually or in the aggregate, a Material Adverse Effect. No demand, claim,
notice, suit, suit in equity, action, administrative action, investigation or
inquiry whether brought by any Governmental Authority, private Person or entity
or otherwise, arising under, relating to or in connection with any Environmental
Laws is pending or threatened against the Company or any of its Restricted
Subsidiaries, any real property in which the Company or any such Restricted
Subsidiary holds or has held an interest or any past or present operation of the
Company or any Restricted Subsidiary, except as disclosed on Schedule 5.18
hereto, and as to such matters disclosed on such Schedule, none will have,
individually or in the aggregate, a Material Adverse Effect. Neither the Company
nor any of its Restricted Subsidiaries (a) is the subject of any federal or
state investigation evaluating whether any remedial action is needed to respond
to a release of any Hazardous Materials, toxic substances, radioactive
materials, hazardous wastes or related materials into the environment, (b) has
received any notice of any Hazardous Materials, toxic substances, radioactive
materials, hazardous waste or related materials in, or upon any of its
properties in violation of any Environmental Laws, or (c) knows of any basis for
any such investigation, notice or violation, except as disclosed on Schedule
5.18 hereto, and as to such matters disclosed on such Schedule, none will have,
individually or in the aggregate, a Material Adverse Effect. No release,
threatened release or disposal of Hazardous Materials, hazardous waste, solid
waste or other wastes is occurring or has occurred on, under or to any real
property in which the Company or any of its Restricted Subsidiaries holds any
interest or performs any of its operations, in violation of any Environmental
Law, except as disclosed on Schedule 5.18 hereto, and as to such matters
disclosed on such Schedule, none will have, individually or in the aggregate, a
Material Adverse Effect.
5.19. EVENT OF DEFAULT.
No Event of Default or Default has occurred and is continuing.
5.20. RANK OF DEBT.
The obligations of the Company to pay the principal of and
interest on the Notes and all other amounts which may become due thereunder or
hereunder will rank at least pari passu in priority of payment with all other
unsecured Senior Debt of the Company.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, PROVIDED that the disposition of your or their property
shall at all times be within your or their control. You understand that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under
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circumstances where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes.
6.2. SOURCE OF FUNDS.
You represent that at least one of the following statements is
an accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) if you are an insurance company, the Source does not
include assets allocated to any separate account maintained by you in
which any employee benefit plan (or its related trust) has any
interest, other than a separate account that is maintained solely in
connection with your fixed contractual obligations under which the
amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in
any manner by the investment performance of the separate account; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of Prohibited Transaction
Exemption ("PTE") 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of the PTE 91-38 (issued
July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (b), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(c) the Source is an insurance company general account in
respect of which the reserves and liabilities for the general account
contract(s) held by or on behalf of any Plan (as defined by the annual
statement for life insurance companies approved by the National
Association of Insurance Commissioners (the "NAIC Annual Statement"))
together with the amount of the reserves and liabilities for the
general account contract(s) held by or on behalf of any other Plans
maintained by the same employer (or affiliate thereof as defined in
Prohibited Transaction Class Exemption 95-60) or by the same employee
organization (as defined by the NAIC Annual Statement) in the general
account do not exceed 10% of the total reserves and liabilities of the
general account (exclusive of separate account liabilities) plus
surplus as set forth in the NAIC Annual Statement filed with the state
of domicile of the insurance company; or
(d) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed
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<PAGE> 24
20% of the total client assets managed by such QPAM, the conditions of
Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM
nor a person controlling or controlled by the QPAM (applying the
definition of "control" in Section V(e) of the QPAM Exemption) owns a
5% or more interest in the Company and (I) the identity of such QPAM
and (II) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (c); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (e); or
(g) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN," "GOVERNMENTAL
PLAN," "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes:
(a) QUARTERLY STATEMENTS -- as soon as their becoming
available (but in any event within 60 days after the end of each
quarterly fiscal period) in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), duplicate
copies of,
(i) a consolidated balance sheet of the Company and
its Restricted Subsidiaries, and a consolidating balance sheet
of the Company and the Subsidiary Guarantors, in each case as
at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Restricted Subsidiaries, and consolidating statements of
income, changes in shareholders' equity and cash flows of the
Company and the Subsidiary Guarantors, in each case for such
quarter and (in the case of the second and third quarters) for
the portion of the fiscal year ending with such quarter,
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<PAGE> 25
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year (and in the case of
the balance sheet, the figures for the previous fiscal year-end), all
in reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a Senior
Financial Officer as fairly presenting, in all material respects, the
financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting
from year-end adjustments;
(b) ANNUAL STATEMENTS -- as soon as their becoming available
(and in any event within 100 days after the end of each fiscal year of
the Company), duplicate copies of,
(i) a consolidated balance sheet of the Company and
its Restricted Subsidiaries, and a consolidating balance sheet
of the Company and the Subsidiary Guarantors, in each case as
at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Restricted Subsidiaries, and consolidating statements of
income, changes in shareholders' equity and cash flows of the
Company and the Subsidiary Guarantors, in each case for such
year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied
(A) by an opinion thereon of Deloitte &
Touche or other independent certified public
accountants selected by the Company and acceptable to
the Required Holders, which opinion shall contain no
qualifications as to the scope of the audit conducted
by such accountants and state that such financial
statements present fairly, in all material respects,
the financial position of the companies being
reported upon and their results of operations and
cash flows and have been prepared in conformity with
GAAP, and that the examination of such accountants in
connection with such financial statements has been
made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable
basis for such opinion in the circumstances, and
(B) a certificate of such accountants
stating that they have reviewed this Agreement and
stating further whether, in making their audit, they
have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if
they are aware that any such condition or event then
exists, specifying the nature and period of the
existence thereof (it being understood that such
accountants shall not be liable, directly or
indirectly, for any failure to obtain knowledge of
any Default or Event of Default unless such
accountants should have obtained
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<PAGE> 26
knowledge thereof in making an audit in accordance
with generally accepted auditing standards or did
not make such an audit);
(c) SEC AND OTHER REPORTS -- promptly upon their becoming
available, one copy of (I) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public
securities holders generally, and (II) each regular or periodic report,
each registration statement (without exhibits except as expressly
requested by such holder), and each prospectus and all amendments
thereto filed by the Company or any Subsidiary with the Securities and
Exchange Commission and of all press releases and other statements made
available generally by the Company or any Subsidiary to the public
concerning developments that are Material;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- immediately, and
in any event within three days after a Responsible Officer becoming
aware of the existence of any Default or Event of Default or that any
Person has given any notice or taken any action with respect to a
claimed default hereunder or that any Person has given any notice or
taken any action with respect to a claimed default of the type referred
to in Section 11(f), a written notice specifying the nature and period
of existence thereof and what action the Company is taking or proposes
to take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within five
days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the
action, if any, that the Company or an ERISA Affiliate proposes to take
with respect thereto:
(i) with respect to any Plan, any reportable event,
as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived
pursuant to such regulations as in effect on the date hereof;
or
(ii) the taking by the PBGC of steps to institute, or
the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or
any ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on
any of the rights, properties or assets of the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material
Adverse Effect;
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(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to
the Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect;
(g) REPORTS TO OTHER LENDERS -- without duplication,
concurrently with the delivery therewith, promptly upon their becoming
available, one copy of each financial statement, report, notice or
other information (other than routine notices of borrowings and
repayments) sent by the Company or any Subsidiary to lenders to the
Company or any Subsidiary;
(h) INFORMATION REQUIRED BY RULE 144A -- with reasonable
promptness, upon the request of the holder of any Note, provide such
holder, and any "qualified institutional buyer" (as such term is
defined in Rule 144A under the Securities Act) designated by such
holder, such financial and other information as such holder may
reasonably determine to be necessary in order to permit compliance with
the information requirements of Rule 144A under the Securities Act in
connection with the resale of Notes;
(i) LOAN RECEIVABLES PORTFOLIO STATISTICS, STATIC POOL
RESULTS, ETC. -- concurrently with the delivery of the financial
statements referred to in Section 7.1(a), a report on loan receivable
portfolio statistics detailing gross receivables in accordance with
GAAP, less deduction for ineligible receivables, including an aging of
accounts receivable, dealer concentrations and static pool results for
such quarterly fiscal period presented in the form of Exhibit 7.1(i)
attached hereto;
(j) CLAIMS ANALYSIS -- within 30 days after the end of each
fiscal year, a claims analysis in the form of Exhibit 7.1(j) attached
hereto;
(k) OTHER MATERIAL INFORMATION -- promptly, and in any event
within three calendar days after the Company or a Responsible Officer
becoming aware of the existence of any of the following, notice of (i)
the commencement of any Material litigation against, by or affecting
the Company or any of its Subsidiaries, and any Material developments
therein, (ii) the entering into by the Company or any Subsidiary of any
Material contract or undertaking that is not entered into in the
ordinary course of business or (iii) any development in the business or
affairs of the Company or any of its Subsidiaries which has resulted in
or which is likely in the reasonable judgment of the Company, to have a
Material Adverse Effect, together with a statement of a Senior
Financial Officer setting forth details of such litigation,
development, contract or undertaking, and the action which the Company
or such Subsidiary, as the case may be, has taken and proposes to take
with respect thereto;
(l) promptly after the end of each fiscal quarter or the
occurrence of a material change in the ownership of stock or other
equity interest by Sam J. Frankino and/or his
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<PAGE> 28
Affiliates of the Company and/or its Affiliates, a report showing the
ownership interest of Sam J. Frankino and his Affiliates in the Company
and its Affiliates; and
(m) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder and under the Notes as from time to
time may be reasonably requested by any such holder of Notes.
7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of
Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied
by a certificate of a Senior Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Sections 10.2, 10.3(i), 10.4, 10.5
and 10.6 hereof, inclusive, during the quarterly or annual period
covered by the statements then being furnished (including with respect
to each such Section, where applicable, the calculations of the maximum
or minimum amount, ratio or percentage, as the case may be, permissible
under the terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition or
event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without limitation,
any such event or condition resulting from the failure of the Company
or any Subsidiary to comply with any Environmental Law), specifying the
nature and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.
7.3. INSPECTION.
The Company shall permit the representatives of each holder of
Notes:
(a) NO DEFAULT -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice
to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and its independent public
accountants (and by this provision the Company authorizes said
accountants to discuss the
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<PAGE> 29
affairs, finances and accounts of the Company and its Subsidiaries) and
to visit the other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and
(b) DEFAULT -- if a Default or Event of Default then exists,
at the expense of the Company to visit and inspect any of the offices
or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. PREPAYMENT OF THE NOTES.
8.1. REQUIRED PREPAYMENTS.
(a) On April 21, 2000 and on each April 21 thereafter to and
including April 21, 2003 the Company will prepay $9,000,000 principal amount (or
such lesser principal amount as shall then be outstanding) of the Notes at par
and without payment of the Make-Whole Amount or any premium, PROVIDED that upon
any partial prepayment of the Notes pursuant to Section 8.2 or any prepayment of
one or more Notes pursuant to paragraph (b) of this Section 8.1 the principal
amount of each required prepayment of the Notes becoming due under this Section
8.1(a) on and after the date of such prepayment shall be reduced in the same
proportion as the aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment.
(b) In the event that a Person or a group of related Persons
(other than Sam J. Frankino or the Frankino Trust) shall at any time
beneficially own, directly or indirectly, more than 35% of the voting power of
the Voting Stock of the Company, a Change of Control shall be deemed to have
occurred (a "Change of Control"). Within 5 days of the occurrence of a Change of
Control, the Company shall give written notice of such occurrence to each holder
of the Notes, which notice shall also contain an offer by the Company to prepay
at par in their entirety the Notes held by such holder on the terms set forth in
this Section 8.1(b). Each holder will have 30 days from the receipt of such
written notice to accept or decline such offer by the Company to prepay in their
entirety the Notes held by such holder, provided that if any holder fails to
respond within such 30 day period such holder shall be deemed to have rejected
such offer. Upon the receipt of the acceptance of such offer from any holder or
holders of any Notes then outstanding, the Company will, not later than 45 days
after the date the Company shall have sent the written notice to the holders of
Notes pursuant to the first sentence of this Section 8.1(b), prepay at par all
of the aggregate principal amount then outstanding of the Notes of such
accepting holder(s) together with accrued interest thereon; PROVIDED, that in
the event that more than one holder of the Notes accepts such offer, the Company
shall make such prepayment of the Notes on the same day for all such holders of
Notes.
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(c) In the event that the Second Closing or the Third Closing
shall not occur at the time specified therefor in Section 3.2 or Section 3.3, as
applicable, for any reason (including, but not limited to, the failure of the
Company to satisfy any conditions set forth in Section 4 required to be
satisfied on such date), the Company shall, within one Business Day of the date
such Second Closing or Third Closing would have occurred, give written notice to
each holder of the Notes, containing an offer by the Company to prepay in their
entirety the Notes held by such holder (plus interest accrued to the date of
prepayment and the applicable Make-Whole Amount) on the terms set forth in this
Section 8.1(c). Each holder will have 30 days from the receipt of such written
notice to accept or decline such offer by the Company to prepay in their
entirety the Notes held by such holder, provided that if any holder fails to
respond within such 30 day period such holder shall be deemed to have accepted
such offer. Upon the receipt of the acceptance of or the deemed acceptance of
such offer from any holder or holders of any Notes then outstanding, the Company
will, not later than 45 days after the date the Company shall have sent the
written notice to the holders of Notes pursuant to the first sentence of this
Section 8.1(c), prepay all of the aggregate principal amount then outstanding of
the Notes of such accepting holder(s) together with accrued interest thereon and
the Make-Whole Amount; PROVIDED, that in the event that more than one holder of
the Notes accepts such offer, the Company shall make such prepayment of the
Notes on the same day for all such holders of Notes. Two Business Days prior to
such prepayment, the Company shall deliver to each holder of Notes a certificate
of a Senior Financial Officer specifying, in reasonable detail, the calculation
of such Make-Whole Amount as of the specified prepayment date.
8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, the Notes, in an
amount not less than $5,000,000 in the case of a partial prepayment, at 100% of
the principal amount so prepaid, plus interest accrued to the date of
prepayment, plus the Make-Whole Amount determined for the prepayment date with
respect to such principal amount. The Company will give each holder of Notes
written notice of each optional prepayment under this Section 8.2 not less than
30 days and not more than 60 days prior to the date fixed for such prepayment.
Each such notice shall specify such date, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each Note held by such
holder to be prepaid (determined in accordance with Section 8.3), and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying, in reasonable detail, the
calculation of such Make-Whole Amount as of the specified prepayment date.
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8.3. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes (other
than pursuant to Section 8.1(b) and Section 8.1(c)), the principal amount of the
Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment.
8.4. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this
Section 8, the principal amount of each Note to be prepaid shall mature and
become due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any. From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together with the
interest and Make-Whole Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Note.
8.5. PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.6. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note,
an amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, PROVIDED that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
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discount factor (applied on the same periodic basis as that on
which interest on the Notes is payable) equal to the Reinvestment Yield
with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (I)
the yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page 678" on the
Telerate Access Service (or such other display as may replace Page 678
on Telerate Access Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or (II) if such
yields are not reported as of such time or the yields reported as of
such time are not ascertainable, the Treasury Constant Maturity Series
Yields reported, for the latest day for which such yields have been so
reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield will be determined, if necessary,
by (A) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and (B)
interpolating linearly between (1) the actively traded U.S. Treasury
security with the duration closest to and greater than the Remaining
Average Life and (2) the actively traded U.S. Treasury security with
the duration closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (I) such Called Principal into (ii) the sum
of the products obtained by multiplying (A) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (B) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, PROVIDED that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
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9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1. COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to
comply in all material respects with all laws, ordinances or governmental rules
or regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
individually or in the aggregate Material to the ownership of their respective
properties or to the conduct of their respective businesses.
9.2. INSURANCE.
The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies of such types, on such terms and in such amounts (including
deductibles and co-insurance) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated and maintain in full force and effect public liability insurance and
insurance against claims for personal injury or death or property damage
occurring in connection with any of its activities or any properties owned,
occupied or controlled by it, in such amount as it shall reasonably deem
necessary, and maintain such other insurance as may be required by law.
9.3. MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, all property individually
or in the aggregate Material to the conduct of the business of the Company or
any of its Subsidiaries in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times in accordance with customary and prudent
business practices for similar businesses.
9.4. PAYMENT OF TAXES AND CLAIMS.
The Company will and will cause each of its Subsidiaries to
file all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges, or levies imposed on them or any of
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, PROVIDED
that neither the Company nor any Subsidiary
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need pay any such tax or assessment or claims if the amount, applicability or
validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary.
9.5. CORPORATE EXISTENCE, ETC.
Subject to Section 10.2, the Company will and will cause each
of its Restricted Subsidiaries to at all times preserve and keep in full force
and effect its corporate existence and its qualification as a foreign
corporation in good standing in each jurisdiction in which such qualification is
necessary under applicable law, and the rights, licenses, permits (including
those required under Environmental Laws), franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses; and defend
all of the foregoing against all claims, actions, demands, suits or proceedings
at law or in equity or by or before any Governmental Authority or other agency
or regulatory authority.
9.6. KEEPING OF RECORDS AND BOOKS OF ACCOUNT.
The Company shall keep, and cause each of its Subsidiaries to
keep, adequate records and books of accounts, in which complete entries will be
made and which in the case of financial statements referred to in Section 7.1
will be prepared (except as otherwise expressly provided in this Agreement) in
accordance with GAAP, consistently applied, reflecting all financial
transactions of the Company and each of its Subsidiaries on a consolidated
basis.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1. TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Restricted
Subsidiary to enter into or remain a party to, directly or indirectly, any
transaction (including without limitation the purchase, lease, sale or exchange
of properties of any kind or the rendering of any service), whether or not in
the ordinary course of business with any Affiliate of the Company or any of its
Restricted Subsidiaries, except pursuant to the reasonable requirements of the
Company's or such Restricted Subsidiary's business and upon fair and reasonable
terms no less favorable to the Company or such Restricted Subsidiary than would
be obtainable in a comparable arm's-length transaction with a Person not an
Affiliate.
10.2. MERGER, CONSOLIDATION, SALE OF ASSETS, TRANSFERS, ETC.
Notwithstanding any other provision of this Agreement, the
Company will not and will not permit any Restricted Subsidiary to consolidate
with or merge with any other corporation
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or convey, transfer or lease (a "Transfer") all or a Substantial Part of its
assets in a single transaction or series of transactions to any Person or
Persons except that:
(a) any Restricted Subsidiary may merge with the Company or
with a Wholly-Owned Restricted Subsidiary (provided that the Company or
such Wholly-Owned Restricted Subsidiary shall be the survivor of such
merger);
(b) any Restricted Subsidiary may Transfer its assets to the
Company or any Wholly-Owned Restricted Subsidiary, and NAC, Inc. and
NAC Investment Company may Transfer assets to each other;
(c) the Company may consolidate or merge with another
corporation or convey, transfer or lease all or a Substantial Part of
its assets if the following conditions are satisfied (i) the successor
formed by such consolidation or the survivor of such merger or the
Person that acquires by conveyance, transfer or lease substantially all
or a Substantial Part of the assets of the Company, as the case may be,
shall be a solvent corporation organized and existing under the laws of
the United States or any State thereof (including the District of
Columbia), (ii) such corporation shall have executed and delivered to
each holder of any Notes its assumption of the due and punctual
performance and observance of each covenant and condition of this
Agreement, the Other Agreements and the Notes, (iii) such corporation
shall have caused to be delivered to each holder of any Notes an
opinion of nationally recognized independent counsel, or other
independent counsel reasonably satisfactory to the Required Holders, to
the effect that all agreements or instruments effecting such assumption
are enforceable in accordance with their terms and comply with the
terms hereof; (iv) immediately after giving effect to such transaction
(including without limitation the events set forth in clauses (i) and
(ii) above), no Default or Event of Default shall have occurred and be
continuing; and (v) immediately after giving effect to such
transaction, the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by such sale all or
substantially all of the assets of the Company as an entirety would be
permitted to incur $1.00 of additional Debt pursuant to Section 10.5
hereof;
(d) the Company and any Restricted Subsidiary may convey,
transfer or lease repossessed vehicles in the ordinary course of
business;
(e) the Company and any Restricted Subsidiary may enter into
Receivables Programs pursuant to Section 10.8; and
(f) the Company and any Restricted Subsidiary may Transfer
assets of the Company and its Restricted Subsidiaries if all of the
following conditions shall have been satisfied with respect thereto:
(i) such Transfer does not involve a Substantial Part of the assets of
the Company and its Restricted Subsidiaries, (ii) in the good faith
opinion of the Company, the Transfer is in exchange for consideration
with a Fair Market Value at least equal to that of the property
Transferred, and is in the best interests of the Company, and
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(iii) immediately before and after giving effect to such Transfer no
Default or Event of Default would exist.
No conveyance, transfer or lease of assets of the Company
pursuant to this Section 10.2 shall have the effect of releasing the Company or
any successor corporation that shall theretofore have become such in the manner
prescribed in this Section 10.2 from its liability under this Agreement or the
Notes.
10.3. LIENS.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist (upon the happening of a contingency or otherwise) any Lien on
or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the
Company or any such Restricted Subsidiary, whether now owned or hereafter
acquired, or any income or profits therefrom, or assign or otherwise convey any
right to receive income or profits, except:
(a) Liens for taxes, assessments or other governmental charges
which are not yet due and payable or the payment of which is not at the
time required by Section 5.9;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each
case, incurred in the ordinary course of business for sums not yet due
and payable or being actively contested in good faith by appropriate
proceedings;
(c) Liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Company or a Subsidiary shall at
any time in good faith be prosecuting an appeal or proceeding for a
review and in respect of which a stay of execution pending such appeal
or proceeding for review shall have been secured;
(d) Liens incidental to the conduct of business or the
ownership of properties and assets (including Liens in connection with
worker's compensation, unemployment insurance and other like laws and
attorneys' liens) and Liens to secure the performance of bids, tenders
or trade contracts, or to secure statutory obligations, surety or
appeal bonds or other Liens of like general nature incurred in the
ordinary course of business and not in connection with the borrowing of
money; PROVIDED, in each case, the obligation secured is not overdue
or, if overdue, is being contested in good faith by appropriate actions
or proceedings;
(e) minor Liens incidental to the conduct of the business of
the Company or its Restricted Subsidiaries which are not incurred in
connection with the borrowing of money or the obtaining of advances or
credits, and which do not in the aggregate materially
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detract from the value of the property or assets of the Company and its
Restricted Subsidiaries or materially impair the use thereof in the
operation of the business of the Company and its Restricted
Subsidiaries;
(f) minor survey exceptions or minor encumbrances, easements,
encroachments, covenants or reservations, or rights of others for
rights-of-way, utilities and other similar purposes, or zoning or other
restrictions as to the use of real properties, which are necessary for
the conduct of the activities of the Company and its Subsidiaries or
which customarily exist on properties of corporations engaged in
similar activities and similarly situated and which do not in any event
materially impair their use in the operation of the business of the
Company and its Subsidiaries;
(g) Liens securing Debt of a Subsidiary to the Company or to a
Wholly-Owned Subsidiary;
(h) any Lien created to secure all or any part of the purchase
price, or to secure Debt incurred or assumed to pay all or any part of
the purchase price or cost of construction, of property (or any
improvement thereon) acquired or constructed by the Company or a
Subsidiary after the date of the Initial Closing, PROVIDED that
(i) any such Lien shall extend solely to the item or
items of such property (or improvement thereon) so acquired or
constructed and, if required by the terms of the instrument
originally creating such Lien, other property (or improvement
thereon) which is an improvement to or is acquired for
specific use in connection with such acquired or constructed
property (or improvement thereon) or which is real property
being improved by such acquired or constructed property (or
improvement thereon),
(ii) the principal amount of Debt secured by any such
Lien shall at no time exceed an amount equal to 80% (or 100%
in the case of Debt consisting of Capital Leases) of the
lesser of (A) the cost to the Company or such Subsidiary of
the property (or improvement thereon) so acquired or
constructed and (B) the Fair Market Value (as determined in
good faith by the board of directors of the Company) of such
property (or improvement thereon) at the time of such
acquisition or construction, and
(iii) any such Liens shall be created
contemporaneously with, or within 365 days after, the
acquisition or construction of such property;
(i) other Liens securing Debt not otherwise permitted by
paragraphs (a) through (h) of this Section 10.3 (including, but not
limited to, Liens created in connection with Receivables Programs),
PROVIDED that the sum of all Debt secured by such Liens PLUS Debt of
Restricted Subsidiaries and Subsidiaries of Restricted Subsidiaries
permitted pursuant to
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Section 10.5(e) does not exceed an amount equal to 5% of
Consolidated Total Assets as of the then most recently ended fiscal
quarter of the Company.
10.4. RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.
(a) Limitation. The Company will not, and will not permit any
of its Restricted Subsidiaries to, at any time, declare or make, or incur any
liability to declare or make, any Restricted Payment or make or authorize any
Restricted Investment unless immediately after giving effect to such action:
(i) the sum of (x) aggregate amount of Restricted
Payments of the Company and its Restricted Subsidiaries declared or
made during the period commencing on February 1, 1997, and ending on
the date such Restricted Payment or Restricted Investment is declared
or made, inclusive and (y) the amount of Restricted Investments of the
Company and its Restricted Subsidiaries (with each Restricted
Investment and Restricted Payment being valued immediately after the
making of any such Restricted Investment or Restricted Payment) would
not exceed the sum of
(A) $2,000,000, plus
(B) 50% of Consolidated Net Income for the
period commencing on February 1, 1997 and ending at the end of
the most recently ended fiscal quarter of the Company (or
minus 100% of Consolidated Net Income for such period if
Consolidated Net Income for such period is negative);
(ii) no Default or Event of Default exists or would
exist after giving effect to such Restricted Payment or Restricted
Investment; and
(iii) the Company would be permitted by the
provisions of Section 10.5 hereof to incur at least $1.00 of additional
Debt owing to a Person other than a Restricted Subsidiary of the
Company.
(b) Time of Payment. The Company will not, nor will it permit
any of its Restricted Subsidiaries to, authorize a Restricted Payment that is
not payable within 60 days of authorization.
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10.5. FINANCIAL COVENANTS.
(a) CONSOLIDATED TANGIBLE NET WORTH. The Company will not, at
any time, permit Consolidated Tangible Net Worth to be less than the
sum of (I) $195,000,000, PLUS (II) an amount equal to 50% of its
Consolidated Cumulative Net Income (if positive) for each completed
fiscal quarter beginning with the fiscal quarter ended April 30, 1997
PLUS (III) 75% of the Net Cash Proceeds from the issuance or sale of
any capital stock of the Company or any Subsidiary, PLUS (IV) 75% of
the Net Cash Proceeds of any Subordinated Debt incurred by the Company
or any Subsidiary at any time.
(b) LIMITATIONS ON CONSOLIDATED DEBT. The Company will not at
any time permit the ratio of Consolidated Debt to Consolidated Total
Capitalization to be greater than 0.45:1.00.
(c) LIMITATIONS ON SENIOR DEBT. The Company will not at any
time permit the ratio of Senior Debt to Eligible Net Installment
Receivables to exceed 0.42:1.00.
(d) CONSOLIDATED FIXED CHARGES COVERAGE RATIO. The Company
will not, as of the end of any fiscal quarter, permit the ratio of (i)
Net Income Available for Fixed Charges for the immediately preceding
four fiscal quarter period to (ii) Fixed Charges for such immediately
preceding four fiscal quarter period, to be less than 3.00:1.00.
(e) LIMITATIONS ON PRIORITY DEBT. The Company will not permit
the aggregate Debt of all Restricted Subsidiaries and Subsidiaries of
Restricted Subsidiaries plus the amount of Debt secured by Liens
permitted under Section (j) of Section 10.3 to exceed at any time 5% of
Consolidated Total Assets.
10.6. SUBORDINATED DEBT.
The Company will not issue any Subordinated Debt unless the
first principal payment or other required payment or prepayment of principal
with respect to such Subordinated Debt is scheduled to occur after April 21,
2004.
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10.7. LINE OF BUSINESS.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, make any substantial change in the nature of its
business from that engaged in on the date of this Agreement as described in the
Memorandum, engage in any other businesses other than those in which it is
engaged on the date of this Agreement as described in the Memorandum or make any
Material change in the structure or terms of any dealer holdback program which
would result in the subordination of any obligation of any Person under the
Notes, this Agreement, the Other Agreements or any other Transaction Document to
the obligations of any such dealer; provided, however, that this Section 10.7
shall not preclude the Company or any Restricted Subsidiary from engaging in
additional related or ancillary businesses that are not likely to have a
Material Adverse Effect, including, without limitation, activating a dormant
insurance company for the purpose of providing credit insurance, automobile
warranty programs and other programs or services related or incidental to the
Company's automobile finance programs (provided such activation is not likely to
have a Material Adverse Effect).
10.8. RECEIVABLES PROGRAMS.
The Company will not, and will not permit its Subsidiaries to,
enter into any transaction (such transaction being referred to herein as a
"RECEIVABLES PROGRAM") involving (i) the sale or other financing by the Company
or any of its Subsidiaries of installment notes receivable or other evidences of
indebtedness arising in the ordinary course of business of the Company or any of
its Subsidiaries or (ii) the incurrence by the Company or any of its
Subsidiaries of Non-Recourse Indebtedness secured by Liens on installment notes
receivable or other evidences of indebtedness arising in the ordinary course of
business of the Company or any of its Subsidiaries (in each case, whether or not
such installment notes receivable or evidences of indebtedness is required to be
included on the balance sheet of the Company or such Subsidiary in accordance
with GAAP); provided that in any twelve month period, the Company and its
Subsidiaries may enter into Receivables Programs if the aggregate of net book
value of all installment notes receivable and other evidences of indebtedness to
be sold or financed in connection with all Receivables Programs in such twelve
month period does not exceed 10% of Consolidated Total Capitalization as of the
last day of the Company's most recently ended fiscal year; provided that, in
performing such calculation, the value of any subordinate or retained interest
or similar interest retained by the Company shall not be "netted" with the net
book value of the assets subject to such Receivables Program. "Non-Recourse
Indebtedness" means, as applied to any Receivables Program, Debt under the terms
of which no personal recourse may be had against the Company or any of its
Subsidiaries for the payment of the principal of or interest or premium on such
Debt solely as a result of a default by one or more account debtors in the
payment of any accounts receivable included in such Receivables Program.
10.9. GUARANTY BY SUBSIDIARIES.
The Company will not permit any Subsidiary to become obligated
under any Guaranty of the Company's obligations under the Bank Credit Agreement
unless such Subsidiary
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has guaranteed or concurrently guarantees the Company's obligations under this
Agreement and the Notes on the same terms.
10.10 NEGATIVE PLEDGE LIMITATION.The Company will not and will not permit any
Restricted Subsidiary to enter into any agreement with any Person, other than
the holders of the Notes pursuant to this Agreement and the Lenders (as defined
in the Bank Credit Agreement) in connection with the Bank Credit Agreement,
which prohibits or limits the ability of the Company or any Subsidiary to
create, incur, assume or suffer to exist any Lien upon any of its assets,
rights, revenues or property, real, personal or mixed, tangible or intangible,
whether now owned or hereafter acquired.
10.11. PAYMENT AMD MODIFICATIONS OF DEBT. The Company will not and will not
permit any Subsidiary to make any optional payment, defeasance (whether a
covenant defeasance, legal defeasance or other defeasance), prepayment or
redemption of any of its or any of its Subsidiaries' Debt (other than debt under
the Bank Credit Agreement) or amend or modify, or consent or agree to any
amendment or modification of, the Bank Credit Agreement or any other instrument
or agreement under which any of its debt under the Bank Credit Agreement is
issued or created or otherwise related thereto, or enter into any agreement or
arrangement providing for any defeasance of any kind of any of its Debt (other
than debt under the Bank Credit Agreement).
10.12 ADDITIONAL COVENANTS. If at any time the Company shall enter into or be a
party to any instrument or agreement, including all such instruments or
agreements in existence as of the date hereof and all such instruments or
agreements entered into after the date hereof, relating to or amending any terms
or conditions applicable to any of its Debt which includes covenants, terms,
conditions or defaults not substantially provided for in this Agreement or more
favorable to the lender or lenders thereunder than those provided for in this
Agreement, then the Company shall promptly so advise the holders of the Notes.
Thereupon, if the Required Holders shall request, upon notice to the Company,
the holders of the Notes shall enter into an amendment to this Agreement or an
additional agreement (as the Required Holders may request), providing for
substantially the same covenants, terms, conditions and defaults as those
provided for in such instrument or agreement to the extent required and as may
be selected by the Required Holders. In addition to the foregoing, any
covenants, terms, conditions or defaults in the Bank Credit Agreement and/or the
Loan Documents (as defined therein) not substantially provided for in this
Agreement or more favorable to the Lenders (as defined in the Bank Credit
Agreement) are hereby incorporated by reference into this Agreement to the same
extent as if set forth fully herein, and no subsequent amendment, waiver or
modification thereof shall effect any such covenants, terms, conditions or
defaults as incorporated herein.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following
conditions or events shall occur and be continuing:
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(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment (whether
such prepayment is required or voluntary) or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Sections 7.1(d) or 10; or
(d) the Company, NAC, Inc., NAC Investment Company or any
other Subsidiary Guarantor defaults in the performance of or compliance
with any term contained herein or the Other Agreements (other than
those referred to in paragraphs (a), (b) and (c) of this Section 11),
any Subsidiary Guaranty or any other Transaction Document and such
default is not remedied within 30 days after the earlier of (I) a
Responsible Officer obtaining actual knowledge of such default and (II)
the Company receiving written notice of such default from any holder of
a Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (d) of Section 11)
(or such shorter period of time as may be specified in the relevant
Subsidiary Guaranty); or
(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company, NAC, Inc., NAC
Investment Company or any other Subsidiary Guarantor in this Agreement,
the Other Agreements, any Subsidiary Guaranty, any other Transaction
Document or in any writing furnished in connection with the
transactions contemplated hereby or thereby proves to have been false
or incorrect in any material respect on the date as of which made; or
(f) (I) the Company or any Restricted Subsidiary is in default
(as principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any Debt
which, individually or together with other such Debt as to which any
such default exists, has an aggregate principal amount of at least
$500,000 beyond any period of grace provided with respect thereto, or
(II) the Company or any Restricted Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Debt
which, individually or together with other such Debt as to which any
such default exists, has an aggregate principal amount of at least
$500,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such
default or condition such Debt has become, or has been declared (or one
or more Persons are entitled to declare such Debt to be), due and
payable before its stated maturity or before its regularly scheduled
dates of payment, or (III) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time
or the right of the holder of Debt to convert such Debt into equity
interests), (X) the Company or any Restricted Subsidiary has become
obligated to purchase or repay Debt
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before its regular maturity or before its regularly scheduled dates of
payment in an aggregate outstanding principal amount of at least
$500,000, or (Y) one or more Persons have the right to require the
Company or any Restricted Subsidiary so to purchase or repay such Debt
or (Z) the holders of such Debt (or a trustee on behalf of such
holders) have the right to elect a majority of the board of directors
of the Company; or
(g) the Company or any Restricted Subsidiary (I) is generally
not paying, or admits in writing its inability to pay, its debts as
they become due, (II) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (III) makes an
assignment for the benefit of its creditors, (IV) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, (V) is adjudicated as insolvent or to be
liquidated, or (VI) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company
or any of its Restricted Subsidiaries, a custodian, receiver, trustee
or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for
relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of
any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any of its
Restricted Subsidiaries, or any such petition shall be filed against
the Company or any of its Subsidiaries and such petition shall not be
dismissed within 60 days; or
(i) One or more judgments or orders for the payment of money
in an aggregate amount of $1,000,000 or more (which $1,000,000 amount
may not be deemed a material amount) shall be rendered against the
Company or any of its Subsidiaries, or any other judgment or order
(whether or not for the payment of money) shall be rendered against or
shall affect the Company or any of its Subsidiaries which causes or
could cause a material adverse change in the business, properties,
operations or condition, financial or otherwise, of the Company or any
of its Subsidiaries or which does or could have a material adverse
effect on the legality, validity or enforceability of this Agreement,
the Other Agreements, the Notes or any Subsidiary Guaranty, and either
(i) such judgment or order shall have remained unsatisfied and the
Company or such Subsidiary shall not have taken action necessary to
stay enforcement thereof by reason of pending appeal or otherwise,
prior to the expiration of the applicable period of limitations for
taking such action or, if such action shall have been taken, a final
order denying such stay shall have been rendered, or (ii) enforcement
proceedings shall have been commenced by any creditor upon any such
judgment or order; or
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(j) if (I) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (II) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (III) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
all Plans, determined in accordance with Title IV of ERISA, shall
exceed $2,000,000, (IV) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (V) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (VI) the Company or
any Subsidiary establishes or amends any employee welfare benefit plan
that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder; and
any such event or events described in clauses (i) through (vi) above,
either individually or together with any other such event or events,
could reasonably be expected to have a Material Adverse Effect; or
(k) Any event of default described in any Subsidiary Guaranty
shall have occurred and be continuing, or any material provision of any
Subsidiary Guaranty shall at any time for any reason cease to be valid,
binding and enforceable against any obligor thereunder, or the
validity, binding effect or enforceability thereof shall be contested
by any Person, or any obligor, shall deny that it has any or further
liability or obligation thereunder, or any Subsidiary Guaranty shall be
terminated, invalidated or set aside, or be declared ineffective or
inoperative or in any way cease to give or provide to the holders of
the Notes the benefits purported to be created thereby.
As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION
(a) If an Event of Default with respect to the Company
described in paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing, any holder or holders of more than 51% in principal amount of the
Notes at the time outstanding may at any time
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at its or their option, by notice or notices to the Company, declare all the
Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b)
of Section 11 has occurred and is continuing, any holder or holders of Notes at
the time outstanding affected by such Event of Default may at any time, at its
or their option, by notice or notices to the Company, declare all the Notes held
by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section
12.1, whether automatically or by declaration, such Notes will forthwith mature
and the entire unpaid principal amount of such Notes, plus (X) all accrued and
unpaid interest thereon and (Y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2. OTHER REMEDIES
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 12.1, the holder of any Note
at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.
12.3. RESCISSION
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of not less than 66_%
in principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (A)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (B) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (C) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will
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extend to or affect any subsequent Event of Default or Default or impair any
right consequent thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note upon any
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes. The name
and address of each holder of one or more Notes, each transfer thereof and the
name and address of each transferee of one or more Notes shall be registered in
such register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
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13.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office
of the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, PROVIDED that if necessary
to enable the registration of transfer by a holder of any Note, such Note may be
in a denomination of less than $100,000. Any transferee, by its acceptance of a
Note registered in its name (or the name of its nominee), shall be deemed to
have made the representation set forth in Section 6.2.
13.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a
Note with a minimum net worth of at least $50,000,000, such Person's
own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
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14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT.
Subject to Section 14.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes shall be made
in the State of Ohio at the principal office of the Company in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.
14.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any
Note, and notwithstanding anything contained in Section 14.1 or in such Note to
the contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by no later than 1:00 p.m.
New York City time on the date specified for payment by the method and at the
address specified for such purpose below your name in Schedule A, or by such
other method or at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, you shall surrender
such Note for cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment most
recently designated by the Company pursuant to Section 14.1. Prior to any sale
or other disposition of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 13.2. The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by you
under this Agreement and that has made the same agreement relating to such Note
as you have made in this Section 14.2.
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15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including reasonable
attorneys' fees and expenses of a special counsel and, if reasonably required,
local or other counsel) incurred by you and each Other Purchaser or holder of a
Note in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement or the Notes (whether
or not such amendment, waiver or consent becomes effective), including, without
limitation: (A) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (B) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any
work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Company will pay, and will save you and each other holder of a Note
harmless from, all claims in respect of any fees, costs or expenses if any, of
brokers and finders (other than those retained by you).
15.2. SURVIVAL.
The obligations of the Company under this Section 15 will
survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the termination of
this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the Notes, the purchase
or transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.
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17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (A) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (B) no such amendment or waiver may, without the written consent
of the holder of each Note at the time outstanding affected thereby, (I) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes, (II) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (III) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.
17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
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17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding upon them and
upon each future holder of any Note and upon the Company without regard to
whether such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company and the
holder of any Note nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of such Note. As used
herein, the term "THIS AGREEMENT" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
17.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of
the requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any of
its Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be
in writing and sent (A) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (B) by registered or certified mail with return receipt
requested (postage prepaid), or (C) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Company
in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of Treasurer, or at
such other address as the Company shall have specified to the holder
of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
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19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (A) consents, waivers and modifications that may hereafter
be executed, (B) documents received by you at the Initial Closing, the Second
Closing or the Third Closing (except the Notes themselves), and (C) financial
statements, certificates and other information previously or hereafter furnished
to you, may be reproduced by you by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and you may destroy
any original document so reproduced. The Company agrees and stipulates that, to
the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
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20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL
INFORMATION" means information delivered to you by or on behalf of the Company
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by
you as being confidential information of the Company or such Subsidiary,
PROVIDED that such term does not include information that (A) was publicly known
or otherwise known to you prior to the time of such disclosure, (B) subsequently
becomes publicly known through no act or omission by you or any Person acting on
your behalf, (C) otherwise becomes known to you other than through disclosure by
the Company or any Subsidiary or (D) constitutes financial statements delivered
to you under Section 7.1 that are otherwise publicly available. You will
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, PROVIDED that you may deliver or disclose
Confidential Information to (I) your directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (II) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (III) any other holder of any Note, (IV) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (V) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(VI) any federal or state regulatory authority having jurisdiction over you,
(VII) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (VIII) any other Person to which
such delivery or disclosure may be necessary or appropriate (W) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (Y) in connection with any
litigation to which you are a party or (Z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.
48
<PAGE> 54
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your
Affiliates as the purchaser of the Notes that you have agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both you and such Affiliate, shall contain such Affiliate's agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 6.
Upon receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted as
a purchaser hereunder and such Affiliate thereafter transfers to you all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of such
transfer, wherever the word "you" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.
22. MISCELLANEOUS.
22.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement
by or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
22.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with
49
<PAGE> 55
any one covenant shall not (absent such an express contrary provision) be deemed
to excuse compliance with any other covenant. Where any provision herein refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
22.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the State
of New York excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such
State.
* * * * *
<PAGE> 56
If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterpart of this Agreement and return
it to the Company, whereupon the foregoing shall become a binding agreement
between you and the Company.
Very truly yours,
NATIONAL AUTO CREDIT, INC.
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
S-1
<PAGE> 57
The foregoing is hereby
agreed to as of the
date thereof.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
on behalf of one or more separate accounts
By CIGNA Investments, Inc.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
S-2
<PAGE> 58
ALLSTATE LIFE INSURANCE COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
S-3
<PAGE> 59
NEW YORK LIFE INSURANCE COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION
BY NEW YORK LIFE INSURANCE COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
S-4
<PAGE> 60
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
S-5
<PAGE> 61
<TABLE>
<CAPTION>
SCHEDULE A
----------
INFORMATION RELATING TO PURCHASERS
Principal Amount Principal Amount Principal Amount
of Notes to be of Notes to be of Notes to be
Purchased on INITIAL Purchased on Purchased on
Name and Address of Purchaser Closing Second Closing Third Closing
----------------------------- ------- -------------- -------------
<S> <C> <C>
[NAME OF PURCHASER] $ $ $
(1) All payments by wire transfer of
immediately available
funds to:
with sufficient
information to identify
the source and application
of such funds.
(2) All notices of payments and
confirmations of such wire
transfers:
(3) All other communications:
</TABLE>
1
Schedule A
<PAGE> 62
SCHEDULE A
----------
<TABLE>
<CAPTION>
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
- ----------------------------- ---------------------
<S> <C>
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY $5,000,000
(1) All payments by wire trans-
fer of immediately available
funds to:
Norwest Bank Iowa, N.A.
666 Walnut Street
Des Moines, Iowa 50309
ABA No. 073000228
Account No. 014752
Reference OBI: PFGSE(S) B 1-B-61017 ( ) Principal $_____ Interest $___
with sufficient information
to identify the source and
application of such funds.
(2) All notices of payments and
written confirmations of such
wire transfers:
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0960
Attn: Investment - Accounting & Treasury
(3) All other communications:
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0800
Attn: Investment Securities
</TABLE>
1
Schedule A
<PAGE> 63
SCHEDULE B
----------
DEFINED TERMS
-------------
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
"AFFILIATE" means, at any time, and with respect to any
Person, (a) any other Person that at such time directly or indirectly through
one or more intermediaries Controls, or is Controlled by, or is under common
Control with, such first Person, and (b) any Person beneficially owning or
holding, directly or indirectly, 5% or more of any class of voting or equity
interests of such first Person or any Subsidiary of such first Person or any
corporation of which such first Person and its Subsidiaries beneficially own or
hold, in the aggregate, directly or indirectly, 5% or more of any class of
voting or equity interests. Each director or officer of any Person shall be
deemed to be an Affiliate of such Person. As used in this definition, "CONTROL"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.
"BANK CREDIT AGREEMENT" means (i) that certain Long-Term
Credit Agreement, dated as of April 21, 1997, by and among the Company, the
lenders set forth on the signature pages thereto and the First National Bank of
Chicago, as administrative agent for such lenders and Morgan Guaranty Trust
Company of New York, as documentation agent for such lenders, as amended from
time to time or replacements or substitutions therefor and/or (ii) that certain
Short-Term Credit Agreement, dated as of April 21, 1997, by and among the
Company, the lenders set forth on the signature pages thereto and the First
National Bank of Chicago, as administrative agent for such lenders and Morgan
Guaranty Trust Company of New York, as documentation agent for such lenders, as
amended from time to time or replacements or substitutions therefor
"BUSINESS DAY" means (A) for the purposes of Section 8.6 only,
any day other than a Saturday, a Sunday or a day on which commercial banks in
New York City are required or authorized to be closed, and (B) for the purposes
of any other provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in New York City or Cleveland, Ohio
are required or authorized to be closed.
"CAPITAL LEASE" means a lease (of real or personal property)
with respect to which the lessee is or should be required concurrently to
recognize the acquisition of an asset and the incurrence of a liability in
accordance with GAAP.
"CHANGE IN CONTROL" has the meaning set forth in
Section 8.1(b)
1
Schedule B
<PAGE> 64
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.
"COMPANY" means National Auto Credit, Inc., a Delaware
corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED CUMULATIVE NET INCOME" means, as of any date,
the net income of the Company and its Restricted Subsidiaries (after deduction
for income and other taxes of the Company and its Restricted Subsidiaries, or
its shareholders in the case of a corporation that has elected to be taxed as a
subchapter S Corporation under the Code, determined by reference to income or
profits of such Person) for the period commencing on February 1, 1997 through
the end of the most recently completed fiscal quarter of the Company (but
without reduction for any net loss incurred for any fiscal quarter during such
period), taken as one accounting period, all as determined in accordance with
GAAP.
"CONSOLIDATED DEBT" means Debt of the Company and its
Restricted Subsidiaries determined on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED NET INCOME" means, with reference to any period,
the net income (or loss) of the Company and its Restricted Subsidiaries for such
period (taken as a cumulative whole), as determined in accordance with GAAP,
after eliminating all offsetting debits and credits between the Company and its
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the Company
and its Restricted Subsidiaries in accordance with GAAP, provided that there
shall be excluded:
(a) the income (or loss) of any Person accrued prior
to the date it becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or a Restricted Subsidiary, and the
income (or loss) of any Person, substantially all of the assets of
which have been acquired in any manner, realized by such other Person
prior to the date of acquisition;
(b) the income (or loss) of any Person (other than a
Restricted Subsidiary) in which the Company or any Restricted
Subsidiary has an ownership interest, except to the extent that any
such income has been actually received by the Company or such
Restricted Subsidiary in the form of cash dividends or similar cash
distributions;
(c) the undistributed earnings of any Restricted
Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary is not at the
time permitted by the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Restricted Subsidiary;
2
Schedule B
<PAGE> 65
(d) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made
out of income accrued during such period;
(e) any aggregate net gain (but not any aggregate net
loss) during such period arising from the sale, conversion, exchange
or other disposition of capital assets (such term to include, without
limitation, (i) all non-current assets and, without duplication, (ii)
the following, whether or not current: all fixed assets, whether
tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets, and all Securities);
(f) any gains resulting from any write-up of
any assets (but not any loss resulting from any write-down of any
assets);
(g) any net gain from the collection of the proceeds
of life insurance policies;
(h) any gain arising from the acquisition of any
Security, or the extinguishment, under GAAP, of any Debt, of the
Company or any Restricted Subsidiary;
(i) any net income or gain (but not any net loss)
during such period from (i) any change in accounting principles in
accordance with GAAP, (ii) any prior period adjustments resulting from
any change in accounting principles in accordance with GAAP, (iii) any
extraordinary items, or (iv) any discontinued operations or the
disposition thereof;
(j) any deferred credit representing the excess
of equity in any Restricted Subsidiary at the date of acquisition over
the cost of the investment in such Restricted Subsidiary;
(k) in the case of a successor to the Company by
consolidation or merger or as a transferee of its assets, any earnings
of the successor corporation prior to such consolidation, merger or
transfer of assets; and
(l) any portion of such net income that cannot be
freely converted into United States Dollars.
"CONSOLIDATED TANGIBLE NET WORTH" means Tangible Net Worth of
the Company and its Restricted Subsidiaries determined on a consolidated basis
in accordance with GAAP.
"CONSOLIDATED TOTAL ASSETS" means, at any time, the total
assets of the Company and its Restricted Subsidiaries which would be shown as
assets on a consolidated balance sheet of the Company and its Restricted
Subsidiaries as of such time prepared in accordance with GAAP, after eliminating
all amounts properly attributable to minority interests, if any, in the stock
and surplus of Restricted Subsidiaries.
3
Schedule B
<PAGE> 66
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any time,
the sum of Consolidated Tangible Net Worth and Consolidated Debt.
"CONTINGENT LIABILITIES" of any Person shall mean, as of any
date, all obligations of such Person or of others for which such Person is
contingently liable, as obligor, guarantor, surety or in any other capacity, or
in respect of which obligations such Person assures a creditor against loss or
agrees to take any action to prevent any such loss (other than endorsements of
negotiable instruments for collection in the ordinary course of business),
including, without limitation, all reimbursement obligations of such Person in
respect of any letters of credit, surety bonds or similar obligations and all
obligations of such Person to advance funds to, or to purchase assets, property
or services form, any other Person in order to maintain the financial condition
of such other Person.
"CONTROLLED GROUP" means a Person and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with such Person, are treated
as a single employer generally under Section 414(b) or 414(c) of the Code.
"DEBT" of any Person means, as of any date, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person as lessee under any Capital Lease, (c) all obligations which are secured
by any Lien existing on any asset or property of such Person whether or not the
obligation secured thereby shall have been assumed by such Person, (d) the
unpaid purchase price for goods, property or services acquired by such Person,
except for trade accounts payable arising in the ordinary course of business
that are not past due, (e) all obligations of such Person to purchase goods,
property or services where payment therefor is required regardless of whether
delivery of such goods or property or the performance of such services is ever
made or tendered (generally referred to as "take or pay contracts"), (f) all
liabilities of such Person in respect of Unfunded Benefit Liabilities under any
plan of such Person or of any member of a Controlled Group of which such Person
is a member, (g) all obligations of such Person in respect of any interest rate
or currency swap, rate cap or other similar transaction (valued in an amount
equal to the highest termination payment, if any, that would be payable by such
Person upon termination for any reason on the date of determination), and (h)
all obligations of others similar in character to those described in clauses (a)
through (g) of this definition for which such Person is contingently liable, as
obligor, guarantor, surety or in any other capacity, or in respect of which
obligations such Person assures a creditor against loss or agrees to take any
action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including,
without limitation, all reimbursement obligations of such Person in respect of
letters of credit, surety bonds or similar obligations and all obligations of
such Person to advance funds to, or to purchase assets, property or services
from, any other Person in order to maintain the financial condition of such
other Person.
4
Schedule B
<PAGE> 67
"DEFAULT" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of notice or
both, become an Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater
of (I) 2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (II) 2% over the rate of interest publicly announced
by The Chase Manhattan Bank, N.A. in New York City, New York as its "base" or
"prime" rate.
"DISTRIBUTION" means, in respect of any corporation,
association or other business entity:
(m) dividends or other distributions or payments on
capital stock or other equity interest of such corporation,
association or other business entity (except distributions in such
stock or other equity interest); and
(n) the redemption or acquisition of such stock or
other equity interests or of warrants, rights or other options to
purchase such stock or other equity interests (except when solely in
exchange for such stock or other equity interests) unless made,
contemporaneously, from the net proceeds of a sale of such stock or
other equity interests.
"ELIGIBLE NET INSTALLMENT RECEIVABLES" means, the net amount
of installment notes receivable of the Company and its Restricted Subsidiaries
as shown on the balance sheet of the Company and its Restricted Subsidiaries
determined on a consolidated basis in accordance with GAAP less (a) the amount
of installment notes receivable more than 120 days past due on a contractual
basis, (b) the amount of installment notes receivable as to which foreclosure
proceedings have been commenced with respect to collateral, (c) the amount of
installment notes receivable as to which the collateral is subject to
repossession or resale, (d) the amount of installment notes receivable which
have been placed on non-accrual, (e) the amount of installment notes receivable
included in or subject to any Receivables Program and (f) the amount of
installment notes receivable otherwise reasonably deemed ineligible by the
Required Holders, net of unearned income in the case of each of (a), (b), (c),
(d), (e) and (f).
"ENVIRONMENTAL LAWS" means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
5
Schedule B
<PAGE> 68
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company or
a Restricted Subsidiary under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" means at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"FIXED CHARGES" means, with respect to any period, the sum of
(a) Interest Charges for such period and (b) Lease Rentals for such period. For
purposes of this definition, "Interest Charges" means, with respect to any
period, the sum (without duplication) of the following (in each case,
eliminating all offsetting debits and credits between the Company and its
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the Company
and its Restricted Subsidiaries in accordance with GAAP): (a) all interest in
respect of Debt of the Company and its Restricted Subsidiaries (including
imputed interest on Capital Leases) deducted in determining Consolidated Net
Income for such period, together with all interest capitalized or deferred
during such period and not deducted in determining Consolidated Net Income for
such period, and (b) all debt discount and expense amortized or required to be
amortized in the determination of Consolidated Net Income for such period. For
purposes of this definition, "Lease Rentals" means, with respect to any period,
the sum of the rental and other obligations required to be paid during such
period by the Company or any Restricted Subsidiary as lessee under all leases of
real or personal property (other than Capital Leases), excluding any amounts
required to be paid by the lessee (whether or not therein designated as rental
or additional rental) on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges, provided that, if at the date of
determination, any such rental or other obligations (or portion thereof) are
contingent or not otherwise definitely determinable by the terms of the related
lease, the amount of such obligations (or such portion thereof) (i) shall be
assumed to be equal to the amount of such obligations for the period of 12
consecutive calendar months immediately preceding the date of determination or
(ii) if the related lease was not in effect during such preceding 12 month
period, shall be the amount estimated by a Senior Financial Officer of the
Company on a reasonable basis and in good faith.
"FRANKINO TRUST" means the Sam J. Frankino Trust so long as
Sam J. Frankino, Robert J. Bronchetti or Connie Frankino (or two or more of them
acting together) have sole voting power over all voting rights with respect to
shares of stock or other ownership interest of the Frankino Trust in the Company
and its Affiliates.
6
Schedule B
<PAGE> 69
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(o) the government of
(i) the United States of America or any
State or other political subdivision thereof, or
(ii) any jurisdiction in which the Company or
any Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of the
Company or any Subsidiary, or
(p) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
"GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any indebtedness, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(q) to purchase such indebtedness or obligation
or any property constituting security therefor;
(r) to advance or supply funds (I) for the purchase
or payment of such indebtedness or obligation, or (II) to
maintain any working capital or other balance sheet
condition or any income statement condition of any other
Person or otherwise to advance or make available funds for
the purchase or payment of such indebtedness or obligation;
(s) to lease properties or to purchase properties
or services primarily for the purpose of assuring the owner
of such indebtedness or obligation of the ability of any
other Person to make payment of the indebtedness or
obligation; or
(t) otherwise to assure the owner of such
indebtedness or obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
7
Schedule B
<PAGE> 70
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company pursuant
to Section 13.1.
"INITIAL CLOSING" is defined in Section 3.1.
"INSTITUTIONAL INVESTOR" means (A) any original purchaser of a
Note, (B) any holder of a Note holding more than 5% of the aggregate principal
amount of the Notes then outstanding, and (C) any bank, trust company, savings
and loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.
"INVESTMENT" means any investment, made in cash or by delivery
of property, by the Company or any of its Restricted Subsidiaries (i) in any
Person, whether by acquisition of stock, Debt or other obligation or Security,
or by loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any
property.
"INVESTMENT COMPANY ACT" means the Investment Company Act of
1940, as amended.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.6.
"MATERIAL" means material in relation to the business,
operations, affairs, financial condition, assets, properties, or prospects of
the Company and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(A) the business, operations, affairs, financial condition, assets or properties
of the Company and its Restricted Subsidiaries taken as a whole, or (B) the
ability of the Company and its Restricted Subsidiaries to perform their
respective obligations under this Agreement, the other Transaction Documents and
the Notes, or (C) the validity or enforceability of this Agreement, the other
Transaction Documents or the Notes.
8
Schedule B
<PAGE> 71
"MEMORANDUM" is defined in Section 5.3.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"NET CASH PROCEEDS" means without duplication in connection
with any issuance or sale of any equities, securities or debt securities or
instruments or the incurrence of loans, the cash proceeds received from such
issuance or incurrence, net of investment banking fees, reasonable and
documented attorneys' fees, accountants' fees, underwriting discounts and
commissions and other reasonable and customary fees and expenses actually
incurred in connection therewith.
"NET INCOME AVAILABLE FOR FIXED CHARGES" means, with respect
to any period, Consolidated Net Income for such period plus all amounts deducted
in the computation thereof on account of (a) Fixed Charges during such period
and (b) taxes imposed on or measured by income or excess profits of the Company
and its Restricted Subsidiaries during such period.
"NET WORTH" means, at any time, with respect to any Person,
(i) the total assets of such Person which would be shown as assets on the
balance sheet of such Person as of such time prepared in accordance with GAAP,
after eliminating all amounts properly attributable to minority interests and
mandatory redeemable shares, if any, in the stock and surplus of Subsidiaries of
such Person MINUS (ii) the total liabilities of such Person which would be shown
as liabilities on a balance sheet of such Person as of such time prepared in
accordance with GAAP.
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.
"OTHER AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company
9
Schedule B
<PAGE> 72
or any ERISA Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.
"PREFERRED STOCK" means any class of capital stock of a
corporation that is preferred over any other class of capital stock of such
corporation as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such corporation.
"PROPERTY" or "PROPERTIES" means, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, choate or inchoate.
"PUBLIC UTILITY HOLDING COMPANY ACT" means the Public
Utility Holding Company Act of 1935, as amended.
"QPAM EXEMPTION" means Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.
"RECEIVABLES PROGRAM" is defined in Section 10.8.
"REQUIRED HOLDERS" means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and
any other officer of the Company with responsibility for the administration of
the relevant portion of this agreement.
"RESTRICTED INVESTMENTS" means all Investments except the
following:
(u) property to be used in the ordinary course of business
of the Company and its Subsidiaries;
(v) current assets arising from the sale of goods and
services in the ordinary course of business of the Company and its
Subsidiaries;
(w) Investments in one or more Restricted Subsidiaries or
any Person that concurrently with such Investment becomes a Restricted
Subsidiary;
(x) Investments existing on the date of the Initial Closing
and disclosed in Schedule B-1;
(y) Investments in United States Governmental Securities,
provided that such obligations mature within 365 days from the date of
acquisition thereof,
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(z) Investments in certificates of deposit or Eurodollar
certificates of deposit (other than Eurodollar certificates of deposit
issued in Italy or France) or banker's acceptances issued by an
Acceptable Bank, provided that such obligations mature within 365 days
from the date of acquisition thereof,
(aa) Investments in commercial paper issued by a corporation
organized under the laws of the United States of America or any State
thereof rated A-1 by S&P or P-1 by Moody's and maturing not more than
270 days from the date of creation thereof; and
(bb) Investments in Repurchase Agreements.
As of any date of determination, each Restricted Investment shall be valued at
the greater of:
(x) the amount at which such Restricted Investment is shown
on the books of the Company or any of its Subsidiaries (or zero if
such Restricted Investment is not shown on any such books); and
(y) either
(i) in the case of any Guaranty of the obligation
of any Person, the amount which the Company or any of its
Subsidiaries has paid on account of such obligation less any
recoupment by the Company or such Subsidiary of any such
payments, or
(ii) in the case of any other Restricted Investment,
the excess of (x) the greater of (A) the amount originally
entered on the books of the Company or any of its
Subsidiaries with respect thereto and (B) the cost thereof
to the Company or its Subsidiary over (y) any return of
capital (after income taxes applicable thereto) upon such
Restricted Investment through the sale or other liquidation
thereof or part thereof or otherwise.
As used in this definition of "Restricted Investments":
"Acceptable Bank" means any bank or trust company (i) which is
organized under the laws of the United States of America or any State
thereof, (ii) which has capital, surplus and undivided profits
aggregating at least $500,000,000 (or $1,000,000,000 in the case of an
Acceptable Bank issuing a Eurodollar certificate of deposit), and
(iii) whose long-term unsecured debt obligations (or the long-term
unsecured debt obligations of the bank holding company owning all of
the capital stock of such bank or trust company) shall have been given
a rating of "A" or better by S&P, "A2" or better by Moody's.
"Acceptable Broker-Dealer" means any Person other than a
natural person (i) which is registered as a broker or dealer pursuant
to the Exchange Act and (ii) whose long-term
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<PAGE> 74
unsecured debt obligations shall have been given a rating of
"A" or better by S&P, "A2" or better by Moody's.
"Moody's" means Moody's Investors Service, Inc.
"Repurchase Agreement" means any written agreement
(cc) that provides for (i) the transfer of one or more United
States Governmental Securities in an aggregate principal amount at
least equal to the amount of the Transfer Price (defined below) to the
Company or any of its Restricted Subsidiaries from an Acceptable Bank
or an Acceptable Broker-Dealer against a transfer of funds (the
"Transfer Price") by the Company or such Restricted Subsidiary to such
Acceptable Bank or Acceptable Broker-Dealer, and (ii) a simultaneous
agreement by the Company or such Subsidiary, in connection with such
transfer of funds, to transfer to such Acceptable Bank or Acceptable
Broker-Dealer the same or substantially similar United States
Governmental Securities for a price not less than the Transfer Price
plus a reasonable return thereon at a date certain not later than 30
days after such transfer of funds,
(dd) in respect of which the Company or such Restricted
Subsidiary shall have the right, whether by contract or pursuant to
applicable law, to liquidate such agreement upon the occurrence of any
default thereunder, and
(ee) in connection with which the Company or such Restricted
Subsidiary, or an agent thereof, shall have taken all action required
by applicable law or regulations to perfect a Lien in such United
States Governmental Securities.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc.
"RESTRICTED PAYMENTS" means
(ff) any Distribution in respect of the Company or any
Restricted Subsidiary of the Company (other than on account of capital
stock or other equity interests of a Restricted Subsidiary of the
Company owned legally and beneficially by the Company or another
Restricted Subsidiary of the Company), including, without limitation,
any Distribution resulting in the acquisition by the Company of
Securities which would constitute treasury stock, and
(gg) any payment, repayment, redemption, retirement, repurchase
or other acquisition, direct or indirect, by the Company or any
Restricted Subsidiary of, on account of, or in respect of, the
principal of any Subordinated Debt (or any installment thereof) prior
to the regularly scheduled maturity date thereof (as in effect on the
date such Subordinated Debt was originally incurred).
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Schedule B
<PAGE> 75
For purposes of this Agreement, the amount of any Restricted Payment made in
property shall be the greater of (x) the Fair Market Value of such property (as
determined in good faith by the board of directors (or equivalent governing
body) of the Person making such Restricted Payment) and (y) the net book value
thereof on the books of such Person, in each case determined as of the date on
which such Restricted Payment is made.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company or
of any of the Wholly-Owned Restricted Subsidiaries which is not designated as an
Unrestricted Subsidiary. The Board of Directors of the Company may designate any
Unrestricted Subsidiary a Restricted Subsidiary; PROVIDED that no such
designation of an Unrestricted Subsidiary shall be effective unless immediately
after such event (I) such Subsidiary could incur an additional $1.00 of Debt
under Section 10.5(e), (II) there shall exist no condition or event which would
constitute a Default or an Event of Default and (III) the Company shall have
provided written notice of such designation to each holder of a Note; PROVIDED,
FURTHER, that no Unrestricted Subsidiary which was previously a Restricted
Subsidiary may be designated a Restricted Subsidiary. Each Subsidiary of the
Company that is (x) a Subsidiary of the Company on the date of the Initial
Closing, the Second Closing or the Third Closing, (y) a Wholly-Owned Subsidiary
or (z) a Subsidiary Guarantor is a Restricted Subsidiary.
"RULE 10b-5" means Rule 10b-5 of the Securities Act of 1934.
"SECOND CLOSING" is defined in Section 3.2.
"SECURITY" has the meaning given such term in Section (2)1 of
the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SENIOR DEBT" means the Notes and all other Debt of the
Company other than Subordinated Debt.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"SUBORDINATED DEBT" means all Debt of the Company the payment
of which is subordinated to the payment of the Notes and any and all payments in
respect of this Agreement and the other Transaction Documents to the written
satisfaction of the Required Holders.
"SUBSIDIARY" means, as to any Person, any corporation,
association or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership or joint
venture if more than a 50% interest in the profits or capital thereof is owned
by such Person or one or more of its
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<PAGE> 76
Subsidiaries or such Person and one or more of its Subsidiaries (unless such
partnership can and does ordinarily take major business actions without the
prior approval of such Person or one or more of its Subsidiaries). Unless the
context otherwise clearly requires, any reference to a "Subsidiary" is a
reference to a Subsidiary of the Company.
"SUBSIDIARY GUARANTOR" means NAC, Inc., NAC Investment Company
and each Subsidiary of the Company that guarantees the Company's obligations
under this Agreement and the Notes pursuant to Section 10.9.
"SUBSIDIARY GUARANTY" means the guaranty of NAC, Inc. and NAC
Investment Company in substantially the form of Exhibit 4.1(k) attached hereto
and each other Guaranty entered into by a Subsidiary of the Company pursuant to
Section 10.9.
"SUBSTANTIAL PART" means, with respect to sales of assets in
the aggregate during any twelve month period, assets of the Company and/or its
Restricted Subsidiaries having a net book value equal to or in excess of 5% of
Consolidated Total Capitalization as of the last day of the Company's most
recently ended fiscal year.
"TANGIBLE NET WORTH" means, at any time, with respect to any
Person, (a) the Net Worth of such Person MINUS (b) the net book amount of all
items of the following character which are included in the assets of such
Person: (i) goodwill, including, without limitation, the excess of cost over
book value of any asset, (ii) organization or experimental expenses, (iii)
unamortized debt discount and expense, (iv) patents, trademarks, trade names and
copyrights, (v) franchises, licenses and permits, and (vi) other assets which
are deemed intangible assets under GAAP.
"THIRD CLOSING" is defined in Section 3.3
"TRANSACTION DOCUMENTS" means this Agreement, the Other
Agreements, each Subsidiary Guaranty, any other guaranty of a Subsidiary
Guarantor, the Notes and each other document, instrument or other writing
entered into or delivered in connection with the transactions contemplated
herein and therein.
"TRANSFER" is defined in Section 10.2.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan
as of any date, the amount of the unfunded benefit liabilities determined in
accordance with Section 4001(a)(18) of ERISA.
"UNITED STATES GOVERNMENTAL SECURITY" means any direct
obligation of, or obligation fully guaranteed by, the United States of America,
or any agency controlled or supervised by or acting as an instrumentality of the
United States of America pursuant to authority granted by the Congress of the
United States of America, so long as such obligation or guarantee
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Schedule B
<PAGE> 77
shall have the benefit of the full faith and credit of the United States of
America which shall have been pledged pursuant to authority granted by the
Congress of the United States of America.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary which has been
designated by the Board of Directors of the Company as an Unrestricted
Subsidiary of the Company, PROVIDED that (I) no such designation of a Subsidiary
shall be effective unless immediately after such designation there shall exist
no condition or event which would constitute a Default or an Event of Default,
(II) such Subsidiary shall not own any stock, other equity interest or Debt of
the Company or any of the Restricted Subsidiaries, (III) no Subsidiary of the
Company that was Subsidiary of the Company on the date of the Initial Closing,
the Second Closing or the Third Closing may be designated an Unrestricted
Subsidiary, (IV) no Subsidiary Guarantor shall be an Unrestricted Subsidiary,
(v) no Wholly-Owned Subsidiary may be designated an Unrestricted Subsidiary,
(VI) no such designation shall be effective unless the Company shall have
provided written notice of such designation to each holder of a Note and (VII)
no Restricted Subsidiary which was previously an Unrestricted Subsidiary may be
designated an Unrestricted Subsidiary.
"VOTING STOCK" means Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary
one hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" means, at any time, any
Restricted Subsidiary one hundred percent (100%) of all of the equity interests
(except directors' qualifying shares) and voting interests of which are owned by
any one or more of the Company and the Company's other Wholly-Owned Restricted
Subsidiaries at such time.
15
Schedule B
<PAGE> 78
EXHIBIT 1
[FORM OF NOTE]
NATIONAL AUTO CREDIT, INC.
7.66% SENIOR NOTE DUE APRIL 21, 2004
No. [_____] [Date]
$[_______] PPN 632900A*7
FOR VALUE RECEIVED, the undersigned, NATIONAL AUTO CREDIT,
INC. (herein called the "Company"), a corporation organized and existing under
the laws of the State of Delaware, hereby promises to pay to [__________ ], or
registered assigns, the principal sum of [__________] DOLLARS on April 21,
2004, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (A) on the unpaid balance thereof at the rate of 7.66% per annum from
the date hereof, payable semiannually, on the 21st day of April and October in
each year, commencing with the April 21 or October 21 next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (B)
to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (I) 9.66% or (II) 2% over the rate of interest publicly
announced by Chase Manhattan Bank, N.A. from time to time in New York, New York
as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money of the United
States of America in the State of Ohio at the principal office of the Company in
such jurisdiction or at such other place as the Company shall have designated by
written notice to the holder of this Note as provided in the Note Purchase
Agreements referred to below.
This Note is one of a series of Senior Notes (herein called
the "Notes") issued pursuant to separate Note Purchase Agreements, dated as of
April 21, 1997 (as from time to time amended, the "Note Purchase Agreements"),
between the Company and the respective Purchasers named therein and is entitled
to the benefits thereof. Each holder of this Note will be deemed, by its
acceptance hereof, (I) to have agreed to the confidentiality provisions set
forth in Section 20 of the Note Purchase Agreements and (II) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note
Purchase Agreements, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly
Exhibit 1-1
<PAGE> 79
authorized in writing, a new Note for a like principal amount will be issued to,
and registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements. This Note is
also subject to optional prepayment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreements, but not
otherwise.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
This Note shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of New
York excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.
NATIONAL AUTO CREDIT, INC.
By
-------------------------------
[Title]
Exhibit 1-2
<PAGE> 80
EXHIBIT 4.1(k)
FORM OF SUBSIDIARY GUARANTY
GUARANTY
This GUARANTY is entered into as of April [__], 1997, by THE
UNDERSIGNED (each a "GUARANTOR" and collectively, "GUARANTORS") in favor of and
for the benefit of each holder of a Note issued pursuant to the Note Purchase
Agreement (as hereinafter defined) (each a" GUARANTIED PARTY").
RECITALS
A. National Auto Credit, Inc. a Delaware corporation
("COMPANY"), has entered into those certain Note Purchase Agreements dated as of
April [__], 1997 with the Guarantied Parties (said Note Purchase Agreements, as
they may hereafter be amended, supplemented or otherwise modified from time to
time, being the "NOTE PURCHASE AGREEMENT"; capitalized terms defined therein and
not otherwise defined herein being used herein as therein defined).
B. A portion of the proceeds of the sale of the Notes may be
advanced to Guarantors and thus the Guarantied Obligations (as hereinafter
defined) are being incurred for and will inure to the benefit of Guarantors
(which benefits are hereby acknowledged).
C. It is a condition precedent to the purchase of the Notes
under the Note Purchase Agreement that Company's obligations thereunder be
guarantied by Guarantors.
D. Guarantors are willing irrevocably and unconditionally to
guaranty such obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Guarantied Parties to enter into the
Note Purchase Agreement and to purchase the Notes thereunder, Guarantors hereby
agree as follows:
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<PAGE> 81
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Guaranty, the following
terms shall have the following meanings unless the context otherwise requires:
"GUARANTIED OBLIGATIONS" has the meaning assigned to that term
in subsection 2.1.
"GUARANTY" means this Guaranty dated as of April [__], 1997, as
it may be amended, supplemented or otherwise modified from time to
time.
"PAYMENT IN FULL", "PAID IN FULL" or any similar term means
payment in full of the Guarantied Obligations, including without
limitation all principal, interest, costs, fees and expenses
(including, without limitation, reasonable legal fees and expenses) of
the Guarantied Parties as required under the Transaction Documents.
1.2 INTERPRETATION.
(a) References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Guaranty unless
otherwise specifically provided. All accounting terms not otherwise
defined herein shall have the meanings assigned to them under generally
accepted accounting principles.
(b) In the event of any conflict or inconsistency between the
terms, conditions and provisions of this Guaranty and the terms,
conditions and provisions of the Note Purchase Agreement, the terms,
conditions and provisions of this Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 GUARANTY OF THE GUARANTIED OBLIGATIONS. Subject to the provisions
of subsection 2.2(a), Guarantors jointly and severally hereby irrevocably and
unconditionally guaranty, as primary obligors and not merely as sureties, the
due and punctual payment in full of all Guarantied Obligations when the same
shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)). The term "GUARANTIED
OBLIGATIONS" is used herein in its most comprehensive sense and includes:
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(a) any and all obligations of Company in respect of the Notes,
any Make-Whole Amount and any other notes, advances, borrowings, loans,
debts, interest, fees, costs, expenses (including, without limitation,
legal fees and expenses of counsel and allocated costs of internal
counsel), indemnities and liabilities of whatsoever nature now or
hereafter made, incurred or created, whether absolute or contingent,
liquidated or unliquidated, whether due or not due, and however arising
under or in connection with the Notes, the Note Purchase Agreement and
the other Transaction Documents, including those arising under
successive borrowing transactions under the Note Purchase Agreement
which shall either continue such obligations of Company or from time to
time renew them after they have been satisfied and including interest
which, but for the filing of a petition in bankruptcy with respect to
Company, would have accrued on any Guarantied Obligations, whether or
not a claim is allowed against Company for such interest in the related
bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 LIMITATION ON AMOUNT GUARANTIED; CONTRIBUTION BY GUARANTORS. (a)
Anything contained in this Guaranty to the contrary notwithstanding, if any
Fraudulent Transfer Law (as hereinafter defined) is determined by a court of
competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, such obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "FRAUDULENT
TRANSFER LAWS"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (x) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (y) under
any guaranty of Subordinated Debt which guaranty contains a limitation as to
maximum amount similar to that set forth in this subsection 2.2(a), pursuant to
which the liability of such Guarantor hereunder is included in the liabilities
taken into account in determining such maximum amount) and after giving effect
as assets to the value
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<PAGE> 83
(as determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, reimbursement, indemnification or contribution of
such Guarantor pursuant to applicable law or pursuant to the terms of any
agreement (including without limitation any such right of contribution under
subsection 2.2(b))
(b) Guarantors under this Guaranty together desire to allocate among
themselves, in a fair and equitable manner, their obligations arising under this
Guaranty. Accordingly, in the event any payment or distribution is made on any
date by any Guarantor under this Guaranty (a "FUNDING GUARANTOR") that exceeds
its Fair Share (as defined below) as of such date, that Funding Guarantor shall
be entitled to a contribution from each of the other Guarantors in the amount of
such other Guarantor's Fair Share Shortfall (as defined below) as of such date,
with the result that all such contributions will cause each Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"FAIR SHARE" means, with respect to a Guarantor as of any date of determination,
an amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined
below) with respect to such Guarantor to (y) the aggregate of the Adjusted
Maximum Amounts with respect to all Guarantors, MULTIPLIED BY (ii) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty in respect of the obligations guarantied. "FAIR SHARE
SHORTFALL" means, with respect to a Guarantor as of any date of determination,
the excess, if any, of the Fair Share of such Guarantor over the Aggregate
Payments of such Guarantor. "ADJUSTED MAXIMUM AMOUNT" means, with respect to a
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Guarantor under this Guaranty, determined as of such date in
accordance with subsection 2.2(a) PROVIDED that, solely for purposes of
calculating the "Adjusted Maximum Amount" with respect to any Guarantor for
purposes of this subsection 2.2(b), any assets or liabilities of such Guarantor
arising by virtue of any rights to subrogation, reimbursement or indemnification
or any rights to or obligations of contribution hereunder shall not be
considered as assets or liabilities of such Guarantor. "AGGREGATE PAYMENTS"
means, with respect to a Guarantor as of any date of determination, an amount
equal to (i) the aggregate amount of all payments and distributions made on or
before such date by such Guarantor in respect of this Guaranty (including,
without limitation, in respect of this subsection 2.2(b)) MINUS (ii) the
aggregate amount of all payments received on or before such date by such
Guarantors as contributions under this subsection 2.2(b). The amounts payable as
contributions hereunder shall be determined as of the date on which the
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<PAGE> 84
related payment or distribution is made by the applicable Funding Guarantor. The
allocation among Guarantors of their obligations as set forth in this subsection
2.2(b) shall not be construed in any way to limit the liability of any Guarantor
hereunder.
2.3 PAYMENT BY GUARANTORS; APPLICATION OF PAYMENTS. Subject to the
provisions of subsection 2.2(a), Guarantors hereby jointly and severally agree,
in furtherance of the foregoing and not in limitation of any other right which
any may have at law or in equity against any Guarantor by virtue hereof, that
upon the failure of Company to pay any of the Guarantied Obligations when and as
the same shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), Guarantors will upon demand pay,
or cause to be paid, in cash, ratably to the Guarantied Parties, an amount equal
to the sum of the unpaid principal amount of all Guarantied Obligations then due
as aforesaid, accrued and unpaid interest on such Guarantied Obligations
(including, without limitation, interest which, but for the filing of a petition
in bankruptcy with respect to Company, would have accrued on such Guarantied
Obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding) and all other Guarantied Obligations then
owed to the Guarantied Parties as aforesaid. All such payments shall be applied
promptly from time to time:
FIRST, to the payment of the costs and expenses of any
collection or other realization under this Guaranty, including
reasonable compensation to the agents and counsels of the Guarantied
Parties, and all expenses, liabilities and advances made or incurred by
Guarantied Parties in connection therewith; and
SECOND, to the payment of all other Guarantied Obligations.
2.4 LIABILITY OF GUARANTORS ABSOLUTE. Each Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guarantied Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:
5
<PAGE> 85
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) The Guarantied Parties may enforce this Guaranty upon the
occurrence of an Event of Default under the Note Purchase Agreement
notwithstanding the existence of any dispute between Company and any
Guarantied Party with respect to the existence of such Event of
Default.
(c) The obligations of each Guarantor hereunder are independent
of the obligations of Company under the Transaction Documents and the
obligations of any other guarantor (including any other Guarantor) of
the obligations of Company under the Transaction Documents, and a
separate action or actions may be brought and prosecuted against such
Guarantor whether or not any action is brought against Company or any
of such other guarantors and whether or not Company is joined in any
such action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge
any Guarantor's liability for any portion of the Guarantied Obligations
which has not been paid. Without limiting the generality of the
foregoing, if Guarantied Party is awarded a judgment in any suit
brought to enforce any Guarantor's covenant to pay a portion of the
Guarantied Obligations, such judgment shall not be deemed to release
such Guarantor from its covenant to pay the portion of the Guarantied
Obligations that is not the subject of such suit, and such judgment
shall not, except to the extent satisfied by such Guarantor, limit,
affect, modify or abridge any other Guarantor's liability hereunder in
respect of the Guarantied Obligations.
(e) Any Guarantied Party upon such terms as it deems
appropriate, without notice or demand and without affecting the
validity or enforceability of this Guaranty or giving rise to any
reduction, limitation, impairment, discharge or termination of any
Guarantor's liability hereunder, from time to time may (i) renew,
extend, accelerate, increase the rate of interest on, or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (ii) settle, compromise, release or discharge, or accept
or refuse any offer of performance with respect to, or substitutions
for, the Guarantied Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other
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guaranties of the Guarantied Obligations and take and hold security for
the payment of this Guaranty or the Guarantied Obligations; (iv)
release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration, any
security for payment of the Guarantied Obligations, any other
guaranties of the Guarantied Obligations, or any other obligation of
any Person (including any other Guarantor) with respect to the
Guarantied Obligations; (v) enforce and apply any security now or
hereafter held by or for the benefit of such Guarantied Party in
respect of this Guaranty or the Guarantied Obligations and direct the
order or manner of sale thereof, or exercise any other right or remedy
that such Guarantied Party may have against any such security, in each
case as such Guarantied Party in its discretion may determine
consistent with the Notes and the Note Purchase Agreement and any
applicable security agreement, including foreclosure on any such
security pursuant to one or more judicial or nonjudicial sales, whether
or not every aspect of any such sale is commercially reasonable, and
even though such action operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of any Guarantor
against Company or any security for the Guarantied Obligations; and
(vi) exercise any other rights available to it under the Transaction
Documents.
(f) This Guaranty and the obligations of Guarantors hereunder
shall be valid and enforceable and shall not be subject to any
reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of the Guarantied Obligations),
including without limitation the occurrence of any of the following,
whether or not any Guarantor shall have had notice or knowledge of any
of them: (i) any failure or omission to assert or enforce an agreement
or election not to assert or enforce, or the stay or enjoining, by
order of court, by operation of law or otherwise, of the exercise or
enforcement of, any claim or demand or any right, power or remedy
(whether arising under the Transaction Documents, at law, in equity or
otherwise) with respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security
for the payment of the Guarantied Obligations; (ii) any rescission,
waiver, amendment or modification of, or any consent to departure from,
any of the terms or provisions (including without limitation provisions
relating to events of default) of the Notes, the Note Purchase
Agreement, any of the other Transaction
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Documents or any agreement or instrument executed pursuant thereto, or
of any other guaranty or security for the Guarantied Obligations, in
each case whether or not in accordance with the terms of the Note
Purchase Agreement or such Transaction Document or any agreement
relating to such other guaranty or security; (iii) the Guarantied
Obligations, or any agreement relating thereto, at any time being found
to be illegal, invalid or unenforceable in any respect; (iv) the
application of payments received from any source (other than payments
received pursuant to the other Transaction Documents or from the
proceeds of any security for the Guarantied Obligations, except to the
extent such security also serves as collateral for indebtedness other
than the Guarantied Obligations) to the payment of indebtedness other
than the Guarantied Obligations, even though any Guarantied Party might
have elected to apply such payment to any part or all of the Guarantied
Obligations; (v) any Guarantied Party's consent to the change,
reorganization or termination of the corporate structure or existence
of Company or any of its Subsidiaries and to any corresponding
restructuring of the Guarantied Obligations; (vi) any failure to
perfect or continue perfection of a security interest in any collateral
which secures any of the Guarantied Obligations; (vii) any defenses,
set-offs or counterclaims which Company may allege or assert against
any Guarantied Party in respect of the Guarantied Obligations,
including but not limited to failure of consideration, breach of
warranty, payment, statute of frauds, statute of limitations, accord
and satisfaction and usury; and (viii) any other act or thing or
omission, or delay to do any other act or thing, which may or might in
any manner or to any extent vary the risk of any Guarantor as an
obligor in respect of the Guarantied Obligations.
2.5 WAIVERS BY GUARANTORS. Each Guarantor hereby waives, for the
benefit of the Guarantied Parties:
(a) any right to require any Guarantied Party, as a condition
of payment or performance by such Guarantor, to (i) proceed against
Company, any other guarantor (including any other Guarantor) of the
Guarantied Obligations or any other Person, (ii) proceed against or
exhaust any security held from Company, any such other guarantor
(including any other Guarantor) or any other Person, (iii) proceed
against or have resort to any balance of any deposit account or credit
on the books of any Guarantied Party in favor of Company or any other
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Person, or (iv) pursue any other remedy in the power of any Guarantied
Party whatsoever;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Company including,
without limitation, any defense based on or arising out of the lack of
validity or the unenforceability of the Guarantied Obligations or any
agreement or instrument relating thereto or by reason of the cessation
of the liability of Company from any cause other than payment in full
of the Guarantied Obligations;
(c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal;
(d) any defense based upon any Guarantied Party's errors or
omissions in the administration of the Guarantied Obligations, except
behavior which amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of such Guarantor's
obligations hereunder, (ii) the benefit of any statute of limitations
affecting such Guarantor's liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims,
and (iv) promptness, diligence and any requirement that any Guarantied
Party protect, secure, perfect or insure any security interest or lien
or any property subject thereto;
(f) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty, notices of default under the
Note Purchase Agreement or any agreement or instrument related thereto,
notices of any renewal, extension or modification of the Guarantied
Obligations or any agreement related thereto, notices of any extension
of credit to Company and notices of any of the matters referred to in
subsection 2.4 and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Guaranty.
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2.6 GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. Each
Guarantor hereby waives any claim, right or remedy, direct or indirect, that
such Guarantor now has or may hereafter have against Company or any of its
assets in connection with this Guaranty or the performance by such Guarantor of
its obligations hereunder, in each case whether such claim, right or remedy
arises in equity, under contract, by statute, under common law or otherwise and
including without limitation (a) any right of subrogation, reimbursement or
indemnification that such Guarantor now has or may hereafter have against
Company, (b) any right to enforce, or to participate in, any claim, right or
remedy that any Guarantied Party now has or may hereafter have against Company,
and (c) any benefit of, and any right to participate in, any collateral or
security now or hereafter held by any Guarantied Party. In addition, until the
Guarantied Obligations shall have been indefeasibly paid in full, each Guarantor
shall withhold exercise of any right of contribution such Guarantor may have
against any other guarantor (including any other Guarantor) of the Guarantied
Obligations (including without limitation any such right of contribution under
subsection 2.2). Each Guarantor further agrees that, to the extent the waiver or
agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against
Company or against any collateral or security, and any rights of contribution
such Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights any Guarantied Party may have against Company, to all
right, title and interest any Guarantied Party may have in any such collateral
or security, and to any right any Guarantied Party may have against such other
guarantor. If any amount shall be paid to any Guarantor on account of any such
subrogation, reimbursement, indemnification or contribution rights at any time
when all Guarantied Obligations shall not have been paid in full, such amount
shall be held in trust for the Guarantied Parties and shall forthwith be paid
over to the Guarantied Parties to be applied against the Guarantied Obligations,
whether matured or unmatured, in accordance with the terms hereof.
2.7 SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness of Company now
or hereafter held by any Guarantor is hereby subordinated in right of payment to
the Guarantied Obligations, and any such indebtedness of Company to such
Guarantor collected or received by such Guarantor after an Event of Default has
occurred and is continuing shall be held
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in trust for the Guarantied Parties and shall forthwith be paid over to the
Guarantied Parties to be applied against the Guarantied Obligations but without
affecting, impairing or limiting in any manner the liability of such Guarantor
under any other provision of this Guaranty.
2.8 EXPENSES. Guarantors jointly and severally agree to pay, or cause
to be paid, on demand, and to save the Guarantied Parties harmless against
liability for, any and all costs and expenses (including fees and disbursements
of counsel and allocated costs of internal counsel) incurred or expended by any
Guarantied Party in connection with the enforcement of or preservation of any
rights under this Guaranty.
2.9 CONTINUING GUARANTY. This Guaranty is a continuing guaranty and
shall remain in effect until all of the Guarantied Obligations shall have been
paid in full. Guarantor hereby irrevocably waives any right to revoke this
Guaranty as to future transactions giving rise to any Guarantied Obligations.
2.10 AUTHORITY OF GUARANTORS OR COMPANY. It is not necessary for any
Guarantied Party to inquire into the capacity or powers of any Guarantor or
Company or any agents acting or purporting to act on behalf of any of them.
2.11 FINANCIAL CONDITION OF COMPANY. Any Notes may be issued by Company
or continued from time to time without notice to or authorization from any
Guarantor regardless of the financial or other condition of Company at the time
of any such grant or continuation. No Guarantied Party shall have any obligation
to disclose or discuss with any Guarantor its assessment, or any Guarantor's
assessment, of the financial condition of Company. Each Guarantor has adequate
means to obtain information from Company on a continuing basis concerning the
financial condition of Company and its ability to perform its obligations under
the Transaction Documents, and each Guarantor assumes the responsibility for
being and keeping informed of the financial condition of Company and of all
circumstances bearing upon the risk of nonpayment of the Guarantied Obligations.
Each Guarantor hereby waives and relinquishes any duty on the part of any
Guarantied Party to disclose any matter, fact or thing relating to the business,
operations or conditions of Company now known or hereafter known by any
Guarantied Party .
2.12 RIGHTS CUMULATIVE. The rights, powers and remedies given to the
Guarantied Parties by this Guaranty are cumulative and shall be in addition to
and independent of all
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rights, powers and remedies given to the Guarantied Parties by virtue of any
statute or rule of law or in any of the other Transaction Documents or any
agreement between any Guarantor and any Guarantied Party or the Guarantied
Parties or between Company and any Guarantied Party or the Guarantied Parties.
Any forbearance or failure to exercise, and any delay by any Guarantied Party in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
2.13 BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF GUARANTY. (a)
So long as any Guarantied Obligations remain outstanding, no Guarantor shall,
without the prior written consent of the Guarantied Parties in accordance with
the terms of the Note Purchase Agreement, commence or join with any other Person
in commencing any bankruptcy, reorganization or insolvency proceedings of or
against Company. The obligations of Guarantors under this Guaranty shall not be
reduced, limited, impaired, discharged, deferred, suspended or terminated by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Company or by any
defense which Company may have by reason of the order, decree or decision of any
court or administrative body resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on
any portion of the Guarantied Obligations which accrues after the commencement
of any proceeding referred to in clause (a) above (or, if interest on any
portion of the Guarantied Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding, such interest as would have
accrued on such portion of the Guarantied Obligations if said proceedings had
not been commenced) shall be included in the Guarantied Obligations because it
is the intention of Guarantors and the Guarantied Parties that the Guarantied
Obligations which are guarantied by Guarantors pursuant to this Guaranty should
be determined without regard to any rule of law or order which may relieve
Company of any portion of such Guarantied Obligations. Guarantors will permit
any trustee in bankruptcy, receiver, debtor in possession, assignee for the
benefit of creditors or similar person to pay the Guarantied Parties, or allow
the claims of Guarantied Party in respect of, any such interest accruing after
the date on which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied
Obligations are paid by Company or by any other guarantor, the obligations of
Guarantors hereunder shall
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continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) are rescinded or
recovered directly or indirectly from any Guarantied Party as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Guarantied Obligations for all purposes under this
Guaranty.
2.14 NOTICE OF EVENTS. As soon as any Guarantor obtains knowledge
thereof, such Guarantor shall give each Guarantied Party written notice of any
condition or event which has resulted in (a) a material adverse change in the
financial condition of any Guarantor or Company or (b) a breach of or
noncompliance with any term, condition or covenant contained herein or in the
Notes, the Note Purchase Agreement, any other Transaction Document or any other
document delivered pursuant hereto or thereto.
2.15 SET OFF. In addition to any other rights any Guarantied Party may
have under law or in equity, if any amount shall at any time be due and owing by
any Guarantor to any Guarantied Party under this Guaranty, such Guarantied Party
is authorized at any time or from time to time, without notice (any such notice
being hereby expressly waived), to set off and to appropriate and to apply any
and all deposits (general or special, including but not limited to indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness of such Guarantied Party owing to such Guarantor and any
other property of such Guarantor held by any Guarantied Party to or for the
credit or the account of such Guarantor against and on account of the Guarantied
Obligations and liabilities of such Guarantor to any Guarantied Party under this
Guaranty.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Guarantied Parties to accept this
Guaranty and to purchase the Notes and enter into the Note Purchase Agreement,
each Guarantor hereby represents and warrants to the Guarantied Parties that the
following statements are true and correct:
3.1 CORPORATE EXISTENCE. Such Guarantor is duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
has the corporate power to own its assets and to transact the business in which
it is now engaged and is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification, except
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for failures to be so qualified, authorized or licensed that would not in the
aggregate have a material adverse effect on the business, operations, assets or
financial condition of such Guarantor.
3.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Such
Guarantor has the corporate power, authority and legal right to execute, deliver
and perform this Guaranty and all obligations required hereunder and has taken
all necessary corporate action to authorize its Guaranty hereunder on the terms
and conditions hereof and its execution, delivery and performance of this
Guaranty and all obligations required hereunder. No consent of any other Person
including, without limitation, stockholders and creditors of such Guarantor, and
no license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required by such Guarantor in connection with this Guaranty or the execution,
delivery, performance, validity or enforceability of this Guaranty and all
obligations required hereunder. This Guaranty has been, and each instrument or
document required hereunder will be, executed and delivered by a duly authorized
officer of such Guarantor, and this Guaranty constitutes, and each instrument or
document required hereunder when executed and delivered by such Guarantor
hereunder will constitute, the legally valid and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws or equitable principles
relating to or limiting creditors' rights generally.
3.3 NO LEGAL BAR TO THIS GUARANTY. The execution, delivery and
performance of this Guaranty and the documents or instruments required
hereunder, and the use of the proceeds of the sale of the Notes under the Note
Purchase Agreement, will not violate any provision of any existing law or
regulation binding on such Guarantor, or any order, judgment, award or decree of
any court, arbitrator or governmental authority binding on such Guarantor, or
the certificate of incorporation or bylaws of such Guarantor or any securities
issued by such Guarantor, or any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which such Guarantor is a party or by
which such Guarantor or any of its assets may be bound, the violation of which
would have a material adverse effect on the business, operations, assets or
financial condition of such Guarantor and will not result in, or require, the
creation or imposition of any Lien on any of its property, assets or revenues
pursuant to the provisions of
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any such mortgage, indenture, lease, contract or other agreement, instrument or
undertaking.
SECTION 4. AFFIRMATIVE COVENANTS
Each Guarantor covenants and agrees that, unless and until all
of the Guarantied Obligations shall have been indefeasibly paid in full, unless
Required Holders shall otherwise consent in writing:
4.1 CORPORATE EXISTENCE, ETC. Such Guarantor shall at all times
preserve and keep in full force and effect its corporate existence and all
rights and franchises material to its business.
4.2 COMPLIANCE WITH LAWS, ETC. Such Guarantor shall comply in all
material respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying when due all taxes,
assessments and governmental charges imposed upon it or upon any of its
properties or assets or in respect of any of its franchises, businesses, income
or property before any penalty or interest accrues thereon.
4.3 BOOKS AND RECORDS. Such Guarantor shall keep and maintain books of
record and account with respect to its operations in accordance with generally
accepted accounting principles and shall permit any Guarantied Party employees
and authorized agents, to the extent such Guarantied Party in good faith deems
necessary for the proper administration of this Guaranty, to examine, copy and
make excerpts from the books and records of such Guarantor and its Subsidiaries,
to discuss the affairs, finances and accounts of such Guarantor and its
Subsidiaries with such Guarantor's officers and its independent public
accountants (and by this provision such Guarantor authorizes said accountants to
discuss the affairs, finances and accounts of such Guarantor and its
Subsidiaries) and to inspect the properties of such Guarantor and its
Subsidiaries, both real and personal, at such reasonable times as such
Guarantied Party may request.
SECTION 5. MISCELLANEOUS
5.1 SURVIVAL OF WARRANTIES. All agreements, representations and
warranties made herein shall survive the execution and delivery of this Guaranty
and the other Transaction Documents.
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5.2 NOTICES. Any communications between any Guarantied Party and any
Guarantor and any notices or requests provided herein to be given may be given
by mailing the same, postage prepaid, or by telex, facsimile transmission or
cable to each such party at its address set forth in the Note Purchase
Agreement, on the signature pages hereof or to such other addresses as each such
party may in writing hereafter indicate. Any notice, request or demand to or
upon any Guarantied Party or any Guarantor shall not be effective until
received.
5.3 SEVERABILITY. In case any provision in or obligation under this
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
5.4 AMENDMENTS AND WAIVERS. No amendment, modification, termination or
waiver of any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom, shall in any event be effective without the written
concurrence of the Required Holders and, in the case of any such amendment or
modification, each Guarantor against whom enforcement of such amendment or
modification is sought; provided that no termination or release of this Guaranty
shall in any event be effective without the written concurrence of the
Guarantied Parties. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
5.5 HEADINGS. Section and subsection headings in this Guaranty are
included herein for convenience of reference only and shall not constitute a
part of this Guaranty for any other purpose or be given any substantive effect.
5.6 APPLICABLE LAW. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
GUARANTORS AND THE GUARANTIED PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
5.7 SUCCESSORS AND ASSIGNS. This Guaranty is a continuing guaranty and
shall be binding upon each Guarantor and its respective successors and assigns.
This Guaranty shall inure to the benefit of the Guarantied Parties and their
respective successors and assigns. No Guarantor shall assign
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this Guaranty or any of the rights or obligations of such Guarantor hereunder
without the prior written consent of all Guarantied Parties. Any Guarantied
Party may, without notice or consent, assign its interest in this Guaranty in
whole or in part. The terms and provisions of this Guaranty shall inure to the
benefit of any transferee or assignee of any Note, and in the event of such
transfer or assignment the rights and privileges herein conferred upon such
Guarantied Party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof.
5.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH GUARANTOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING
IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO SUCH GUARANTOR AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SUBSECTION 5.2;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT THE GUARANTIED PARTIES RETAIN THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST SUCH GUARANTOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 5.8 RELATING
TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
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5.9 WAIVER OF TRIAL BY JURY. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF
THE BENEFITS HEREOF, EACH GUARANTIED PARTY EACH HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each Guarantor and, by its acceptance of the benefits hereof,
each Guarantied Party, each (i) acknowledges that this waiver is a material
inducement for such Guarantor and the Guarantied Parties to enter into a
business relationship, that such Guarantor and the Guarantied Parties have
already relied on this waiver in entering into this Guaranty or accepting the
benefits thereof, as the case may be, and that each will continue to rely on
this waiver in their related future dealings and (ii) further warrants and
represents that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 5.9 AND EXECUTED BY THE
GUARANTIED PARTIES AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY.
In the event of litigation, this Guaranty may be filed as a written consent to a
trial by the court.
5.10 NO OTHER WRITING. This writing is intended by Guarantors and the
Guarantied Parties as the final expression of this Guaranty and is also intended
as a complete and exclusive statement of the terms of their agreement with
respect to the matters covered hereby. No course of dealing, course of
performance or trade usage, and no parol evidence of any nature, shall be used
to supplement or modify any terms of this Guaranty. There are no conditions to
the full effectiveness of this Guaranty.
5.11 FURTHER ASSURANCES. At any time or from time to time, upon the
request of the Required Holders, Guarantors shall execute and deliver such
further documents and do such other acts and things as the Required Holders may
reasonably request in order to effect fully the purposes of this Guaranty.
5.12 ADDITIONAL GUARANTORS. The initial Guarantors hereunder shall be
the Subsidiary of Company that is a
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signatory hereto on the date hereof. From time to time subsequent to the date
hereof, additional Subsidiaries of Company may become parties hereto, as
additional Guarantors (each an "ADDITIONAL GUARANTOR"), by executing a
counterpart of this Guaranty. Upon delivery of any such counterpart to the
Company and the Guarantied Parties notice of which is hereby waived by
Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as
fully a party hereto as if such Additional Guarantor were an original signatory
hereof. Each Guarantor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Guarantor hereunder, nor by any election of the Required Holders not to cause
any Subsidiary of Company to become an Additional Guarantor hereunder. This
Guaranty shall be fully effective as to any Guarantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Guarantor hereunder.
5.13 COUNTERPARTS; EFFECTIVENESS. This Guaranty may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become effective
as to each Guarantor upon the execution of a counterpart hereof by such
Guarantor (whether or not a counterpart hereof shall have been executed by any
other Guarantor) and receipt by the Company and the Guarantied Parties of
written or telephonic notification of such execution and authorization of
delivery thereof.
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<PAGE> 99
IN WITNESS WHEREOF, each undersigned Guarantor has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
NAC, INC.
By
--------------------------------
Title
-----------------------------
By
--------------------------------
Title
-----------------------------
NAC INVESTMENT COMPANY
By
--------------------------------
Title
-----------------------------
S-1
<PAGE> 100
IN WITNESS WHEREOF, the undersigned Additional Guarantor has
caused this Guaranty to be duly executed and delivered by its officer thereunto
duly authorized as of ______________, 199_.
--------------------------------------
(Name of Additional Guarantor)
By
-----------------------------------
Title
--------------------------------
S-2
<PAGE> 101
EXHIBIT 4.1(d)(i)
FORM OF OPINION OF SPECIAL COUNSEL
TO THE COMPANY
Matters To Be Covered In
Opinion of Special Counsel To the Company
-----------------------------------------
1. The Company has been duly incorporated and is validly
existing in good standing under the laws of the State of its incorporation and
is duly licensed or qualified and is in good standing as a foreign corporation
in each jurisdiction in which the character of the properties owned or leased by
it or the nature of the business transacted by it makes such licensing or
qualification necessary.
2. Each Subsidiary has been duly incorporated and is validly
existing in good standing under the laws of its jurisdiction of incorporation
and is duly licensed or qualified and is in good standing in each jurisdiction
in which the character of the properties owned or leased by it or the nature of
the business transacted by it makes such licensing or qualification necessary.
3. The Company has the corporate power to execute and deliver
the Note Purchase Agreements, to issue and sell the Notes and to perform its
obligations set forth in each of the Note Purchase Agreements and the Notes.
4. The execution, delivery and performance of each of the Note
Purchase Agreements and the Notes have been duly authorized by all necessary
corporate action on the part of the Company, and each of the Note Purchase
Agreements and the Notes has been duly executed and delivered by the Company.
5. The Note Purchase Agreements and the Notes constitute the
legally valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally (including, without limitation,
fraudulent conveyance laws) and by general principles of equity including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in equity or at law.
6. The Company's execution and delivery of, and performance of
its obligations under the Note Purchase Agreements and the Notes do not and will
not (i) violate the Company's Certificate of Incorporation or Bylaws, (ii)
violate, breach or result in a default under any existing obligation of or
restriction on the Company
Exhibit 4.1(d)(i) - 1
<PAGE> 102
under any other agreement, instrument or indenture, (iii) breach or otherwise
violate any existing obligation of or restriction on the Company under any
order, judgment or decree of any Ohio or federal court or governmental
authority binding on the Company, or (iv) violate any Ohio, New York or federal
statute or any provision of the Delaware General Corporation Law.
7. Each of NAC, Inc. and NAC Investment Company has the
corporate power to execute and deliver the Subsidiary Guaranty and to perform
its obligations set forth therein.
8. The execution, delivery and performance of the Subsidiary
Guaranty have been duly authorized by all necessary corporate action on the part
of NAC, Inc., and NAC Investment Company and the Subsidiary Guaranty has been
duly executed and delivered by NAC, Inc. and NAC Investment Company.
9. The Subsidiary Guaranty constitutes the legally valid and
binding obligation of each of NAC, Inc. and NAC Investment Company, enforceable
against each of NAC, Inc. and NAC Investment Company in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws) and by general
principles of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
10. NAC, Inc.'s and NAC Investment Company's execution and
delivery of, and performance of its respective obligations under the Subsidiary
Guaranty do not and will not (i) violate NAC Inc.'s or NAC Investment Company's
Certificate of Incorporation or Bylaws, (ii) violate, breach or result in a
default under any existing obligation of or restriction on NAC, Inc. or NAC
Investment Company under any other agreement, instrument or indenture, (iii)
breach or otherwise violate any existing obligation of or restriction on NAC,
Inc. or NAC Investment Company under any order, judgment or decree of any state
or federal court or governmental authority binding on NAC, Inc., or NAC
Investment Company or (iv) violate any state or federal statute or any provision
of the Delaware General Corporation Law or the Business Associations Law of
Nevada.
11. No order, consent, permit or approval of any state or
federal governmental authority is required on the part of the Company to issue
and sell the Notes or for the execution and delivery of, and performance of its
obligations under, the Note Purchase Agreements.
12. No order, consent, permit or approval of any state or
federal governmental authority is required on the part of either of NAC, Inc. or
NAC Investment Company for the execution and delivery of, and performance of its
respective obligations under, the Subsidiary Guaranty.
13. There is no action, suit or proceeding pending against or
threatened against or affecting the Company or any Subsidiary before any court,
governmental or regulatory authority or arbitrator, which if adversely
determined would question, either individually or collectively, the
Exhibit 4.1(d)(i) - 2
<PAGE> 103
validity of the Note Purchase Agreements, or the Notes, or the Subsidiary
Guaranty or any of the transactions contemplated thereby.
14. Assuming the accuracy of (i) the Company's representations
in the first sentence of Section 5.13 of the Note Purchase Agreements and (ii)
your representations in Section 6.1 of the Note Purchase Agreements, it is not
necessary in connection with the execution and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreements to register the Notes
under the Securities Act of 1933, as amended, or to qualify an indenture in
respect thereof under the Trust Indenture Act of 1939, as amended.
15. Neither the extension of credit nor the use of proceeds
provided in the Note Purchase Agreements will violate Regulations G, T or X of
the Board of Governors of the Federal Reserve System.
16. The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
<PAGE> 104
EXHIBIT 4.1(d)(ii)
FORM OF OPINION OF
SPECIAL COUNSEL TO THE PURCHASERS
---------------------------------
1. The Company has been duly incorporated and is validly
existing in good standing under the laws of the State of Delaware.
2. The Company has the corporate power to execute and deliver
the Note Purchase Agreements, to issue and sell the Notes and to perform its
obligations set forth in each of the Note Purchase Agreements and the Notes.
3. NAC, Inc. has been duly incorporated and is validly
existing in good standing under the laws of the State of Delaware. NAC
Investment Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Nevada.
4. Each of NAC, Inc. and NAC Investment Company has the
corporate power to execute and deliver the Subsidiary Guaranty and to perform
its respective obligations set forth therein.
5. The execution, delivery and performance of each of the Note
Purchase Agreements and the Notes have been duly authorized by all necessary
corporate action on the part of the Company, and each of the Note Purchase
Agreements and the Notes has been duly executed and delivered by the Company.
6. The Note Purchase Agreements and the Notes constitute the
legally valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally (including, without limitation,
fraudulent conveyance laws) and by general principles of equity including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in equity or at law.
7. The execution, delivery and performance of the Subsidiary
Guaranty have been duly authorized by all necessary corporate action on the part
of the NAC, Inc. and NAC Investment Company and the Subsidiary Guaranty has been
duly executed and delivered by each of NAC, Inc. and NAC Investment Company.
8. The Subsidiary Guaranty constitutes the legally valid and
binding obligation of each of NAC, Inc. and NAC Investment Company, enforceable
against each of NAC, Inc. and NAC Investment Company in accordance with its
terms, except as may be limited by bankruptcy,
Exhibit 4.1(d)(ii) - 1
<PAGE> 105
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law.
9. Assuming the accuracy of (i) the Company's representations
in the first sentence of Section 5.13 of the Note Purchase Agreements and (ii)
your representations in Section 6.1 of the Note Purchase Agreements, it is not
necessary in connection with the execution and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreements to register the Notes
under the Securities Act of 1933, as amended, or to qualify an indenture in
respect thereof under the Trust Indenture Act of 1939, as amended.
10. Neither the extension of credit nor the use of proceeds
provided in the Note Purchase Agreements will violate Regulations G, T or X of
the Board of Governors of the Federal Reserve System.
11. The opinion of David R. Posteraro, counsel for the
Company, is satisfactory in scope and form to us, and we believe you are
justified in relying on such opinion.
Exhibit 4.1(d)(ii) - 2
<PAGE> 106
NATIONAL AUTO CREDIT, INC.
Secretary's Certificate
-----------------------
I, _____________, Secretary of National Auto Credit, Inc., a
Delaware corporation (the "Corporation"), do hereby certify that:
1. Attached hereto as Exhibit "A" is a true and correct copy of
the Certificate of Incorporation of the Corporation, and
that such Certificate of Incorporation is in full force and
effect as of the date hereof;
2. Attached hereto as Exhibit "B" is a true and correct copy of
the Bylaws of the Corporation as in effect an the date
hereof;
3. Attached hereto as Exhibit "C" is a true and complete copy
of a resolution adopted by the Board of Directors of the
Corporation on ____________, 1997, and that such resolution
has not been rescinded or otherwise modified and is in full
force and effect on the date hereof; and
4. The persons named below are duly elected and qualified of
officers of the Corporation as of the date hereof, holding
the office(s) set forth below opposite their respective
names, and that the signatures set forth below opposite
their respective names are the genuine signatures of such
persons or genuine facsimiles thereof:
Name Title Signature
---- ----- ---------
--------------
--------------
--------------
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of April, 1997.
-----------------------------
[Insert Name]
Secretary
<PAGE> 107
NAC, INC.
Secretary's Certificate
-----------------------
I, _____________, Secretary of NAC, Inc., a Delaware
corporation (the "Corporation"), do hereby certify that:
1. Attached hereto as Exhibit "A" is a true and correct copy of
the Certificate of Incorporation of the Corporation, and
that such Certificate of Incorporation is in full force and
effect as of the date hereof;
2. Attached hereto as Exhibit "B" is a true and correct copy of
the Bylaws of the Corporation as in effect an the date
hereof;
3. Attached hereto as Exhibit "C" is a true and complete copy
of a resolution adopted by the Board of Directors of the
Corporation on ____________, 1997, and that such resolution
has not been rescinded or otherwise modified and is in full
force and effect on the date hereof; and
4. The persons named below are duly elected and qualified of
officers of the Corporation as of the date hereof, holding
the office(s) set forth below opposite their respective
names, and that the signatures set forth below opposite
their respective names are the genuine signatures of such
persons or genuine facsimiles thereof:
Name Title Signature
---- ----- ---------
--------------
--------------
--------------
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of April, 1997.
-----------------------------
[Insert Name]
Secretary
<PAGE> 108
NAC INVESTMENT COMPANY
Secretary's Certificate
-----------------------
I, _____________, Secretary of NAC Investment Company, a
Nevada corporation (the "Corporation"), do hereby certify that:
1. Attached hereto as Exhibit "A" is a true and correct copy of
the Certificate of Incorporation of the Corporation, and
that such Certificate of Incorporation is in full force and
effect as of the date hereof;
2. Attached hereto as Exhibit "B" is a true and correct copy of
the Bylaws of the Corporation as in effect an the date
hereof;
3. Attached hereto as Exhibit "C" is a true and complete copy
of a resolution adopted by the Board of Directors of the
Corporation on ____________, 1997, and that such resolution
has not been rescinded or otherwise modified and is in full
force and effect on the date hereof; and
4. The persons named below are duly elected and qualified of
officers of the Corporation as of the date hereof, holding
the office(s) set forth below opposite their respective
names, and that the signatures set forth below opposite
their respective names are the genuine signatures of such
persons or genuine facsimiles thereof:
Name Title Signature
---- ----- ---------
--------------
--------------
--------------
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of April, 1997.
-----------------------------
[Insert Name]
Secretary
<PAGE> 109
NATIONAL AUTO CREDIT, INC.
Officers' Certificate
---------------------
____________________, [Insert Title] and _______________, [Insert
Title], of National Auto Credit, Inc., a Delaware corporation (the "Company"),
pursuant to Section 4.1(c) of the Note Purchase Agreements dated April 17, 1997
(the "Note Agreement"), between the Company and the purchasers listed therein
both hereby certify that:
(1) The representations and warranties of the Company contained
in the Note Agreement are true and correct on and as of the
date hereof.
(2) The Company has performed and complied with all agreements
and conditions contained in the Note Agreement required to
be performed or complied with by the Company prior to or on
the date hereof and after giving effect to the issue and
sale of the Notes to be issued and sold on the date hereof
pursuant to the Note Agreement (and the application of the
proceeds thereof as contemplated in Section 5.14) no Default
(as defined in the Note Agreement) or Event of Default (as
defined in the Note Agreement) has occurred or is
continuing. Neither the Company nor any Subsidiary has
entered into any transaction since the date of the
Memorandum (as defined in the Note Agreement) that would
have been prohibited by Section 10 of the Note Agreement had
such Section applied since such date.
(3) The Company has not changed its jurisdiction of
incorporation or been a party to any merger or consolidation
and has not succeeded to all or any substantial part of the
liabilities of any other entity at any time following the
date of the most recent financial statements referred to in
Schedule 5.5 to the Note Agreement.
IN WITNESS WHEREOF, we have hereunto signed our names as of this 21st
day of April, 1997.
By: _____________________________
[Insert Name and Title]
By: ___________________________
[Insert Name and Title]
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<NAME> NATIONAL AUTO CREDIT, INC.
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<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
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0
0
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