<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
Commission file number: 1-13461
GROUP 1 AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 76-0506313
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
950 Echo Lane, Suite 350
Houston, Texas 77024
(Address of principal executive offices) (Zip code)
(713) 467-6268
(Registrant's telephone number including area code)
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 [ ]
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Title Outstanding
----- -----------
<S> <C>
Common stock, par value $.01 18,218,795
</TABLE>
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
UNAUDITED COMBINED STATEMENTS OF OPERATIONS
BASIS OF PRESENTATION
In October 1997, Group 1 Automotive, Inc.("Group 1") completed its
acquisition of substantially all of the net assets of four automobile dealership
groups (the "Founding Groups") simultaneous with the completion of its initial
public offering. The Founding Groups were acquired in exchange for consideration
consisting principally of common stock of Group 1. During the first six months
of 1998, Group 1 acquired thirty-one additional automobile dealership
franchises, which have been accounted for as purchases (the "Purchased
Companies").
The accompanying historical combined statements of operations, for the
three months and six months ended June 30, 1998, include the operations of Group
1 and the Founding Groups, from January 1, 1998, and the Purchased Companies,
from the effective dates of the acquisitions.
The accompanying pro forma combined statements of operations, for the
three months and six months ended June 30, 1997, include the combined operations
of Group 1 and the Founding Groups, from January 1, 1997, and give effect to the
completion of Group 1's initial public offering. The 1997 data may not be
comparable to and may not be indicative of Group 1's post-combination results of
operations because the Founding Groups were not under common control of
management.
Operating results of interim periods are not necessarily indicative of
the results for full year periods. The results of operations have historically
been subject to seasonal fluctuations, with the first and fourth quarters
generally contributing less operating profit than the second and third quarters.
These combined statements of operations should be read in conjunction with the
Company's filings with the Securities and Exchange Commission.
2
<PAGE> 3
GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
UNAUDITED COMBINED STATEMENTS OF OPERATIONS
(in thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------------- --------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
REVENUES:
New vehicle sales .................. $ 251,019 $ 134,411 $ 389,041 $ 251,830
Used vehicle sales ................. 133,625 75,351 220,745 148,567
Parts and service sales ............ 34,154 19,371 55,722 38,400
Other dealership revenues, net ..... 12,733 5,828 19,958 11,546
------------- ------------- ------------- -------------
Total revenues ............... 431,531 234,961 685,466 450,343
COST OF SALES:
New vehicle sales .................. 231,504 123,339 358,880 230,360
Used vehicle sales ................. 123,898 69,753 204,458 137,912
Parts and service sales ............ 15,776 9,012 25,754 18,170
------------- ------------- ------------- -------------
Total cost of sales .......... 371,178 202,104 589,092 386,442
------------- ------------- ------------- -------------
GROSS PROFIT .......................... 60,353 32,857 96,374 63,901
GOODWILL AMORTIZATION ................. 569 200 812 399
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ............. 45,991 25,591 74,303 50,865
------------- ------------- ------------- -------------
Income from operations ..... 13,793 7,066 21,259 12,637
OTHER INCOME AND EXPENSES:
Floorplan interest expense .......... (3,479) (1,483) (5,304) (2,824)
Other interest expense, net ......... (627) (239) (938) (454)
Other income (expense), net ......... (24) 3 (48) (19)
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES ............ 9,663 5,347 14,969 9,340
PROVISION FOR INCOME TAXES ............ 4,042 2,191 6,234 3,847
------------- ------------- ------------- -------------
NET INCOME ............................ $ 5,621 $ 3,156 $ 8,735 $ 5,493
============= ============= ============= =============
Earnings per share on net income:
Basic ............................... $ 0.32 $ 0.22 $ 0.54 $ 0.37
Diluted ............................. $ 0.31 $ 0.21 $ 0.52 $ 0.36
Weighted average shares outstanding:
Basic ............................... 17,441,678 14,673,051 16,325,873 14,673,051
Diluted ............................. 18,128,366 15,101,510 16,869,256 15,101,510
</TABLE>
The accompanying notes are an integral part of these
combined statements of operations.
3
<PAGE> 4
GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO COMBINED STATEMENTS OF OPERATIONS
1. BASIS OF PRESENTATION
The 1998 historical combined data are a presentation in accordance with
generally accepted accounting principles. The financial data represent the
combined historical results of operations of Group 1 and the Founding Groups,
for the three months and six months ended June 30, 1998, and the Purchased
Companies, from the effective dates of the acquisitions.
The 1997 pro forma combined data does not purport to be a presentation
in accordance with generally accepted accounting principles, but represents a
summation of certain data on an historical basis including the effects of the
pro forma adjustments. This data may not be comparable to and may not be
indicative of Group 1's post-combination results of operations because the
acquired dealerships were not under common control of management. The pro forma
adjustments primarily relate to: (a) increases in revenues and decreases in cost
of sales related to commission arrangements on certain third-party products sold
by the dealerships which previously benefited the stockholders and which were
terminated in conjunction with the acquisitions, allowing the dealerships to
realize the benefits thereafter; (b) pro forma goodwill amortization expense
over an estimated useful life of 40 years; (c) reductions in compensation
expense and management fees to the level that certain management employees and
owners of the acquired companies will contractually receive; (d) incremental
corporate overhead costs related to personnel costs, rents, professional service
fees and directors and officers liability insurance premiums; (e) net decreases
in interest expense resulting from the repayment of floorplan obligations with
proceeds from the initial public offering, net of cash utilized to complete
acquisitions; and (f) incremental provisions for federal and state income taxes
relating to the compensation differential, S Corporation income and other pro
forma adjustments.
4
<PAGE> 5
2. EARNINGS PER SHARE
SFAS No. 128 requires the presentation of basic earnings per share and
diluted earnings per share in financial statements of public enterprises. Under
the provisions of this statement, basic earnings per share is computed based on
weighted average shares outstanding and excludes dilutive securities. Diluted
earnings per share is computed including the impacts of all potentially dilutive
securities. The following table sets forth the shares outstanding for the
earnings per share calculations:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------------ ------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Common stock outstanding, beginning of period .. 16,045,069 450,000 14,673,051 450,000
Shares issued in initial public
offering ............................ -- 5,148,136 -- 5,148,136
Shares issued in acquisition of
Founding Companies .................. -- 9,074,915 -- 9,074,915
Weighted average common stock issued
to Purchased Companies .............. 1,349,995 -- 1,664,241 --
Weighted average common stock
issued to Employee Stock
Purchase Plan ....................... 56,140 -- 28,382 --
Weighted average common stock
issued in stock option
exercises ........................... 454 -- 228 --
Less: weighted average treasury shares
repurchased ......................... (9,980) -- (40,029) --
------------ ------------ ------------ ------------
Shares used in computing basic earnings per
share ..................................... 17,441,678 14,673,051 16,325,873 14,673,051
Dilutive effect of stock options, net
of assumed repurchase of treasury
stock ............................... 686,688 428,459 543,383 428,459
------------ ------------ ------------ ------------
Shares used in computing diluted earnings per
share ..................................... 18,128,366 15,101,510 16,869,256 15,101,510
============ ============ ============ ============
</TABLE>
5
<PAGE> 6
GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------ ------------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 69,571 $ 35,092
Accounts receivable, net .................................... 16,938 9,749
Inventories, net ............................................ 185,877 105,421
Deferred income taxes ....................................... 10,612 8,692
Other assets ................................................ 2,853 2,728
------------ ------------
Total current assets .................................. 285,851 161,682
------------ ------------
PROPERTY AND EQUIPMENT, net .................................... 34,969 21,586
GOODWILL, net .................................................. 98,007 27,078
OTHER ASSETS ................................................... 3,588 2,803
------------ ------------
Total assets .......................................... $ 422,415 $ 213,149
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floorplan notes payable ..................................... $ 158,576 $ 58,488
Current maturities of long-term debt ........................ 1,416 2,316
Accounts payable and accrued expenses ....................... 78,635 50,668
------------ ------------
Total current liabilities ............................. 238,627 111,472
------------ ------------
DEBT, net of current maturities ................................ 57,050 7,053
DEFERRED INCOME TAXES .......................................... 3,882 3,699
OTHER LIABILITIES .............................................. 3,230 1,553
STOCKHOLDERS' EQUITY:
Preferred stock, 1,000,000 shares authorized, none issued or
outstanding ................................................ -- --
Common stock, $.01 par value, 50,000,000 shares authorized,
17,792,138 and 14,673,051 issued and outstanding ........... 178 147
Additional paid-in capital .................................. 113,783 91,846
Retained earnings (deficit) ................................. 6,206 (2,529)
Treasury stock, at cost, 32,607 and 10,000 shares ........... (541) (92)
------------ ------------
Total stockholders' equity ............................ 119,626 89,372
------------ ------------
Total liabilities and stockholders' equity ............ $ 422,415 $ 213,149
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE> 7
GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------ ------------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
New vehicle sales ................... $ 251,019 $ 46,675 $ 389,041 $ 84,923
Used vehicle sales .................. 133,625 28,748 220,745 54,354
Parts and service sales ............. 34,154 5,350 55,722 10,763
Other dealership revenues, net ...... 12,733 2,165 19,958 4,006
--------------- --------------- --------------- ---------------
Total revenues ................ 431,531 82,938 685,466 154,046
COST OF SALES:
New vehicle sales ................... 231,504 43,622 358,880 79,322
Used vehicle sales .................. 123,898 26,012 204,458 49,186
Parts and service sales ............. 15,776 2,163 25,754 4,541
--------------- --------------- --------------- ---------------
Total cost of sales ........... 371,178 71,797 589,092 133,049
--------------- --------------- --------------- ---------------
GROSS PROFIT ........................... 60,353 11,141 96,374 20,997
GOODWILL AMORTIZATION .................. 569 10 812 20
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES .............. 45,991 8,421 74,303 16,433
--------------- --------------- --------------- ---------------
Income from operations ...... 13,793 2,710 21,259 4,544
OTHER INCOME AND EXPENSES:
Floorplan interest expense ........... (3,479) (995) (5,304) (1,878)
Other interest expense, net .......... (627) (12) (938) (12)
Other income (expense), net .......... (24) 20 (48) 34
--------------- --------------- --------------- ---------------
INCOME BEFORE INCOME TAXES ............. 9,663 1,723 14,969 2,688
PROVISION FOR INCOME TAXES ............. 4,042 205 6,234 166
--------------- --------------- --------------- ---------------
NET INCOME ............................. $ 5,621 $ 1,518 $ 8,735 $ 2,522
=============== =============== =============== ===============
S Corporation pro forma income taxes ... 474 899
--------------- ---------------
Pro forma net income ................... $ 1,044 $ 1,623
=============== ===============
Earnings per share on net income:
Basic ................................ $ 0.32 $ 0.54
Diluted .............................. $ 0.31 $ 0.52
Weighted average shares outstanding:
Basic ................................ 17,441,678 16,325,873
Diluted .............................. 18,128,366 16,869,256
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
7
<PAGE> 8
GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................ $ 8,735 $ 2,522
Adjustments to reconcile net income to net cash provided by ...........
operating activities -
Depreciation and amortization ...................................... 2,335 340
Deferred income taxes .............................................. (2,356) 45
Provision for doubtful accounts and uncollectible notes ............ 110 42
Gain on sale of assets .............................................. (3) (18)
Changes in assets and liabilities -
Accounts receivable .............................................. (344) (1,763)
Inventories ...................................................... 9,586 2,472
Other assets ..................................................... 46 (2)
Floorplan notes payable .......................................... (17,268) (4,728)
Accounts payable and accrued expenses ............................ 9,922 2,077
---------- ----------
Total adjustments ............................................. 609 (116)
---------- ----------
Net cash provided by operating activities ................... 9,344 2,406
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable ....................................... (1,180) (96)
Collections on notes receivable .................................... 699 --
Purchases of property and equipment ................................ (5,351) (272)
Proceeds from sale of property and equipment ....................... 15 279
Cash paid in acquisitions, net of cash received .................... (50,057) --
---------- ----------
Net cash used in investing activities ............................ (55,874) (89)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under floorplan facilities for acquisition financing .... 33,523 --
Principal payments of long-term debt ............................... (2,020) (168)
Borrowings of long-term debt ....................................... 50,192 --
Issuance of common stock to benefit plans .......................... 459 --
Purchase of treasury stock ......................................... (1,145) --
Dividends paid in cash ............................................. -- (3,891)
---------- ----------
Net cash provided by (used in) financing activities .......... 81,009 (4,059)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .................... 34,479 (1,742)
CASH AND CASH EQUIVALENTS, beginning of period .......................... 35,092 11,679
---------- ----------
CASH AND CASH EQUIVALENTS, end of period ................................ $ 69,571 $ 9,937
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for -
Interest ......................................................... $ 5,428 $ 2,066
Taxes ............................................................ 6,801 11
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
8
<PAGE> 9
GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION:
Group 1 Automotive, Inc. and subsidiaries ("Group 1" or the "Company")
was founded in December 1995 to become a leading operator and consolidator in
the highly fragmented automobile retailing industry. The Company is primarily
engaged in the retail sale of new and used vehicles and the arranging of
finance, insurance and vehicle service contracts thereon. In addition, the
Company sells automotive parts and provides vehicle servicing. In October 1997,
Group 1 acquired four separate dealership groups (the "Founding Groups"),
consisting of 30 dealership franchises and related businesses, in exchange for
consideration consisting principally of restricted Common Stock. Concurrent with
the acquisition of the Founding Groups, Group 1 completed an initial public
offering of 5,520,000 shares of Common Stock.
During the first six months of 1998 the Company acquired thirty-one
additional dealership franchises in exchange for a combination of restricted
Common Stock and cash.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
For financial statement presentation purposes, as required by the
Securities and Exchange Commission, Howard Group, one of the Founding Groups,
has been identified as the accounting acquirer. The acquisitions of the
remaining Founding Groups and the subsequent acquisitions were accounted for
using the purchase method of accounting. The operations of Group 1 Automotive,
Inc., the parent company, and the Founding Groups, excluding the Howard Group,
are included in the results of operations beginning October 31, 1997, the
effective closing date of the acquisitions for accounting purposes. The results
of operations of the Howard Group are included for all periods presented. The
operations of all acquisitions subsequent to October 31, 1997, are included from
the effective dates of the closings of the acquisitions. The allocation of
purchase price to the assets acquired and liabilities assumed has been initially
assigned and recorded based on preliminary estimates of fair value and may be
revised as additional information concerning the valuation of such assets and
liabilities becomes available. All significant intercompany balances and
transactions have been eliminated in consolidation.
New Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. The statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability, measured at its fair value. Additionally,
any changes in the derivative's fair value are to be recognized currently in
earnings, unless specific hedge accounting criteria are met. This statement is
effective for fiscal years beginning after June 15, 1999. The Company does not
believe that adoption of this statement will have a material impact on its
financial statements.
9
<PAGE> 10
3. EARNINGS PER SHARE:
SFAS No. 128 requires the presentation of basic earnings per share and
diluted earnings per share in financial statements of public enterprises. Under
the provisions of this statement, basic earnings per share is computed based on
weighted average shares outstanding and excludes dilutive securities. Diluted
earnings per share is computed including the impacts of all potentially dilutive
securities. As the Company was not a public enterprise until October 1997, and
the companies included in the statements of operations were under different tax
structures (S Corporations and C Corporations), no earnings per share data has
been presented for the historical results of operations for the three months and
six months ended June 30, 1997. The following table sets forth the shares
outstanding for the earnings per share calculations:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1998
------------- -------------
<S> <C> <C>
Common stock outstanding, beginning of period ............. 16,045,069 14,673,051
Weighted average common stock issued in acquisitions . 1,349,995 1,664,241
Weighted average common stock issued to
Employee Stock Purchase Plan ..................... 56,140 28,382
Weighted average common stock issued in
stock option exercises ........................... 454 228
Less: weighted average treasury shares repurchased ... (9,980) (40,029)
------------- -------------
Shares used in computing basic earnings per share ......... 17,441,678 16,325,873
Dilutive effect of stock options, net of assumed
repurchase of treasury stock ..................... 686,688 543,383
------------- -------------
Shares used in computing diluted earnings per share ....... 18,128,366 16,869,256
============= =============
</TABLE>
4. BUSINESS COMBINATIONS
During the first six months of 1998, the Company acquired thirty-one
automobile dealership franchises. These acquisitions were accounted for as
purchases. The consideration paid in completing these acquisitions, including
real estate acquired, included approximately $62.4 million in cash,
approximately 3.1 million shares of restricted Common Stock and the assumption
of an estimated $83.8 million of inventory financing. Additional consideration
may be paid based on the financial performance of certain dealerships, over
specified periods. Additional consideration, if any, will be payable in cash and
Common Stock and will result in an increase in goodwill on the balance sheet of
the Company. The accompanying consolidated balance sheet includes preliminary
allocations of the purchase price of the acquisitions, which are subject to
final adjustment. The preliminary allocations resulted in recording
approximately $71.6 million of goodwill, which is being amortized over 40 years.
10
<PAGE> 11
The following unaudited pro forma financial information consists of
income statement data from continuing operations as presented in the
consolidated financial statements plus (1) unaudited income statement data for
all acquisitions, completed before June 30, 1998, assuming that they occurred on
January 1, 1997, (2) the completion of the initial public offering as of January
1, 1997 and (3) certain pro forma adjustments discussed below.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------------------------
1998 1997
------------------------ ----------------------
(in thousands, except per share amounts)
<S> <C> <C>
Revenues .......................... $ 813,302 $ 709,394
Gross profit ...................... 117,105 103,838
Income from operations ............ 26,547 22,563
Net income ........................ 10,118 8,272
Basic earnings per share .......... 0.57 0.47
Diluted earnings per share ........ 0.55 0.45
</TABLE>
Pro forma adjustments included in the amounts above primarily relate to: (a)
increases in revenues and decreases in cost of sales related to commission
arrangements on certain third-party products sold by the dealerships which
previously benefited the stockholders and which were terminated in conjunction
with the acquisitions, allowing the dealerships to realize the benefits
thereafter; (b) pro forma goodwill amortization expense over an estimated useful
life of 40 years; (c) reductions in compensation expense and management fees to
the level that certain management employees and owners of the acquired companies
will contractually receive; (d) incremental corporate overhead costs related to
personnel costs, rents, professional service fees and directors and officers
liability insurance premiums; (e) net decreases in interest expense resulting
from the repayment of floorplan obligations with proceeds from the initial
public offering, net of cash utilized to complete acquisitions; and (f)
incremental provisions for federal and state income taxes relating to the
compensation differential, S Corporation income and other pro forma adjustments.
5. SUBSEQUENT EVENTS
Effective during July of 1998, for accounting purposes, the Company
completed acquisitions of several automobile franchises, including certain real
estate, in exchange for consideration consisting of approximately $11.0 million
in cash, approximately 0.4 million shares of restricted Common Stock, the
assumption of approximately $2.9 million of mortgage debt, and the assumption of
an estimated $10.6 million of inventory financing. As part of certain of the
acquisitions, the Company has committed, for a limited period of time, to
certain sellers that they will realize an agreed upon minimum price upon the
sale of the Common Stock received in the acquisitions. If the Company is called
upon to perform under this arrangement, the cash payment will result in
additional goodwill on the balance sheet of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The following should be read in conjunction with the response to Part
I, Item 1 of this Report and the Company's filings with the Securities and
Exchange Commission.
11
<PAGE> 12
OVERVIEW
The Company was founded to become a leading operator and consolidator
in the highly fragmented automobile retailing industry. The Company owns
automobile dealership franchises located in Colorado, Florida, Georgia, New
Mexico, Oklahoma and Texas. Additionally, the Company provides maintenance and
repair services at its dealerships and collision service centers. The Company
expects that a significant portion of its future growth will be derived from
acquisitions of additional dealerships.
The Company has diverse sources of revenues, including: new car sales,
new truck sales, used car sales, used truck sales, manufacturer remarketed
vehicle sales, parts sales, service sales, collision repair services, finance
fees, insurance commissions, vehicle service contract sales, documentary fees
and after-market product sales. Sales revenues from new and used vehicle sales
and parts and service sales include sales to retail customers, other dealers and
wholesalers. Other dealership revenue includes revenue from arranging financing
and selling insurance and vehicle service contracts, net of a provision for
anticipated chargebacks, and documentary fees charged to customers.
The Company's gross profit will vary as the Company's merchandise mix
(the mix between new vehicle sales, used vehicle sales, parts and service sales,
collision repair services and other dealership revenues) changes. The gross
margin realized by the Company on the sale of its products and services
generally varies between approximately 7.5% and 60.0%, with new vehicle sales
generally resulting in the lowest gross margin and parts and service sales
generally resulting in the highest gross margin. When the Company's new vehicle
sales increase or decrease at a rate greater than the Company's other revenue
sources, the Company's gross margin will respond inversely. Factors such as
seasonality, weather, cyclicality and manufacturers' advertising and incentives
may impact the Company's merchandise mix and, therefore influence the Company's
gross margin.
Selling, general and administrative expenses consist primarily of
compensation for sales, administrative, finance and general management
personnel, rent, marketing, insurance and utilities. Interest expense consists
of interest charges on interest-bearing debt, including floorplan inventory
financing, net of interest income earned.
SELECTED OPERATIONAL AND FINANCIAL DATA
NEW VEHICLE DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- ----------------------------
(dollars in thousands,
except per unit amounts) 1998 1997 1998 1997
------------ ------------ ------------ -------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Retail unit sales ........ 10,767 6,174 16,739 11,625
Retail sales revenue ..... $ 251,019 $ 134,411 $ 389,041 $ 251,830
Gross profit ............. $ 19,515 $ 11,072 $ 30,161 $ 21,470
Gross margin ............. 7.8% 8.2% 7.8% 8.5%
Average gross profit per
retail unit sold ....... $ 1,812 $ 1,793 $ 1,802 $ 1,847
</TABLE>
12
<PAGE> 13
USED VEHICLE DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
(dollars in thousands,
except per unit amounts) 1998 1997 1998 1997
---------- ---------- ---------- ----------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Retail unit sales ............ 7,991 4,724 13,345 9,203
Retail sales revenue (1) ..... $ 106,578 $ 61,685 $ 177,554 $ 120,854
Gross profit ................. $ 9,727 $ 5,598 $ 16,287 $ 10,655
Gross margin ................. 9.1% 9.1% 9.2% 8.8%
Average gross profit per
retail unit sold ........... $ 1,217 $ 1,185 $ 1,220 $ 1,158
</TABLE>
- -------------------
(1) Excludes wholesale revenues.
PARTS AND SERVICE DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- ---------------------------
(dollars in thousands) 1998 1997 1998 1997
---------- ---------- ---------- ----------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Sales revenue ................ $ 34,154 $ 19,371 $ 55,722 $ 38,400
Gross profit ................. $ 18,378 $ 10,359 $ 29,968 $ 20,230
Gross margin ................. 53.8% 53.5% 53.8% 52.7%
</TABLE>
THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH PRO FORMA THREE MONTHS ENDED JUNE
30, 1997
REVENUES. Revenues increased $196.5 million, or 83.6%, from $235.0
million for the three months ended June 30, 1997 to $431.5 million for the three
months ended June 30, 1998. New vehicle revenues increased $116.6 million, or
86.8% from $134.4 million for the three months ended June 30, 1997 to $251.0
million for the three months ended June 30, 1998. The increase in revenue was
primarily attributable to strong customer acceptance of the Company's products,
particularly Toyota and Lexus, accounting for approximately one-fifth of the
increase and the acquisitions of the additional dealership operations during
1998. The increase was partially offset by reduced sales at the Company's Nissan
franchises, which declined due to reduced manufacturer sales incentives as
compared to the prior year. Used vehicle revenues increased $58.2 million, or
77.2%, from $75.4 million for the three months ended June 30, 1997 to $133.6
million for the three months ended June 30, 1998. The increase was primarily
attributable to successful marketing efforts, an emphasis on used vehicle sales
in the Oklahoma market and the additional franchise operations acquired, with
existing operations accounting for approximately one-fourth of the increase.
Parts and service sales increased $14.8 million, or 76.3%, from $19.4 million
for the three months ended June 30, 1997 to $34.2 million for the three months
ended June 30, 1998. The increase was primarily attributable to the additional
dealership operations acquired. Other dealership revenues increased $6.9 million
or 119.0% from $5.8 million for the three months ended June 30, 1997 to $12.7
million for the three months ended June 30, 1998.
13
<PAGE> 14
The increase was due primarily to an increase in the number of retail new and
used vehicle sales and improved revenue per unit. The improved revenue per unit
was driven primarily by the implementation of the Company's vehicle service
contract and insurance programs.
GROSS PROFIT. Gross profit increased $27.5 million, or 83.6%, from
$32.9 million for the three months ended June 30, 1997 to $60.4 million for the
three months ended June 30, 1998. The increase was attributable to increased
revenues, as the overall gross margin remained stable. The gross margin on new
retail vehicle sales declined from 8.2% for the three months ended June 30, 1997
to 7.8% for the three months ended June 30, 1998. The decline is attributable
primarily to reduced margins in the Nissan product line, due to reduced
manufacturer sales incentives in 1998. The gross margin for used retail vehicle
sales remained stable at 9.1% for the three months ended June 30, 1997 and for
the three months ended June 30, 1998. Parts and service gross margin increased
from 53.5% for the three months ended June 30, 1997 to 53.8% for the three
months ended June 30, 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $20.4 million, or 79.7%, from $25.6 million
for the three months ended June 30, 1997 to $46.0 million for the three months
ended June 30, 1998. The increase was primarily attributable to the additional
dealership operations acquired and increased variable expenses, particularly
incentive pay to employees, which increase as revenues and gross profit
increase. Selling, general and administrative expenses declined as a percentage
of revenues from 10.9% for the three months ended June 30, 1997 to 10.7% for the
three months ended June 30, 1998. The decline is primarily attributable to
maintaining total expenses at a constant level by offsetting increased variable
expenses with cost reductions, such as the Company's risk management program.
Additionally, by implementing the Company's budgeting process, the dealerships
have improved their operating expense leverage.
INTEREST EXPENSE. Floorplan and other interest expense, net, increased
$2.4 million, or 141.2%, from $1.7 million for the three months ended June 30,
1997 to $4.1 million for the three months ended June 30, 1998. The increase was
primarily attributable to the interest expense of the additional dealership
operations acquired, reduced interest earnings due to the utilization of cash in
completing the acquisitions and additional interest expense due to borrowings on
the Company's credit facility to complete acquisitions. Partially offsetting the
increases were cost reductions realized due to the lower interest rates on
floorplan notes payable obtained though the Company's credit facility.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH PRO FORMA SIX MONTHS ENDED JUNE 30,
1997
REVENUES. Revenues increased $235.2 million, or 52.2%, from $450.3
million for the six months ended June 30, 1997 to $685.5 million for the six
months ended June 30, 1998. New vehicle revenues increased $137.2 million, or
54.5% from $251.8 million for the six months ended June 30, 1997 to $389.0
million for the six months ended June 30, 1998. The increase in revenue was
primarily attributable to strong customer acceptance of the Company's products,
particularly Toyota and Lexus, accounting for approximately one-fifth of the
increase and the acquisitions of the additional dealership operations during
1998. The increase was partially offset by reduced sales at the Company's Nissan
franchises, which declined due to reduced manufacturer sales
14
<PAGE> 15
incentives as compared to the prior year. Used vehicle revenues increased $72.1
million, or 48.5%, from $148.6 million for the six months ended June 30, 1997 to
$220.7 million for the six months ended June 30, 1998. The increase was
primarily attributable to successful marketing efforts, an emphasis on used
vehicle sales in the Oklahoma market and the additional franchise operations
acquired, with existing operations accounting for approximately one-third of the
increase. Parts and service sales increased $17.3 million, or 45.1%, from $38.4
million for the six months ended June 30, 1997 to $55.7 million for the six
months ended June 30, 1998. The increase was primarily attributable to the
additional dealership operations acquired. Other dealership revenues increased
$8.5 million or 73.9% from $11.5 million for the six months ended June 30, 1997
to $20.0 million for the six months ended June 30, 1998. The increase was due
primarily to an increase in the number of retail new and used vehicle sales and
improved revenue per unit. The improved revenue per unit was driven primarily by
the implementation of the Company's vehicle service contract and insurance
programs.
GROSS PROFIT. Gross profit increased $32.5 million, or 50.9%, from
$63.9 million for the six months ended June 30, 1997 to $96.4 million for the
six months ended June 30, 1998. The increase was attributable to increased
revenues, partially offset by a reduced gross margin. The gross margin on new
retail vehicle sales declined from 8.5% for the six months ended June 30, 1997
to 7.8% for the six months ended June 30, 1998. The decline is attributable
primarily to reduced margins in the Nissan product line, due to reduced
manufacturer sales incentives in 1998. The gross margin for used retail vehicle
sales increased from 8.8% for the six months ended June 30, 1997 to 9.2% for the
six months ended June 30, 1998. The increase was primarily attributable to an
emphasis on the used vehicle operations in the Oklahoma platform. Parts and
service gross margin increased from 52.7% for the six months ended June 30, 1997
to 53.8% for the three months ended June 30, 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $23.4 million, or 46.0%, from $50.9 million
for the six months ended June 30, 1997 to $74.3 million for the six months ended
June 30, 1998. The increase was primarily attributable to the additional
dealership operations acquired and increased variable expenses, particularly
incentive pay to employees, which increase as revenues and gross profit
increase. Selling, general and administrative expenses declined as a percentage
of revenues from 11.3% for the six months ended June 30, 1997 to 10.8% for the
six months ended June 30, 1998. The decline is primarily attributable to
maintaining total expenses at a constant level by offsetting increased variable
expenses with cost reductions, such as the Company's risk management program.
Additionally, by implementing the Company's budgeting process, the dealerships
have improved their operating expense leverage.
INTEREST EXPENSE. Floorplan and other interest expense, net, increased
$2.9 million, or 87.9%, from $3.3 million for the six months ended June 30, 1997
to $6.2 million for the six months ended June 30, 1998. The increase was
primarily attributable to the interest expense of the additional dealership
operations acquired, reduced interest earnings due to the utilization of cash in
completing the acquisitions and additional interest expense due to borrowings on
the Company's credit facility to complete acquisitions. Partially offsetting the
increases were cost reductions realized due to the lower interest rates on
floorplan notes payable obtained though the Company's credit facility.
15
<PAGE> 16
HISTORICAL RESULTS OF OPERATIONS - GROUP 1 AUTOMOTIVE, INC.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1997
REVENUES. Revenues increased $348.6 million, or 420.5%, from $82.9
million for the three months ended June 30, 1997 to $431.5 million for the three
months ended June 30, 1998. New vehicle revenues increased $204.3 million, or
437.5% from $46.7 million for the three months ended June 30, 1997 to $251.0
million for the three months ended June 30, 1998. Used vehicle revenues
increased $104.9 million, or 365.5%, from $28.7 million for the three months
ended June 30, 1997 to $133.6 million for the three months ended June 30, 1998.
Parts and service sales increased $28.8 million, or 533.3%, from $5.4 million
for the three months ended June 30, 1997 to $34.2 million for the three months
ended June 30, 1998. Other dealership revenues increased $10.5 million or 477.3%
from $2.2 million for the three months ended June 30, 1997 to $12.7 million for
the three months ended June 30, 1998. These increases were due primarily to the
inclusion of the dealership operations acquired since October 31, 1997.
GROSS PROFIT. Gross profit increased $49.3 million, or 444.1%, from
$11.1 million for the three months ended June 30, 1997 to $60.4 million for the
three months ended June 30, 1998. The increase was attributable to the inclusion
of the dealership operations acquired since October 31, 1997 and an increased
gross margin from 13.4% for the three months ended June 30, 1997 to 14.0% for
the three months ended June 30, 1998. This increase was due primarily to an
increase in higher gross margin parts and service sales and other dealership
revenues as a percentage of total revenues.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $37.6 million, or 447.6%, from $8.4 million
for the three months ended June 30, 1997 to $46.0 million for the three months
ended June 30, 1998. The increase was primarily attributable to the additional
dealership operations acquired.
INTEREST EXPENSE. Floorplan and other interest expense, net, increased
$3.1 million, or 310.0%, from $1.0 million for the three months ended June 30,
1997 to $4.1 million for the three months ended June 30, 1998. The increase was
primarily attributable to the interest expense of the additional dealership
operations acquired, reduced interest earnings due to the utilization of cash in
completing the acquisitions and additional interest expense due to borrowings on
the Company's credit facility to complete acquisitions. Partially offsetting the
increases were cost reductions realized due to the lower interest rates on
floorplan notes payable obtained though the Company's credit facility.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997
REVENUES. Total revenues increased $531.5 million, or 345.1%, from
$154.0 million for the six months ended June 30, 1997 to $685.5 million for the
six months ended June 30, 1998. Revenues from new vehicle sales increased $304.1
million, or 358.2%, from $84.9 million for the six months ended June 30, 1997 to
$389.0 million for the six months ended June 30, 1998. Revenues from used
vehicle sales increased $166.3 million, or 305.7%, from $54.4 million for the
six months ended June 30, 1997 to $220.7 million for the six months ended June
30, 1998. Parts and service sales increased $44.9 million, or 415.7%, from $10.8
million for the six months ended June 30, 1997 to $55.7 million for the six
months ended June 30, 1998. Other dealership revenues increased $16.0 million,
or 400.0%, from $4.0 million for the six months ended
16
<PAGE> 17
June 30, 1997 to $20.0 million for the six months ended June 30, 1998. These
increases were due primarily to the inclusion of the dealership operations
acquired since October 31, 1997.
GROSS PROFIT. Gross profit increased $75.4 million, or 359.0%, from
$21.0 million for the six months ended June 30, 1997 to $96.4 million for the
six months ended June 30, 1998. The increase was attributable to the inclusion
of the dealership operations acquired since October 31, 1997 and an increased
gross margin from 13.6% for the six months ended June 30, 1997 to 14.1% for the
six months ended June 30, 1998. This increase was due primarily to an increase
in higher gross margin parts and service sales and other dealership revenues as
a percentage of total revenues.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $57.9 million, or 353.0%, from $16.4 million
for the six months ended June 30, 1997 to $74.3 million for the six months ended
June 30, 1998. The increase was primarily attributable to the additional
dealership operations acquired.
INTEREST EXPENSE. Floorplan and other interest expense, net, increased
$4.3 million, or 226.3%, from $1.9 million for the six months ended June 30,
1997 to $6.2 million for the six months ended June 30, 1998. The increase was
primarily attributable to the interest expense of the additional dealership
operations acquired, reduced interest earnings due to the utilization of cash in
completing the acquisitions and additional interest expense due to borrowings on
the Company's credit facility to complete acquisitions. Partially offsetting the
increases were cost reductions realized due to the lower interest rates on
floorplan notes payable obtained though the Company's credit facility.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity are cash on hand, cash
from operations, floorplan financing and its credit facility.
During the first six months of 1998 the Company generated cash from
operations of approximately $9.3 million. The cash flow was generated primarily
by net income.
During the first six months of 1998 the Company used approximately
$55.9 million for investing activities, primarily related to cash paid in
completing acquisitions offset by the cash balances obtained in the
acquisitions.
During the first six months of 1998 the Company obtained approximately
$81.0 million from financing activities. The cash was generated primarily from
drawings on the Company's credit facility and was utilized in completing
acquisitions.
At June 30, 1998, the Company had working capital of $47.2 million and
$40 million of unused capacity under the acquisition portion of the credit
facility. Historically, the Company has funded its operations with internally
generated cash flow and borrowings from lenders. While there can be no
assurance, based on current facts and circumstances, management believes it has
adequate cash flows and financing alternatives to fund its current operations
for the next twelve months.
17
<PAGE> 18
CREDIT FACILITY
The Company closed its syndicated credit facility on June 19, 1998,
increasing its existing $125 million credit facility to a $345 million credit
facility to be used for acquisitions, floorplan financing, general corporate
purposes, capital expenditures and working capital.
FORWARD LOOKING INFORMATION
This Quarterly Report and Management's Discussion and Analysis of
Results of Operations and Financial Condition include certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements other than
statements of historical facts included in this document, including statements
regarding potential acquisitions, expected cost savings, planned capital
expenditures, the Company's future financial position, business strategy and
other plans and objectives for future operations are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, such statements are based upon
assumptions and anticipated results that are subject to numerous uncertainties.
Actual results may vary significantly from those anticipated due to many
factors, including industry conditions, future demand for new and used vehicles,
the ability to obtain manufacturer consents to acquisitions, the availability of
capital resources and the willingness of acquisition candidates to accept the
Company's capital stock as currency. These important factors, risks and
uncertainties include, but are not limited to, those described in the Company`s
filings with the Securities and Exchange Commission. All subsequent written and
oral forward-looking statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by such factors.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company's dealerships are named in claims
involving the manufacture of automobiles, contractual disputes and other matters
arising in the ordinary course of business. Currently, no legal proceedings are
pending against or involve the Company that, in the opinion of management, could
reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of the Company.
ITEM 2. CHANGES IN SECURITIES
On May 6, 1998 the Company issued 875,000 shares of its common stock in
completing the acquisition of the Johns Group, pursuant to the purchase
agreements executed on February 25, 1998. On July 7, 1998 the Company issued
341,100 shares of its common stock in completing the acquisition of Luby
Chevrolet, pursuant to the purchase agreement executed on March 11, 1998. On
July 20, 1998 the Company issued 56,618 shares of its common stock in completing
the acquisition of McKinney Dodge, pursuant to the purchase agreement executed
on May 16, 1998. The Company relied on Regulation D under the Securities Act of
1933 as an exemption from Registration as all shareholders of the acquired
dealerships are accredited investors.
18
<PAGE> 19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the May 28, 1998 Annual Meeting of Stockholders, the Company's
stockholders voted on two matters.
(1) Election of two Directors:
The stockholders elected the two nominees as directors for
three-year terms based on the following voting results:
<TABLE>
<CAPTION>
VOTES CAST:
------------------------------------
AGAINST OR
NOMINEE ELECTED FOR WITHHELD
---------------------------- -------------- -------------
<S> <C> <C>
Bennett E. Bidwell 11,241,977 8,800
Sterling B. McCall, Jr. 11,241,977 8,800
</TABLE>
(2) Appointment of Independent Public Accountants:
The stockholders ratified the appointment of Arthur Andersen
LLP as the Company's independent public accountants for 1998.
The results of the voting were as follows:
<TABLE>
<S> <C>
For 10,936,488
Against 280,255
Abstain 34,034
</TABLE>
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS:
1. 10.1 Revolving Credit Agreement dated June 19, 1998.
2. 11.1 Statement re: computation of earnings per share is included
under Note 3 to the financial statements.
3. 27.1 Financial Data Schedule.
B. REPORTS ON FORM 8-K:
On May 28, 1998, the Company filed a Current Report on Form 8-K/A including
exhibits under Item 7 thereof.
On June 11, 1998, the Company filed a Current Report on Form 8-K/A
reporting under Item 7 thereof.
19
<PAGE> 20
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.
Group 1 Automotive, Inc.
August 14, 1998 By: /s/ Scott L. Thompson
- ------------------- --------------------------------------
Date Scott L. Thompson, Senior Vice
President, Chief Financial
Officer and Treasurer
20
<PAGE> 21
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.1 Revolving Credit Agreement dated June 19, 1998.
11.1 Statement re: computation of earnings per share is included
under Note 3 to the financial statements.
27.1 Financial Data Schedule.
<PAGE> 1
EXHIBIT 10.1
================================================================================
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
DATED AS OF
JUNE 19, 1998
AMONG
GROUP 1 AUTOMOTIVE, INC.,
ITS SUBSIDIARY BORROWERS LISTED HEREIN
THE BANKS LISTED HEREIN,
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
FORMERLY KNOWN AS TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
AS ADMINISTRATIVE AGENT
COMERICA BANK
AS FLOOR PLAN AGENT,
NATIONSBANK, N.A.
AS DOCUMENTATION AGENT,
U. S. BANK
AS CO-AGENT
AND
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION
AS CO-AGENT
================================================================================
<PAGE> 2
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated as of June
19, 1998, is entered into among GROUP 1 AUTOMOTIVE, INC., a Delaware
corporation (the "Company"), each of the Subsidiaries of the Company listed on
the signature pages hereof and such other Subsidiaries of the Company which
hereafter shall become parties to this Agreement (the Company and the
Subsidiaries are sometimes referred to herein as, individually, a "Borrower,"
and collectively, the "Borrowers"), the Banks listed on the signature pages
hereof (the "Banks"), CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a national
banking association, formerly known as Texas Commerce Bank National
Association, as Administrative Agent for the Banks (in such capacity together
with any successor in such capacity pursuant to Section 12.6, the "Agent"),
COMERICA BANK, a Michigan banking association, as Floor Plan Agent for the
Banks (in such capacity together with any successor in such capacity pursuant
to Section 12.13, the "Floor Plan Agent").
ARTICLE I
CERTAIN DEFINED TERMS, ACCOUNTING TERMS AND
CONSTRUCTION
SECTION 1.1 Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"ABR Borrowing" means a Borrowing comprised of Alternate Base Rate
Loans.
"Accounts" means any and all rights of the Company or any of its
Subsidiaries to payment for goods and services sold or leased, including any
such right evidenced by chattel paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates.
"Acquisition" means the acquisition by the Company or any of its
wholly owned Subsidiaries of (i) not less than one hundred percent (100%) of
the capital stock or other evidence of equity ownership of an Auto Dealer, or
(ii) all or substantially all of the assets of an Auto Dealer.
"Acquisition Loan" has the meaning specified in Section 3.1.
"Acquisition Loan Worksheet" has the meaning specified in Section
9.16(a)(viii).
"Acquisition Loan Advance Limit" means as of any Borrowing Date of an
Acquisition Loan, for the Company and its Subsidiaries on a consolidated basis,
calculated as of the last day of the most recently ended fiscal quarter or year
for which financial statements have been delivered under either Section 7.5 or
9.5, an amount equal to the lesser of (i) $90,000,000 MINUS the amount, if
any, of any portion of the Acquisition Commitment allocated to Floor Plan
Borrowings or the Floor Plan Commitment, or (ii) the sum of (y) the aggregate
amount for all Qualifying Subsidiaries of two (2)
<PAGE> 3
times the difference between Pro Forma EBITDA of each such Qualifying
Subsidiary MINUS Pro Forma Interest Expense of each such Qualifying Subsidiary
PLUS (z) the lesser of (A) the aggregate amount for all Qualifying Ford
Subsidiaries of two (2) times the difference between Pro Forma EBITDA of each
such Qualifying Ford Subsidiary MINUS Pro Forma Interest Expense of each such
Qualifying Ford Subsidiary, or (B) the amount derived under clause (x) of the
definition of the Ford Borrower Liability Amount and such amount shall not
include the Pro Forma EBITDA of any of the GM Borrowers. If the purpose of any
Borrowing of an Acquisition Loan is to make a Permitted Acquisition, then the
foregoing amounts shall be calculated to give effect to such Permitted
Acquisition as if such Acquisition had been consummated on or before the last
day of the fiscal quarter immediately preceding such Borrowing Date.
"Acquisition Loan Commitment" means for each Bank, its obligation to
make Acquisition Loans to the Company up to the amount set forth opposite such
Bank's name on Schedule I under the caption "Acquisition Loan Commitments" (as
the same may be permanently terminated or reduced or increased from time to
time pursuant to the applicable provisions in Sections 2.3(g)(iii), 3.4, 5.5,
or 11.1 and as such amount may be increased or decreased from time to time by
assignment or assumption pursuant to Section 13.3(b)).
"Addendum" means the Addendum to Amended and Restated Revolving Credit
Agreement and Note substantially in the form attached hereto as Exhibit A.
"Adjusted Indebtedness" means as of any date of determination, for the
Company and its Subsidiaries, on a consolidated basis, the difference between
(i) Indebtedness minus (ii) the sum of (x) Floor Plan Loans outstanding, (y)
Retail Loan Guaranties, and (z) Subordinated Indebtedness.
"Adjustment Period" means the period of time commencing on a Floor
Plan Adjustment Date and ending on the next succeeding Floor Plan Adjustment
Date.
"Administrative Questionnaire" means an Administrative Questionnaire
in the form of Exhibit B hereto, which each Bank shall complete and provide to
the Agent.
"Affiliate" means any Person (including any member of the immediate
family of any such natural person) who directly or indirectly beneficially owns
or controls five percent (5%) or more of the total voting power of shares of
capital stock of the Company having the right to vote for directors under
ordinary circumstances, any Person controlling, controlled by or under common
control with any such Person (within the meaning of Rule 405 under the
Securities Act of 1933) and any director or executive officer of such Person.
"Agency Fee" has the meaning specified in Section 5.4(b).
"Agent" has the meaning specified in the introduction to this
Agreement.
"Agent's Letter" has the meaning specified in Section 5.4(b).
2
<PAGE> 4
"Agreement" means this Amended and Restated Revolving Credit
Agreement.
"Alternate Base Rate" means, for any day, a fluctuating rate per annum
(rounded upwards to the next highest one-eighth (1/8) of one percent (1%) if
not already an integral multiple of one-eighth (1/8) of one percent (1%)) equal
to the greater of (a) the Prime Rate in effect on such day, or (b) the Federal
Funds Effective Rate in effect on such day plus one-half ( 1/2) of one percent
(1%). "Prime Rate" shall mean, as of a particular date, the prime rate most
recently announced by Chase and thereafter entered in the minutes of Chase's
Loan and Discount Committee, automatically fluctuating upward and downward with
and at the time specified in each such announcement without notice to any
Borrower or any other Person, which prime rate may not necessarily represent
the lowest or best rate actually charged to a customer. "Federal Funds
Effective Rate" shall mean, for any day, an interest rate per annum equal to
the weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by the Agent from
three federal funds brokers of recognized standing selected by it. Any change
in the Alternate Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective on the effective date of such change in
the Prime Rate, or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loan" means any Loan with respect to which the
Company shall have selected an interest rate based on the Alternate Base Rate
in accordance with the provisions of this Agreement.
"Applicable Interest Rate" means the LIBO Rate, the Alternate Base
Rate, or the Comerica Prime-based Rate, as selected by the Company from time to
time subject to the terms and conditions of this Agreement.
"Applicable Margin" means, on any date, with respect to Eurodollar
Loans which are Acquisition Loans or to Alternate Base Rate Loans, as the case
may be, the applicable percentages set forth below based upon the Leverage
Ratio as in effect as of such date.
<TABLE>
<CAPTION>
Leverage Eurodollar Alternate Base
Ratio Margin Rate Margin
--------- ------ -----------
<S> <C> <C>
Category 1
x > 1.75 2.75% 1.25%
Category 2
1.25 < x # 1.75 2.25% .75%
</TABLE>
3
<PAGE> 5
<TABLE>
<S> <C> <C>
Category 3
1.00 < x # 1.25 1.75% .25%
Category 4
x # 1.00 1.50% .0%
</TABLE>
Each change in the Applicable Margin shall apply to all Eurodollar
Loans that are outstanding at any time during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change.
"Applicable Lending Office" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of a Comerica Prime Rate Loan and an
Alternate Base Rate Loan and such Bank's Eurodollar Lending Office in the case
of a Eurodollar Loan.
"Assignment and Acceptance" has the meaning specified in Section
13.3(b).
"Auto Dealer" means a Person engaged in the sale of new and/or Used
Motor Vehicles pursuant to a franchise or licensing agreement with a
Manufacturer and related operations.
"Banks" has the meaning specified in the introduction to this
Agreement, and Bank(s) shall include the Swing Line Bank unless the context
otherwise requires.
"Board" means the Board of Governors of the Federal Reserve System of
the United States.
"Book Value" means the wholesale value set forth in the most recent
edition of the National Automotive Dealers Association ("N.A.D.A.") Official
Used Car Guide Retail Edition.
"Borrower" or "Borrowers" has the meaning specified in the
introduction to this Agreement.
"Borrowing" means a Loan or a group of Loans of a single Type made by
the Banks on a single date and as to which a single Interest Period is in
effect.
"Borrowing Date" means, with respect to each Borrowing, the Business
Day upon which the proceeds of such Borrowing are made available to any
Borrower.
"Business Day" means a day when the Agent and each Bank are open for
business, and if the applicable Business Day relates to any Eurodollar Loan, a
day on which dealings are carried on in the London interbank market and
commercial banks are open for domestic or international business in London,
England, in New York City, New York, Detroit, Michigan and in Houston, Texas.
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<PAGE> 6
"Capital Lease" means any lease required to be accounted for as a
capital lease under generally accepted accounting principles.
"Cash Collateral Account" has the meaning specified in Section 6.8(a).
"Cash Receipted" means, in connection with the sale of a Motor
Vehicle, that cash has been received upon the sale thereof.
"Change of Control" will be deemed to have occurred if either (a) the
shares of the Company shall cease to be publicly traded or (b) at any time
after the Closing Date, individuals who were directors of the Company on the
Closing Date shall cease to constitute a majority of the members of the board
of directors of the Company.
"Chase" means Chase Bank of Texas, National Association and its
successors and assigns as permitted in this Agreement.
"Closing Date" means the earliest date upon which all of the following
shall have occurred: counterparts of this Agreement and all of the Loan
Documents shall have been executed by each Borrower, each Bank, the Agent and
the Floor Plan Agent and the Agent shall have received counterparts hereof
which taken together, bear the signature of all such signatories and all of the
other conditions to the initial Borrowing or the issuance of any Letters of
Credit set forth in Section 8.1 hereof shall have been satisfied.
"Code" means the Internal Revenue Code of 1986 and any successor
statute of similar import, together with the regulations thereunder, in each
case as in effect from time to time. References to sections of the Code shall
be construed to also refer to any successor sections.
"Collateral" means the collateral described in each of the Loan
Documents including the Security Documents and shall include (a) all of the
capital stock and any other equity interests of all Subsidiaries of the Company
or other Borrowers, now or hereafter existing (except such capital stock and
equity interests which the Company or other applicable Borrower is prohibited
by a Manufacturer from pledging), and (b) with respect each of the Borrowers,
(i) all inventory, including without limitation, Motor Vehicles, (ii) all
Accounts, (iii) all equipment, machinery, furniture and fixtures, and (iv) all
real estate owned or leased by any Borrower.
"Comerica Alternate Base Rate" shall mean, for any day, an interest
rate per annum equal to the Federal Funds Effective Rate in effect on such day,
plus one percent (1%).
"Comerica Prime-based Rate" shall mean, for any day, that rate of
interest which is equal to (a) the greater of (i) the Comerica Prime Rate and
(ii) the Comerica Alternate Base Rate minus (b) 0.50%.
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<PAGE> 7
"Comerica Prime Rate" shall mean the per annum rate of interest
announced by the Floor Plan Agent, at its main office from time to time as its
"prime rate" (it being acknowledged that such announced rate may not
necessarily be the lowest rate charged by the Floor Plan Agent to any of its
customers), which rate shall change simultaneously with any change in such
announced rate.
"Comerica Prime Rate Loan" or "Comerica Prime Rate Borrowing" means
any Loan with respect to which the Company shall have selected an interest rate
based on the Comerica Prime-based Rate in accordance with the provisions of
this Agreement.
"Commitment" means (a) for each Bank (or, as to any Person who becomes
a Bank after the Closing Date), its obligation to make Loans to the Borrowers
up to the amounts of its Pro Rata Share of the Acquisition Loan Commitment and
Floor Plan Loan Commitment, respectively, but in any event not to exceed the
amount set forth opposite such Bank's name on Schedule I under the caption
"Total Commitments," as the same may be permanently terminated or reduced from
time to time pursuant to Section 5.5 or 11.1 and as such amount may be
increased or decreased from time to time by assignment or assumption pursuant
to Section 13.3(b); and (b) for the Swing Line Bank, its obligation to make
Swing Line Loans to the Floor Plan Borrowers up to the amount of the Swing Line
Commitment as the same may be increased or decreased pursuant to the provisions
of Sections 2.3(g)(iii), 3.4 or 5.5.
"Commitment Fee" has the meaning specified in Section 5.4(a).
"Communications" has the meaning specified in Section 13.1.
"Company" has the meaning specified in the introduction to this
Agreement.
"Confidential Information Memorandum" means the Confidential
Information Memorandum dated April, 1998 furnished by Chase Securities Inc., as
Arranger on behalf of the Agent, the Floor Plan Agent and the Banks, relating
to the credit facilities evidenced by this Agreement.
"Consolidated EBITDA" means, for any period for which the amount
thereof is to be determined, Consolidated Net Income for such period, plus, to
the extent deducted in the determination of Consolidated Net Income and without
duplication with items included in the adjustments under generally accepted
accounting principles to net income in the determination of Consolidated Net
Income, (a) provisions for income taxes, (b) Interest Expense, (c) depreciation
and amortization expense, and (d) other non-cash income or charges.
"Consolidated Net Income" means for any period for which the amount
thereof is to be determined, the Net Income of the Company in accordance with
generally accepted accounting principles.
"Consolidated Pro Forma EBITDA" means, Pro Forma EBITDA of the Company
and its Subsidiaries, determined on a consolidated basis.
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<PAGE> 8
"Consolidated Tangible Net Worth" means, with respect to the Company,
at any time, the total Stockholders' Equity less the total amount of any
intangible assets, plus until six (6) months after the Effective Date, fifty
percent (50%) of the allowances and reserves as set forth in the consolidated
balance sheet of the Company with all such amounts being calculated for the
Company and its Subsidiaries on a consolidated basis in accordance with
generally accepted accounting principles applied on a consistent basis.
Intangible assets shall include unamortized debt discount and expense,
unamortized deferred charges and goodwill.
"Current Ratio" means, as of any date of determination, for the
Company and its Subsidiaries on a consolidated basis, the quotient of (a)
current assets as of such date divided by (b) the sum of (without duplication)
current liabilities and the outstanding balance of all Floor Plan Indebtedness
as of such date.
"Curtailment Date" means (a) with respect to a new Motor Vehicle, one
year after the date it is Deemed Floored, (b) with respect to a Fleet Motor
Vehicle, thirty (30) days from the date it is Deemed Floored, (c) with respect
to a Demonstrator, two hundred ten (210) days from the date it is Deemed
Floored, (d) with respect to a Used Motor Vehicle, one hundred twenty (120)
days from the date it is Deemed Floored, (v) with respect to a Program Car, one
hundred eighty (180) days from the date it is Deemed Floored and (vi) with
respect to a Rental Motor Vehicle the first to occur of (y) two (2) years from
the date it is Deemed Floored or (z) the introduction by the Manufacturer of
the third model year for such Motor Vehicle.
"Dealer Franchise Agreement" has the meaning specified in Section
7.20.
"Deemed Floored" means with respect to a Motor Vehicle, the earlier of
(a) the date a Floor Plan Loan Borrowing is deemed by the Floor Plan Agent in
its sole discretion to be advanced by the Floor Plan Agent; or (b) thirty (30)
days after an advance is made on a Floor Plan Loan with respect to such Motor
Vehicle.
"Default" means any event or condition which, with the lapse of time
or giving of notice or both, would constitute an Event of Default.
"Demonstrator" means a new Motor Vehicle with mileage resulting from
customer test drives or use of such Motor Vehicle by dealership personnel.
"Disposition" means the sale, lease, conveyance or other disposition
of property.
"Dollars" and the symbol "$" mean the lawful currency of the United
States of America.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" on such Bank's
signature page to this Agreement or, as to any Person who becomes a Bank after
the Closing Date, on the signature page of the Assignment and Acceptance
executed by such Person or such other office of such Bank as such Bank may
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<PAGE> 9
hereafter designate from time to time as its "Domestic Lending Office" by
notice to the Company and the Agent.
"Draft" means a draft on a Floor Plan Borrower's account at the Floor
Plan Agent made by a Manufacturer in accordance with the terms of a Drafting
Agreement by and among the Floor Plan Agent, the Manufacturer and/or any of the
Borrowers.
"Drafting Agreement" means an agreement (whether or not issued in the
form of a letter of credit) by and between the Floor Plan Agent and a
Manufacturer, entered into for the account of a Floor Plan Borrower (and in
some cases acknowledged or countersigned by a Floor Plan Borrower) under which
a Manufacturer is entitled to submit Drafts to the Floor Plan Agent (via ACH
electronic transfer or otherwise) for payment of invoices identifying Motor
Vehicles delivered or shipped to the applicable Floor Plan Borrower, such
agreements to be substantially in the form of the existing Drafting Agreements
identified in Schedule II hereto or otherwise on terms and conditions
consistent with the usual customs and practices in effect from time to time for
the floor plan industry.
"EBITDA" means, for any Person, for any period for which the amount
thereof is to be determined, Net Income for such period, plus, to the extent
deducted in the determination of Net Income and without duplication with items
included in the adjustments under generally accepted accounting principles to
Net Income in the determination of net income, (a) provisions for income taxes,
(b) Interest Expense, (c) depreciation and amortization expense and (d) other
non-cash income or charges.
"Earnings Available for Fixed Charges" means, for any period for which
the amount thereof is to be determined, Consolidated EBITDA plus (a) lease
expense of the Company and its Subsidiaries on a consolidated basis minus (b)
the cash income taxes of the Company and its Subsidiaries, determined on a
consolidated basis as reported in the annual audited and the quarterly
unaudited financial statements.
"Eligible Assignee" means (a) any Bank or any Affiliate of any Bank
(b) a commercial bank organized under the laws of the United States, or any
state there of, and having total assets in excess of One Billion Dollars
($1,000,000,000) or its equivalent in any other currency and having deposits
that rated in either of the two highest generic letter rating categories
(without regard to subcategories) from either S&P or Moody's or a comparable
nationally recognized national or international rating agency; (c) a commercial
bank organized under the laws of any other country which is a member of the
OECD, or a political subdivision of any such country, and having total assets
in excess of One Billion Dollars ($1,000,000,000) or its equivalent in any
other currency, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is
also a member of the OECD; (d) the central bank of any country which is a
member of the OECD; or (e) any other financial institution approved by the
Agent and the Company, (if such consent is required pursuant to Section 13.3)
whose consent shall not be unreasonably withheld.
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"ERISA" means the Employee Retirement Income Security Act of 1974, and
any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to
sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" means any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in sections 414(b) and
414(c), respectively, of the Code or section 4001 of ERISA.
"Eurodollar Borrowing" means a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Lending Office" means, with respect to each Bank, the
branches or Affiliates of such Bank which such Bank has designated as its
"Eurodollar Lending Office" on such Bank's signature page to this Agreement or,
as to any Person who becomes a Bank after the Closing Date, on the signature
page of the Assignment and Acceptance executed by such Person or such other
office of such Bank as such Bank may hereafter designate from time to time as
its "Eurodollar Lending Office" by notice to the Company and the Agent.
"Eurodollar Loan" means any Loan with respect to which the Company
shall have selected an interest rate based on the LIBO Rate in accordance with
the provisions of this Agreement.
"Event of Default" has the meaning specified in Section 11.1.
"Excess/Payments in Process" means as of any date of determination the
funds transferred from any Floor Plan Borrower to the Floor Plan Agent in
payment of Floor Plan Loans which have at such time not yet been applied on a
VIN specific basis.
"Federal Funds Effective Rate" has the meaning specified in the
definition of "Alternate Base Rate."
"Fixed Charges" means, for any period for which the amount thereof is
to be determined, the sum of Interest Expense, lease expense, principal
payments, cash dividends, and capital expenditures (other than capital
expenditures on Property which is or will be within six (6) months of the date
of such expenditures the subject of a Qualified Sale/Leaseback Transaction), in
each case, for the Company and its Subsidiaries, determined on a consolidated
basis.
"Fixed Charge Coverage Ratio" means the quotient of (a) Earnings
Available for Fixed Charges divided by (b) Fixed Charges.
"Fleet Motor Vehicle" means one of a large group of new Motor Vehicles
sold to a purchaser (e.g., a rental car agency) which purchases vehicles for
short term use.
"Floor Plan Adjustment Date" means each of (a) the last Business Day
of each calendar month, and (b) the first Business Day after two (2) Business
Days prior written notice from the
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<PAGE> 11
Swing Line Bank to the Agent requesting therein a Floor Plan Adjustment Date,
but in any event not less frequently than once each calendar month.
"Floor Plan Advance Limit" means (a) with respect to new Motor
Vehicles, Demonstrators, and Rental Motor Vehicles the wholesale purchase price
charged by a Manufacturer as reflected in the invoice to the Company or any
other Floor Plan Borrower for such Motor Vehicles, and (b) with respect to Used
Motor Vehicles and Program Cars, the cost of such Motor Vehicles to the Company
or any other Floor Plan Borrower; provided, however, with respect to
Demonstrators, Used Motor Vehicles, Program Cars, and Rental Motor Vehicles,
(w) the aggregate amount of Floor Plan Loans outstanding at any time in
connection with Used Motor Vehicles may not exceed an amount equal to
fifty-five percent (55%) of the aggregate Book Value of all Used Motor Vehicles
of the Floor Plan Borrowers, as reflected in their current Manufacturer/Dealer
Statement, (x) the aggregate amount of Floor Plan Loans outstanding at any time
in connection with Used Motor Vehicles and Program Cars may not exceed
Forty-Five Million Dollars ($45,000,000), (y) the aggregate amount of Floor
Plan Loans outstanding at any time in connection with Demonstrators may not
exceed Twenty Million Dollars ($20,000,000) and (z) the aggregate amount of
Floor Plan Loans outstanding at any time in connection with Rental Motor
Vehicles may not exceed Six Million Dollars ($6,000,000).
"Floor Plan Agency Fee" has the meaning specified in Section 5.4(c).
"Floor Plan Borrowers" shall mean the Company and/or any Floor Plan
Subsidiaries.
"Floor Plan Indebtedness" means (without duplication) all Indebtedness
of the Borrowers secured by Motor Vehicles.
"Floor Plan Interest Expense" means that component of the Company's
aggregate Interest Expense, determined on a consolidated basis, attributable to
Floor Plan Indebtedness.
"Floor Plan Loan" has the meaning specified in Section 2.1.
"Floor Plan Loan Commitment" means for each Bank, its obligation to
make Floor Plan Loans to the Floor Plan Borrowers up to the amount set forth
opposite such Bank's name on Schedule I under the caption "Floor Plan Loan
Commitments" (as the same may be increased, permanently terminated, reduced or
increased from time to time pursuant to the applicable provisions of Sections
2.3(g)(iii), 3.4, 5.5 or 11.1 and as such amount may be increased or decreased
from time to time by assignment or assumption pursuant to Section 13.3(b)).
"Floor Plan Subsidiary" means any Subsidiary of the Company which has
granted a Lien to the Agent for the benefit of the Banks on its Property in the
manner required by the Loan Documents.
"Ford Borrower Liability Amount" means, at any time, an amount equal
to the lesser of (i) all Obligations owed to the Banks by the Company and/or
any of the Ford Borrowers or (ii) at any
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time of determination thereof, (w) an amount equal to all Floor Plan Loans
outstanding to ANY Ford Borrower, PLUS (x) an amount equal to the greater of
(A) $25,000,000 or (B) all cash consideration paid by the Company or any of its
Subsidiaries in connection with the acquisition of the stock or other equity
interest, or assets of any Auto Dealer engaged in the sale of new Motor
Vehicles manufactured by Ford Motor Company PLUS (y) an amount equal to all
reasonable costs and expenses associated with the collection and enforcement of
the obligations of any Ford Borrower arising under the Loan Documents including
attorneys fees PLUS (z) an amount equal to all capital contributions and
expenditures for capital or fixed assets, made by the Company or any of its
Subsidiaries on behalf of any Ford Borrower.
"Ford Borrower" means any Subsidiary of the Company engaged in the
sale of new Motor Vehicles manufactured by any division of the Ford Motor
Company.
"Fronting Fees" has the meaning specified in Section 6.7(b).
"GM Borrower" means the Borrowers set forth in Schedule XV and any
other Subsidiary of the Company engaged in the sale of new Motor Vehicles
manufactured by any division of General Motors Corporation.
"GM Borrower Guaranty" has the meaning specified in Section
8.1(b)(vii).
"GM Borrower Liability Amount" means, at any time, the sum of (y) an
amount equal to the Floor Plan Borrowings of all GM Borrowers and (z) all
reasonable costs and expenses associated with the collection and enforcement of
the obligations of any GM Borrower arising under the Loan Documents including
attorneys fees and expenses in connection with Floor Plan Loans of any GM
Borrower.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranties" by any Person means all obligations (other than
endorsements 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 (the
"primary obligor") in any manner, whether directly or indirectly, including all
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Indebtedness or obligation or any
property or assets constituting security therefor,
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(b) to advance or supply funds (a) for the purchase or
payment of such Indebtedness or obligation, (b) to maintain working capital or
other balance sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation,
(c) to lease property under a Capital Lease or any other
lease, the lessee under which is a Person other than the Company or
wholly-owned Subsidiary of the Company or to purchase securities or other
property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make
payment of such Indebtedness or perform such obligation, or
(d) otherwise to assure the owner of the Indebtedness or
the obligation of the primary obligor against loss in respect thereof.
For the purposes of all computations made under this Agreement, a Guaranty in
respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness
equal to the maximum aggregate amount of such obligation, liability or
dividend.
"Hedging Agreement" shall mean any interest rate or currency swap,
rate cap, rate floor, rate collar, forward agreement, or other exchange or
rate protection agreement with the Agent, any Bank, or any affiliate of the
Agent, or any Bank or any option with respect to any such transaction.
"Highest Lawful Rate" means, as to any Bank, the maximum nonusurious
rate of interest, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the aggregate principal
amount of all Loans under the laws of the United States of America and/or the
laws of the State of Texas as may be applicable thereto that are presently in
effect or, to the extent allowed under such applicable law, which may hereafter
be in effect and which allow a higher maximum non-usurious interest rate than
applicable law now allows. To the extent, if any, that the maximum
non-usurious rate is determined with reference to the laws of the State of
Texas, the Highest Lawful Rate shall be the "weekly" rate ceiling as defined in
Chapter 1D of Subtitle 1 of Title 79, Texas Revised Civil Statutes (as amended)
(the "Act"), calculated on the basis of a 365/366 day year; provided, however,
that to the extent permitted by the Act, the Agent may at its election or at
the request of the Required Banks substitute for the "weekly" rate ceiling the
"annual" or "quarterly" ceiling, as those terms are defined in the Act, upon
the giving of notices provided for by the Act and effective upon the giving of
such notices.
"Honor Date" has the meaning specified in Section 6.3(b).
"Indebtedness" of any Person means, without duplication:
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(a) any obligation of such Person for borrowed money,
including any obligation of such Person evidenced by bonds, debentures, notes
or other similar debt instruments, and
(b) any obligation of such Person on account of deposits
or advances,
(c) all obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such
Person,
(d) any obligation of such Person for the deferred
purchase price of any property or services, except accounts payable arising in
the ordinary course of such Person's business,
(e) rentals in respect of Capital Leases of such Person,
(f) Guaranties by such Person to the extent required
pursuant to the definition thereof,
(g) any Indebtedness of another Person secured by a Lien
on any asset of such first Person, whether or not such Indebtedness is assumed
by such first Person, and
(h) any Indirect Indebtedness of such Person.
"Indemnitee" has the meaning specified in Section 13.4(b).
"Indirect Indebtedness" means preferred stock of a Person having a
mandatory redemption prior to the Maturity Date.
"Insolvency Proceeding" means (a) any case, action or proceeding
relating to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general assignment for
the benefit of creditors, composition, marshalling of assets for creditors, or
other, similar arrangements in respect of its creditors generally or any
substantial portion of a Person's creditors, undertaken under federal.
"Interest Coverage Ratio" means for any period the quotient of (a)
Consolidated EBITDA for such period divided by (b) Interest Expense of the
Company for such period.
"Interest Expense" means, for any Person, determined on a consolidated
basis, the sum of all interest on Indebtedness paid or payable (including the
portion of rents payable under Capital Leases allocable to interest, but
excluding interest allowances from Manufacturers) plus all original issue
discount and other interest expense associated with Indebtedness amortized or
required to be amortized in accordance with GAAP.
"Interest Payment Date" means, (a) with respect to Floor Plan Loans
(other than Swing Line Loans and Swing Line Overdraft Loans), the last day of
the Interest Period applicable to each such
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<PAGE> 15
Loan (and, in addition, in the case of any Interest Period more than 30 days'
duration, the day that would have been the Interest Payment Date of such
Interest Period if such Interest Period had been of one month or 30 days'
duration), (b) with respect to Acquisition Loans which are Eurodollar Loans,
the last day of the Interest Period applicable to each such Loan (and in
addition, in the case of any Interest Period of six months or 180 days'
duration, the day that would have been the Interest Payment Date of such
Interest Period if such Interest Period had been of three months' or 90 days'
duration), (c) with respect to Alternate Base Rate Loans, on the first Business
Day of each January, April, July and October of each year, commencing July 1,
1998 and with respect to Swing Line Loans, Swing Line Overdraft Loans and
Comerica Prime Rate Loans, on the fifth (5th) Business Day of each month.
"Interest Period" means: with respect to:
(a) Floor Plan Loans and Swing Line Loans (i) as to any Eurodollar
Loan, the period commencing on the date of such Eurodollar Loan and
ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month
that is fourteen (14) days or one month thereafter, as the Company may
elect, and (ii) as to any Comerica Prime Rate Loan, the period
commencing on the date of such Comerica Prime Rate Loan and ending on
the date such Loan is repaid; or converted into a Eurodollar Loan in
accordance with the terms of Section 5.15(b); provided, however, that
(A) if any Interest Period would end on a day that shall not be a
Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, with respect to Eurodollar Loans only,
such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next
preceding Business Day, (B) no Interest Period shall end later than
the Maturity Date and (C) interest shall accrue from and including the
first day of an Interest Period to but excluding the last day of such
Interest Period; and
(b) Acquisition Loans (i) as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the
numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is one,
two, three or six months thereafter, as the Company may elect and (ii)
as to any Alternate Base Rate Loan, a period commencing on the date of
such Loan and ending on the date such Loan is repaid or converted into
a Eurodollar Loan in accordance with the terms of Section 5.15(a);
provided, however, that (A) if any Interest Period would end on a day
that shall not be a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, with respect to
Eurodollar Loans only, such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day, (B) no Interest Period shall end
later than the Maturity Date and (C) interest shall accrue from and
including the first day of an Interest Period to but excluding the
last day of such Interest Period.
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"Inventory Detail Report" means a report delivered pursuant to Section
9.5(f) by the Company and the other Floor Plan Borrowers (on an individual and
consolidated basis) which breaks out in detail the new Motor Vehicles, Used
Motor Vehicles, Demonstrators, and Program Vehicles held by such Floor Plan
Borrower as reflected in its Manufacturer/Dealer Statements.
"Investment" means, as to any Person, any investment so classified
under generally accepted accounting principles made by stock purchase, capital
contribution, loan or advance or by purchase of property or otherwise, but in
any event shall include as an investment in any other Person the amount of all
Indebtedness owed by such other Person and all Accounts from such other Person
which are not current assets or did not arise from services rendered or sales
to such other Person in the ordinary course of business.
"Issue" means, with respect to any Letter of Credit, to issue or to
extend the expiration date of, or to renew or increase the amount of, such
Letter of Credit; and the terms "Issued," "Issuing" and "Issuance" have
corresponding meanings.
"Issuing Bank" means Chase Bank of Texas, National Association,
formerly known as Texas Commerce Bank National Association, in its capacity as
issuer of one or more Letters of Credit hereunder, together with any successor
letter of credit issuer and any replacement letter of credit issuer.
"Leasehold Mortgage" has the meaning specified in Section 8.1(b)(iv).
"Letter of Credit" means any letter of credit issued by the Issuing
Bank pursuant to Article VI.
"Letter of Credit Advance" means each Bank's participation in any
Letter of Credit Borrowing in accordance with its Pro Rata Share.
"Letter of Credit Application" and "Letter of Credit Amendment
Application" means an application form for Issuance of, and for amendment of,
Letters of Credit as shall at any time be in use at the Issuing Bank, as the
Issuing Bank shall request.
"Letter of Credit Borrowing" means an extension of credit resulting
from a drawing under any Letter of Credit which shall not have been reimbursed
on the date when made from proceeds of a Borrowing of Acquisition Loans under
Section 6.3(b).
"Letter of Credit Commitment" means the commitment of the Issuing Bank
to Issue, and the commitment of the Banks severally to participate in, Letters
of Credit from time to time Issued or outstanding under Article VI in an
aggregate amount not to exceed on any date the amount of Five Million Dollars
($5,000,000); provided that the Letter of Credit Commitment is a part of the
combined Acquisition Loan Commitment, rather than a separate, independent
commitment.
"Letter of Credit Fees" has the meaning specified in Section 6.7(a).
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"Letter of Credit Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding, plus (b)
the amount of all unreimbursed drawings under all Letters of Credit, including
all outstanding Letter of Credit Borrowings.
"Letter of Credit-Related Documents" means the Letters of Credit, the
Letter of Credit Applications, the Letter of Credit Amendment Applications and
any other document relating to any Letter of Credit, including any of the
Issuing Bank's standard for documents for Letter of Credit Issuances.
"Letter of Credit Termination Date" has the meaning provided in
Section 6.1(a).
"Leverage Ratio" means as of any date of determination, for the
Company, the quotient of (a) Adjusted Indebtedness as of such date divided by
(b) (y) Consolidated Pro Forma EBITDA as of such date, minus (z) Pro Forma
Floor Plan Interest Expense of the Company and its Subsidiaries, determined on
a consolidated basis and after having given effect to any proposed Acquisition,
as of such date.
"LIBO Rate" means with respect to a Borrowing the rate (rounded to
the nearest one-sixteenth (1/16) of one percent (1%) or, if there is no nearest
one-sixteenth (1/16) of one percent (1%), the next higher one-sixteenth (1/16)
of one percent (1%) at which dollar deposits approximately equal in principal
amount of such Borrowing and for a maturity equal to the applicable Interest
Period are offered in immediately available funds to the principal office of
the Agent in London, England (or if the Agent does not at the time any such
determination is made, maintain an office in London, England, the principal
office of any Affiliate of the Agent in London, England) by leading banks in
the London interbank market for Eurodollars at approximately 11:00 A.M.,
LONDON, ENGLAND TIME, two Business Days prior to the commencement of such
Interest Period.
"Lien" means any mortgage, pledge, hypothecation, judgment lien or
similar legal process, title retention lien, or other lien or security
interest, including the interest of a vendor under any conditional sale or
other title retention agreement and the interest of a lessor under any Capital
Lease.
"Loan" means an Alternate Base Rate Loan, a Comerica Prime Rate Loan,
a Eurodollar Loan, an Acquisition Loan, a Floor Plan Loan, a Swing Line Loan,
or a Swing Line Overdraft Loan; and "Loans" means all such Loans made pursuant
to this Agreement
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Agent's Letter and all other documents and instruments executed
by the Borrowers or any other Person in connection with this Agreement and the
Loans.
"Manufacturer" means the manufacturer of a Motor Vehicle.
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"Manufacturer/Dealer Statement" means a financial statement prepared
by a Floor Plan Borrower for a Manufacturer and delivered to the Manufacturer
on a monthly basis.
"Manufacturer's Certificate" means any Manufacturer's Statement of
Origin, Manufacturer's Certificate, MSO, Certificate of Origin or any other
document evidencing the ownership or transfer of ownership of a new Motor
Vehicle from a Manufacturer to any Borrower.
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), (i) a material
adverse effect on the financial condition, business, operations, assets or
prospects of the Company and its Subsidiaries, on a consolidated basis, (ii) a
material impairment of the ability of the Company and its Subsidiaries on a
consolidated basis or the Floor Plan Subsidiaries as a group, to perform their
Obligations under the Loan Documents or (iii) a material impairment of the
validity or enforceability of the Loan Documents.
"Maturity Date" means December 31, 2000, or the earlier termination of
the Commitments under Sections 5.5 and 11.1 unless extended pursuant to Section
5.16.
"Maximum Permissible Rate" has the meaning specified in Section 13.8.
"Mortgage" means a mortgage or deed of trust substantially in the form
of Exhibit D covering each parcel of real estate owned by any Borrower (other
than real estate securing Non-Recourse Real Estate Debt that cannot be
subordinately mortgaged), executed by the respective Borrower in favor of the
Agent for the benefit of the Banks.
"Motor Vehicle" means an automobile, truck, van or any other motor
vehicle, including, without limitation, new Motor Vehicles, Used Motor
Vehicles, Program Cars, Fleet Motor Vehicles, Rental Motor Vehicles and
Demonstrators.
"Net Income" means for any Person for any period for which the amount
thereof is to be determined the net income (or net losses) of such Person and
its Subsidiaries on a consolidated basis as determined in accordance with
generally accepted accounting principles after deducting, to the extent
included in computing said net income and without duplication, (i) the income
(or deficit) of any Person (other than a Subsidiary) in which such Person or
any of its Subsidiaries has any ownership interest, except to the extent that
any such income has been actually received by such Person or such Subsidiary in
the form of cash dividends or similar cash distribution, (ii) any income (or
deficit) of any other Person accrued prior to the date it becomes a Subsidiary
of such Person or merges into or consolidates with such entity, (iii) the gain
or loss (net of any tax effect) resulting from the sale of any capital assets,
(iv) any gains or losses or other income which is non-recurring, extraordinary
or attributable to discontinued operations, (v) income resulting from the
write-up of any assets, and (vi) any portion of the net income of any
Subsidiaries which is not available for distribution.
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"Non-Recourse Real Estate Debt" means Indebtedness of a Subsidiary of
the Company existing as of the Closing Date and described in Schedule XII or
incurred in connection with an Acquisition, provided that such Indebtedness is
non-recourse to such Borrower and secured solely by real estate of such
Borrower used in the day-to-day operations of its business.
"Note" and "Notes" mean each of the Promissory Notes substantially in
the form of Exhibit C-1 duly executed by all of the Borrowers each payable and
delivered to each of the respective Banks in the principal face amount of the
respective Bank's Commitment.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties, arising under any Loan Document or arising under any
Hedging Agreement owing by any Borrower to any Bank, the Agent, the Floor Plan
Agent, the Swing Line Bank, or the Issuing Bank, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.
"OECD" means the Organization for Economic Cooperation and
Development.
"Other Activities" has the meaning specified in Section 12.3.
"Other Financings" has the meaning specified in Section 12.3.
"Other Taxes" has the meaning specified in Section 5.14(b).
"Out of Balance" means (i) with respect to a Motor Vehicle, the
outstanding balance of the Floor Plan Loan pursuant to which such Motor Vehicle
was purchased exceeds the Floor Plan Advance Limit and (ii) with respect to a
Floor Plan Loan, the outstanding balance thereof has not been paid in
accordance with the terms of this Agreement; provided, however, that so long as
the outstanding balance of (y) Cash Receipted Motor Vehicles shall have been
received within five (5) days of the sale thereof and (z) Sale Dated Motor
Vehicles shall have been received within ten (10) days of the sale thereof,
such Loans shall not be considered Out of Balance.
"Out of Balance Amount" has the meaning specified in Section 9.12(b).
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Performance Letter of Credit" has the meaning specified in Section
6.2.
"Permitted Acquisition" means (a) in connection with an Acquisition by
the Company pursuant to which (i) the total consideration (exclusive of stock
or other equity consideration) is less than or equal to Ten Million Dollars
($10,000,000), (ii) when combined with the total consideration (exclusive of
stock or other equity consideration) paid or payable in connection with all
other
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Acquisitions completed within the immediately preceding twelve (12) calendar
months, such amount is less than or equal to Twenty-five Million Dollars
($25,000,000) and (iii) not less than one hundred percent (100%) of the capital
stock or other evidence of equity ownership (other than director qualifying
shares) of the target entity is acquired, and that satisfies all the
requirements for a Permitted Acquisition set forth in Section
9.16(a)(i)(ii)(v)(vi)(viii)(ix) and Section 9.16(b); (b) in connection with an
Acquisition by the Company pursuant to which (i) the total consideration
(exclusive of stock or other equity consideration) is greater than Ten Million
Dollars ($10,000,000), and (ii) not less than one hundred percent (100%) of the
capital stock or other evidence of equity ownership (other than director
qualifying shares) of the target entity is acquired, and that satisfies all the
requirements for a Permitted Acquisition set forth in Section 9.16(a) and
Section 9.16(b); and (c) in connection with an Acquisition by the Company
pursuant to which (i) the total consideration (exclusive of stock or other
equity consideration) is less than Ten Million Dollars ($10,000,000), (ii) when
combined with the total consideration (exclusive of stock or other equity
consideration) paid or payable in connection with all other Acquisitions
completed within the immediately preceding twelve (12) calendar months, such
amount is greater than Twenty-Five Million Dollars ($25,000,000) and (iii) not
less than one hundred percent (100%) of the capital stock or other evidence of
equity ownership, other than director qualifying shares, of the target entity
is acquired and that satisfies all the requirements of a Permitted Acquisition
set forth in Section 9.16(a) and Section 9.16(b).
"Permitted Acquisition Notice" has the meaning specified in Section
9.16(a)(ii).
"Permitted Liens" means those Liens described in Section 10.2.
"Person" means any natural person, corporation, business trust,
association, company, limited liability company, joint venture, partnership or
government or any agency or political subdivision thereof.
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any of its Subsidiaries or any
ERISA Affiliate or as to which the Company or any of its Subsidiaries or any
ERISA Affiliate contributes or is a member or otherwise may have any liability.
"Pledge Agreement" means a Stock Pledge Agreement substantially in the
form of Exhibit E attached hereto, executed by the Company and certain other
Borrowers in favor of the Agent for the benefit of the Banks covering all of
the capital stock and other equity interests of the Company's direct and
indirect Subsidiaries which the Company or such other Borrower is not
prohibited by a Manufacturer from pledging.
"Prime Rate" has the meaning specified in the definition of the term
"Alternate Base Rate."
"Pro Forma EBITDA" means, for any Person, as of any date of
determination, based upon the immediately preceding four fiscal quarters, for
any period for which the amount thereof is to be
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<PAGE> 21
determined, EBITDA of such Person plus (or minus), without duplication, the
EBITDA for such four quarter period of any Person acquired during such period.
"Pro Forma Floor Plan Interest Expense" means, for any Person, as of
any date of determination, based upon the immediately preceding four fiscal
quarters of such Person, Floor Plan Interest Expense of such Person plus (or
minus), without duplication, the Floor Plan Interest Expense for such period of
any Person acquired during such period.
"Pro Forma Interest Expense" means Pro Forma Floor Plan Interest
Expense plus pro forma Interest Expense of other permitted Indebtedness of the
Borrowers.
"Program Car" means a Motor Vehicle in the current or immediately
preceding model year in readily saleable condition, previously used by a car
rental company as a part of its rental fleet or previously driven by an
executive of a Manufacturer before being offered for sale to the Company or any
other Floor Plan Borrower at a Manufacturer sponsored auction.
"Pro Rata Share" shall mean, at any time, with respect to any Bank,
the percentage corresponding to the fraction the numerator of which shall be
the amount of the Commitment of such Bank and the denominator of which shall be
the aggregate amount of the Commitments of all of the Banks.
"Qualified Sale/Lease back Transaction" means the sale by any of the
Borrowers of real property and related fixtures and accessories thereto used in
ordinary course of business, which property is, in a concurrent transaction,
leased by such Borrower from the purchaser thereof under a lease agreement, the
terms of which, as of the date of such transaction, based upon the immediately
preceding four fiscal quarters of the Company, would not cause the Company to
be in Default of any of the provisions of Sections 10.14, 10.15, 10.16 or 10.17
or any other provision of this Agreement.
"Qualifying Ford Subsidiary" means a Ford Borrower (i) which is a
Floor Plan Subsidiary, (ii) which has granted a general Lien and security
interest in favor of the Agent for the benefit of the Banks in substantially
all of the Property subject only to Permitted Liens, (iii) which is a co-maker
of the Notes with joint and several liability with all other Ford Borrowers for
all the Obligations to the extent of the Ford Borrower Liability Amount, except
as limited by Section 13.13 of this Agreement, (iv) the capital stock or other
equity ownership of which has been pledged by the Company to the Agent for the
benefit of the Banks, (v) which has no Indebtedness except as permitted
pursuant to Sections 10.1(a), (f), (g), (l) and (m), and (vi) which is in all
other respects in compliance with the terms of this Agreement.
"Qualifying Subsidiary" means a wholly-owned (other than director
qualifying shares) Subsidiary of the Company (i) which is a Floor Plan
Subsidiary, (ii) which has granted a general Lien and security interest in
favor of the Agent for the benefit of the Banks on substantially all of its
Property, subject only to Permitted Liens, (iii) which is a co- maker of the
Notes with joint and several liability with all other Borrowers for all the
Obligations except as limited by Section 13.13 of this Agreement, (iv) the
capital stock or other equity ownership of which has been pledged by the
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<PAGE> 22
Company to the Agent for the benefit of the Banks, (v) which has no
Indebtedness except as permitted pursuant to Section 10.1(a), (f), (g) (l) and
(m), and (vi) which is in all other respects in compliance with the terms of
this Agreement.
"Quoted Rate" shall mean the lesser of (i) rate of interest per annum
offered by Swing Line Bank in its sole discretion with respect to a Swing Line
Loan or a Swing Line Overdraft Loan, such rate to be derived from the LIBO Rate
(or other cost of funds, as selected by Swing Line Bank) on the applicable date
of determination, plus 1.5% and (ii) the Highest Lawful Rate.
"Refunded Swing Line Loans" has the meaning specified in Section
4.5(a).
"Register" has the meaning specified in Section 13.3(d).
"Regulation D" means Regulation D of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation G" means Regulation G of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation T" means Regulation T of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation U" means Regulation U of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation X" means Regulation X of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Reportable Event" means a Reportable Event as defined in Section
4043(b) of ERISA.
"Rental Motor Vehicle" means a Motor Vehicle owned by a Floor Plan
Subsidiary and purchased directly from a Manufacturer as a new Motor Vehicle
which is less than two years old and which is used as a service loaner vehicle
or is periodically subject to a rental contract with customers of the Floor
Plan Subsidiary for loaner or rental periods of up to thirty (30) consecutive
days.
"Request for Borrowing" means, in connection with a Floor Plan Loan, a
Swing Line Loan, or a Swing Line Overdraft Loan, a Request for Borrowing
substantially in the form attached hereto as Exhibit F-1, and in the case of an
Acquisition Loan, a Request for Borrowing substantially in the form attached
hereto as Exhibit F-2.
"Required Banks" means, at any time Banks holding 66-2/3% of the
aggregate principal amount of the Loans and the Letter of Credit Obligations at
the time outstanding, as of the immediately preceded Floor Plan Adjustment Date
(provided that, for purposes of determining
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Required Banks hereunder, Swing Line Loans shall be allocated among the Banks
based upon their respective Pro Rata Share of the Total Commitment), or if no
such principal amount is outstanding, Banks having sixty-six and two-thirds
percent (66-2/3%) of the Total Commitment.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of any arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is
subject.
"Reserve Commitment" has the meaning specified in Section 3.4.
"Restricted Payment" means, as to any Person, any dividend or other
distribution of assets, properties, cash, rights, obligations or securities
made by such Person or any Subsidiary of such Person on account of shares of
such Person's capital stock, or any partnership interest or similar ownership
interest in such Person, or any purchase, retirement, redemption or other
acquisition made by such Person or any Subsidiary of such Person of any of such
Person's capital stock, partnership interest or similar ownership interest or
warrants, rights or options evidencing a right to acquire such shares or
interests.
"Retail Loan Guarantees" means any Guaranty by the Company or any of
its Subsidiaries in favor of any Person of retail installment contracts or
other retail payment obligations in respect of Motor Vehicles sold to a
customer.
"Sale Dated" means, in connection with the sale of a Motor Vehicle,
that closing of the sale of such Motor Vehicle is pending financing or other
contingencies.
"Security Agreement" means a Security Agreement substantially in the
form of Exhibit G attached hereto, executed by each of the Borrowers in favor
of the Agent for the benefit of the Banks covering all assets of the Borrowers
described therein.
"Security Documents" means this Agreement, the Pledge Agreement, the
Security Agreements, the agreements or instruments described or referred to in
Section 8.1(b) and any and all other agreements or instruments now or hereafter
executed and delivered by any Borrower or any other Person in connection with,
or as security for, the payments or performance of any of the Obligations.
"Stockholders' Equity" means the consolidated stockholders' equity of
the Company and its Subsidiaries after eliminating all intercompany items and
after deducting from stockholders' equity such portion thereof as is properly
attributable to minority interests in such Subsidiaries.
"Subordinated Indebtedness" means Indebtedness of any Borrower having
maturities and terms, and which is subordinated to payment of the Notes in a
manner, approved in writing by the
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Agent and the Required Banks and which in the aggregate, is less than Ten
Million Dollars ($10,000,000).
"Subsidiary" means any Person of which or in which any other Person
(the "Parent") and the other Subsidiaries of the Parent own directly or
indirectly fifty percent (50%) or more of:
(a) the combined voting power of all classes of stock
having general voting power under ordinary circumstances to elect a majority of
the board of directors of such Person, if it is a corporation;
(b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar entity; or
(c) the beneficial interest of such Person, if it is a
trust, association or other unincorporated organization.
The term Subsidiary (or Subsidiaries), as used in the introduction to
this Agreement, means a Subsidiary (or the Subsidiaries) of the Company.
"Swing Line Bank" means Comerica Bank and its successors and assignees
as provided in this Agreement.
"Swing Line Commitment" means, for the Swing Line Bank, its obligation
to make Swing Line Loans to the Floor Plan Borrowers up to the amount equal to
the greater of (i) $50,000,000, or (ii) in the sole determination of the Swing
Line Bank after five (5) Business Days' notice to the Agent, from time to time
an amount equal to $75,000,000, or such lesser amount (not less than
$50,000,000) as the Floor Plan Agent shall determine in its sole discretion;
provided that, subject to the provisions of Article IV, the Swing Line
Commitment is a part of the Floor Plan Loan Commitment rather than a separate,
independent commitment.
"Swing Line Loan" has the meaning specified in Section 4.1.
"Swing Line Minimum Amount" means the amount of Swing Line Loans
which in the mutual determination of the Borrowers and the Floor Plan Agent
shall remain outstanding as of each Floor Plan Adjustment Date, which amount
may change from time to time as the Borrowers and the Floor Plan Agent shall
mutually agree; provided, however, the Swing Line Minimum Amount shall in any
event not be in excess of Ten Million Dollars ($10,000,000).
"Swing Line Note" means the Swing Line Note substantially in the form
of Exhibit C-2, duly executed by all of the Floor Plan Borrowers and payable to
and delivered to the Swing Line Bank, in the principal face amount of the Swing
Line Commitment.
"Swing Line Overdraft Borrowing Request" has the meaning specified in
Section 2.3(g)(iii).
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"Swing Line Overdraft Loan" has the meaning specified in Section
2.3(g)(iii).
"Taxes" has the meaning specified in Section 5.14(a).
"Total Commitment" means, at any time, the aggregate amount of the
Commitments, as in effect at such time.
"Transferee" has the meaning specified in Section 5.14(a).
"Type" means any type of Loan determined with respect to the interest
option applicable thereto, i.e., a Eurodollar Loan, an Alternate Base Rate Loan
or Comerica Prime Rate Loan.
"UCC" means the Uniform Commercial Code as adopted and in effect in
the State of Texas from time to time.
"Used Motor Vehicle" means a Motor Vehicle in the current or any of
the four preceding model years which is in readily saleable condition.
"Wholly-Owned Subsidiary" means any Person of which the Company or its
other Wholly-Owned Subsidiaries own directly or indirectly one hundred percent
(100%) of:
(a) the issued and outstanding shares of stock (except
shares required as directors' qualifying shares and shares constituting less
than two percent (2%) of the issued and outstanding shares);
(b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar entity; or
(c) the beneficial interest of such Person, if it is a
trust, association or other unincorporated organization.
SECTION 1.2 Accounting Terms. Except as otherwise herein
specifically provided, each accounting term used herein shall have the meaning
given it under generally accepted accounting principles as in effect, as of the
applicable date of determination thereof, from time to time as set forth in the
opinions, statements and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board and applied on a consistent basis.
SECTION 1.3 Interpretation.
(a) In this Agreement, unless a clear contrary intention
appears:
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(i) the singular number includes the plural
number and vice versa;
(ii) reference to any gender includes each other
gender;
(iii) the words "herein," "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision;
(iv) reference to any Person includes such
Person's successors and assigns but, if applicable, only if
such successors and assigns are permitted by this Agreement,
and reference to a Person in a particular capacity excludes
such Person in any other capacity or individually, provided
that nothing in this clause (iv) is intended to authorize any
assignment not otherwise permitted by this Agreement;
(v) reference to any agreement (including this
Agreement), document or instrument means such agreement,
document or instrument as amended, supplemented or modified
and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms hereof, and reference to
any Note includes any note issued pursuant hereto in extension
or renewal thereof and in substitution or replacement
therefor;
(vi) unless the context indicates otherwise,
reference to any Article, Section, Schedule or Exhibit means
such Article or Section hereof or such Schedule or Exhibit
hereto;
(vii) the word "including" (and with correlative
meaning "include") means including, without limiting the
generality of any description preceding such term;
(viii) with respect to the determination of any
period of time, the word "from" means "from and including" and
the word "to" means "to but excluding"; and
(ix) reference to any law means such law as
amended, modified, codified or reenacted, in whole or in part,
and in effect from time to time.
(b) The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the construction
hereof.
(c) No provision of this Agreement shall be interpreted
or construed against any Person solely because that Person or its legal
representative drafted such provision.
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ARTICLE II
THE FLOOR PLAN LOANS
SECTION 2.1 Floor Plan Loan Commitments. Subject to the
terms and conditions and relying upon the representations and warranties of the
Borrowers herein set forth, each Bank severally and not jointly agrees, on the
terms and conditions set forth herein, to make revolving credit loans (each
such loan, a "Floor Plan Loan") to any Floor Plan Borrower from time to time on
any Business Day during the period from the Closing Date to the Maturity Date
in an aggregate amount not to exceed at any time outstanding such Bank's Floor
Plan Loan Commitment; provided, however, that after giving effect to all Floor
Plan Loans and Swing Line Loans requested on any date, the aggregate principal
amount of all outstanding Floor Plan Loans, all outstanding Swing Line Loans,
all outstanding Acquisition Loans, and all outstanding Letter of Credit
Obligations shall not at any time exceed the Total Commitment within the limits
of each Bank's Commitment and subject to the other terms and conditions hereof,
any Floor Plan Borrower may borrow, prepay and reborrow Floor Plan Loans under
this Section 2.1.
SECTION 2.2 Floor Plan Loans.
(a) Each Floor Plan Loan Borrowing made to any of the
Floor Plan Borrowers by the Banks on the Closing Date or on any Floor Plan
Adjustment Date shall be in the minimum aggregate principal amount of One
Million Dollars ($1,000,000) and in integral multiples of One Million Dollars
($1,000,000); provided that a Comerica Prime Rate Loan or a Floor Plan Loan
resulting from a Draft may be in any amount and shall consist of Floor Plan
Loans of the same Type made ratably by the Banks in accordance with their
respective Floor Plan Loan Commitments; provided, however, that the failure of
any Bank to make any Floor Plan Loan shall not relieve any other Bank of its
obligation to lend hereunder.
(b) Each Floor Plan Loan Borrowing shall be a
Comerica Prime Rate Borrowing or a Eurodollar Borrowing as any of the Floor
Plan Borrowers may request pursuant to Section 2.3. Each Bank may fulfill its
obligation to make Floor Plan Loans with respect to any Eurodollar Loan by
causing, at its option, any domestic or foreign branch or Affiliate of such
Bank to make such Loan, provided that the exercise of such option shall not
affect the obligation of the applicable Floor Plan Borrower to repay such Loan
in accordance with the terms of the applicable Note.
(c) Not later than 10:00 A.M., HOUSTON, TEXAS TIME on
the Closing Date any one or more of the Floor Plan Borrowers shall deliver a
Request for Borrowing to the Floor Plan Agent. Not later than 11:00 A.M.
HOUSTON, TEXAS TIME of the same day, the Floor Plan Agent shall notify the
Agent of the Type of Borrowing requested and the aggregate amount of Floor Plan
Loans being requested by the Floor Plan Borrowers as of the Closing Date, less
an amount equal to the initial Swing Line Loan Minimum Amount. Upon receipt of
such notice, the Agent shall notify each Bank of the contents thereof and of
such Bank's Pro Rata Share of such Borrowing.
(d) Each Bank shall, upon request from the Agent,
from time to time as herein provided, make its Pro Rata Share of the amount of
such Floor Plan Loan Borrowing to the
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Agent by paying the amount required to the Agent in U.S. Dollars and in
immediately available funds on the same day not later than 3:00 P.M., HOUSTON,
TEXAS TIME, and, subject to satisfaction of the conditions set forth in Article
VIII, and the terms, provisions and conditions set forth in Section 2.3 and
Section 4.3, the Agent shall promptly and in any event on the same day, credit
the amounts so received to the account of the Floor Plan Agent, or, if a Floor
Plan Loan Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return the amounts so
received to the respective Banks. Upon receipt of such funds the Floor Plan
Agent shall promptly and in any event on the same day, credit the amount so
received to the account of the applicable Borrower.
(e) Unless the Agent shall have received notice from
a Bank prior to the date of any such Floor Plan Loan Borrowing that such Bank
will not make available to the Agent such Bank's portion of such Borrowing, the
Agent may assume that such Bank has made such portion available to the Agent on
the date of such Floor Plan Loan Borrowing in accordance with this Section
2.2(e) and the Agent may, in reliance upon such assumption, make available to
the Floor Plan Agent on such date a corresponding amount. If, and to the
extent that such Bank shall not have made such portion available to the Agent,
such Bank and the applicable Floor Plan Borrowers severally agree to repay to
the Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the Floor
Plan Agent until the date such amount is repaid to the Agent (i) in the case of
the Floor Plan Borrowers, at the Applicable Interest Rate at the time to the
Loans comprising such Borrowing and (ii) in the case of such Bank, at the
Federal Funds Effective Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount shall constitute such Bank's Loan as part of
such Borrowing for purposes of this Agreement.
(f) A Floor Plan Subsidiary shall not be entitled to
request a Floor Plan Borrowing hereunder until it (i) has executed and
delivered to the Banks, as aforesaid, the Notes, and to the Swing Line Bank, a
Swing Line Note, (ii) has become a party to this Agreement by execution and
delivery of an Addendum, and (iii) has become a party to the Security
Documents, accompanied in each case by authority documents, legal opinions and
other supporting documents as required by Agent, Floor Plan Agent and the
Required Banks hereunder and has otherwise complied with the provisions of
Section 9.15.
SECTION 2.3 Floor Plan Borrowing Procedure. Any Floor Plan
Borrower may request a Floor Plan Loan, (i) subject to Sections 2.8 through
2.12, inclusive, in the case of a Draft by a Manufacturer, if such Draft is
delivered in accordance with the express terms of a Drafting Agreement and (ii)
in the case of Floor Plan Loans requested directly by a Floor Plan Borrower,
only after delivery to the Floor Plan Agent of a written Request for Borrowing
executed by a Person authorized by such Floor Plan Borrower to make such
requests on behalf of such Floor Plan Borrower. Floor Plan Loan Borrowings are
subject to the following and to the remaining provisions hereof:
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(a) each such Request for Borrowing shall set forth
the following information:
(i) the proposed date of such Borrowing,
which must be a Business Day;
(ii) the aggregate amount of such
requested Borrowing;
(iii) whether such Floor Plan Borrowing is
to be a Comerica Prime Rate Loan or a Eurodollar Loan, or in
the case of a Swing Line Loan, a Loan at the Quoted Rate
(provided, however, that all Drafts shall be deemed to be
requested at the Quoted Rate) and the Interest Period
applicable thereto;
(iv) a description of the Motor
Vehicle(s) purchased or to be purchased with the proceeds of
such Borrowing, including for each Motor Vehicle, its vehicle
identification number, make, model and purchase price, and
whether such Motor Vehicle is a new Motor Vehicle, Used Motor
Vehicle, Program Car or Demonstrator; and
(v) if requested by the Floor Plan
Agent, in the case of a Request for Borrowing requested
directly by a Floor Plan Borrower to fund the purchase of Used
Motor Vehicles, such Borrower shall deliver a current
Manufacturer/Dealer Statement with appropriate inventory
breakout as required by the Floor Plan Agent with the first
such Request for Borrowing in any month.
(b) each such Request for Borrowing shall be
delivered to the Floor Plan Agent (i) in the case of a Draft by a Manufacturer,
by 11:00 A.M., HOUSTON, TEXAS TIME one (1) Business Day prior to the Borrowing
Date of a proposed Borrowing, (ii) in the case of a Eurodollar Borrowing, not
later than 10:00 A.M., HOUSTON, TEXAS TIME, three (3) Days prior to the
Borrowing Date of a proposed Borrowing, and (iii) in the case of a Comerica
Prime Rate Borrowing, not later than 11:00 A.M., HOUSTON, TEXAS TIME on the
Borrowing Date of a proposed Borrowing.
(c) the aggregate principal amount of such Borrowing
shall not exceed the aggregate Floor Plan Advance Limit for the Motor Vehicles
described in such Request for Borrowing;
(d) subject to Section 2.3(g) hereof, the aggregate
principal amount of such requested Borrowing, plus the principal amount of all
Floor Plan Loans then outstanding plus the aggregate principal amount of all
Swing Line Loans then outstanding shall not exceed the Floor Plan Loan
Commitment;
(e) the aggregate principal amount of such requested
Borrowing, plus the principal amount of all Floor Plan Loans then outstanding
hereunder plus the aggregate principal amount of all Swing Line Loans (but
minus the amount of any Swing Line Loans to be refunded
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with the proceeds of such Borrowing) then outstanding plus the aggregate
principal amount of all Acquisition Loans then outstanding plus all outstanding
Letter of Credit Obligations shall not exceed the Total Commitment;
(f) each Request for Borrowing shall be irrevocable
and shall constitute a certification as to itself by the applicable Floor Plan
Borrower as of the date thereof that:
(i) both before and after such
Borrowing, the obligations of the Company and its Subsidiaries
under this Agreement and the other Loan Documents to which it
is a party, as applicable, are valid, binding, and enforceable
obligations of such Person;
(ii) to the best knowledge of the
Company and the applicable Borrower, all conditions to such
Borrowing have been satisfied;
(iii) there is no Default or Event of
Default in existence, and none will exist upon the making of
such Floor Plan Loan;
(iv) the representations and warranties
contained in this Agreement and the other Loan Documents are
true and correct in all material respects and shall be true
and correct in all material aspects as of and immediately
after the making of such Floor Plan Loan; and
(v) such Borrowing will not violate the
material terms and conditions of any material contract,
agreement or other Borrowing of the Company and such
applicable Borrower, or any of its Subsidiaries.
(g) Notwithstanding the foregoing,
(i) if the Floor Plan Agent has, at the
request of the Required Banks or acting in its discretion
according to the terms hereof, taken action to suspend or
terminate Drafts pursuant to one or more Drafting Agreements
and such Drafting Agreements have in fact been suspended or
terminated in accordance with their respective terms, then
subject to the terms of any such Drafting Agreements, the
Floor Plan Agent shall not fund the amount of such Draft; and
(ii) if on any day the requirements set
forth in Section 2.3(f) have been satisfied and the aggregate
principal amount of a Request for Borrowing of a Floor Plan
Loan, plus(A) the aggregate principal amount of all other Floor
Plan Loans then outstanding plus (B) the aggregate principal
amount of all Swing Line Loans (but minus the amount of any
Swing Line Loans to be refunded with the proceeds of
such Borrowing) then outstanding exceeds the aggregate
principal amount of such Loans outstanding as of the
immediately preceding Floor Plan
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Adjustment Date and is less than the Swing Line Commitment,
then such Request for Borrowing shall be deemed for all
purposes a Request for Borrowing of a Swing Line Loan and the
Borrowing to be disbursed in connection therewith shall
constitute a Swing Line Loan, and shall be disbursed in
accordance with the provisions of Article IV hereof; and
(iii) if on any day the requirements set
forth in Section 2.3(f) have been satisfied and the aggregate
principal amount of a Request for Borrowing of a Floor Plan
Loan consists of a Draft, the payment of which would cause (A)
the aggregate principal amount of all Floor Plan Loans then
outstanding, plus (B) the aggregate principal amount of all
Swing Line Loans (but minus the amount of any Swing Line Loan
to be refunded with the proceeds of such Borrowing) then
outstanding, plus (C) the aggregate principal amount of all
Requests for Borrowings of Floor Plan Loans outstanding as of
such day to exceed the Floor Plan Loan Commitment, as of such
day, and the Company fails to either immediately reduce any
pending Request for a Borrowing of a Floor Plan Loan which
does not consist of a Draft or make a payment of principal on
Floor Plan Loans and/or Swing Line Loans in an amount which
would prevent the aggregate amounts described in (A), (B) and
(C) above from exceeding such Floor Plan Loan Commitment,
then, in such event:
(1) the Company may request an
increase in the Floor Plan Loan Commitment
pursuant to Section 5.5(b), and such Request
for Borrowing shall be funded to the extent
of the increased Floor Plan Loan Commitment
(if any), or
(2) if the Company does not elect
to act under clause (1) above and if pursuant
to Section 3.4 there is a Reserve Commitment
available, then the Floor Plan Loan
Commitment shall be deemed to be irrevocably
increased by the amount of such Reserve
Commitment, and the Request for Borrowings of
Floor Plan Loans shall be funded to the
extent of the Floor Plan Loan Commitment as
increased by the Reserve Commitment, or
(3) if there is no Reserve
Commitment available, such Request for
Borrowing shall be deemed for all purposes a
Swing Line Overdraft Loan Borrowing Request
(each a "Swing Line Overdraft Borrowing
Request") and such Borrowing shall constitute
a Swing Line Overdraft Loan (each, a "Swing
Line Overdraft Loan") to be disbursed and
subject to the provisions of Section 4.6.
(h) The Floor Plan Agent, acting on behalf of the
Banks, may, at its option make Loans under this Article II upon the irrevocable
telephone request of a duly authorized officer
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of any Floor Plan Borrower and, in the event the Floor Plan Agent, acting on
behalf of the Banks, makes any such Loan upon a telephone request, the
requesting officer of such Floor Plan Borrower shall, if so requested by the
Floor Plan Agent, deliver (including via fax) to the Floor Plan Agent, on the
same day as such telephone request, a written Request for Borrowing. Each of
the Floor Plan Borrowers hereby authorizes the Floor Plan Agent to disburse
Floor Plan Loans under this Section 2.3 pursuant to the telephone instructions
of any Person purporting to be a Person identified by name on a written list of
Persons authorized by each such Floor Plan Borrower to make a Request for
Borrowing for Floor Plan Loans on behalf of such Borrower(s). Notwithstanding
the foregoing, each of the Floor Plan Borrowers acknowledges and agrees that
the applicable Floor Plan Borrower shall bear all risk of loss resulting from
disbursements made upon any telephone request. Each Request for Floor Plan
Loan Borrowing made via telephone as hereunder provided shall constitute a
certification of the matters set forth in Section 2.3(f) of this Agreement.
(i) If at any time during an Adjustment Period the
payment of all of a Swing Line Loan would cause the outstanding balance of all
Swing Line Loans to be fully repaid, the Company may elect to cause such funds
to be invested in overnight funds or other securities held by Comerica
Securities, Inc. and acceptable to the Floor Plan Agent and the Banks, which
investments shall be subject to the first priority security interest of the
Floor Plan Agent for the benefit of the Banks to secure the outstanding balance
of the Obligations. The Floor Plan Agent and any of the Floor Plan Borrowers
may enter into an agreement from time to time to facilitate the investment of
such funds.
SECTION 2.4 Notice of Types of Floor Plan Loans and Interest
Periods.
(a) On or before 10:00 A.M. HOUSTON, TEXAS TIME,
three (3) Business Days prior to each Floor Plan Adjustment Date, the Company
shall provide written (including via fax) Request for Borrowing to the Floor
Plan Agent designating the Type of Floor Plan Loans which will be outstanding
commencing on the Floor Plan Adjustment Date immediately following such notice
until the next succeeding Floor Plan Adjustment Date. If, for any reason, the
Company does not deliver the Request for Borrowing as herein provided,
including, without limitation providing for three (3) Business Days' notice,
the Company shall be deemed to have delivered the Request for Borrowing and
requested that on the Floor Plan Adjustment Date all Floor Plan Loans be
Comerica Prime Rate Borrowings.
(b) On or before 11:00 A.M. HOUSTON, TEXAS TIME on
each Floor Plan Adjustment Date, the Floor Plan Agent shall provide written
(including via fax) notice to the Agent of the amount of (i) Floor Plan Loans
outstanding, plus (ii) Swing Line Loans (plus Swing Line Overdraft Loans, if
any) outstanding in excess of the Swing Line Minimum Amount (if any), plus
(iii) the amount of Floor Plan Loans being requested pursuant to any Request
for Borrowing of Floor Plan Loans, as of 10:00 A.M., HOUSTON, TEXAS TIME on
such date. Upon receipt of such notice, the Agent shall provide prompt written
(including via fax) notice to the Banks advising them (A) that the amount of
Floor Plan Loans required pursuant to (i), (ii) and (iii) above is greater than
the amount required as of the immediately preceding Floor Plan Adjustment Date
and, with respect to
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each Bank, the amount of additional Floor Plan Loans to be advanced by such
Bank, (B) that the amount of Floor Plan Loans required pursuant to (i), (ii)
and (iii) above, has decreased since the immediately preceding Floor Plan
Adjustment Date and, with respect to each Bank, the amount of such repayment to
be made to such Bank, or (C) that there is no change in the amount of Floor
Plan Loans required pursuant to (i), (ii) and (iii) above since the immediately
preceding Floor Plan Adjustment Date. Such notice shall also advise the Banks
of the Type of Floor Plan Loans the Floor Plan Borrowers have selected for the
period of time from the next Floor Plan Adjustment Date to the next succeeding
Floor Plan Adjustment Date.
(c) On each Floor Plan Adjustment Date (i) if Swing
Line Loans (plus Swing Line Overdraft Loans, if any) outstanding are greater
than the Swing Line Minimum Amount, the Swing Line Overdraft Loans shall be
repaid and the Swing Line Loans shall be reduced to the Swing Line Minimum
Amount with proceeds advanced by the Banks pursuant to notices from the Floor
Plan Agent given to the Agent as provided in Section 2.2(e) hereof; in such
event the Agent shall remit the proceeds of such Floor Plan Loans to the Floor
Plan Agent for application to the Swing Line Loans (and to the Swing Line
Overdraft Loans, if any) outstanding in excess of the Swing Line Minimum
Amount, or (ii) if Swing Line Loans are less than the Swing Line Minimum
Amount, the Swing Line Bank shall make a Swing Line Loan to the Floor Plan
Borrowers in an amount required to cause the total amount of Swing Line Loans
outstanding to equal the Swing Line Minimum Amount; in such event the Floor
Plan Agent shall remit the proceeds of such Swing Line Loan to the Agent, and
the Agent shall promptly remit such proceeds to the Banks.
SECTION 2.5 Payments.
(a) Subject to the provisions of Section 2.3(i), each
Floor Plan Borrower shall, on the Curtailment Date of a Motor Vehicle, pay in
full the Floor Plan Advance Limit with respect to such Motor Vehicle.
(b) Subject to the provisions of Section 2.3(i), upon
the sale of any Motor Vehicle by a Floor Plan Borrower, such Floor Plan
Borrower shall pay in full the Floor Plan Advance Limit with respect to such
Motor Vehicle (i) with respect to Cash Receipted Motor Vehicles, immediately
upon receipt of payment, (ii) with respect to Sale Dated Motor Vehicles, within
ten (10) days of the date of such Motor Vehicle was sold and (iii) with respect
to Fleet Motor Vehicles, within thirty (30) days of the date of sale.
(c) Subject to the provisions of Section 2.3(i) and
Section 4.6(c), payments required to be made by any Floor Plan Borrower as set
forth in Sections 2.5(a) and 2.5(b) shall be applied first to the outstanding
principal balance of Swing Line Overdraft Loans, next to the outstanding
principal balance of Swing Line Loans and then, only if no Swing Line Overdraft
Loans or Swing Line Loans are then outstanding, to the outstanding principal
balance of Floor Plan Loans.
(d) Each Floor Plan Borrower shall cause all proceeds
from the sale of Motor Vehicles to be deposited directly into an account of the
applicable Borrower with its local financial
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institution which proceeds shall be transferred to the Excess/Payments in
Process for payment of the Loans as provided in Section 2.5(b).
(e) An amount equal to two percent (2%) of the
original principal amount of Floor Plan Loans (or any portion thereof)
attributable to each Rental Motor Vehicle shall be payable on the fifteenth
(15th) day of each month after the date such Motor Vehicle is Deemed Floored.
SECTION 2.6 Title Documents. All original Manufacturer's
invoices and title documents evidencing the Floor Plan Borrowers' ownership of
all of their Motor Vehicles, including, without limitation, the Manufacturer's
Certificate, shall be maintained in safekeeping by the Floor Plan Borrowers in
a manner acceptable to the Floor Plan Agent, unless and until an Event of
Default has occurred and is continuing, within three (3) Business Days of the
request by the Floor Plan Agent, the Floor Plan Borrowers shall deliver or
cause to be delivered all such original Manufacturer's invoices and title
documents whether at the time of such request or thereafter, to the Floor Plan
Agent and the Floor Plan Agent shall retain or hold all such original
Manufacturer's invoices and title documents received by the Floor Plan Agent
after such request. Thereafter, for so long as such Event of Default shall be
continuing, all original Manufacturer's Certificates and title documents shall
remain in the Floor Plan Agent's possession until the Floor Plan Loan Borrowing
in connection therewith or such ratable portion thereof in respect of a Motor
Vehicle sold by any Floor Plan Borrower in the ordinary course of business has
been paid and performed in full; provided that, upon the happening of an Event
of Default and during the continuance thereof, the Floor Plan Agent may
transfer, as applicable, title documents delivered to it pursuant to this
Section 2.6 in connection with the sale of Motor Vehicles in accordance with
its rights provided for in this Agreement or the other Loan Documents.
SECTION 2.7 Power of Attorney. For the purpose of expediting
the financing of Motor Vehicles under the terms of this Agreement and for other
purposes relating to such financing transaction, each of the Floor Plan
Borrowers irrevocably constitutes and appoints the Floor Plan Agent and any of
its officers, and each of them, severally, as its true and lawful
attorneys-in-fact or attorney-in-fact with full authority to act on behalf of,
and in the name of, place, and stead of, each such Floor Plan Borrower,
regardless of whether or not an Event of Default shall have occurred hereunder,
to prepare, execute, and deliver any and all instruments, documents, and
agreements required to be executed and delivered by each such Floor Plan
Borrower necessary to evidence Floor Plan Loan Borrowings (and if outstanding,
Swing Line Overdraft Loans) hereunder and/or after the occurrence and during
the continuance of an Event of Default, to evidence, perfect, or realize upon
the security interest granted by this Agreement, and/or any of the Loan
Documents, including, without limitation, the Notes, requests for advances,
security agreements, financing statements, other instruments for the payment of
money, receipts, manufacturer's certificates of origin, certificates of origin,
certificates of title, applications for certificates of title, other basic
evidences of ownership, dealer reassignments of any of the foregoing,
affidavits, and acknowledgments. The foregoing power of attorney shall be
coupled with an interest, and shall be irrevocable so long as this Agreement
remains in effect, any Drafting Agreement remains in effect or any Obligations
(including Letter of Credit Obligations and Swing Line Overdraft Loans) remain
outstanding under this Agreement or any of the Notes. Each of said
attorneys-in-fact shall have the power to act
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hereunder with or without the other. The Floor Plan Agent may, but shall not
be obligated to, notify the Floor Plan Borrowers of any such instruments or
documents the Floor Plan Agent has executed on any Borrower's behalf prior to
such execution.
SECTION 2.8 Issuance of Drafting Agreements. Subject to the
terms and conditions of this Agreement, Floor Plan Agent shall, at any time and
from time to time from and after the Closing Date until thirty (30) Business
Days prior to the Maturity Date, upon the written request of the Company or the
applicable Floor Plan Borrower, countersigned by the Company, accompanied by
applications, letter of credit agreements and/or such other documentation
related thereto as the Floor Plan Agent may require, issue Drafting Agreements
for the account of the applicable Floor Plan Borrower.
SECTION 2.9 Conditions to Issuance. The Floor Plan Agent
shall not be obligated to enter into or issue a Drafting Agreement unless, as
of the date of issuance of such Drafting Agreement:
(a) the Company or the applicable Floor Plan Borrower
requesting the Drafting Agreement shall have delivered to the Floor Plan Agent
not less than ten (10) Business Days prior to the requested date for issuance
(or such shorter time as the Floor Plan Agent in its sole discretion may
permit), a written application and such other documentation (including without
limitation a letter of credit agreement if the Drafting Agreement is to be
issued in the form of a letter of credit) and the terms of such documents and
of the proposed Drafting Agreement shall satisfy the terms hereof and otherwise
be satisfactory to Floor Plan Agent;
(b) the obligations of the Company and its
Subsidiaries set forth in this Agreement and the other Loan Documents to which
each is a party are valid, binding and enforceable obligations of such parties
and the valid, binding and enforceable nature of this Agreement and the other
Loan Documents has not been disputed by any of the Company or any of its
Subsidiaries;
(c) the representations and warranties contained in
this Agreement or any other Loan Documents are true in all material respects as
if made on such date (unless limited to an earlier date), and both immediately
before and immediately after issuance of the Drafting Agreement so requested,
no Default or Event of Default has occurred and is continuing;
(d) No order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the
Floor Plan Agent from entering into or issuing such Drafting Agreement; no
Requirement of Law applicable to the Floor Plan Agent and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Floor Plan Agent shall prohibit the Floor
Plan Agent, or request that the Floor Plan Agent refrain, from issuing or
entering into Drafting Agreements generally or such Drafting Agreement in
particular or shall impose upon the Floor Plan Agent with respect to such
Drafting Agreement any restriction, reserve or capital requirement (for which
the Floor Plan Agent is not
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otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon the Floor Plan Agent any unreimbursed loss, cost or expense which
was not applicable on the Closing Date and which the Floor Plan Agent in good
faith deems material to it (relating to Drafts and Drafting Agreements); and
(e) The Floor Plan Agent does not receive written
notice from any Bank, the Agent or any Floor Plan Borrower, on or prior to the
Business Day prior to the requested date of issuance or entry into such
Drafting Agreement that one or more of the applicable conditions contained in
Article VIII (or in this Section 2.9) has not been satisfied or that a Default
or Event of Default has occurred and is continuing.
Each application for a Drafting Agreement issued by a Borrower hereunder shall
constitute certification by each of the Company of the matters set forth in
subparagraphs (a) through (d) hereof, and Floor Plan Agent shall be entitled to
rely on such certification without any duty of inquiry. Immediately upon the
issuance or entering into by the Floor Plan Agent of each Drafting Agreement
(except in respect of any Drafting Agreement issued or entered into by the
Floor Plan Agent after it has obtained actual knowledge that an Event of
Default has occurred and is continuing), each Bank shall be deemed to, and
subject to Section 4.6 (relating to a Swing Line Overdraft Loan) hereby
irrevocably and unconditionally agrees to purchase from the Floor Plan Agent a
participation in such Drafting Agreement and each Draft thereunder in an amount
equal to the product of (i) the Pro Rata Share of such Bank and (ii) the amount
of each Draft presented by a Manufacturer.
Notwithstanding the foregoing, the Floor Plan Agent shall take such action as
necessary to terminate and suspend all Drafting Agreements effective ten days
prior to the Maturity Date then in effect.
SECTION 2.10 Notice of Issuance of or entering into
Manufacturers Drafting Letters. The Floor Plan Agent shall give notice,
substantially in the form attached to this Agreement as Exhibit H, to each Bank
of the issuance of or entering into each Drafting Agreement not later than five
(5) Business Days after issuance of or entering into each such Drafting
Agreement, attaching a copy of such Drafting Agreement, as issued or entered
into.
SECTION 2.11 Drafts Under Manufacturers Drafting Letters.
(a) In accordance with Sections 2.3, 4.3 and 4.6
hereof, each Draft submitted by a Manufacturer pursuant to a Drafting Agreement
shall constitute a Request for Borrowing of a Floor Plan Loan, a Swing Line
Loan, or a Swing Line Overdraft Loan, as the case may be, and upon the funding
of each Draft presented by a Manufacturer under a Drafting Agreement, the Floor
Plan Agent shall be deemed to have disbursed or on behalf of the applicable
Floor Plan Borrower and the applicable Floor Plan Borrower shall be deemed to
have elected to substitute for its respective reimbursement obligations in
respect of such Draft, an advance of a Floor Plan Loan, a Swing Line Loan, or a
Swing Line Overdraft Loan, as the case may be, bearing interest at the
Applicable Interest Rate. Each of the Floor Plan Borrowers shall be
irrevocably obligated to reimburse Floor Plan Agent on demand for the amount of
any Draft presented by a Manufacturer under the terms of any
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Drafting Agreement; provided however that such reimbursement obligation shall
be deemed satisfied by the funding of a Loan in respect thereto.
(b) Notwithstanding the obligation (if any) of the
Floor Plan Agent to fund a Draft drawn under a Drafting Agreement, (i) if at
any time any of the Floor Plan Borrowers has failed to satisfy the conditions
precedent for the Floor Plan Agent to make a Floor Plan Loan, or the Swing Line
Bank to make a Swing Line Loan or a Swing Line Overdraft Loan, (ii) if at any
time the amount of such Draft would cause the aggregate amount of Floor Plan
Loans to exceed the Floor Plan Loan Commitment, or (iii) after a Default or an
Event of Default has occurred and is continuing, then in any such event, the
funding of such Draft shall not constitute a waiver of any such condition,
commitment, Default or Event of Default or otherwise any manner whatsoever
affect the rights, and remedies available to the Floor Plan Agent, the Agent,
the Swing Line Bank or any of the Banks hereunder. In any such event, the
Floor Plan Borrowers shall remain obligated to pay the amount of any Swing Line
Overdraft Loan forthwith as set forth herein and shall have all other duties
and obligations applicable to the Floor Plan Borrowers under this Agreement.
Notwithstanding anything to the contrary contained herein, each of the Floor
Plan Borrowers shall bear all risk of loss resulting from the payment of any
Draft, or any resulting disbursements of the Floor Plan Loans, Swing Line
Loans or Swing Line Overdraft Loans, as the case may be, whether or not due to
the gross negligence, willful misconduct or fraud of any Manufacturer.
(c) Subject to Section 4.6 hereof, each Bank shall be
obligated to fund Floor Plan Loans resulting from the presentation of Drafts by
Manufacturers under the Drafting Agreements, by making available their
respective Pro Rata Shares of the amounts so advanced, all in accordance with
Section 2.2 hereof; provided, however, that if for any reason the Floor Plan
Agent is prohibited from making a Floor Plan Loan in respect of any such Draft,
each such Bank shall be deemed to and unconditionally agrees to purchase from
the Floor Plan Agent a participation interest in the amount of such Draft (in
the amount of its Pro Rata Share), subject only to Section 4.6 hereof.
Notwithstanding the amount of the Floor Plan Loan Commitment in effect from
time to time, except with respect to the notices terminating or suspending
drafting privileges to be given pursuant Section 4.6(d) or Section 11.1 hereof
or any other notices given by the Floor Plan Agent in response to the written
direction of the Required Banks, the Floor Plan Agent shall not be obligated to
terminate or suspend the drafting privileges of any Manufacturer under the
Drafting Agreements even though the aggregate amount of Drafts which may be
presented by Manufacturers under the Drafting Agreements may exceed the amount
of the Floor Plan Loan Commitment in effect from time to time. Furthermore,
(i) any limitations contained in any of the Drafting Agreements (whether in
respect of daily Drafts to be presented or otherwise) are for informational
purposes only and Floor Plan Agent shall not be obligated to monitor or limit
the amount of Drafts presented or honored on the basis of any such limitations
and (ii) any right of the Floor Plan Agent, acting in its discretion and not at
the direction or with the concurrence of the Required Banks, to terminate or
suspend drafting privileges of any Manufacturer or otherwise exercise any right
or remedy shall be for the sole benefit and protection of the Floor Plan Agent,
and Floor Plan Agent shall not owe any duty to any of the other Banks with
respect to such rights or remedies or be required to exercise such rights or
remedies to protect any of the other Banks.
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SECTION 2.12 Obligations Absolute. The Obligations of the
Floor Plan Borrowers under this Agreement and any of the other Loan Documents
to reimburse the Floor Plan Agent for Drafts presented by a Manufacturer under
a Drafting Agreement, and to repay any Swing Line Loans, the Floor Plan Loans
or the Swing Line Overdraft Loans, as the case may be, funded to pay a Draft
shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and each such other Loan Document
under all circumstances, including the following: (a) any lack of validity or
enforceability of this Agreement or any of the other Loan Documents; (b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations of any Borrower in respect of any Draft or any
Drafting Agreement or any other amendment or waiver of or any consent to
departure from all or any of the applicable/related Loan Documents; (c) the
existence of any claim, set-off, defense or other right that any Floor Plan
Borrower may have at any time against any Manufacturer or any other beneficiary
or transferee of any Drafting Agreement (or any Person for whom any such
beneficiary or such transferee may be acting), the Floor Plan Agent or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the related Loan Documents or any unrelated
transaction other than the defense of payment or claims arising out of the
gross negligence, bad faith or willful misconduct of the Floor Plan Agent or
the Swing Line Bank; (d) any Draft, demand, certificate or other document
presented under a Drafting Agreement proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a Draft under any Drafting
Agreement; (e) any payment by the Floor Plan Agent under any Drafting Agreement
against presentation of a draft or certificate that does not strictly comply
with the terms of any Drafting Agreement; or any payment made by the Floor Plan
Agent under any Drafting Agreement to any trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, liquidator, receiver or
other representative of a successor to any beneficiary or any transferee of any
Drafting Agreement, including any arising in connection with any Insolvency
Proceeding; (f) any exchange, release or non-perfection of any Collateral, or
any release or amendment or waiver of or consent to departure from all or any
of the Obligations of any Borrower in respect of any Drafting Agreement; or (g)
any other circumstance that might otherwise constitute a defense available to,
or discharge of, any Borrower other than the defense of payment or claims
arising out of the gross negligence, bad faith or willful misconduct of the
Floor Plan Agent or the Swing Line Bank.
ARTICLE III
ACQUISITION LOANS
SECTION 3.1 General. Subject to the terms and conditions and
relying upon the representations and warranties of the Company herein set
forth, each Bank severally and not jointly agrees on the terms and conditions
set forth herein to make revolving credit loans to the Company, (each such
loan, an "Acquisition Loan") from time to time on any Business Day during the
period from the Closing Date to the Maturity Date in an aggregate amount not to
exceed at any time outstanding such Bank's Pro Rata Share of the lesser of (a)
the Acquisition Loan Advance Limit, or
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(b) the aggregate amount of the Acquisition Loan Commitments of all the Banks;
provided, however, that, after giving effect to any Acquisition Loan Borrowing,
the aggregate amount of all outstanding Acquisition Loans, all outstanding
Floor Plan Loans, all outstanding Swing Line Loans and all outstanding Letter
of Credit Obligations, shall not at any time exceed the Total Commitment within
the limits of each Bank's Commitment and subject to the other terms and
conditions hereof, the Company may borrow, prepay and reborrow Acquisition
Loans under this Section 3.1.
SECTION 3.2 Acquisition Loans.
(a) Each Acquisition Loan Borrowing made by the Banks
to the Company on any Borrowing Date shall be in the minimum aggregate
principal amount of One Million Dollars ($1,000,000) (or the amount of a Letter
of Credit Borrowing or the remaining balance of the aggregate Acquisition Loan
Commitments, if less) and an integral multiple of One Million Dollars
($1,000,000) and shall consist of Acquisition Loans of the same Type made
ratably by the Banks in accordance with their respective Commitments; provided,
however, that the failure of any Bank to make any Acquisition Loan shall not
relieve any other Bank of its obligation to lend hereunder.
(b) Each Acquisition Loan Borrowing shall be an ABR
Borrowing or a Eurodollar Borrowing as the Company may request in a Request for
Borrowing delivered to the Agent in accordance with Section 3.3. Each Bank may
fulfill its Commitment with respect to any Eurodollar Loan by causing, at its
option, any domestic or foreign branch or Affiliate of such Bank to make such
Loan, provided that the exercise of such option shall not affect the obligation
of the Company to repay such Loan in accordance with the terms hereof.
Subject to the provisions of Section 3.3 and Section 5.9, Acquisition Loan
Borrowings of more than one Type may be outstanding at the same time.
(c) Each Bank shall make its Pro Rata Share of the
amount of each Acquisition Loan Borrowing to the Company hereunder on the
proposed Borrowing Date thereof by paying the amount required to the Agent in
Houston, Texas in U.S. Dollars and in immediately available funds not later
than 1:00 P.M., HOUSTON, TEXAS TIME, and, subject to satisfaction of the
conditions set forth in Article VIII, the Agent shall promptly and in any event
on the same day, credit the amounts so received to the general deposit account
of the Company, with the Agent, or such other depository account as shall be
designated by the Company or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have been met,
return the amounts so received to the respective Banks. Unless the Agent shall
have received notice from a Bank prior to the date of any Acquisition Loan
Borrowing that such Bank will not make available to the Agent such Bank's
portion of such Acquisition Loan Borrowing, the Agent may assume that such
Bank has made such portion available to the Agent on the date of such
Acquisition Borrowing in accordance with this Section 3.2 and the Agent may, in
reliance upon such assumption, make available to the Company on such date a
corresponding amount. If, and to the extent that such Bank shall not have made
such portion available to the Agent, such Bank and the Company jointly and
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to the Company until the date such amount is repaid to the
Agent (i) in the case of the Company at the interest rate applicable
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at the time to the Loans comprising such Borrowing and (ii) in the case of such
Bank, at the Federal Funds Effective Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount shall constitute such Banks' Pro
Rata Share of the Acquisition Loan as part of such Acquisition Loan Borrowing
for purposes of this Agreement.
SECTION 3.3 Notice of Acquisition Loan Borrowings.
(a) In order to obtain an Acquisition Loan, the
Company shall make an irrevocable written request therefor (or irrevocable
telephone notice thereof, confirmed as soon as practicable by written request)
to the Agent, in the form of a Request for Borrowing (i) in the case of an ABR
Borrowing, not later than 11:00 A.M., HOUSTON, TEXAS TIME, one (1) Business Day
before the Borrowing Date of a proposed Acquisition Loan Borrowing, and (ii) in
the case of a Eurodollar Borrowing, not later than 11:00 A.M., HOUSTON, TEXAS
TIME, three (3) Business Days before the Borrowing Date of a proposed
Acquisition Loan Borrowing. Each Request for Loan Borrowing shall be
irrevocable and shall in each case refer to this Agreement and specify (1)
whether the Request for Borrowing then being requested is to be an ABR
Borrowing or a Eurodollar Borrowing, (2) the Borrowing Date of such Acquisition
Loan Borrowing (which shall be a Business Day) and (3) the aggregate amount
thereof (which shall not be less than One Million Dollars ($1,000,000) or an
integral multiple of One Million Dollars ($1,000,000) in excess thereof), and
(4) the Interest Period or Interest Periods with respect thereto. If no
election as to the Type of Acquisition Loan Borrowing is specified in any such
Request for Borrowing by the Company, such Acquisition Loan Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Borrowing is
specified in any such Request for Borrowing, the Company shall be deemed to
have selected an Interest Period of one (1) month's duration. The Agent shall
promptly advise the Banks of any Request for Borrowing given by the Company
pursuant to this Section 3.3 and of each Bank's portion of the requested
Acquisition Loan Borrowing.
(b) No more than eight (8) Acquisition Loans may be
outstanding at any time. For purposes of the foregoing, Borrowings comprised
of Acquisition Loans having different Interest Periods, regardless of whether
they commence on the same date, shall be considered separate Borrowings.
SECTION 3.4 Reserve Commitment; Suspension of Acquisition
Loans. Notwithstanding the foregoing provisions of this Article III, in the
event that on any day the aggregate outstanding principal amount of all (a)
Floor Plan Loans, plus (b) Swing Line Loans, plus (c) Requests for Floor Plan
Loan Borrowings exceeds ninety-five percent (95%) of the Floor Plan Loan
Commitment as of such date, then (i) a portion of the Acquisition Loan
Commitment (the "Reserve Commitment") in an amount equal to the lesser of (ii)
Five Million Dollars ($5,000,000) and (iii) the entire remaining unused portion
of the Acquisition Loan Commitment as of such date shall be reserved and shall
no longer be available for funding Acquisition Loans, and (d) no further
Acquisition Loan Borrowings (after giving effect to the Reserve Commitment in
clause (a) hereof) shall be available to the Company until the next Business
Day on which such condition no longer exists.
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ARTICLE IV
SWING LINE LOANS
SECTION 4.1 Swing Line Commitments.
(a) The Swing Line Bank shall, on the terms and
subject to the conditions hereinafter set forth (including Section 4.3), make
one or more advances (each such advance being a "Swing Line Loan") to any Floor
Plan Borrower from time to time on any Business Day during the period from the
Closing Date to the Maturity Date in an aggregate principal amount not to
exceed at any time (not including Swing Line Overdraft Loans) the aggregate
amount of the Swing Line Commitment as such amount may change from time to
time; and
(b) Swing Line Bank may on the terms and subject to
the conditions hereinafter set forth (including Section 4.3) make one or more
Swing Line Loans to any Floor Plan Borrower from time to time on any Business
Day during the period from the Closing Date to the Maturity Date in an
aggregate principal amount greater than the Swing Line Commitment but not to
exceed at any time (not including Swing Line Overdraft Loans) the aggregate
amount of the Floor Plan Loan Commitments of all the Banks;
provided, however, that after giving effect to all Borrowings of Swing Line
Loans, Floor Plan Loans and all Floor Plan Loans requested on any date, the sum
of the aggregate principal amount of all outstanding Floor Plan Loans and Swing
Line Loans (but excluding Swing Line Overdraft Loans) shall not exceed the
aggregate amount of the then applicable aggregate Floor Plan Loan Commitments.
All Swing Line Loans (including the Swing Line Overdraft Loans) shall be
evidenced by the Swing Line Note, under which advances, repayments and
readvances may be made, subject to the terms and conditions of this Agreement.
Each Swing Line Loan shall mature and the principal amount thereof shall be due
and payable by the applicable Floor Plan Borrower, as the case may be, on the
last day of the Interest Period applicable thereto. In no event whatsoever
shall any outstanding Swing Line Loan be deemed to reduce, modify or affect any
Bank's commitment to make Floor Plan Loans based upon its Pro Rata Share of the
Floor Plan Loan Commitment.
SECTION 4.2 Accrual of Interest; Margin Adjustments. Each
Swing Line Loan shall, from time to time after the date of such Loan, bear
interest at its Applicable Interest Rate. The amount and date of each Swing
Line Loan, its Applicable Interest Rate, its Interest Period, and the amount
and date of any repayment shall be noted on the Swing Line Bank's records,
which records will be conclusive evidence thereof, absent manifest error;
provided, however, that any failure by the Swing Line Bank to record any such
information shall not affect the obligations of the applicable Floor Plan
Borrower with respect thereto in accordance with the terms of this Agreement
and the Loan Documents.
SECTION 4.3 Requests for Swing Line Loans.
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(a) On the Closing Date, subject to the terms and
conditions hereunder set forth, the Swing Line Bank shall make a Swing Line
Loan to one or more of the Floor Plan Borrowers pursuant to a Request for
Borrowing given by such Floor Plan Borrowers in the manner specified in Section
4.3(b) and at the Applicable Interest Rate in the aggregate amount of the Swing
Line Minimum Amount.
(b) On any day that a Request for Borrowing
constitutes a Request for Borrowing of a Swing Line Loan pursuant to Section
2.3(g)(ii), the applicable Floor Plan Borrower shall be deemed to have
delivered to Swing Line Bank a Request for Borrowing in connection therewith,
subject to the following and to the remaining provisions of this Section 4.3:
(i) the aggregate principal amount of
such requested Swing Line Loan Borrowing, plus the aggregate
principal amount of all other Swing Line Loans then
outstanding shall not exceed the Swing Line Commitment;
(ii) each such Request for
Borrowing of a Swing Line Loan once delivered to the Swing
Line Bank, shall not be revocable by the applicable Floor Plan
Borrower, as the case may be, and shall constitute and include
a certification to the extent applicable, by the Company of
the provisions of Section 2.3(f); and
(iii) the Swing Line Bank may, at its
option, make Swing Line Loans under this Section 4.3 upon the
irrevocable telephone request of a duly authorized officer of
any Floor Plan Borrower and, in the event the Swing Line Bank
makes any such Swing Line Loan upon a telephone request, the
requesting officer of such Floor Plan Borrower shall, if so
requested by the Swing Line Bank, deliver (including via fax)
to the Swing Line Bank on the same day as such telephone
request, a written Request for Borrowing of a Swing Line Loan.
Each of the Floor Plan Borrowers hereby authorizes the Swing
Line Bank to disburse Swing Line Loans pursuant to the
telephone instructions of any Person purporting to be a Person
identified by name on a written list of Persons authorized by
each such Floor Plan Borrower to make Requests for Borrowings
of Swing Line Loans on behalf of such Floor Plan Borrowers.
Notwithstanding the foregoing, each of the Floor Plan
Borrowers acknowledges and agrees that such Floor Plan
Borrower shall bear all risk of loss resulting from
disbursements made upon any telephone request. Each telephone
request for a Swing Line Loan Borrowing shall constitute a
certification of the matters set forth in Section 2.3(f) of
this Agreement.
SECTION 4.4 Disbursement of Swing Line Loans. Subject to
receipt by the Swing Line Bank of a Request for Borrowing of a Swing Line Loan
by any Floor Plan Borrower without exceptions noted in the compliance
certifications in connection therewith, and to the other terms and conditions
of this Agreement, the Swing Line Bank shall make available to any Floor Plan
Borrower the amount so requested, in same day funds, not later than 1:00 P.M.,
HOUSTON, TEXAS TIME on the
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Borrowing Date of such Swing Line Loan, by credit to an account of the
applicable Floor Plan Borrower maintained with the Swing Line Bank or to such
other account or third party as such Floor Plan Borrower may reasonably direct.
The Swing Line Bank shall promptly notify the Floor Plan Agent of any Swing
Line Loan by telephone or telecopier.
SECTION 4.5 Refunding of or Participation Interest in Swing
Line Loans.
(a) On any Floor Plan Adjustment Date the Swing Line
Bank shall, and upon the occurrence and during the continuance of an Event of
Default, the Swing Line Bank in its sole and absolute discretion, may:
on behalf of any Floor Plan Borrower (each of whom hereby irrevocably
directs the Swing Line Bank to act on its behalf) make a written
(including via fax) request to the Floor Plan Agent, requesting each
Bank (including the Swing Line Bank in its capacity as a Bank) to make
a Floor Plan Loan in an amount equal to such Bank's Pro Rata Share of
the outstanding principal amount of the Swing Line Loans (including,
but only if an Event of Default shall have occurred and is continuing,
the portion thereof which constitutes the Swing Line Minimum Amount
and excluding Swing Line Overdraft Loans, but only to the extent that,
after giving effect to such request, such Bank's Pro Rata Share of the
outstanding principal amount of all Floor Plan Loans plus all Swing
Line Loans would not exceed such Bank's Floor Plan Loan Commitment)
(the "Refunded Swing Line Loans") on the date such request is made;
provided however, unless an Event of Default has occurred and is
continuing, Refunded Swing Line Loans shall not be subject to the
indemnification provisions of Section 5.10, and no losses, costs or
expenses may be assessed by the Swing Line Bank against the applicable
Floor Plan Borrower or the other Banks as a consequence thereof.
Unless an Event of Default described in Section 11.1(f) or 11.1(g)
shall have occurred (in which event the procedures of paragraph (b) of
this Section 4.5 shall apply) and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Floor Plan
Loan are then satisfied, each Bank shall upon request by the Agent in
the manner specified in Section 2.4 thereof make the proceeds of its
Floor Plan Loan available to the Floor Plan Agent for the benefit of
the Swing Line Bank.
(b) If, prior to the Banks' making of Floor Plan
Loans pursuant to the provisions in paragraph (a) of this Section 4.5, an
Event of Default described in Section 11.1(f) or 11.1(g) shall have occurred,
each Bank shall, in the manner provided in Section 2.11 (b) and (c), on the
date such Floor Plan Loan was to have been made, purchase from the Swing Line
Bank a participation interest in the Refunded Swing Line Loan in an amount
equal to its Pro Rata Share of such Refunded Swing Line Loan; provided,
however, except for any Borrowing which occurs as a result of a Draft made
prior to the effective suspension or termination of the Drafting Agreement
pursuant to which such Borrowing occurred which Borrowing is subject to Section
2.11 hereof, no Bank shall be obligated to purchase a participation interest in
a Refunded Swing Line Loan to the extent such Loan was made by the Swing Line
Bank notwithstanding the failure of the Floor Plan Borrower to which such Loan
was made to satisfy the requirements of Section 2.3(f).
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(c) Each Bank's obligation to make Floor Plan Loans
and to purchase participation interests in accordance with Section 4.5(a) and
Section 4.5(b) shall be absolute and unconditional and shall not be affected by
any circumstance, including, without limitation, (i) any setoff counterclaim,
recoupment, defense or other right which such Bank may have against the Swing
Line Bank, any Floor Plan Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of any Default or Event of
Default; (iii) any adverse change in the condition (financial or otherwise) of
any Floor Plan Borrower or any other Person; (iv) any breach of this Agreement
by any Floor Plan Borrower or any other Person; (v) any inability of any Floor
Plan Borrower to satisfy the conditions precedent to a Borrowing set forth in
this Agreement on the date upon which such Floor Plan Loan is required to be
made or such participating interest is to be purchased; or (vi) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If any Bank does not make available to the Floor Plan Agent the
amount required pursuant to Section 4.5(a) or Section 4.5(b), as the case may
be, the Swing Line Bank shall be entitled to recover such amount on demand from
such Bank, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the Federal Funds Effective
Rate.
(d) Refunded Swing Line Loans which are funded by the
Banks after two (2) Business Days notice as provided in subsection 4.5(a) shall
thereafter become Floor Plan Loans and subject to any right of acceleration
herein provided, shall remain outstanding until the next succeeding Floor Plan
Adjustment Date. Such Loans shall accrue interest in favor of the Banks
according to their Pro Rata Share at the Comerica Prime-based Rate. On the
next succeeding Floor Plan Adjustment Date such Loans shall be treated as all
other Floor Plan Loans outstanding in accordance with the provisions of Section
2.4(b).
SECTION 4.6 Swing Line Overdraft Loans.
(a) On any day that a Request for Borrowing of a
Floor Plan Loan constitutes a Swing Line Overdraft Borrowing Request pursuant
to Section 2.3(g)(iii), the applicable Floor Plan Borrower shall be deemed to
have delivered to the Swing Line Bank a Swing Line Overdraft Borrowing Request,
and each such Swing Line Overdraft Borrowing Request shall not be revocable by
the applicable Floor Plan Borrower, as the case may be, and shall constitute
and include a certification as to itself and its Subsidiaries, to the extent
applicable, by such Floor Plan Borrower of the provisions of Section 2.3(f).
(b) Each Swing Line Overdraft Loan shall bear
interest at the Applicable Interest Rate. The amount and date of each Swing
Line Overdraft Loan, the Applicable Interest Rate, the Interest Period, and the
amounts and dates of any repayment shall be noted on the Swing Line Bank's
records, which records will be conclusive evidence thereof, absent manifest
error; provided however, that any failure by the Swing Line Bank to record any
such information shall not affect the applicable Floor Plan Borrower's
obligation under the terms of this Agreement and the Loan Documents.
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(c) Swing Line Overdraft Loans shall be made only by
the Swing Line Bank, solely for its own account and shall not be subject to the
provisions of Section 4.5; provided, however, at any time a Swing Line
Overdraft Loan is outstanding, the payment of principal and interest with
respect to all Loans shall be subordinated in right of payment and priority to
the prior payment in full of the Swing Line Overdraft Loans and the Floor Plan
Agent, the Agent and the Banks, as the case may be, shall remit to the Swing
Line Bank, and the Swing Line Bank shall have the right to receive, all
payments of principal and interest made by any Borrower in respect of any Loan
and all other proceeds of Collateral securing the Loans for application and
reduction of the aggregate principal amount of outstanding Swing Line Overdraft
Loans.
(d) If at any time the aggregate outstanding
principal amount of all (i) Floor Plan Loans, plus (ii) Swing Line Loans, plus
(iii) Swing Line Overdraft Loans, plus (iv) Requests for Borrowings of Floor
Plan Loans exceeds (A) one hundred ten percent (110%) of the aggregate Floor
Plan Loan Commitments as of such date and such condition exists for two (2)
consecutive Business Days or (B) the aggregate Floor Plan Loan Commitments by
any amount for any fifteen (15) days out of any thirty (30) day period, then,
in such event, the Floor Plan Agent shall give prompt written notice to the
Agent and the Agent shall give prompt written notice to the Banks and the Floor
Plan Agent acting in its sole discretion may, and upon the election of the
Required Banks shall (y) take any and all actions reasonably necessary to
suspend and/or terminate Drafts pursuant to the Drafting Agreements and (z)
elect by written notice to the Company to terminate the Commitments and to deem
such occurrence as constituting an Event of Default.
ARTICLE V
ALL LOANS
SECTION 5.1 Notes: Repayment of Loans.
(a) All Loans made hereunder shall be evidenced by
the Notes or the Swing Line Note, as the case may be, shall be payable as
therein provided, dated the Closing Date, and shall be in a principal amount
equal to the Commitments on such date. All Borrowers agree, jointly and
severally, to pay the outstanding principal balance of such Loans and all
interest thereon and all the obligations, as evidenced by the Notes, in
accordance with the terms and provisions of this Agreement and on the Maturity
Date. Each Note shall bear interest from its date on the outstanding principal
balance thereof as provided in Section 5.2.
(b) Each Bank, the Agent or the Floor Plan Agent and
the Swing Line Bank, on its behalf, and the Swing Line Bank shall, and is
hereby authorized by each Borrower to, endorse on the schedule attached to the
Notes delivered to each Bank (or a continuation of such schedule attached to
such Notes and made a part thereof), or otherwise record in such Bank's
internal records, an appropriate notation evidencing the date and amount of
each Loan, as well as the date and amount of each payment and prepayment with
respect thereto; provided, however, that the failure of any
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Bank, Agent or the Floor Plan Agent, or the Swing Line Bank to make such a
notation or any error in such a notation shall not affect the obligations of
all Borrowers hereunder or under the Notes or the Swing Line Note.
SECTION 5.2 Interest on Loans.
(a) Subject to the provisions of Section 5.3, each
Alternate Base Rate Loan shall bear interest at a rate per annum, equal to the
lesser of (i) the Alternate Base Rate plus the Applicable Margin for ABR Loans
and (ii) the Highest Lawful Rate (if the Alternate Base Rate is based on the
Prime Rate, computed on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as the case may be; or if the Alternate Base Rate is
based on the Federal Funds Effective Rate, computed on the basis of the actual
number of days elapsed over a year of 360 days).
(b) Subject to the provisions of Section 5.3, each
Comerica Prime Rate Loan shall bear interest at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 360 days) equal
to the lesser of (i) the Comerica Prime-based Rate for the Interest Period in
effect for such Loan and (ii) the Highest Lawful Rate.
(c) Subject to the provisions of Section 5.3, (i)
each Eurodollar Loan which is an Acquisition Loan shall bear interest at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the lesser of (1) the LIBO Rate for the Interest
Period in effect for such Loan plus the Applicable Margin for Eurodollar
Acquisition Loans and (2) the Highest Lawful Rate; and (ii) each Eurodollar
Loan which is a Floor Plan Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the lesser of (1) the LIBO Rate for the Interest Period in
effect for such Loan plus 1.50% and (2) the Highest Lawful Rate.
(d) Interest on each Acquisition Loan and each Floor
Plan Loan shall be payable in arrears on each Interest Payment Date applicable
to such Loan except as otherwise provided in this Agreement. Interest on each
Swing Line Loan and Swing Line Overdraft Loan shall be payable in arrears on
each Interest Payment Date applicable to such Loan except as otherwise provided
in this Agreement. The applicable LIBO Rate, and the Alternate Base Rate shall
be determined by the Agent, and the Comerica Prime Rate shall be determined by
the Floor Plan Agent, and such determination shall be conclusive absent
demonstrable error. The Agent shall promptly advise the Borrowers and each
Bank of each such determination.
SECTION 5.3 Interest on Overdue Amounts. If any Borrower
shall default in the payment of the principal of or interest on any Loan or any
other amount due hereunder, by acceleration or otherwise, such Borrower shall
on demand from time to time pay interest, to the extent permitted by law, on
such defaulted amount up to (but not including) the date of actual payment
(after as well as before judgment) at a rate per annum (computed on the basis
of the actual number of days elapsed over a period of 360 days) equal to the
lesser of (a) the Highest Lawful Rate and (b) the Alternate Base Rate plus two
percent (2%) per annum.
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SECTION 5.4 Fees.
(a) The Company shall pay each Bank, through the
Agent, on the last day of each March, June, September and December, and on the
Maturity Date, in immediately available funds, a commitment fee (such Bank's
"Commitment Fee") equal to twenty-five-one-hundredths of one percent (0.25%)
per annum times the average unused amount of the Commitment of such Bank,
during the immediately preceding fiscal quarter (or shorter portion thereof)
just ended. All Commitment Fees under this Section 5.4(a) shall be computed on
the basis of the actual number of days elapsed in a year of 365 or 366 days, as
the case may be. The Commitment Fee due to each Bank shall commence on the
Closing Date cease to accrue on the earlier of the Maturity Date or the
termination of the Commitment of such Bank pursuant to Section 5.5 or 13.3 (b).
(b) The Company shall pay the Agent and Chase
Securities Inc. the fees (the "Agency Fees") in such amount and on such dates
as may be agreed between the Company, the Agent and Chase Securities Inc.
pursuant to that certain letter agreement dated March 26, 1998 herewith among
the Company, the Agent, and Chase Securities Inc. (the "Agent's Letter").
(c) The Company shall pay the Floor Plan Agent a
Floor Plan Agency Fee ("Floor Plan Agency Fee") in such amount on such dates as
may be agreed between the Company and the Floor Plan Agent pursuant to that
certain letter agreement of even date herewith between the Company and the
Floor Plan Agent (the "Floor Plan Agent's Letter").
(d) The Company shall pay the Agent for the benefit
of the Banks, according to their Pro Rata Share, a fee in the amount of $750.00
for each day any Swing Line Overdraft Loan is outstanding; and such amount (if
any) shall be payable on the last Business Day of each month.
(e) The Agent shall pay to each of the Banks on the
Closing Date the participation fee ("Participation Fee") payable to each of the
Banks as provided in the letter agreement between the Agent and each of the
Banks, respectively.
SECTION 5.5 Termination, Reduction or Conversion of
Commitments. The Commitment of a Bank shall be deemed "unused" to the extent
and in the amount such Bank is obligated to fund future Loans or Letter of
Credit Obligations of any Borrower.
(a) Subject to Section 3.4, upon at least three (3)
Business Days' prior written notice to the Agent, the Company may at any time
in whole permanently terminate, or from time to time permanently reduce, the
Total Commitment, ratably among the Banks in accordance with their respective
Commitments; provided, however, (i) that any partial reduction of the Total
Commitment shall be in minimum increments of Five Million Dollars ($5,000,000)
and the Total Commitment may not be reduced to less than One Hundred Million
Dollars ($100,000,000) unless the Commitment is terminated in whole; (ii) that
any such partial reduction shall be made ratably between the Floor Plan
Commitments and the Acquisition Loan Commitments, and (iii) no reduction
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shall reduce the amount of the Acquisition Loan Commitment to an amount which
is less than the Letter of Credit Obligations outstanding at such time;
provided however that the Floor Plan Agent in its sole discretion may, or at
the direction of the Required Banks, shall suspend and/or terminate all or any
portion of the then outstanding Drafting Agreements.
(b) At any time there exists any unused portion of
the Acquisition Loan Commitment, the Company may request the Agent to convert
such unused portion of the Acquisition Loan Commitment to the Floor Plan Loan
Commitment and thereafter each Bank's Pro Rata Share of the Acquisition Loan
Commitment shall be in an aggregate amount equal to (i) the sum of all
Acquisition Loans then outstanding, plus (ii) all Letter of Credit Obligations
then outstanding, plus (iii) the remaining unused portion of the Acquisition
Loan Commitment after subtracting the amount thereof converted to the Floor
Plan Loan Commitment; in such event, the Floor Plan Loan Commitment shall, upon
such request, be irrevocably increased by the amount so requested by the
Company, such amount together with the Acquisition Loan Commitment not to
exceed the Total Commitment. At any time there exists any unused amount of a
converted portion of the Floor Plan Loan Commitment, the Company may request
the Agent to reverse any such portion thereof, in whole or in part, and in such
event the Floor Plan Loan Commitment and the Acquisition Loan Commitment shall
be restored, as applicable, in the respective amounts so requested by the
Company.
(c) At the time the Commitments of any Bank are
terminated or reduced pursuant to Section 5.5, the Floor Plan Company shall pay
to the Agent for the account of each such Bank, the Commitment Fees on the
amount of the Commitments so terminated or reduced owed through the date of
such termination or reduction.
(d) Each of the Commitments shall automatically and
permanently terminate on the Maturity Date.
SECTION 5.6 Alternate Rate of Interest. In the event, and
on each occasion, that on the day two (2) Business Days prior to the
commencement of any Interest Period for a Eurodollar Borrowing, the Agent shall
have determined (which determination shall be conclusive and binding upon the
Borrowers) that: (a) dollar deposits in the amount set forth in such request
for Borrowing are not generally available in the London interbank market, or
that the rate at which dollar deposits are being offered will not adequately
and fairly reflect the cost to any Bank or the Swing Line Bank of making or
maintaining the principal amount of its Eurodollar Loan comprising such
Borrowing during such Interest Period, or (b) reasonable means do not exist for
ascertaining the LIBO Rate, then the Agent shall as soon as practicable
thereafter give written notice of such determination to the Company, the Banks
and/or the Swing Line Bank; and any request by a Borrower for the making of a
Eurodollar Borrowing shall, until the circumstances giving rise to such notice
no longer exist, be deemed to be a request for a Borrowing to be comprised of
(i) if such Borrowing is a Floor Plan Loan Borrowing, Comerica Prime Rate
Loans, and (ii) if such Borrowing is an Acquisition Loan Borrowing, Alternate
Base Rate Loans. Each determination of the Agent hereunder shall be conclusive
absent demonstrable error.
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SECTION 5.7 Prepayment of Loans; Mandatory Reduction of
Indebtedness.
(a) So long as no Swing Line Overdraft Loans are
outstanding, each Acquisition Loan Borrowing and each Floor Plan Loan Borrowing
may be prepaid at any time and from time to time, in whole or in part, subject
to the requirements of Section 5.10, but otherwise without premium or penalty,
upon at least thee (3) Business Days' prior written or telex notice to the
Agent.
(b) On the date of any termination or reduction of
the Total Commitment pursuant to Section 5.5(a), each of the Borrowers shall
prepay so much of its Loans (up to the amount by which the Commitment is so
terminated or reduced) as shall be necessary in order that the aggregate
principal amount of the Loans and Letter of Credit Obligations outstanding will
not exceed the Total Commitment following such termination or reduction. All
prepayments under this paragraph shall be subject to Section 5.10.
(c) Each notice of prepayment shall specify the
prepayment date and the principal amount of each Loan (or portion thereof) to
be prepaid, which notice shall be irrevocable and shall commit the Borrower
making such notice to prepay such Loan by the amount stated therein on the date
stated therein. All prepayments shall be accompanied by accrued interest on
the principal amount being prepaid to the date of prepayment.
(d) Subject to the provisions of Section 2.3(g)(iii),
if at any time and for any reason:
(i) the aggregate principal amount of
all (y) Floor Plan Loans outstanding, plus (z) Swing Line
Loans outstanding shall exceed the amount of Floor Plan Loan
Commitment at such time, or
(ii) the aggregate principal
amount of all (y) Acquisition Loans, plus (z) Letter of Credit
Obligation's shall exceed the amount of the Acquisition Loan
Commitment, or
(iii) the aggregate principal amount of
all (w) Floor Plan Loans outstanding, (x) Swing Line Loans
outstanding, plus (y) Acquisition Loans outstanding, plus (z)
Letter of Credit Obligations outstanding shall exceed the
Total Commitment,
the Borrowers shall immediately pay to the Agent (for application in the manner
directed by the Company) an amount of such Obligations equal to such excess,
provided, however, that Borrowers shall have the right to direct such repayment
first to prepay such portion of the Indebtedness not subject to the
indemnification provisions of this Agreement in Section 5.10.
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SECTION 5.8 Reserve Requirements; Change in Circumstances.
(a) It is understood that the cost to each Bank of
making or maintaining any of the Eurodollar Loans may fluctuate as a result of
the applicability of reserve requirements imposed by the Board at the ratios
provided for in Regulation D on the date hereof. The Borrowers agree to pay to
each of the Banks from time to time such amounts as shall be necessary to
compensate such Bank for the portion of the cost of making or maintaining
Eurodollar Loans resulting from any increase in such reserve requirements
provided for in Regulation D from those as in effect on the date hereof, it
being understood that the rates of interest applicable to Eurodollar Loans have
been determined on the assumption that no such reserve requirements exist or
will exist and that such rates do not reflect costs imposed on the Banks in
connection with such reserve requirements.
(b) Notwithstanding any other provision herein, if
after the date of this Agreement any change in applicable law or regulation or
in the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof (whether or not
having the force of law) shall change the basis of taxation of payments to any
Bank of the principal of or interest on any Eurodollar Loan made by such Bank
or any other fees or amounts payable hereunder (other than taxes imposed on the
overall net income of such Bank by the jurisdiction in which such Bank has its
principal office or is located or by any political subdivision or taxing
authority therein), or 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, such Bank or shall impose on such Bank
or the London interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Bank and the result of any of the foregoing shall
be to increase the cost to such Bank of making or maintaining any Eurodollar
Loan or to reduce the amount of any sum received or receivable by such Bank
hereunder (whether of principal, interest or otherwise) in respect thereof, by
an amount deemed by such Bank in its sole discretion to be material, then the
Borrowers shall pay as required in Section 5.8(d) such additional amount or
amounts as will compensate such Bank for such additional costs or reduction
will be paid to such Bank with respect to the Eurodollar Loans.
(c) If any Bank shall have determined that the
applicability of any law, rule, regulation or guideline adopted pursuant to or
arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards," or the adoption after the date
hereof of any other law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any lending office of such Bank) or any
Bank's holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital or on the capital of such Bank's holding company, if
any, as a consequence of this Agreement or the Loans made by such Bank pursuant
hereto to a level below
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that which such Bank or such Bank's holding company could have achieved but for
such adoption, change or compliance (taking into consideration such Bank's
policies and the policies of such Bank's holding company with respect to
capital adequacy) by an amount deemed by such Bank to be material, then the
Borrowers shall pay as required to Section 5.8(d) to such Bank such additional
amount or amounts as will compensate such Bank or such Bank's holding company
for any such reduction suffered.
(d) A certificate of each Bank setting forth in
reasonable detail calculations (together with the basis and assumptions
therefor) to establish such amount or amounts as shall be necessary to
compensate such Bank (or participating banks or other entities pursuant to
Article XIII) as specified in paragraph (a), (b) or (c) above shall be
delivered to the Agent which shall promptly deliver the same to the Company and
such certificate shall be rebuttably presumptive evidence of the amount or
amounts which such Bank is entitled to receive. The Borrowers shall pay such
Bank the amount shown as due on any such certificate within ten (10) days after
its receipt of the same.
(e) Any demand for compensation pursuant to this
Section 5.8 must be made on or before one (1) year after the Bank incurs the
expense, cost or economic loss referred to or such Bank shall be deemed to have
waived the right to such compensation. The protection of this Section 5.8 shall
be available to each Bank regardless of any possible contention of the
invalidity or inapplicability of any law, regulation or other condition which
shall give rise to any demand by such Bank for compensation.
(f) Nothing in this Section 5.8 shall entitle any
Bank to receive interest at a rate per annum in excess of the Highest Lawful
Rate.
(g) The term "Bank" or "Banks" as used in this
Section 5.8 shall include the Swing Line Bank and the provisions hereof, when
applicable, shall apply to the Swing Line Bank.
SECTION 5.9 Change in Legality.
(a) Notwithstanding anything to the contrary herein
contained, if any change in any law or regulation or in the interpretation
thereof by any Governmental Authority charged with the administration or
interpretation thereof shall make it unlawful for any Bank to make or maintain
any Eurodollar Loan or to give effect to its obligations in respect of any
Eurodollar Borrowing contemplated hereby, then, by written notice to the Agent,
such Bank may:
(i) declare that Eurodollar Loans will
not thereafter be made by such Bank hereunder, whereupon any
request by any Borrower for a Eurodollar Borrowing shall, as
to such Bank only, be deemed a request for an Alternate Base
or the Comerica Prime Rate, as applicable, Rate Loan unless
such declaration shall be subsequently withdrawn; and
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(ii) require that all outstanding
Eurodollar Loans made by it be converted to Alternate Base
Rate Loans, in which event all such Eurodollar Loans shall be
automatically converted to Alternate Base Rate Loans if
Acquisition Loans and to Comerica Prime Rate Loans if Floor
Plan Loans, as of the effective date of such notice as
provided in paragraph (b) below.
In the event any Bank shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied
to repay the Eurodollar Loans that would have been made by such Bank or the
converted Eurodollar Loans of such Bank shall instead be applied to repay the
Alternate Base Rate Loans if Acquisition Loans and to Comerica Prime Rate Loans
if Floor Plan Loans, made by such Bank in lieu of, or resulting from the
conversion of, such Eurodollar Loans; provided, however, the Alternate Base
Rate Loans or Comerica Prime Rate Loans resulting from the conversion of such
Eurodollar Loans shall be prepayable only at the times the converted Eurodollar
Loans would have been prepayable, notwithstanding the provisions of Section
5.7(a).
(b) For purposes of Section 5.9(a), a notice to the
Agent by any Bank shall be effective as to each Eurodollar Loan, if lawful, on
the last day of the then-current Interest Period or, if there are then two (2)
or more current Interest Periods, on the last day of each such Interest Period,
respectively; otherwise, such notice shall be effective on the date of receipt
by the Agent.
(c) The term "Bank" or "Banks" as used in this
Section 5.9 shall include the Swing Line Bank and the provisions hereof, when
applicable, shall apply to the Swing Line Bank.
SECTION 5.10 Indemnity.
(a) The Borrowers shall indemnify each Bank against
any loss or expense which such Bank may sustain or incur as a consequence of
(i) any failure by any Borrower to fulfill on the date of any Borrowing
hereunder the applicable conditions set forth in Article VIII, (ii) any failure
by any Borrower to borrow, convert or continue hereunder after delivery of a
Request for Borrowing or a notice of conversion or continuation has been given
pursuant to Sections 2.4, 3.3 and 5.15, (iii) any payment, prepayment or
conversion of a Eurodollar Loan required by any other provision of this
Agreement or otherwise made on a date other than the last day of the applicable
Interest Period, (iv) any default in payment or prepayment of the principal
amount of any Loan or any part thereof or interest accrued thereon, as and when
due and payable (at the due date thereof, by irrevocable notice of prepayment
or otherwise), or (v) the occurrence of any Event of Default, including, but
not limited to, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a Eurodollar
Loan. Such loss or reasonable expense shall include an amount equal to the
excess, if any, as reasonably determined by each Bank of (A) its cost of
obtaining the funds for the Loan being paid, prepaid or converted or not
borrowed (based on the LIBO Rate applicable thereto) for the period from the
date of such payment, prepayment or conversion or failure to borrow to the last
day of the Interest Period for such Loan (or, in the case
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<PAGE> 53
of a failure to borrow, the Interest Period for such Loan which would have
commenced on the date of such failure to borrow) over (B) the amount of
interest (as reasonably determined by such Bank) that could be realized by such
Bank in reemploying during such period the funds so paid, prepaid or converted
or not borrowed. A certificate of each Bank setting forth in reasonable detail
calculations (together with the basis and assumptions therefore) to establish
any amount or amounts which such Bank is entitled to receive pursuant to this
Section 5.10 shall be delivered to the Agent which shall promptly deliver the
same to the Company and such certificate shall be rebuttably presumptive
evidence of the amount or amounts which such Bank is entitled to receive.
Nothing in this Section 5.10 shall entitle any Bank to receive interest at a
rate per annum in excess of the Highest Lawful Rate.
(b) The provisions of this Section 5.10 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the invalidity or unenforceability of any
term or provision of this Agreement or any Note, or any investigation made by
or on behalf of any Bank; provided demand for compensation pursuant to Section
5.08 must be made on or before one (1) year after the Bank incurs the expense,
cost or economic loss referred to or such Bank shall be deemed to have waived
the right to such compensation. All amounts due under this Section 5.10 shall
be payable within ten (10) days after receipt of demand therefor.
(c) The term "Bank" or "Banks" as used in this
Section 5.10 shall include the Swing Line Bank and the provisions hereof, when
applicable, shall apply to the Swing Line Bank.
SECTION 5.11 Pro Rata Treatment. Subject to Section 4.6(c)
hereof, and except as permitted under Section 5.8, each Borrowing, each payment
or prepayment of principal of the Notes, each payment of interest on such
Notes, each other reduction of the principal or interest outstanding under such
Notes, however achieved, each payment of the Commitment Fees and each reduction
of the Commitments shall be made pro rata among the Banks in the proportions
that their respective Commitments bear to the Total Commitment.
SECTION 5.12 Payments.
(a) The Company and/or any of the Borrowers shall
make all payments of principal and interest on any Swing Line Loan and any
Swing Line Overdraft Loan, any curtailment payment, and payments of the
proceeds of the sale of any Motor Vehicle to the Floor Plan Agent on the date
when due in dollars to the Floor Plan Agent at its offices in Detroit Michigan,
and except as otherwise provided in this Agreement, the Company and/or any of
the Borrowers shall make all payments (including principal of or interest on
any Borrowing, Agency Fee, or any other fees or other amounts) payable
hereunder and under any other Loan Document not later than 1:00 P.M., HOUSTON,
TEXAS TIME, on the date when due in dollars to the Agent at its offices at 707
Travis Street, Houston, Texas 77002, in immediately available funds, without
setoff or counterclaim.
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(b) Subject to the provisos contained in subclauses
(A) of the definition of "Interest Period", whenever any payment (including
principal of or interest on any Borrowing or any fees or other amounts)
hereunder or under any other Loan Document shall become due, or otherwise would
occur, on a day that is not a Business Day, such payment may be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, if applicable.
SECTION 5.13 Sharing of Setoffs. Except as otherwise provided
in Section 4.6(c) in connection with the payment of Swing Line Overdraft Loans,
each Bank agrees that if it shall, in any manner, including through the
exercise of a right of banker's lien, setoff or counterclaim against any
Borrower, or pursuant to a secured claim under Section 506 of Title 11 of the
United States Code or other security or interest arising from, or in lieu of,
such secured claim, received by such Bank under any Insolvency Proceeding or
otherwise, obtain payment (voluntary or involuntary) in respect of the Note
held by it as a result of which the unpaid principal portion of the Note held
by it shall be proportionately less than the unpaid principal portion of the
Note held by any other Bank, it shall be deemed to have simultaneously
purchased from such other Bank a participation in the Note held by such other
Bank, so that the aggregate unpaid principal amount of the Note and
participations in Notes held by each Bank shall be in the same proportion to
the aggregate unpaid principal amount of all Notes then outstanding as the
principal amount of the Note held by it prior to such exercise of banker's
lien, setoff or counterclaim was to the principal amount of all Notes
outstanding prior to such exercise of banker's lien, setoff or counterclaim;
provided, however, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 5.13 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrowers expressly consent to the
foregoing arrangements and agree that any Person holding a participation in a
Note under this Section 5.13 deemed to have been so purchased may exercise any
and all rights of banker's lien, setoff or counterclaim with respect to any and
all moneys owing by any such Borrower to such Bank as fully as if such Bank had
made a Loan directly to such Borrower in the amount of such participation.
SECTION 5.14 Payments Free of Taxes.
(a) Any and all payments by the Borrowers hereunder
shall be made free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on the Agent's, the
Floor Plan Agent's, the Swing Line Bank's or any Bank's or any transferee's or
assignee's, excluding a participation holder's (any such entity a "Transferee")
net income and franchise taxes imposed on the Agent, the Floor Plan Agent, the
Swing Line Bank or any Bank (or Transferee) by the United States or any
jurisdiction under the laws of which it is organized or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrowers shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to the Banks (or any Transferee),
the Agent, the Floor Plan Agent or the Swing Line Bank (i) the sum payable
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shall be increased by the amount necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 5.14) such Bank (or Transferee) or the Agent, the Floor Plan Agent
or the Swing Line Bank (as the case may be) shall receive an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrowers shall make such deductions and (iii) the Borrowers shall pay the full
amount deducted to the relevant taxing authority or other governmental
authority in accordance with applicable law.
(b) In addition, the Borrowers agree to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Document which are not excluded under Section
5.14(a) (hereinafter referred to as "Other Taxes").
(c) The Borrowers will indemnify each Bank (or
Transferee), the Swing Line Bank, the Agent and/or the Floor Plan Agent for the
full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 5.14) paid by
such Bank (or Transferee), the Swing Line Bank, the Agent and/or the Floor Plan
Agent, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant taxing
authority or other Governmental Authority. Such indemnification shall be made
within thirty (30) days after the date any such Person indemnified hereunder
makes written demand therefor, such demand to contain a certificate setting
forth the calculations (including all assumptions and the basis therefor) to
establish the amount for which indemnity is claimed. If a Bank (or
Transferee), the Agent, the Swing Line Bank, and/or the Floor Plan Agent shall
become aware that it is entitled to receive a refund in respect of Taxes or
Other Taxes, it shall promptly notify the Company of the availability of such
refund and shall, within thirty (30) days after receipt of a request by the
Borrowers, apply for such refund at the Company's expense. If any Bank (or
Transferee), the Swing Line Bank, the Agent and/or the Floor Plan Agent
receives a refund in respect of any Taxes or Other Taxes for which such Person
has received payment from any of the Borrowers, it shall promptly notify the
Company of such refund and shall, within thirty (30) days after receipt of a
request by any of the Borrowers (or promptly upon receipt, if any of the
Borrowers has requested application for such refund pursuant hereto), repay
such refund to the Company, net of all out-of-pocket expenses of such Person
and without interest; provided that the Borrowers, upon the request of such
Person, agree to return such refund (plus penalties, interest or other charges)
to such Person in the event such Person is required to repay such refund.
(d) Within thirty (30) days after the date of any
payment of Taxes or Other Taxes withheld by the Borrowers in respect of any
payment to any Bank (or Transferee) the Swing Line Bank, the Agent, and/or the
Floor Plan Agent, the Borrowers will furnish to such Person, at its address
referred to in Section 13.1, the original or a certified copy of a receipt
evidencing payment thereof to the extent available.
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(e) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations contained in this
Section 5.14 shall survive the payment in full of the principal of and
interest on all Loans made hereunder.
(f) The Agent, the Floor Plan Agent, each Bank, the
Swing Line Bank and each Transferee each represents that is either (i) a
corporation organized under the laws of the United States of America or any
state thereof or (ii) it is entitled to complete exemption from United States
withholding tax imposed on or with respect to any payments, including fees, to
be made to it pursuant to this Agreement (y) under an applicable provision of a
tax convention to which the United States of America is a party or (z) because
it is acting through a branch, agency or office in the United States of America
and any payment to be received by it hereunder is effectively connected with a
trade or business in the United States of America. Each Bank (or Transferee)
which is organized outside the United States shall, on the date it becomes a
signatory hereto, deliver to the Company such certificates, documents or other
evidence, as required by the Code or Treasury Regulations issued pursuant
thereto, including Internal Revenue Service Form 1001 or Form 4224 and any
other certificate or statement of exemption required by Treasury Regulation
Section 1.1441-1(a) or Section 1.1441-6(c) or any subsequent version thereof,
properly completed and duly executed by such Bank (or Transferee) establishing
such payments to it are (i) not subject to withholding under the Code because
such payment is effectively connected with the conduct by such Bank (or
Transferee) of a trade or business in the United States or (ii) totally exempt
from United States tax under a provision of an applicable tax treaty. Unless
the Company and the Agent have received forms or other documents satisfactory
to them indicating that payments hereunder or under the Notes are not subject
to United States withholding tax or are subject to such tax at a rate reduced
by an applicable tax treaty, the Borrowers, the Agent, the Swing Line Bank
and/or the Floor Plan Agent shall withhold taxes from such payments at the
applicable statutory rate in the case of payments to or for any Bank (or
Transferee) or assignee organized under the laws of a jurisdiction outside the
United States.
(g) The Borrowers shall not be required to pay any
additional amounts to any Bank (or Transferee) in respect of United States
withholding tax pursuant to paragraph (a) or (c) above if the obligation to pay
such additional amounts would not have arisen but for the failure of the
representation in Section 5.14(f) to be true or a failure by such Bank (or
Transferee) to comply with the provisions of paragraph (f) above unless such
failure results from (i) a change in applicable law, regulation or official
interpretation thereof or (ii) an amendment, modification or revocation of any
applicable tax treaty or a change in official position regarding the
application or interpretation thereof, in each case after the Closing Date
(and, in the case of a Transferee, after the date of assignment or transfer).
(h) Any Bank (or Transferee) claiming any additional
amounts payable pursuant to this Section 5.14 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by the Company or to change the jurisdiction of its
Applicable Lending Office if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which may
thereafter accrue and
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would not, in the sole determination of such Bank, be otherwise disadvantageous
to such Bank (or Transferee).
(i) If any Bank (or Transferee) requests compensation
pursuant to this Section__5.14, the Company may give notice to such Bank (with
a copy to the Agent) that they wish to seek one or more Eligible Assignees
(which may be one or more of the Banks) to assume the Commitments of such Bank
and to purchase its outstanding Loans and Note. Each Bank (or Transferee)
requesting compensation pursuant to this Section 5.14 hereto agrees to sell all
of its Commitments, its Loans and its Note pursuant to Section 13.3 to any such
Eligible Assignee for an amount equal to the sum of the outstanding unpaid
principal of and accrued interest on such Loans and Note plus all Commitment
Fees and other fees and amounts due such Bank (or Transferee) hereunder
calculated, in each case, to the date such Commitment, Loans and Note are
purchased, whereupon such Bank (or Transferee) shall thereafter have no other
Commitments or other obligation to the Floor Plan Borrowers hereunder or under
any Note.
SECTION 5.15 Conversion and Continuation of Acquisition Loan
Borrowings and Floor Plan Borrowings.
(a) The Company shall have the right with respect to
Acquisition Loan Borrowings, on behalf of any Borrower, at any time upon prior
irrevocable notice to the Agent (a) not later than 10:00 A.M., HOUSTON, TEXAS
TIME, on the date of conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 11:00 A.M., HOUSTON, TEXAS TIME, three
Business Days prior to conversion or continuation, to convert all or any
portion of any ABR Borrowing into a Eurodollar Borrowing or to continue all or
any portion of any Eurodollar Borrowing of any Borrower as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 11:00 A.M.,
HOUSTON, TEXAS TIME, three Business Days prior to conversion, to convert all or
any portion of the Interest Period with respect to any Eurodollar Borrowing to
another permissible Interest Period subject in each case to the following:
(i) each conversion or continuation shall be made
pro rata among the Banks, in accordance with the respective principal
amounts of the Acquisition Loans comprising the converted or continued
Acquisition Loan Borrowing;
(ii) if less than all the outstanding principal
amount of any such Acquisition Loan Borrowing shall be converted or
continued, the aggregate principal amount of such Acquisition Loan
Borrowing converted or continued shall be an integral multiple of One
Million Dollars ($1,000,000) and not less than One Million Dollars
($1,000,000);
(iii) if any Eurodollar Borrowing is converted at a
time other than the end of the Interest Period applicable thereto, the
Company shall pay, upon demand, any amounts due, if any, to the Banks
under Section 5.10;
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(iv) any portion of a Borrowing maturing or
required to be repaid in less than one month may not be converted into
or continued as a Eurodollar Borrowing;
(v) any portion of a Eurodollar Borrowing which
cannot be converted into or continued as a Eurodollar Borrowing by
reason of clause (iv) above shall be automatically converted at the
end of the Interest Period in effect for such Acquisition Loan
Borrowing into an ABR Borrowing;
(vi) no Interest Period may be selected for any
Eurodollar Borrowing that would end later than the Maturity Date; and
(vii) accrued interest on an Acquisition Loan (or
portion thereof) being converted or continued shall be paid by the
Company at the time of conversion or continuation.
Each notice pursuant to this Section 5.15(a) shall be irrevocable and
shall refer to this Agreement and specify (w) the identity and amount of the
Acquisition Loan Borrowing that the Company requests to be converted or
continued, (x) whether such Acquisition Loan Borrowing is to be converted to or
continued as a Eurodollar Borrowing or an ABR Borrowing, (y) if such notice
requests a conversion, the date of such conversion (which shall be a Business
Day) and (z) if such Acquisition Loan Borrowing is to be converted to or
continued as a Eurodollar Borrowing, the Interest Period with respect thereto.
If no Interest Period is specified in any such notice with respect to any
conversion to or continuation as a Eurodollar Borrowing, the Company shall be
deemed to have selected an Interest Period of one (1) month's duration. The
Agent shall promptly advise the other Banks of any notice given pursuant to
this Section 5.15(a) and of each Bank's Pro Rata Share of any converted or
continued Borrowing. If the Company shall not have given written notice in
accordance with this Section 5.15(a) to continue any Eurodollar Borrowing into
a subsequent Interest Period (and shall not otherwise have given written notice
in accordance with this Section 5.15(a) to convert such Acquisition Loan
Borrowing), such Acquisition Loan Borrowing shall, at the end of the Interest
Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be converted into as an ABR Borrowing.
(b) The Company shall have the right with respect to
Floor Plan Loan Borrowings, on behalf of any Floor Plan Borrower, at any time
upon prior irrevocable notice to the Agent (a) not later than 10:00 A.M.,
HOUSTON, TEXAS TIME, on the date of conversion, to convert any Eurodollar
Borrowing into a Comerica Prime Rate Borrowing, (b) not later than 11:00 A.M.,
HOUSTON, TEXAS TIME, three Business Days prior to conversion or continuation,
to convert all or any portion of any Comerica Prime Rate Borrowing into a
Eurodollar Borrowing or to continue all or any portion of any Eurodollar
Borrowing of any Floor Plan Borrower as a Eurodollar Borrowing for an
additional Interest Period, and (c) not later than 11:00 A.M., HOUSTON, TEXAS
TIME, three Business Days prior to conversion, to convert all or any portion of
the Interest Period with respect to any Eurodollar Borrowing to another
permissible Interest Period subject in each case to the following:
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(i) each conversion or continuation shall be made
pro rata among the Banks, in accordance with the respective principal
amounts of the Floor Plan Loans comprising the converted or continued
Floor Plan Loan Borrowing;
(ii) if less than all the outstanding principal
amount of any such Floor Plan Loan Borrowing shall be converted or
continued, the aggregate principal amount of such Floor Plan Loan
Borrowing converted or continued shall be an integral multiple of One
Million Dollars ($1,000,000) and not less than One Million Dollars
($1,000,000);
(iii) if any Eurodollar Borrowing is converted at a
time other than the end of the Interest Period applicable thereto, the
Company shall pay, upon demand, any amounts due, if any, to the Banks
under Section 5.10;
(iv) any portion of a Borrowing maturing or
required to be repaid in less than one month may not be converted into
or continued as a Eurodollar Borrowing;
(v) any portion of a Eurodollar Borrowing which
cannot be converted into or continued as a Eurodollar Borrowing by
reason of clause (iv) above shall be automatically converted at the
end of the Interest Period in effect for such Floor Plan Loan
Borrowing into a Comerica Prime Rate Borrowing;
(vi) no Interest Period may be selected for any
Eurodollar Borrowing that would end later than the Maturity Date; and
(vii) accrued interest on an Floor Plan Loan (or
portion thereof) being converted or continued shall be paid by the
Company at the time of conversion or continuation.
Each notice pursuant to this Section 5.15(b) shall be irrevocable and
shall refer to this Agreement and specify (w) the identity and amount of the
Floor Plan Loan Borrowing that the Company requests to be converted or
continued, (x) whether such Floor Plan Loan Borrowing is to be converted to or
continued as a Eurodollar Borrowing or a Comerica Prime Rate Borrowing, (y) if
such notice requests a conversion, the date of such conversion (which shall be
a Business Day) and (z) if such Floor Plan Loan Borrowing is to be converted to
or continued as a Eurodollar Borrowing, the Interest Period with respect
thereto. If no Interest Period is specified in any such notice with respect to
any conversion to or continuation as a Eurodollar Borrowing, the Company shall
be deemed to have selected an Interest Period of one (1) month's duration. The
Agent shall promptly advise the other Banks of any notice given pursuant to
this Section 5.15(b) and of each Bank's Pro Rata Share of any converted or
continued Borrowing. If the Company shall not have given written notice in
accordance with this Section 5.15(b) to continue any Eurodollar Borrowing into
a subsequent Interest Period (and shall not otherwise have given written notice
in accordance with this Section 5.15(b) to convert such Floor Plan Loan
Borrowing), such Floor Plan Loan Borrowing shall,
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at the end of the Interest Period applicable thereto (unless repaid pursuant to
the terms hereof), automatically be converted into a Comerica Prime Rate
Borrowing.
SECTION 5.16 Extension of Maturity Date.
(a) Provided that no Default or Event of Default has
occurred and is continuing, the Company may, by written notice to Agent (with
sufficient copies for each Bank) (which notice shall be irrevocable and which
shall not be deemed effective unless actually received by Agent) prior to
November 1, but not before October 1, of each fiscal year, request that the
Banks extend the then applicable Maturity Date to a date that is one year later
than the Maturity Date, then in effect (each such request, a "Request"). Each
Bank shall, not later than November 30th of such fiscal year, give written
notice to the Agent stating whether such Bank is willing to extend the Maturity
Date as requested. If Agent has received the aforesaid written approvals of
such Request from each of the Banks, then, effective upon the date of Agent's
receipt of all such written approvals from the Banks, as aforesaid, the
Maturity Date shall be so extended for an additional one year period, the term
Maturity Date shall mean such extended date and Agent shall promptly notify the
Company that such extension has occurred.
(b) If (i) any Bank gives the Agent written notice
that it is unwilling to extend the Maturity Date as requested or (ii) any Bank
fails to provide written approval to Agent of such a Request on or before
November 30th of such fiscal year, the (w) the Banks shall be deemed to have
declined to extend the Maturity Date, (x) the then- current Maturity Date shall
remain in effect (with no further right on the part of the Company to request
extensions thereof under this Section 2.9), and (y) the commitments of the
Banks to make Floor Plan Loans or Acquisition Loans hereunder shall terminate
on the Maturity Date then in effect, the Floor Plan Agent shall take such
action as necessary to terminate and suspend all Drafting Agreements effective
ten (10) days prior to the Maturity Date then in effect, and Agent shall
promptly notify Company thereof.
ARTICLE VI
LETTERS OF CREDIT
SECTION 6.1 General.
(a) On the terms and conditions set forth herein (i)
the Issuing Bank agrees from time to time on any Business Day during the period
from the Closing Date to the last Business Day thirty (30) days prior to the
Maturity Date (the "Letter of Credit Termination Date") to issue Letters of
Credit for the account of any Borrower, and to amend or renew Letters of Credit
previously issued by it, in accordance with Section 6.2; and (ii) the Banks
severally agree to participate in Letters of Credit Issued for the account of
the Borrowers; provided, that the Issuing Bank shall not be obligated to Issue,
and no Bank shall be obligated to participate in, any Letter of Credit if, as
of the date of request of such Letter of Credit, after giving effect to the
maximum amount payable under such Letter of Credit, (y) the aggregate
principal amount of all Letter of
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Credit Obligations outstanding shall at any time exceed Five Million Dollars
($5,000,000) or (z) the aggregate principal amount of Acquisition Loans
outstanding plus the Letter of Credit Obligations outstanding as of such day
shall exceed the Acquisition Loan Commitment; further, the aggregate principal
amount of all Letter of Credit Obligations outstanding, plus the aggregate
principal amount of all Acquisition Loans outstanding, plus the aggregate
principal amount of all Swing Line Loans outstanding plus the aggregate
principal amount of all Floor Plan Loans outstanding shall not at any time
exceed the Total Commitment. Within the foregoing limits, and subject to the
other terms and conditions hereof, the ability of the Borrowers to obtain
Letters of Credit shall be fully revolving, and, accordingly, the Borrowers
may, during the foregoing period, obtain Letters of Credit to replace Letters
of Credit which have expired or which have been drawn upon and reimbursed.
(b) The Issuing Bank is under no obligation to Issue
any Letter of Credit if: (i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the
Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
the Issuing Bank shall prohibit Issuing Bank, or request that the Issuing Bank
refrain, from the Issuance of Letters of Credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
Issuing Bank is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost
or expense which was not applicable on the Closing Date and which the Issuing
Bank in good faith deems material to it; (ii) the Issuing Bank has received
written notice from any Bank, the Agent or any Borrower, on or prior to the
Business Day prior to the requested date of Issuance of such Letter of Credit,
that one or more of the applicable conditions contained in Article VIII is not
then satisfied; (iii) the expiration date of any requested Letter of Credit is
more than one (1) year from the date of Issuance thereof or after the Maturity
Date; (iv) any requested Letter of Credit does not provide for drafts, or is
not otherwise in form and substance acceptable to the Issuing Bank, or the
Issuance of a Letter of Credit shall violate any applicable policies of the
Issuing Bank, or the Issuance of a Letter of Credit is for an amount less than
One Hundred Thousand Dollars ($100,000) or to be denominated in a currency
other than U.S. Dollars.
SECTION 6.2 Issuance, Amendment and Renewal of Letters of
Credit.
(a) Each Letter of Credit shall be issued upon the
irrevocable written request of the Company received by the Issuing Bank (with a
copy sent by the Company to the Agent) at least three (3) days (or such shorter
time as the Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of Issuance. Each such request for
Issuance of a Letter of Credit shall be by facsimile, confirmed immediately in
an original writing, in the form of a Letter of Credit Application, and shall
specify in form and detail satisfactory to the Issuing Bank such matters as the
Issuing Bank may require. Each Letter of Credit (i) will be for the account of
such Borrower, (ii) will be a (A) nontransferable standby letter of credit to
support certain performance obligations of such Borrower, or (B)
non-transferable standby letter of credit to support certain payment
obligations of such Borrower that are not prohibited by this Agreement, (iii)
will be for
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purposes reasonably satisfactory to the Issuing Bank and (iv) will contain such
terms and provisions as may be customarily required by the Issuing Bank.
(b) Prior to the Issuance of any Letter of Credit,
the Issuing Bank will confirm with the Agent (by telephone or in writing) that
the Agent has received a copy of the Letter of Credit Application or Letter of
Credit Amendment Application from any Borrower and, if not, the Issuing Bank
will provide the Agent with a copy thereof. Unless the Issuing Bank has
received notice prior to its Issuance of a requested Letter of Credit from the
Agent (i) directing the Issuing Bank not to Issue such Letter of Credit because
such Issuance is not then permitted under this Section 6.2, or (ii) that one or
more conditions specified in Article VIII are not then satisfied or waived;
then, subject to the terms and conditions hereof, the Issuing Bank shall, on
the requested date, Issue a Letter of Credit for the account of such Borrower
in accordance with the Issuing Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is
outstanding and prior to the Letter of Credit Termination Date, the Issuing
Bank will, upon the written request of any Borrower received by the Issuing
Bank (with a copy sent by the Borrower to the Agent) at least three (3) days
(or such shorter time as the Issuing Bank may agree in particular instance in
its sole discretion) prior to the proposed date of amendment or extension,
amend any Letter of Credit Issued by it or extend the expiry date. Each such
request for amendment or extension of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, made in such form as
the Issuing Bank shall require. The Issuing Bank shall be under no obligation
to amend or extend the expiry date any Letter of Credit if: (i) the Issuing
Bank would have no obligation at such time to Issue such Letter of Credit in
its amended form under the terms of this Agreement; or (ii) the beneficiary of
any such Letter of Credit does not accept the proposed amendment to the Letter
of Credit.
(d) Upon receipt of notice from the Issuing Bank, the
Agent will promptly notify the Banks of the Issuance of a Letter of Credit and
any amendment or extension thereto.
(e) If any outstanding Letter of Credit shall provide
that it shall be automatically renewed unless the beneficiary thereof receives
notice from the Issuing Bank that such Letter of Credit shall not be renewed,
the Issuing Bank shall be permitted to allow such Letter of Credit to renew,
and the Borrowers and the Banks hereby authorize such renewal. The Issuing
Bank shall not be obligated to allow such Letter of Credit to renew if the
Issuing Bank would have no obligation at such time to Issue or amend such
Letter of Credit under the terms of this Agreement.
(f) The Issuing Bank may, at its election (or as
required by the Agent at the direction of the Required Banks), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the
expiration date of any Letter of Credit to be a date not later than the
Maturity Date.
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(g) This Agreement shall control in the event of any
conflict with any Letter of Credit- Related Document.
(h) The Issuing Bank will also deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment or extension to a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit, amendment,
or extension to a Letter of Credit.
SECTION 6.3 Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of
Credit, each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank a participation in
such Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) the Pro Rata Share of such Bank, and (ii) the maximum amount
available to be drawn under such Letter of Credit and the amount of such
drawing respectively. Each Issuance of a Letter of Credit shall be deemed to
utilize the Acquisition Loan Commitment of each Bank by an amount equal to the
amount of such participation.
(b) In the event of any request for a drawing under a
Letter of Credit by the beneficiary or transferee thereof, the Issuing Bank
will promptly notify the Company. In the case of Letters of Credit under which
drawings are payable one or more Business Days after the drawing is made, the
Issuing Bank will give such notice to the Company at least one Business Day
prior to the Honor Date. The Company shall reimburse the Issuing Bank prior to
11:00 A.M., HOUSTON, TEXAS TIME, on each date that any amount is paid by the
Issuing Bank under any Letter of Credit (each such date, an "Honor Date") in an
amount equal to the amount so paid by the Issuing Bank. In the event the
Company fails to reimburse the Issuing Bank for the full amount of any drawing
under any Letter of Credit by 11:00 A.M., HOUSTON, TEXAS TIME, on the Honor
Date, the Issuing Bank will promptly notify the Agent and the Agent will
promptly notify each Bank thereof, and the Company shall be deemed to have
requested an Alternate Base Rate Loan be made by the Banks to be disbursed on
the Honor Date under such Letter of Credit, subject to the amount of the
unutilized portion of the Acquisition Loan Commitment and subject to the
conditions set forth in Article VIII. Any notice given by the Issuing Bank or
the Agent pursuant to this Section 6.3(b) may be oral if immediately confirmed
in writing (including by facsimile); provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.
(c) Each Bank shall upon any notice pursuant to
Section 6.3(b) make available to the Agent for the account of the Issuing Bank
an amount in Dollars and in immediately available funds equal to its Pro Rata
Share of the amount of the drawing, whereupon the participating Banks shall
each be deemed to have made an Acquisition Loan consisting of an Alternate Base
Rate Loan to the applicable Borrower in that amount. If any Bank so notified
fails to make available to the Agent for the account of the Issuing Bank the
amount of such Bank's Pro Rata Share of the amount of the drawing by no later
than 12:00 NOON, HOUSTON, TEXAS TIME, on the Honor Date, then interest shall
accrue on such Bank's obligation to make such payment, from the Honor Date to
the
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date such Bank makes such payment, at the rate per annum equal to the Federal
Funds Rate in effect from time to time during such period. The Agent will
promptly give notice to each Bank of the occurrence of the Honor Date, but
failure of the Agent to give any such notice on the Honor Date or in sufficient
time to enable any Bank to effect such payment on such date shall not relieve
such Bank from its obligations under this Section 6.3.
(d) With respect to any unreimbursed drawing that is
not converted into an Alternate Base Rate Loan to the Company in whole or in
part, because of failure of the Company to satisfy the conditions set forth in
Article VIII or for any other reason, the Company shall be deemed to have
incurred from the Issuing Bank a Letter of Credit Borrowing in the amount of
such drawing, which Letter of Credit Borrowing shall be due and payable on
demand (together with interest) and shall bear interest at a rate per annum
equal to the Alternate Base Rate plus two percent (2%) per annum, and each
Bank's payment to the Issuing Bank pursuant to Section 6.3(b) shall be deemed
payment in respect of its participation in such Letter of Credit Borrowing and
shall constitute a Letter of Credit Advance from such Bank in satisfaction of
its participation obligation under this Section 6.3.
(e) Each Bank's obligation in accordance with this
Agreement to make Acquisition Loans or Letter of Credit Advances, as
contemplated by this Section 6.3, as a result of a drawing under the Letter of
Credit, shall be absolute and unconditional and without recourse to the Issuing
Bank and shall not be affected by any circumstance, including (i) any set-off,
counterclaim, recoupment, defense or other right which such Bank may have
against the Issuing Bank, any Borrower or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of a Default, an Event of
Default or a Material Adverse Effect; or (iii) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing;
provided, however, that each Bank's obligation to make Acquisition Loans under
this Section 6.3 is subject to the conditions set forth in Article VIII.
SECTION 6.4 Repayment of Participation.
(a) When the Agent receives (and only if the Agent
receives), for the account of the Issuing Bank, immediately available funds
from the Borrowers (i) in respect of which any Bank has paid the Agent for the
account of the Issuing Bank for such Bank's participation in the Letter of
Credit Advance pursuant to Section 6.3 or (ii) in payment of interest thereon,
the Agent will pay to each Bank, in the same funds as those received by the
Agent for the account of the Issuing Bank, the amount of such Bank's Pro Rata
Share of such funds and the Issuing Bank shall receive and retain the amount of
the Pro Rata Share of such funds of any Bank that did not so pay the Agent for
the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at
any time to return to the Borrowers or to a trustee, receiver, liquidator,
custodian, or any official in an Insolvency Proceeding, any portion of the
payments made by the Borrowers to the Agent for the account of the Issuing Bank
pursuant to Section 6.4(a) in reimbursement of a payment made under the Letter
of Credit Advance or interest thereon, each Bank shall, on demand of the Agent,
forthwith return to the Agent or the
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Issuing Bank the amount of its Pro Rata Share of any amounts so returned by the
Agent or the Issuing Bank plus interest thereon from the date such demand is
made to the date such amounts are returned by such Bank to the Agent or the
Issuing Bank, at a rate per annum equal to the Federal Funds Rate in effect
from time to time.
SECTION 6.5 Role of the Issuing Bank.
(a) Each Bank and each Borrower agree that, in paying
any drawing under a Letter of Credit, the Issuing Bank shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and other documents, if any, expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.
(b) Neither the Issuing Bank nor any of its
correspondents, participants or assignees shall be liable to any Bank for: (i)
any action taken or omitted in connection herewith at the request or with the
approval of the Banks (including the Required Banks, as applicable); (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any Letter of Credit-Related Document.
(c) The Borrowers hereby assume all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude any Borrower from pursuing such rights and remedies as
it may have against the beneficiary or transferee at law or under any other
agreement or assume risks or losses arising out of the gross negligence, bad
faith or wilful misconduct of the Issuing Bank. Neither the Issuing Bank, nor
any correspondents, participants or assignees of the Issuing Bank, shall be
liable or responsible for any of the matters described in clauses (i) through
(vii) of Section 6.6; provided, however, that any Borrower may have a claim
against the Issuing Bank, and the Issuing Bank may be liable to such Borrower,
to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered or incurred by such Borrower(s)
which are caused by the Issuing Bank's willful misconduct or gross negligence
(i) in failing to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft, certificate(s) and any other documents, if
any, strictly complying with the terms and conditions of such Letter of Credit,
(ii) in its paying under a Letter of Credit against presentation of a sight
draft, certificate(s) or other documents not complying with the terms of such
Letter of Credit or (iii) its failure to comply with the obligations imposed
upon it, as an issuing bank, under applicable state law; provided, however,
that (y) the Issuing Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and (z) the Issuing Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason, provided that any such
instrument appears on its face to be in order.
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SECTION 6.6 Obligations Absolute. The Obligations of the
Borrowers under this Agreement and any Letter of Credit-Related Document to
reimburse the Issuing Bank for a drawing under a Letter of Credit, and to repay
any Letter of Credit Borrowing and any drawing under a Letter of Credit
converted into an Acquisition Loan, shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement and each
such other Letter of Credit-Related Document under all circumstances, including
the following: (i) any lack of validity or enforceability of this Agreement or
any Letter of Credit-Related Document; (ii) any change in the time, manner or
place of payment of, or in any other term of, all or any of the Obligations of
any Borrower in respect of any Letter of Credit, (iii) the existence of any
claim, set-off, defense or other right that any Borrower may have at any time
against any beneficiary or any such transferee of any Letter of Credit (or any
Person for whom any such beneficiary or any such transferee may be acting), the
Issuing Bank or any other Person, whether in connection with this Agreement,
the transactions contemplated hereby or by the Letter of Credit-Related
Documents or any unrelated transaction other than the defense of payment or
claims arising out of the gross negligence, bad faith or wilful misconduct of
the Floor Plan Agent or the Swing Line Bank; (iv) any draft, demand,
certificate or other 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; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit; (v) any payment by the Issuing Bank under any
Letter of Credit against presentation of a draft or certificate that does not
strictly comply with the terms of any Letter of Credit; or any payment made by
the Issuing Bank under any Letter of Credit to any trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of a successor to any beneficiary or any
transferee of any Letter of Credit, including any arising in connection with
any Insolvency Proceeding; (vi) any exchange, release or non-perfection of any
Collateral, or any release or amendment or waiver of or consent to departure
from any other guarantee, for all or any of the Obligations of any Borrower in
respect of any Letter of Credit; or (vii) any other circumstance that might
otherwise constitute a defense available to, or discharge of, any Borrower.
SECTION 6.7 Letter of Credit Fees.
(a) Letter of Credit Fees. The Company shall pay to
the Agent for the account of each of the Banks a letter of credit fee (the
"Letter of Credit Fees") with respect to outstanding Letters of Credit equal to
the greater of: (i) $500, or (ii) the Applicable Margin for Eurodollar Loans
which are Acquisition Loans multiplied by the average daily maximum amount
available to be drawn on such outstanding Letters of Credit.
(b) Fronting Fees. The Company shall pay to the
Issuing Bank for its own account a letter of credit fronting fee (the "Fronting
Fees") for each Letter of Credit Issued by the Issuing Bank equal to one
hundred twenty-five-one-thousandths percent (0.125%) per annum multiplied by
the average daily maximum amount available to be drawn on such outstanding
Letters of Credit.
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(c) Calculation of Fees. The Letter of Credit Fees
and the Fronting Fees each shall be computed on a quarterly basis in arrears on
the last Business Day of each calendar quarter based upon Letters of Credit
outstanding for that quarter as calculated by the Agent (computed on the basis
of the actual number of days elapsed over a year of 360 days). Such fees shall
be due and payable quarterly in arrears on the last Business Day of each
calendar quarter during which Letters of Credit are outstanding, commencing on
the first such quarterly date to occur after the Closing Date, through the
Maturity Date, with the final payment to be made on the Maturity Date.
(d) Other. The Company shall pay to the Issuing Bank
from time to time on demand the normal issuance, presentation, amendment and
other processing fees, and other standard costs and charges of the Issuing Bank
relating to Letters of Credit as from time to time in effect.
SECTION 6.8 Cash Collateralization.
(a) If any Event of Default shall occur and be
continuing, or the Acquisition Loan Commitment is terminated or reduced to an
amount insufficient to fund the outstanding Letter of Credit Obligations, the
Company agrees that it shall on the Business Day it receives notice from the
Agent, acting upon instructions of the Required Banks, deposit in an account
(the "Cash Collateral Account") held by the Agent, for the benefits of the
Banks, an amount of cash equal to the Letter of Credit Obligations as of such
date. Such deposit shall be held by the Agent as Collateral for the payment
and performance of the Obligations. The Agent shall have exclusive dominion
and control, including exclusive right of withdrawal, over such account. Cash
Collateral shall be held in a blocked, interest- bearing account held by the
Agent upon such terms and in such type of account as customary at the
depository institution. The Company shall pay any fees charged by the Agent
which fees are of the type customarily charged by such institution with respect
to such accounts. Moneys in such account shall (i) be applied by the Agent to
the payment of Letter of Credit Borrowings and interest thereon, (ii) be held
for the satisfaction of the reimbursement Obligations of the Borrowers in
respect of Letters of Credit, and (iii) in the event the maturity of the Loans
has been accelerated, with the consent of the Required Banks, be applied to
satisfy the Obligations. If the Company shall provide Cash Collateral under
this Section 6.08(a) or shall prepay any Letter of Credit and thereafter either
(i) drafts or other demands for payment complying with the terms of such
Letters of Credit are not made prior to the respective expiration dates
thereof, or (ii) such Event of Default shall have been waived or cured, then
the Agent, the Floor Plan Agent, the Swing Line Bank and the Banks agree that
the Agent is hereby authorized, without further action by any other Person, to
release the Lien in such cash and will direct the Agent to remit to the Company
amounts for which the contingent obligations evidenced by such Letters of
Credit have ceased.
(b) As security for the payment of all Obligations,
each Borrower hereby grants, conveys, assigns, pledges, sets over and transfers
to the Agent, and creates in the Agent's favor a Lien on, and security interest
in, all money, instruments and securities at any time held in or acquired in
connection with the Cash Collateral Account, together with all proceeds
thereof. At any time and from time to time, upon the Agent's request, each
Borrower promptly shall execute and deliver any and all such further
instruments and documents as may be reasonably necessary,
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appropriate or desirable in the Agent's judgment to obtain the full benefits
(including perfection and priority) of the security interest created or
intended to be created by this Section 6.8(b) and of the rights and powers
herein granted.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Company, as to itself and as to all of the other Borrowers and
each of the Borrowers other than the Company, as to itself and its Subsidiaries
only, represent and warrant to the Agent, the Floor Plan Agent, the Swing Line
Bank and the Banks as follows:
SECTION 7.1 Organization; Corporate Powers. The Company and
each of its Subsidiaries is duly organized, validly existing and in good
standing under the laws of the state of its respective incorporation or
organization, has the requisite power and authority, governmental licenses,
consents and approvals to own its property and assets and to carry on its
business as now conducted and is qualified to do business in every jurisdiction
where such qualification is required and is in compliance with all Requirements
of Law except where the failure to so qualify or comply could not reasonably be
expected to have a Material Adverse Effect. Each Borrower and each of their
Subsidiaries has the corporate power to execute, deliver and perform its
Obligations under this Agreement and the other Loan Documents to which it is a
party, to borrow hereunder and to execute and deliver the Notes and the Swing
Ling Note.
SECTION 7.2 Authorization. The execution, delivery and
performance of this Agreement and the Loan Documents, the Borrowings hereunder,
and the execution and delivery of the Notes and the Swing Line Note by the
Borrowers, the issuance of Letters of Credit and Drafting Agreements hereunder
and the use of the proceeds of the Borrowings (a) have been duly authorized by
all requisite corporate and, if required, stockholder action on the part of the
Company and each Subsidiary and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation or the certificate of incorporation or the
bylaws of the Company or any Subsidiary, (B) any order of any court, or any
rule, regulation or order of any other agency of government binding upon the
Company or any Subsidiary or (C) any provisions of any indenture, agreement or
other instrument to which the Company or any of its Subsidiaries is a party, or
by which the Company or any Subsidiary or any of their respective properties or
assets are or may be bound which violation could reasonably be expected to have
a Material Adverse Effect, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under any
indenture, agreement or other instrument referred to in (b)(i)(C) above which
violation could reasonably be expected to have a Material Adverse Effect or
(iii) result in the creation or imposition of any Lien whatsoever upon any
property or assets of the Company or any of its Subsidiaries.
SECTION 7.3 Governmental Approval. No registration with, or
consent or approval of, or other action by, any federal, state or other
Governmental Authority is or will be required in connection with the execution,
delivery and performance of this Agreement, any other Loan
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Document, the execution and delivery of the Notes and the Swing Line Note or
repayment of the Borrowings hereunder.
SECTION 7.4 Enforceability. This Agreement and each of the
Loan Documents have been duly executed and delivered by each of the Borrowers
and each of their Subsidiaries which is a party thereto and constitute legal,
valid and binding obligations of the Borrowers and such Subsidiaries, and the
Notes, and the Swing Line Note, when duly executed and delivered by each
applicable Borrower, will constitute legal, valid and binding Obligations of
such Borrower(s), in each case enforceable in accordance with their respective
terms (subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting creditors'
rights generally and general principles of equity).
SECTION 7.5 Financial Statements.
(a) The audited consolidated financial statements of
the Company and each of its Subsidiaries, as of December 31, 1997, copies of
which have been furnished to the Banks, have been prepared in conformity with
generally accepted accounting principles applied on a basis consistent with
that of the preceding fiscal year, and present fairly the financial condition
of the Company and each of its Subsidiaries, as at such date and the
consolidated results of the operations of the Company and each of its
Subsidiaries for the period then ended.
(b) The Form 10-K of the Company for the fiscal year
ended December 31, 1997, copies of which have been furnished to the Banks, have
been prepared in accordance with all applicable rules, regulations and
guidelines of the Securities and Exchange Commission and present fairly the
financial condition of the Company and each of its Subsidiaries, as at such
dates and the results of their operations for the periods then ended, subject
to year-end audit adjustments.
SECTION 7.6 No Material Adverse Change. There has been no
material adverse change in the businesses, assets, operations, prospects or
condition, financial or otherwise, as determined on a consolidated basis, of
the Company or any of its Subsidiaries, since December 31, 1997.
SECTION 7.7 Title to Properties; Security Documents.
(a) Each Borrower and each of their respective
Subsidiaries has good and marketable title to, or valid leasehold interests in,
all its properties and assets, including, without limitation, those properties
and assets which constitute real property as specified in Schedule IV (which
Schedule specifies the owner of, current leases (if any) of, and general
description of each individual property or asset listed therein), except for
(i) such properties as are no longer used or useful in the conduct of its
business or as have been disposed of in the ordinary course of business, (ii)
Liens permitted by Section 7.16, Section 10.2, and Section 10.18, and (iii)
minor defects in title that do not interfere with the ability of such Borrower
or such Subsidiary to conduct its business as now conducted.
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(b) The Security Documents contain descriptions of
the Collateral sufficient to grant to the Agent for the benefit of Banks,
perfected Liens therein pursuant to applicable law and the terms, provisions
and conditions of this Agreement.
SECTION 7.8 Litigation; Compliance with Laws; Etc.
(a) There are no actions, suits or proceedings,
except as specified in Schedule V, at law or in equity or by or before any
Governmental Authority now pending or, to the knowledge of any of the Borrowers
or any of their respective Subsidiaries, threatened against or affecting any of
the Borrowers or any of their respective Subsidiaries or the business, assets
or rights of any of the Borrowers or any of their respective Subsidiaries as to
which there is a reasonable possibility of an adverse determination and which,
if adversely determined, could, individually or in the aggregate, reasonably to
be expected to have a Material Adverse Effect.
(b) None of the Borrowers and none of their
respective Subsidiaries is (i) in violation of any law, the breach or
consequence of which could reasonably be expected to have a Material Adverse
Effect and to the best knowledge of the Company and its Subsidiaries after due
investigation, the Company and each of its Subsidiaries are in material
compliance with all statutes and governmental rules and regulations applicable
to them, or (ii) in default under any material order, writ, injunction, award
or decree of any Governmental Authority binding upon it or its assets or any
material indenture, mortgage, contract, agreement or other undertaking or
instrument to which it is a party or by which any of its properties may be
bound, which default could reasonably be expected to have a Material Adverse
Effect, and nothing has occurred which would materially and adversely affect
the ability of any Borrower to carry on its business as now conducted or
perform its obligations under any such order, writ, injunction, award or decree
or any such material indenture, mortgage, contract, agreement or other
undertaking or instrument.
SECTION 7.9 Agreements; No Default.
(a) None of the Borrowers and none of their
respective Subsidiaries is a party to any agreement or instrument or subject to
any corporate restriction reasonably to be expected to have a Material Adverse
Effect.
(b) No Event of Default has occurred and is
continuing.
SECTION 7.10 Federal Reserve Regulations.
(a) Neither the Company nor any of its Subsidiaries
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or carry Margin Stock or to extend credit to others
for the purpose of purchasing or carrying Margin Stock or to refund
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indebtedness originally incurred for such purpose, or (ii) for any purpose
which entails a violation of, or which is inconsistent with, the provisions of
the Regulations of the Board, including Regulations G, T, U or X; provided,
however, the Company may acquire Margin Stock if, upon the acquisition of such
Margin Stock, twenty-five percent (25%) or less of the Company's total assets
subject to the restrictions set forth in Section 10.1 would then be composed of
Margin Stock, and the Company shall furnish to the Agent upon its request, a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U.
SECTION 7.11 Taxes. The Company and each of its Subsidiaries
has filed all tax returns which are required to have been filed and has paid,
or made adequate provisions for the payment of, all of its taxes which are due
and payable, except such taxes, if any, as are being contested in good faith
and by appropriate proceedings and as to which such reserves or other
appropriate provisions as may be required by generally accepted accounting
principles have been maintained. Neither the Company nor any of its
Subsidiaries is aware of any proposed assessment against it for additional
taxes (or any basis for any such assessment) which might be material to the
Company or such Subsidiary.
SECTION 7.12 Pension and Welfare Plans. Each Plan complies in
all respects with all applicable statutes and governmental rules and
regulations except where the failure to comply could not reasonably be expected
to have a Material Adverse Effect, and: (a) no Reportable Event has occurred
and is continuing with respect to any Plan, (b) since December 31, 1997,
neither the Company nor any ERISA Affiliate has withdrawn from any Plan or
instituted steps to do so, except as listed on Schedule VI and (c) since
December 31, 1997, no steps have been instituted to terminate any Plan, except
as listed on Schedule VI. No condition exists or event or transaction has
occurred in connection with any Plan which could result in the incurrence by
the Company or any ERISA Affiliate of any liability, fine or penalty which
could reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate is a member of, or contributes to, any multiple
employer Plan as described in Section 4064 of ERISA. None of the Borrowers has
any contingent liability with respect to any post-retirement "welfare benefit
plans," as such term is defined in ERISA.
SECTION 7.13 No Material Misstatements. Neither this
Agreement, the other Loan Documents, the Confidential Information Memorandum
nor any other document delivered by or on behalf of the Company or any
Subsidiary in connection with any Loan Document or included therein contained
or contains any material misstatement of fact or omitted or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 7.14 Investment Company Act; Public Utility Holding
Company Act. Neither the Company nor any of its Subsidiaries is an "investment
company" or company "controlled" by an investment company as defined in, or
subject to regulation under, the Investment Company Act of 1940. Neither the
Company nor any of its Subsidiaries is a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
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SECTION 7.15 Maintenance of Insurance. The Company and each
of its Subsidiaries agree to maintain insurance to such extent and against such
hazards and liabilities as is commonly maintained by companies similarly
situated.
SECTION 7.16 Existing Liens. None of the assets of the
Company or any Subsidiary is subject to any Lien, except:
(a) Liens for current taxes not delinquent or taxes
being contested in good faith and by appropriate proceedings and as to which
such reserves or other appropriate provisions as may be required by generally
accepted accounting principles are being maintained;
(b) carriers', warehousemen's, mechanics',
materialmen's and other like statutory Liens arising in the ordinary course of
business securing obligations which are not overdue for a period of more than
ninety (90) days or which are being contested in good faith and by appropriate
proceedings and as to which such reserves or other appropriate provisions as
may be required by generally accepted accounting principles are being
maintained;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, and other obligations of a like
nature incurred in the ordinary course of business, and Liens securing
reimbursement obligations created by open letters of credit for the purchase of
inventory;
(e) Liens granted by a Subsidiary of the Company to
secure such Subsidiary's Indebtedness to the Company or to any other Subsidiary
of the Company;
(f) Liens, if any, disclosed in the financial
statements referred to in Section 7.5; and
(g) Liens listed on Schedule VII as permitted by
Section 10.2.
SECTION 7.17 Environmental Matters. Each Borrower has
complied in all respects with all applicable federal, state, local and other
statutes, ordinances, orders, judgments, rulings and regulations relating to
environmental pollution or to environmental regulation or control except where
the failure to comply could not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received
notice of any failure so to comply which alone or together with any other such
failure could reasonably be expected to have a Material Adverse Effect.
Neither the Company, any of its Subsidiaries nor any of its facilities manages
any hazardous wastes, hazardous substances, hazardous materials, toxic
substances or toxic pollutants, as those terms are used in the Resource
Conservation and Recovery Act, the Comprehensive
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Environmental Response Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean Air Act or the
Clean Water Act, in violation of any regulations promulgated pursuant thereto
or in any other applicable law where such violation could reasonably be
expected to have, individually or together with other violations, a Material
Adverse Effect.
SECTION 7.18 Subsidiaries. As of the Closing Date, the
Company has no Subsidiaries, and no Subsidiary has a Subsidiary other than
those specifically disclosed in part (a) of Schedule VIII, and neither the
Company nor any Subsidiary has any equity investments in any other corporation
or entity other than those specifically disclosed in part (b) of Schedule VIII.
The state of incorporation, address, principal place of business and a list of
other business locations for each Subsidiary is specified in part (a) of
Schedule VIII. The Company and/or each of its Subsidiaries is the owner,
directly or indirectly, free and clear of all Liens (except for Liens in favor
of the Agent and the Banks and transfer restrictions contained in the Dealer
Franchise Agreements), of all of the issued and outstanding voting stock of
each Subsidiary disclosed on Schedule VIII (except where ownership of less than
one hundred percent (100%) is indicated on Schedule VIII). All shares of such
stock have been validly issued and are fully paid and nonassessable, and no
rights to subscribe to additional shares have been granted or exist.
SECTION 7.19 Engaged in Motor Vehicle Sales. The Floor Plan
Borrowers are engaged in the business of selling new and/or Used Motor
Vehicles; all such Motor Vehicles consist solely of goods held by the Borrowers
for sale; no sales or other transactions involving such Motor Vehicles are and
will not become subject to set-off, counterclaim, defense, allowance, or
adjustment (other than warranty claims, the aggregate amount of which shall not
be material); except as set forth in Schedule VII, as of the Closing Date,
there is no financing statement, or similar statement or instrument of
registration under the laws of any jurisdiction, covering or purporting to
cover any interest of any kind in all such Motor Vehicles or their proceeds on
file or registered in any public office other than a financing statement in
favor of the Agent for the benefit of the Banks covering all such Motor
Vehicles; except as set forth in Schedule VII, as of the Closing Date, there is
no other floor plan or other financing arrangement with any party other than
the Agent for the benefit of the Banks with respect to all such Motor Vehicles;
and except as set forth in Schedule VII, as of the Closing Date, none of the
Borrowers has made any other verbal or written contract or arrangement of any
kind, the performance of which by the other party thereto would give rise to a
Lien against any such Motor Vehicle, or the proceeds thereof; all such Motor
Vehicles are free from damage caused by fire or other casualty, unless covered
by insurance, subject to customary deductibles. The locations (and addresses)
set forth in Schedule IV are the locations at which the Company and its
Subsidiaries keep the Motor Vehicles held as inventory, except when such Motor
Vehicles may be in transit between locations, in transit for 'dealer swaps' or
being test driven by potential customers. The addresses set forth in Schedule
IV are each Floor Plan Borrower's place of business if such Person has only one
such place of business; or a Floor Plan Borrower's chief executive office if it
has more than one place of business. All of each Floor Plan Borrower's books
and records with regard to all Motor Vehicles are maintained and kept at the
address(es) of such Floor Plan Borrower set forth in Schedule IV.
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SECTION 7.20 Dealer Franchise Agreements. As of the Closing
Date, none of the Borrowers is a party to any dealer franchise agreements
("Dealer Franchise Agreements") other than those specifically disclosed in
Schedule IX, which schedule shows the Manufacturer and the Borrower which is a
party to each such agreement, the date such agreement was entered into and the
expiration date (if any) of each such agreement. Each of the Dealer Franchise
Agreements is currently in full force and effect, and no Borrower has received
any notice of termination with respect to any such agreements; and, except as
disclosed on Schedule IX, no Borrower is aware of any event which with notice,
lapse of time, or both would allow any Manufacturer which is a party to any of
the Dealer Franchise Agreements to terminate any such agreements. There exists
no actual or threatened termination, cancellation, or limitation of, or any
modification or change in, the business relationship between any Borrower and
any customer or any group of customers whose purchases individually or in the
aggregate are material to the business of such Borrower, or with any material
Manufacturer, and there exists no present condition or state of facts or
circumstances which could reasonably be expected to have a Material Adverse
Effect.
SECTION 7.21 Year 2000 Requirement. Any reprogramming
required to permit the proper functioning, in and following the year 2000, of
(i) the Borrowers' computer systems and (ii) equipment containing embedded
microchips (including systems and equipment supplied by others or with which
Borrowers' systems interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed by January 1, 1999. The cost
to the Borrowers of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to the Borrowers (including, without
limitation, reprogramming errors and the failure of others' systems or
equipment) will not result in a Default or a Material Adverse Effect. Except
for such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrowers are
and, with ordinary course upgrading and maintenance, will continue for the term
of this Agreement to be, sufficient to permit the Borrowers to conduct their
businesses without Material Adverse Effect.
ARTICLE VIII
CONDITIONS OF LENDING
SECTION 8.1 Conditions Precedent to Closing Date. The
Closing Date shall be deemed to have occurred when the following conditions
precedent shall have occurred and the Agent shall have received on or before
such date the following, each dated (unless otherwise indicated) the Closing
Date and, with respect to all such documents referred to in Section 8.1(a),
Section 8.1(c), Section 8.1(d), Section 8.1(e), Section 8.1(f), Section 8.1(g),
Section 8.1(h) and Section 8.1(i) in sufficient copies for each Bank:
(a) A counterpart of this Agreement (to which all of
the Exhibits and Schedules have been attached) executed by the Borrowers, the
Agent, the Floor Plan Agent, the Swing Line Bank and the Banks.
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(i) Notes of the Borrowers dated the
Closing Date, properly executed by the Borrowers to the order
of the Banks, respectively.
(ii) The Swing Line Note, dated the
Closing Date, properly executed by the Floor Plan Borrowers to
the order of the Swing Line Bank.
(b) Counterparts of each of the following:
(i) a Security Agreement
substantially in the form set
forth in Exhibit G, dated as
of the Closing Date or an
earlier date;
(ii) a Pledge Agreement in the
form set forth in Exhibit E;
(iii) Mortgages in substantially the form
set forth in Exhibit D, dated as of the Closing Date or an
earlier date, with respect to each parcel or tract of real
property required by the Agent to be encumbered by a Lien in
favor of the Agent for the benefit of the Banks;
(iv) Leasehold Mortgage in substantially
the form set forth in Exhibit I, dated as of the Closing Date
or an earlier date, covering the same property referenced in
8.1(b)(iii);
(v) Landlord Estoppel Agreements in
substantially the form set forth in Exhibit J, dated as of the
Closing Date or an earlier date, with respect to all real
property leased by any of the Borrowers;
(vi) First Lienholder Estoppel Agreements
in substantially the form set forth in Exhibit K, dated as of
the Closing Date or an earlier date, with respect to all real
property subject to Non-Recourse Real Estate Debt; and
(vii) GM Borrower Guaranty, in
substantially the form set forth in Exhibit P dated as of the
Closing Date, properly executed by each of the GM Borrowers.
(viii) Any other necessary Security
Documents in the form satisfactory to the Agent and its
Counsel;
each of which, if required by this Agreement, shall be duly executed by the
parties thereto; provided, however, the Obligations secured by the Security
Documents executed by the GM Borrowers and the Ford Borrowers and the
Collateral described therein may be limited, respectively, to the GM Borrower
Liability Amount and the Ford Borrower Liability Amount.
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(c) The Banks shall have received from each Borrower,
a certificate dated as of the Closing Date (i) a copy of the certificate of
incorporation of the Company and each of its Subsidiaries, and a certificate as
to the good standing of and charter documents filed by the Company and each of
its Subsidiaries from such Secretary of State; (ii) a copy of the certificate
of authority to do business as a foreign corporation in each state in which the
Company or such Subsidiary maintains activities which require such
certification, certified by the Secretary of State of such state and a
certificate as to the good standing of the Company and/or each such Subsidiary
from the Comptroller or other official state official responsible for the
delivery of such certification; (iii) a certificate of the Secretary or an
Assistant Secretary of the Company and each of its Subsidiaries, dated the
Closing Date and certifying (A) that attached thereto is a true and complete
copy of its articles and bylaws as in effect on the date of such
certificate,(B) that attached thereto is a true and complete copy of
resolutions or unanimous consent duly adopted by its Board of Directors
authorizing the execution, delivery and performance of the Agreement, Notes,
the Swing Line Note and/or Loan Documents to which it is a party, and that
such resolutions have not been modified, rescinded or amended and are in full
force and effect, and (C) as to the incumbency and specimen signature of each
officer of each Borrower executing this Agreement, the Notes, the Swing Line
Note, any of the Loan Documents or any other document delivered in connection
herewith or therewith; (iii) a certificate of another officer of each Borrower,
which is a party to this Agreement, the Notes, the Swing Line Note and/or any
of the Loan Documents as to the incumbency and specimen signature of the
Secretary or such Assistant Secretary of such Person; and (iv) such other
documents as Jackson Walker L.L.P., special counsel for the Agent, may
reasonably request.
(d) A certificate of a Senior Vice President, an
Executive Vice President or a Vice President of each Borrower dated the Closing
Date certifying (i) the truth of the representations and warranties made by
such Borrower in this Agreement, and (ii) the absence of the occurrence and
continuance of any Default or Event of Default.
(e) The Agent shall have received the Agent's Letter
duly executed by the Company.
(f) The Floor Plan Agent shall have received the
Floor Plan Agent's Letter duly executed by the Company.
(g) The opinion of counsel to the Borrowers and any
Subsidiary which signs any of the Loan Documents, dated the initial Borrowing
Date, addressed to the Agent and the Banks and in the form of Exhibit L hereto.
(h) An Administrative Questionnaire completed by each
Bank and, if required, the tax forms set forth in Section 5.14.
(i) The fees and disbursements required to be paid by
the Company pursuant to Section 5.4 and 13.4 on the Closing Date shall have
been paid.
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SECTION 8.2 Conditions Precedent to Initial Borrowing.
(a) The date on which the obligation of each Bank to
make the initial Acquisition Loans, or of the Issuing Bank to issue any Letter
of Credit (the "Acquisition Funding Date")to the Company shall be deemed to
have occurred and is subject to the conditions precedent that:
(i) Each document (including, without
limitation, any UCC financing statement) required by the
Security Documents or under law or requested by Agent to be
filed, registered or recorded in order to create, in favor of
Agent, for the benefit of Banks, a perfected first Lien
(subject to any Permitted Liens) on the Collateral owned by
the Company shall have been properly filed, registered or
recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or
requested, and the Agent, as herein provided, shall have
received an acknowledgment copy, or other evidence
satisfactory to it, of each such filing, registration or
recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto; and
(ii) Such other and further
conditions shall have been fulfilled as the Agent, or its
counsel shall have reasonably determined.
(a) The date on which the obligation of each Bank to
make the initial Floor Plan Loans or of the Swing Line Bank to make the initial
Swing Line Loan, or of the Floor Plan Agent to issue any Drafting Agreement
("each, a Floor Plan Funding Date") to any Floor Plan Borrower shall be deemed
to have occurred and is subject to the condition precedent that :
(i) Each document (including, without
limitation, any UCC financing statement) required by the
Security Documents or under law or requested by Agent or the
Floor Plan Agent to be filed, registered or recorded in order
to create, in favor of Agent, for the benefit of Banks, a
perfected first Lien on the Collateral owned by such Floor
Plan Borrower shall have been properly filed, registered or
recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or
requested, and the Agent or Floor Plan Agent, as herein
provided, shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration
or recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;
(ii) The Floor Plan Agent shall
have completed to its' satisfaction any and all audits of
Motor Vehicles owned by or in transit to each such Floor Plan
Borrower; and
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(iii) The Company shall have delivered to
the Agent copies of substantially all Dealer Franchise
Agreements between Manufacturers and its Subsidiaries, which
Dealer Franchise Agreements have been duly executed between a
Manufacturer and such Subsidiary. For purposes of this
subsection, the term "substantially all" shall mean that the
Agent and the Floor Plan Agent shall be satisfied in their
sole determination that a sufficient amount of duly executed
Dealer Franchise Agreements have been delivered by the
Company.
(c) Such other and further conditions shall have been
fulfilled as the Agent, the Floor Plan Agent or its counsel shall have
reasonably determined.
SECTION 8.3 Conditions Precedent to Each Borrowing. The
obligation of each Bank to make a Loan on the occasion of any Borrowing
(including the initial Acquisition Borrowing and the initial Floor Plan
Borrowing) and the obligation of the Issuing Bank to issue Letters of Credit
and the obligation of the Swing Line Bank to make Swing Line Loans and the
obligation of the Floor Plan Bank to issue Drafting Agreements shall be subject
to the further conditions precedent that on the Borrowing Date of such
Borrowing or Issuance the Company shall execute and deliver to the Agent a
Borrowing Request and the following statements shall be true (and the
acceptance by any Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Company that on the date of such Borrowing
such statements are true):
(a) The representations and warranties contained in
Article VII are correct on and as of the date of such Borrowing, before and
after giving effect to such Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date;
(b) No event has occurred and is continuing, or would
result from such Borrowing or from the application of the proceeds therefrom,
which constitutes either a Default or an Event of Default; and
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(c) Following the making of such Borrowing or
Issuance of any Letter of Credit and all other Borrowings to be made on the
same day under this Agreement, except as may otherwise be permitted hereunder
(i) if such Borrowing is a Floor Plan Loan Borrowing, the aggregate principal
amount of all Floor Plan Loans outstanding plus all Swing Line Loans
outstanding shall not exceed the Floor Plan Loan Commitment, (ii) if such
Borrowing is an Acquisition Loan Borrowing, the aggregate principal amount of
all Acquisition Loans outstanding plus Letters of Credit Obligations
outstanding shall not exceed the Acquisition Loan Commitment, (iii) if such
Borrowing is a Swing Line Loan Borrowing, the aggregate principal amount of all
Swing Line Loans outstanding shall not exceed the Swing Line Commitment, (iv)
if a Letter of Credit is issued, the total amount of Letter of Credit
outstanding plus the aggregate principal amount of all Acquisition Loans
outstanding shall not exceed the Acquisition Loan Commitment, and (v) the
aggregate principal amount of all Loans and Letter of Credit Obligations then
outstanding shall not exceed the Total Commitment.
SECTION 8.4 Conditions Precedent to Conversions and
Continuations. The obligation of the Banks to convert any existing Borrowing
into a Eurodollar Borrowing or to continue any existing Borrowing as a
Eurodollar Borrowing is subject to the condition precedent that on the date of
such conversion or continuation each of the conditions to Borrowing set forth
in Section 8.3 shall have been satisfied, and no Default or Event of Default
shall have occurred and be continuing or would result from the making of such
conversion or continuation. The acceptance of the benefits of each such
conversion and continuation shall constitute a representation and warranty by
the Company to each of the Banks that no Default or Event of Default shall have
occurred and be continuing or would result from the making of such conversion
or continuation.
ARTICLE IX
AFFIRMATIVE COVENANTS
So long as this Agreement shall remain in effect or the principal of
or interest on any Note, the Swing Line Note, any Commitment Fee or any other
fee, expense or amount payable hereunder shall be unpaid and until the
Commitments of the Banks shall expire or terminate, until no Letter of Credit
Obligations are outstanding, and until all Drafting Agreements are terminated,
the Company, as to itself and as to all of the other Borrowers and each of the
Borrowers other than the Company, as to itself and its Subsidiaries only,
covenant and agree with the Agent, the Floor Plan Agent, the Swing Line Bank
and each Bank that:
SECTION 9.1 Existence. The Company will maintain and
preserve, and except as permitted by Section 10.3, will cause each Subsidiary
to maintain and preserve, its respective existence and good standing under the
laws of its state of jurisdiction, as a corporation or other form of business
organization, as the case may be, and all rights, privileges, licenses,
patents, patent rights, copyrights, trademarks, trade names, franchises and
other authority to the extent material and necessary for the conduct of their
respective businesses in the ordinary course as conducted from time to time.
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SECTION 9.2 Repair. The Company will maintain, preserve and
keep, and will cause each of its Subsidiaries to maintain, preserve and keep,
all of its properties in good repair, working order and condition (ordinary
wear and tear excepted), and the Company will make, and will cause each of the
Subsidiaries to make, all necessary and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that at all times the
efficiency thereof shall be fully preserved and maintained; the Company will at
all times do or cause to be done all things necessary to preserve, renew and
keep in full force and effect, and will cause each Subsidiary to do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect, the rights, licenses, permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses; the
Company and each of its Subsidiaries will maintain and operate such businesses
in substantially the manner in which they are presently conducted and operated
(subject to changes in the ordinary course of business); the Company and each
of its Subsidiaries will comply with all laws and regulations applicable to the
operation of such businesses whether now in effect or hereafter enacted and
with all other applicable laws and regulations except where the failure to
comply could not reasonably be expected to have a Material Adverse Effect; and
the Company and each of its Subsidiaries will take all action which may be
required to obtain, preserve, renew and extend all licenses, permits and other
authorizations which may be material to the operation of such businesses.
SECTION 9.3 Insurance. The Company will maintain, on a
consolidated basis, insurance to such extent and against such hazards and
liabilities as is commonly maintained by companies similarly situated or as may
be required in the Security Documents including, without limitation with
respect to Motor Vehicles owned by Floor Plan Borrowers, naming the Agent, for
the benefit of the Banks, as Mortgagee (in connection with any real estate),
lender loss payee and additional loss payee.
WARNING
UNLESS EACH BORROWER PROVIDES THE AGENT WITH EVIDENCE OF THE INSURANCE COVERAGE
AS REQUIRED BY THE AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE AGENT (AT ITS
DISCRETION, OR ACTING AT THE REQUEST OF THE FLOOR PLAN AGENT) MAY PURCHASE
INSURANCE AT THE BORROWER'S EXPENSE TO PROTECT THE BANKS' INTEREST. THIS
INSURANCE MAY, BUT NEED NOT, ALSO PROTECT THE BORROWER'S INTEREST. IF THE
COLLATERAL BECOMES DAMAGED, THE COVERAGE THE AGENT PURCHASES MAY NOT PAY ANY
CLAIM ANY BORROWER MAKES OR ANY CLAIM MADE AGAINST THE BORROWER. EACH BORROWER
MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE THAT THE BORROWER HAS
OBTAINED PROPERTY COVERAGE ELSEWHERE.
EACH BORROWER IS RESPONSIBLE FOR THE COST OF ANY INSURANCE PURCHASED
BY THE AGENT. THE COST OF THIS INSURANCE MAY BE ADDED TO THE OBLIGATIONS. IF
THE COST IS ADDED TO THE OBLIGATIONS, THE INTEREST RATE PROVIDED IN SECTION 5.3
SHALL APPLY TO SUCH ADDED AMOUNT. THE EFFECTIVE DATE OF COVERAGE MAY BE THE
DATE ANY BORROWER'S PRIOR COVERAGE LAPSED OR THE DATE THE BORROWER FAILED TO
PROVIDE PROOF OF COVERAGE.
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THE COVERAGE THE AGENT PURCHASES MAY BE CONSIDERABLY MORE EXPENSIVE
THAN INSURANCE ANY BORROWER CAN OBTAIN ON ITS OWN AND MAY NOT SATISFY ANY NEED
FOR PROPERTY DAMAGE COVERAGE OR ANY MANDATORY LIABILITY INSURANCE REQUIREMENTS
IMPOSED BY APPLICABLE LAW.
SECTION 9.4 Obligations and Taxes. The Company will pay and
discharge and will cause each of its Subsidiaries to pay and discharge, when
due, all taxes, assessments and governmental charges or levies imposed upon the
Company or such Subsidiary, as the case may be, as well as all lawful claims
for labor, materials and supplies or otherwise unless and only to the extent
that the Company or such Subsidiary, as the case may be, is contesting such
taxes, assessments and governmental charges, levies or claims in good faith and
by appropriate proceedings and the Company or such Subsidiary has set aside on
its books such reserves or other appropriate provisions therefor as may be
required by generally accepted accounting principles.
SECTION 9.5 Financial Statements; Reports. The Company will
furnish to the Agent and each Bank:
(a) Annual Audit Reports. Within 120 days after the
end of each fiscal year of the Company, a copy of the annual audit report of
the Company and its Subsidiaries prepared on a consolidated and consolidating
basis in conformity with generally accepted accounting principles consistently
applied and certified by Arthur Andersen or another independent certified
public accountant of recognized national standing;
(b) Quarterly Financial Statements. Within 60 days
after the end of each quarter (except the last quarter) of each fiscal year of
the Company, a copy of the Form 10-Q of the Company, for such quarter, prepared
in accordance with the rules, regulations and guidelines of the Securities and
Exchange Commission and including therein the consolidated and consolidating
financial statement of the Company, subject to normal year end audit
adjustments;
(c) Officer's Certificate. Together with the
financial statements furnished by the Company under the preceding clauses (a)
and (b), a compliance certificate in the form of Exhibit N executed by the
Company's Chief Financial Officer or Vice President and Treasurer dated the
date of such annual audit report or such quarterly financial statement, as the
case may be, and including therewith the calculations (and supporting
documentation and/or backup in for such calculations) for all financial
covenants set forth in Article 10 hereof, and notices of all Hedging Agreements
to which it is a party as of the date of such certificate;
(d) SEC and Other Reports. Copies of each filing and
report made by the Company or any of its Subsidiaries with or to any securities
exchange or the Securities and Exchange Commission and each communication from
the Company or any of its Subsidiaries to shareholders generally, promptly upon
the making thereof;
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(e) Manufacturer/Dealer Statements. As soon as
available, but in any event within thirty (30) days after the end of each
month, copies of each Manufacturer/Dealer Statement of each Floor Plan Borrower
delivered during such month;
(f) Inventory Detail Report. Upon request of the
Floor Plan Agent, the Agent or any Bank, copies of the Inventory Detail Report
of each Floor Plan Borrower individually and on a consolidated basis; and
(g) Requested Information. Promptly, from time to
time, such other reports or information as the Agent, the Floor Plan Agent or
any Bank may reasonably request.
SECTION 9.6 Litigation and Other Notices. The Company will
notify the Agent and the Banks in writing of any of the following immediately
upon learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken by the Person(s) affected with respect
thereto:
(a) Judgment. The entry of any judgment or decree
against the Company and/or any of its other Subsidiaries if the aggregate
amount of such judgment or decree exceeds $500,000 (after deducting the amount
with respect to which the Company or such Subsidiary is insured and with
respect to which the insurer has assumed responsibility in writing);
(b) Suits and Proceedings. The filing or
commencement of any action, suit or proceeding, whether at law or in equity or
by or before any court or any Governmental Authority as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect;
(c) Default. The occurrence of any Event of Default
or Default;
(d) Material Adverse Change. The occurrence of any
event which could reasonably be expected to have a Material Adverse Effect.
(e) Pension and Welfare Plans. The occurrence of a
Reportable Event with respect to any Plan; the institution of any steps by the
Company, any of its Subsidiaries or any ERISA Affiliate, the PBGC or any other
Person to terminate any Plan; the institution of any steps by the Company, or
any of its Subsidiaries or any ERISA Affiliate to withdraw from any Plan; or
the incurrence of any material increase in the contingent liability of the
Company or any of its Subsidiaries with respect to any post-retirement welfare
benefits; and
(f) Other Events. The occurrence of such other
events as the Agent or the Required Banks may reasonably specify from time to
time.
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SECTION 9.7 ERISA. Each Borrower will comply with the
applicable provisions of ERISA except where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
SECTION 9.8 Books, Records and Access. Each Borrower will
maintain complete and accurate books and records in which full and correct
entries in conformity with generally accepted accounting principles shall be
made of all dealings and transactions in relation to the business and
activities of such Borrowers. Each Borrower will permit reasonable access by
the Agent and each Bank, upon reasonable request, to the books and records
relating to such Borrower during normal business hours, to permit or cause to
be permitted, the Agent and each Bank to make extracts from such books and
records and permit, or cause to be permitted, upon reasonable request, any
authorized representative designated by any Bank to discuss the affairs,
finances and condition of such Borrower with such Person's principal financial
officers and principal accounting officers and such other officers as such
Borrower shall deem appropriate.
SECTION 9.9 Use of Proceeds. The Borrowers shall use the
proceeds of the Loans for only the following purposes:
(a) Floor Plan Loans. The proceeds of the Floor Plan
Loans may be used only to finance the purchase of Motor Vehicles for resale in
the ordinary course of business of the Floor Plan Borrowers.
(b) Acquisition Loans. The proceeds of the
Acquisition Loans may be used only for the following purposes: (i) for working
capital and general corporate purposes, including, without limitation, the
issuance of Letters of Credit and to pay outstanding Floor Plan Loans; and (ii)
to make Permitted Acquisitions.
(c) Swing Line Loans. The proceeds of the Swing Line
Loans may be used only to finance the purchase of Motor Vehicles for resale in
the ordinary course of business of the Borrowers.
(d) All Loans. No Loans shall be used for any
purpose which would be in contravention of any Requirement of Law.
SECTION 9.10 Nature of Business. The Borrowers will engage in
substantially the same field of business as they are engaged in on the date
hereof, and except as permitted in Section 10.5(k), will refrain from engaging
in, establishing or becoming in any way involved as a lender in the business of
automobile financing, sub-prime automobile financing or any other credit
transactions related to automobiles other than Retail Loan Guarantees.
SECTION 9.11 Compliance. The Borrowers will comply with all
statutes and governmental rules and regulations applicable to them including
all such statutes and government rules and regulations relating to
environmental pollution or to environmental regulation and control
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except where the failure to comply could not reasonably be expected to have a
Material Adverse Effect.
SECTION 9.12 Audits
(a) Entry on Premises. Each Floor Plan Borrower
shall permit a duly authorized representative of the Floor Plan Agent to enter
upon such Borrower's premises during regular business hours to perform audits
of Motor Vehicles in a manner satisfactory to the Agent, provided that the
Floor Plan Agent or its representative shall not perform an audit of such Motor
Vehicles prior to the occurrence of an Event of Default without having given
the applicable Borrower reasonable prior notice; and provided, further,
however, the Floor Plan Agent shall not be required to make more than six (6)
such audits in any fiscal year of any Floor Plan Borrower. Each Floor Plan
Borrower shall assist the Floor Plan Agent, and its representatives, in
whatever way necessary to make the inspections and audits provided for herein.
(b) Excess/Payments in Process. The Borrowers shall
maintain as of the last Business Day of each calendar month, Excess/Payments in
Process in an amount of not less than Three Million Dollars ($3,000,000), which
amount may be increased or decreased from time to time in the sole reasonable
determination of the Floor Plan Agent (the "Out of Balance Amount"). If and to
the extent audits performed from time to time by the Floor Plan Agent as
provided in Section 9.12(a) reveal that any Motor Vehicles of the Floor Plan
Borrowers are for any such calendar month Out of Balance in an aggregate amount
equal to or greater than the Out of Balance Amount, the Floor Plan Agent shall
so notify the Company. The Company shall, or shall cause the other applicable
Floor Plan Borrowers to, deliver by the next Business Day after receipt of such
notice, sufficient funds so as to cause the Borrowings with respect to any such
Motor Vehicles and/or Floor Plan Loans which are Out of Balance to be in
compliance with the Floor Plan Advance Limits. If the Company or such other
Floor Plan Borrowers fail to deliver such funds, or any of them notifies the
Floor Plan Agent that such funds will not be delivered, the Floor Plan Agent
shall, and the Floor Plan Borrowers hereby authorize the Floor Plan Agent to,
apply sufficient funds from such Excess/Payments in Process to cause the
Borrowings with respect to any such Motor Vehicles and/or Floor Plan Loans
which are Out of Balance to be in compliance with the Floor Plan Advance
Limits. The Floor Plan Agent shall provide written notice (including via fax)
to the Company on each Business Day Excess/Payments in Process are so applied
and the Floor Plan Borrowers shall, on or before the next following Business
Day, deposit sufficient funds to restore the balance thereof back to the Out of
Balance Amount then in effect.
(c) Within thirty (30) days after the end of each
quarter of each fiscal year of the Company, commencing the second fiscal
quarter of 1998, the Floor Plan Agent shall deliver to the Agent a summary of
the audits of Motor Vehicles of each of the Floor Plan Borrowers performed by
the Floor Plan Agent during the fiscal quarter just ended, setting forth
therein a spread sheet reflecting for all Floor Plan Borrowers all Motor
Vehicles Out of Balance at any time during such fiscal quarter and the number
of days, if any, each such Motor Vehicle was Out of Balance. The Agent shall
promptly deliver a copy of such report to each Bank.
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SECTION 9.13 Demonstration, Service Rental or Loaner Vehicles.
The Floor Plan Agent may from time to time limit the number of Motor Vehicles
which may be placed in service as Demonstrators and Rental Motor Vehicles and
establish other requirements for Demonstrators and Rental Motor Vehicles as the
Floor Plan Agent may reasonably determine. Each Borrower shall maintain
records at the premises where the Motor Vehicles are kept evidencing which
Motor Vehicles are being used as Demonstrators and Rental Motor Vehicles.
SECTION 9.14 Disbursement Account. Subject to the terms and
conditions of this Agreement, including Sections 2.1 and 5.7 hereof, a Floor
Plan Borrower may prepay, in whole or in part, from time to time, outstanding
Floor Plan Loans, Swing Line Loans or Swing Line Overdraft Loans and may
reborrow Floor Plan Loans and Swing Line Loans.
Any or all of the Floor Plan Borrowers and the Floor Plan Agent, at
various times, may be parties to a corporate cash management service agreement
(the "Service Agreement") providing for a controlled disbursement account (the
"Disbursement Account") between such Floor Plan Borrower and the Floor Plan
Agent. Subject to the terms and conditions of this Agreement, each such Floor
Plan Borrower authorizes the Floor Plan Agent to fund the Disbursement Account,
on a daily basis if necessary, by advancing Loans under this Agreement to the
extent of availability under the aggregate Floor Plan Loan Commitments. Each
such Floor Plan Borrower acknowledges and agrees that any requests for funding
from the Disbursement Account will not be paid unless funds in an amount
sufficient to pay such requests are then available for reborrowing in
compliance with the terms and conditions of this Agreement, including Section
2.1 hereof to enable Floor Plan Agent to advance those funds to the
Disbursement Account. Floor Plan Agent agrees that any requests to be
submitted for payment through the Disbursement Account will not be made unless
sufficient funds are available and such request is made in compliance with the
terms and conditions of this Agreement to pay all such requests. Each Floor
Plan Borrower at all times is responsible for having sufficient available funds
in Excess/Payments in Process to pay all requests to be paid through the
Disbursement Account, whether these funds are advances under this Agreement or
otherwise. Each Floor Plan Borrower acknowledges and agrees that the Service
Agreement relating to the Disbursement Account may be canceled by the Floor
Plan Agent at any time upon written notice to the applicable Floor Plan
Borrower, notwithstanding anything to the contrary in the Service Agreement. A
copy of the form of Service Agreement may be attached to this Agreement by the
Floor Plan Agent at any time a Service Agreement is in effect between a Floor
Plan Borrower and the Floor Plan Agent, although the failure to attach it shall
not affect its validity or the effectiveness of this Agreement.
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SECTION 9.15 Further Assurances.
(a) The Company shall and shall cause each of the
Borrowers to the extent applicable to execute, acknowledge, deliver, and record
or file such further instruments, including, without limitation, further
security agreements, financing statements, and continuation statements, and do
such further acts as may be reasonably necessary, desirable, or proper to carry
out more effectively the purposes of this Agreement, including, without
limitation, (i) causing any additions, substitutions, replacements, or
appurtenances to the Motor Vehicles to be covered by and subject to the Liens
created in this Agreement or the Documents to which any Floor Plan Borrower is
a party; and (ii) with respect to any Motor Vehicles which are or are required
to be subject to Liens created in this Agreement or any other Loan Document to
which any Floor Plan Borrower is a party, execute, acknowledge, endorse,
deliver, procure, and record or file any document or instrument, including,
without limitation, any financing statement, certificate of title,
manufacturer's statement of origin, certificate of origin, and dealer
reassignment of any of the foregoing which are evidences of ownership of such
Motor Vehicles, deemed advisable by the Agent or the Floor Plan Agent to
protect the Liens granted in this Agreement or the Loan Documents to which any
of them respectively is a party and against the rights or interests of third
persons, and will pay all reasonable costs connected with any of the foregoing;
(b) The Company shall and shall cause each of its
Subsidiaries to pledge the capital stock or other evidence of ownership of any
Person which becomes a Subsidiary of the Company or any of its Subsidiaries
(except (i) such capital stock and equity interests which the Company or such
Subsidiaries are prohibited by a Manufacturer from pledging and (ii) such
capital stock and equity interests of Subsidiaries that are capitalized with
the minimum capitalization requirement under applicable law and which the
Company has notified the Agent are dormant and provided such Subsidiaries
remain dormant and have no other assets). The Company shall cause all of its
Subsidiaries which become Subsidiaries after the Closing Date to execute the
Addendum to Credit Agreement and Notes, and if applicable, to execute such
other Security Documents as the Agent and/or the Floor Plan Agent shall
reasonably request to establish Liens on the assets of such Subsidiary
consistent with those in place on the Closing Date.
(c) In the event the Dealer Franchise Agreement or
other agreements with Manufacturers to which any GM Borrower and/or Ford
Borrower is subject shall, in the reasonable determination of the Company and
the Agent, which determination shall be agreed to by the relevant Manufacturer,
no longer (i) prohibit or restrict the Company or any Subsidiary of the Company
from pledging the capital stock or equity interests of such GM Borrower and/or
Ford Borrower, (ii) prohibit or restrict any Ford Borrower from becoming liable
for or granting liens on the Property to secure the Obligations in an amount
greater than the Ford Liability Amount, or (iii) prohibit or restrict any GM
Borrower from being liable as a maker of the Notes to the extent of amounts
equal to all or any portion of the Obligations evidenced by the Acquisition
Loans of the Borrowers or any one or more of them then, in any such event, the
Company, the GM Borrowers and/or the Ford Borrowers shall forthwith execute,
acknowledge, deliver, and record or file such further instruments including,
without limitation, further security agreements, financing statements, and
continuation
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statements and do such further acts as may be reasonably necessary, desirable
or proper to carry out more effectively the purposes of this Agreement.
SECTION 9.16 Permitted Acquisitions.
(a) Subject to the remaining provisions of this
Section 9.16 applicable thereto and the requirements contained in the
definition of Permitted Acquisition, the Company may, from time to time after
the Closing Date, effect Permitted Acquisitions, as long as with respect
thereto each of the following conditions are satisfied:
(i) no Default or Event of Default is in
existence at the time of the consummation of such proposed
Acquisition or would exist after giving effect thereto, all
representations and warrants contained herein and in the other
Loan Documents shall be true and correct in all material
respects with the same effect as though such representations
and warranties were made on and as of the date of such
proposed Acquisition (both before and after giving effect
thereto), and no other agreement, contract or instrument to
which any Borrower is a party restricts such proposed
Acquisition;
(ii) the Company shall have given the
Agent and the Banks at least 30 days (or ten Business Days, in
the case of clause (B) below) prior written notice of any such
proposed Acquisition (each of such notices, a "Permitted
Acquisition Notice"), which notice shall (A) contain the
estimated date such proposed Acquisition is scheduled to be
consummated, (B) attach a true and correct copy of the draft
purchase agreement, letter of intent, description of material
terms or similar agreements executed by the parties thereto in
connection with such proposed Acquisition, (C) contain the
estimated aggregate purchase price of such proposed
Acquisition and the amount of related costs and expenses and
the intended method of financing thereof, and (D) contain the
estimated amount of Acquisition Loans required to effect such
proposed Acquisition;
(iii) the Company shall have provided the Agent
and the Banks with all information related to the Auto Dealer
being acquired and the proposed Acquisition as required in the
form of Acquisition Information worksheet attached hereto as
Exhibit O, and such additional information as the Agent shall
reasonably request, including, without limitation, delivery of
the expert reports (if any) prepared by accounting,
environmental, and/or other experts which the Company has
obtained as the Agent shall reasonably request;
(iv) (A) as soon as available but not less
than the earlier of three (3) days after the execution
thereof, a copy of the executed purchase agreement and all
related agreements, schedules and exhibits with respect to
such proposed Acquisition and (B) at the time of delivery of
the purchase agreement, certification from the Company
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as to the purchase price for the acquisition (or a formula
therefor) and the estimated amount of all related costs, fees
and expenses and that, except as described, there are no other
amounts which will be payable in connection with the
respective proposed Acquisition;
(v) the Company shall have given the Agent
and the Banks, at least ten (10) Business Days prior to the
closing date of the proposed Acquisition, (i) a good faith
estimate made by the Company of its Consolidated Pro Forma
EBITDA and Consolidated Pro Forma Floor Plan Interest Expense,
the calculations for which, the Company shall have furnished
to the Agent together with audited statements from an auditor,
satisfactory to the Agent, supporting such calculations for
Pro Forma Floor Plan Interest Expense (except in the case of
an Acquisition, the total consideration exclusive of stock or
other equity consideration is $5,000,000 or less, in which
event audited statements shall not be required) and (ii) a
completed Availability Analysis in the form of Exhibit Q, and
such other information as the Agent may have reasonably
requested to determine the accuracy of such calculation,
calculated as of a date immediately after the projected
closing date of such proposed Acquisition, and the amount of
Consolidated Pro Forma EBITDA shall exceed zero for the
immediately preceding four (4) fiscal quarters of the Company;
provided, however, in the case of calculations based on
financial statements not audited by a nationally recognized
accounting firm reasonably acceptable to the Agent, the Agent
shall be satisfied that the consolidated EBITDA of the Auto
Dealer being acquired pursuant to the proposed Acquisition
exceeds zero for such period;
(vi) recalculations are made by the Company of
compliance with the covenants contained in Sections 10.14
through 10.17, inclusive, for the immediately preceding four
(4) fiscal quarters of the Company on a pro forma basis, and
such recalculations shall show that during such period, on a
pro forma basis, the Company would have been in compliance
therewith;
(vii) the Company shall have delivered updated
Schedules of the Agreement to the Agent and the Banks; and
(viii) prior to the consummation of the
respective proposed Acquisition, the Company shall furnish the
Agent and the Banks an officer's certificate executed by the
chief financial officer of the Company, certifying as to
compliance with the requirements of the applicable preceding
clauses (i) through (vii), containing the calculations
required in this Section 9.16(a). The consummation of each
Permitted Acquisition shall be deemed to be a representation
and warranty by the Company that all conditions thereto have
been satisfied and that same is permitted in accordance with
the terms of this Agreement, which representation and warranty
shall be deemed to be a representation and warranty for all
purposes hereunder.
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(ix) For each Permitted Acquisition involving
the acquisition or creation of a direct or indirect Subsidiary
of the Company, (i) not less than 100% of the capital stock or
other equity interest of such Subsidiary shall be directly
owned by the Company or another Borrower, (ii) the Acquisition
will not have the effect of causing or requiring any
Subsidiary of the Company to have any direct or indirect
Subsidiary engaged in the sale of new Motor Vehicles by a
Manufacturer which is different than the Manufacturer whose
new Motor Vehicles such Subsidiary was authorized to sell
prior to the Acquisition, and (iii) all such stock or other
equity interest in such acquired or created Subsidiary shall
be pledged to the Agent for the benefit of the Banks pursuant
to the Pledge Agreement or pursuant to a similar agreement
satisfactory to the Agent to the extent such pledge is not
prohibited by any Dealer Franchise Agreement to which such
Subsidiary is a party.
(x) The Required Banks shall have consented
in writing to the proposed Acquisition prior to the closing
thereof; provided, however, such consent shall be deemed to
have been granted if the Required Banks shall not have given
written notice of consent or rejection of such consent to the
Agent within thirty (30) days after receipt by the Agent of
the Permitted Acquisition Notice.
(b) The Company shall cause each Subsidiary that is
created, or is otherwise acquired pursuant to a Permitted Acquisition to
execute and deliver, an Addendum, if applicable, and the other applicable Loan
Documents, with the documentation to be in form and substance reasonably
satisfactory to the Agent. Each such Subsidiary shall also grant to the Agent,
for the benefit of the Banks, first priority perfected security interests in
all property of such Subsidiary subject only to Liens permitted by Section 10.2
acquired in connection with the Permitted Acquisition, and such Subsidiary
shall take all actions requested by the Agent or the Required Banks including,
without limitation, the obtaining of UCC-1's and the filing of UCC-1's in
connection with the granting of such security interests. All security
interests required to be granted pursuant to this Section 9.16(c) shall be
granted pursuant to such security documentation (which shall be substantially
similar to the analogous Security Documents already executed and satisfactory
in form and substance to the Agent) and shall (except as otherwise consented to
by the Agent and the Required Banks) constitute valid and enforceable perfected
security interests prior to the rights of all third Persons and subject to no
other Liens, except Liens permitted under Section 10.2. The security documents
and other instruments related thereto shall be duly recorded or filed in such
manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens, in favor of the Agent for the benefit of the
Banks, required to be granted pursuant to such additional Security Documents
and all taxes, fees and other charges payable in connection therewith shall be
paid in full by the Company. At the time of the execution and delivery of such
additional Security Documents, the Company and the applicable Borrower shall
cause to be delivered to the Agent such documents as may be reasonably
requested by the Agent to assure that this Section 9.16(b) has been complied
with. All actions required to be taken by Section 9.16(b) with respect to the
additional Collateral shall be completed no later than thirty (30) days after
the date on which the Permitted Acquisition is effected.
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SECTION 9.17 Ford Borrower and GM Borrower Dividends. On or
before the last Business Day of each fiscal quarter of the Company, the Company
shall cause all GM Borrowers and Ford Borrowers to make cash transfers to the
Company or to their respective parent with a view toward making an ultimate and
concurrent cash transfers to the Company of all pre-tax profits in excess of
working capital reasonably required in the day to day operations of such
Borrower or such amounts as may be required pursuant to a Dealer Franchise
Agreement or other agreements with Manufacturers to which such Borrower is a
party.
ARTICLE X
NEGATIVE COVENANTS
So long as this Agreement shall remain in effect or the principal of
or interest on any Note, the Swing Line Note, any Commitment Fee or any other
expense or amount payable hereunder shall be unpaid and until the Commitments
of the Banks shall expire or terminate, the Letter of Credit Obligations are
paid in full and all Drafting Agreements are terminated, the Company, as to
itself and as to all of the other Borrowers and each of the Borrowers other
than the Company, as to itself only covenants and agrees with the Agent, the
Floor Plan Agent, the Swing Line Bank and each Bank that:
SECTION 10.1 Indebtedness. No Borrower will incur, create,
assume or suffer to exist any Indebtedness, except:
(a) The Notes, the Swing Line Note, and Indebtedness
and Obligations under this Agreement and the other Loan Documents;
(b) Indebtedness of any Borrower existing at the
Closing Date which is reflected in Schedule X hereto and all renewals and
extensions thereof;
(c) Indebtedness created under leases which, in
accordance with generally accepted accounting principles, have been recorded
and/or should have been recorded on the books of the applicable Borrower as
Capital Leases which, when combined with Indebtedness described in Section
10.1(d), is less than Three Million Dollars ($3,000,000);
(d) Indebtedness which is permitted in connection
with the purchase of property, provided that the aggregate amount of such
Indebtedness shall not exceed $3,000,000;
(e) Subordinated Indebtedness as specified in
Schedule XI;
(f) accounts payable (for the deferred purchase price
of Property or services) from time to time incurred in the ordinary course of
business and which are not in excess of ninety (90) days past the invoice or
billing date;
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(g) Non-Recourse Real Estate Debt and any Guaranties
by the Company of such Indebtedness;
(h) INTENTIONALLY DELETED
(i) Indebtedness of any Subsidiary of the Company in
existence (but not incurred or created in connection with such acquisition) on
the date on which such Subsidiary is acquired by the Company and for which
Indebtedness neither the Company nor any of its other Subsidiaries has any
obligation and with respect to which Indebtedness none of the properties of the
Company or any of its other Subsidiaries is bound;
(j) Indebtedness secured by Liens upon any property
hereafter acquired by the Company or any of its Subsidiary to secure
Indebtedness in existence on the date of such acquisition (but not incurred or
created in connection with such acquisition), which Indebtedness is assumed by
such Person simultaneously with such acquisition, which Liens extend only to
such Property so acquired and with respect to which Indebtedness none of the
Company or any of its Subsidiaries (other than the acquiring Person) has any
obligation;
(k) Indebtedness owed by the Company or any of its
Subsidiaries to the Company or to any other Subsidiary; provided, however,
Indebtedness of the GM Borrowers and Ford Borrowers owed to the Company or to
any of its other Subsidiaries shall not exceed an amount required to be in
compliance with capital maintenance requirements pursuant to the Dealer
Franchise Agreement of any GM Borrower or any Ford Borrower, as applicable, or
such working capital as may be required from time to time in the ordinary
course of business;
(l) any Retail Loan Guaranties; provided that the
aggregate principal amount of such Retail Loan Guaranties shall not exceed
$12,500,000; and
(m) Indebtedness arising under any Service Agreement
as such term is defined in Section 9.14.
SECTION 10.2 Liens. No Borrower will incur, create, assume
or permit to exist any Lien on any of its property or assets, whether owned at
the date hereof or hereafter acquired, or assign or convey any rights to or
security interests in any future revenues, except:
(a) Liens securing payment of the Obligations;
(b) (i) Liens securing Indebtedness permitted by
Sections 10.1(c) or (d), but only on the property subject to such Capital Lease
or purchase-money arrangement, or (ii) securing Indebtedness permitted by
Sections 10.1(i), (j) and (k);
(c) Liens referred to in Section 7.16;
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(d) Liens securing Non-Recourse Real Estate Debt;
(e) extensions, renewals and replacements of Liens
referred to in paragraphs (a) through (d) of this Section 10.2 provided, that
any such extension, renewal or replacement Lien shall be limited to the
property or assets covered by the Lien extended, renewed or replaced and that
the Indebtedness secured by any such extension, renewal or replacement lien
shall be in an amount not greater than the amount of the Indebtedness secured
by the Lien extended, renewed or replaced;
(f) rights of set off which any Manufacturer may have
on Investments permitted under Section 10.5(i); and
(g) Liens existing under Qualified Sale/Leaseback
Transaction, but only on the Property subject of such transaction.
SECTION 10.3 Consolidations and Mergers. No Borrower shall
merge, consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except:
(a) any of its Subsidiaries may merge with the
Company, provided that the Company shall be the continuing or surviving
corporation, or with any one or more such Subsidiaries, provided that if any
such transaction shall be between Subsidiaries, one hundred percent (100%) of
the capital stock of which is a Wholly Owned Subsidiary and one of its
Subsidiaries which is not a Wholly Owned Subsidiary, the Wholly Owned
Subsidiary shall be the continuing or surviving corporation;
(b) any Subsidiary of the Company may sell all or
substantially all of its assets (upon voluntary liquidation or otherwise) to
the Company or a Wholly-Owned Subsidiary); and
(c) any Subsidiary of the Company or the Company may
merge or consolidate with another Person; if (x) the Company or such Subsidiary
involved in the merger or the consolidation is the surviving corporation, and
(y) immediately prior to and after giving effect to such merger or
consolidation, there exists no Default or Event of Default.
SECTION 10.4 Disposition of Assets. Each Borrower agrees that
it shall not permit any Disposition (whether in one or a series of
transactions) of any property or assets (including Accounts, notes receivable,
and/or chattel paper, with or without recourse) or enter into any agreement so
to do, except:
(a) Dispositions of Motor Vehicles and dispositions
of other inventory in the ordinary course of business;
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(b) Dispositions of assets, properties or businesses
by the Company or any of its Subsidiaries or Affiliates to any other Subsidiary
or to the Company provided, however, other than dispositions to newly created
Subsidiaries which become Borrowers for purposes of complying with Dealer
Franchise Agreements, any such disposition made to a Ford Borrower or a GM
Borrower shall be made on an arms-length basis for fair market value for cash
and only in the ordinary course of business.
(c) Dispositions of property in connection with any
consolidation or merger permitted by Schedule XIII hereof;
(d) Dispositions of the property described in
Schedule XIV attached hereto;
(e) Dispositions of equipment and other property
which is obsolete, worn out or no longer used or useful in such Person's
business, all in the ordinary course of business;
(f) Dispositions occurring as the result of a
casualty event, condemnation or expropriation; and
(g) Dispositions of any property, assets (including
capital stock of its Subsidiaries and Affiliates) or businesses of the Company
not otherwise permitted by clauses (a) through (g) of this Section 10.4;
provided, that the aggregate book value of all such property, assets or
businesses sold, leased or otherwise disposed of during the term of this
Agreement shall not at any time exceed the greater of (i) Five Million Dollars
($5,000,000) or (ii) ten percent (10%) of the total book value of the assets of
the Company and each of its Subsidiaries, (determined on a consolidated basis
in accordance with generally accepted accounting principles, as of the end of
the immediately preceding fiscal quarter), and provided, further, that for any
such property, assets or business other than capital stock that is sold, leased
or otherwise disposed of, for purposes of determining compliance with this
Section 10.4, the value of any such property, asset or business shall be equal
to the book value of such property, asset or business as of the date of such
Disposition; and provided, further, that for purposes of determining compliance
with this Section 10.4, the value of any capital stock sold or disposed of
shall be determined by multiplying the number of shares of such capital stock
sold by the net book value per share of such capital stock; and provided,
further, that this Section 10.4 does not authorize Disposition of any Accounts,
notes receivable and/or Chattel Paper with or without recourse; and
(h) Dispositions pursuant to Qualified Sale/Leaseback Transactions.
SECTION 10.5 Investments. No Borrower will make or permit to
exist any Investment in any Person, except for:
(a) Permitted Acquisitions;
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(b) extensions of credit in the nature of Accounts
receivable or notes receivable and/or chattel paper arising from the sale of
goods and services in the ordinary course of business;
(c) shares of stock, obligations or other securities
received in settlement of claims arising in the ordinary course of business;
(d) Investments in securities, maturing within two
(2) years and issued or fully guaranteed or insured by the United States of
America or any agency thereof;
(e) Investments in commercial paper, maturing in two
hundred seventy (270) days or less from the date of issuance, rated in the
highest or second highest grade by a nationally recognized credit rating
agency;
(f) Investments in United States Dollar denominated
and Eurodollar denominated time deposits, maturing within two (2) years from
the date of such Investment and issued by a bank or trust company having
capital, surplus and undivided profits aggregating at least One Hundred Million
Dollars ($100,000,000) and whose unsecured long- term debt is rated in the
highest or second highest grade by a nationally recognized credit rating
agency;
(g) Investments outstanding on the date hereof in
Subsidiaries by the Company and its Subsidiaries;
(h) Investments in negotiable instruments held by
Comerica Securities, Inc. which are acceptable to the Floor Plan Agent not to
exceed the amounts required to be invested pursuant to Section 2.3(i);
(i) INTENTIONALLY DELETED
(j) Investments in capital assets, subject to the
limitations set forth in Section 10.11; and
(k) Investments in seller financed notes in
connection with Motor Vehicles at Foyt Motors, Inc. not to exceed $2,000,000 in
the aggregate at anytime.
SECTION 10.6 Transactions with Affiliates. No Borrower will
enter into any transaction with any Affiliate except in the ordinary course of
business and upon fair and reasonable terms no less favorable than the
applicable Borrower could obtain or could become entitled to in an arm's-length
transaction with a Person which was not an Affiliate.
SECTION 10.7 Other Agreements. No Borrower will enter into
any agreement containing any provision which would be violated or breached by
such Borrower's performance of its Obligations hereunder or under any
instrument or document delivered or to be delivered by the
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Borrowers hereunder or in connection herewith if the effect of such violation
or breach could reasonably be expected to have a Material Adverse Effect.
SECTION 10.8 Fiscal Year; Accounting. No Borrower will change
its fiscal year or method of accounting (other than immaterial changes and
methods and changes authorized by generally accepted accounting principles).
SECTION 10.9 Credit Standards. No Borrower will modify in any
way the credit standards and procedures, the collection policies or the loss
recognition procedures with respect to the creation or collection of Accounts,
notes received and/or chattel paper.
SECTION 10.10 Pension Plans. No Borrower will permit any
condition to exist in connection with any Plan which might constitute grounds
for the PBGC to institute proceedings to have such Plan terminated or a trustee
appointed to administer such Plan, or engage in, or permit to exist or occur
any other condition, event or transaction with respect to any Plan which could
reasonably be expected to have Material Adverse Effect.
SECTION 10.11 Capital Expenditures. The Borrowers will not
make expenditures for capital or fixed assets or improvements in any
consecutive twelve (12) month period in excess of Five Million Dollars
($5,000,000) in the aggregate, except for such capital expenditures in Property
which is or will be within six (6) months of the date of such expenditure the
subject of a Qualified Sale/Leaseback Transaction.
SECTION 10.12 Net Worth of Company. The Company will not at
any time permit (a) its Consolidated Tangible Net Worth to be less than
Twenty-Five Million Dollars ($25,000,000), and (b) its Stockholders' Equity to
be less than an amount equal to the sum of (x) $85,000,000 plus (y)
seventy-five percent (75%) of Consolidated Net Income, computed on a cumulative
basis, for the period beginning on December 31, 1997 and ending on the date of
determination (provided that no negative adjustment will be made in the event
that Consolidated Net Income is a deficit figure for such period), plus (z) one
hundred percent (100%) of the net proceeds (cash or non-cash) realized from the
issuance of any equity securities by the Company (or other capital
contributions made to the Company) after December 31, 1997.
SECTION 10.13 Restricted Payments. Each Borrower agrees that
it shall not declare or make any Restricted Payment, except that any Borrower
may make the following Restricted Payments provided that immediately prior to
and after giving effect to the declaration of any dividend, and immediately
prior to and after giving effect to the payment of any Restricted Payment,
there exists no Default or Event of Default:
(a) any Borrower may declare and make dividend
payments or other distributions payable solely in its capital stock;
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(b) any Subsidiaries of the Company may declare and
make Restricted Payments to the Company or its parent company for the purpose
of such parent company making a Restricted Payment to the Company;
(c) the Company may declare and pay cash dividends on
its capital stock, provided (i) no Default or Event of Default has occurred, is
continuing or would be created thereby and (ii) that the aggregate cash
dividends paid by the Company shall not exceed an amount equal to thirty-three
and three-one-hundredths percent (33.3%) of the aggregate Consolidated Net
Income for the period commencing on December 31, 1997 and ending on the date of
determination taken as a single accounting period.
SECTION 10.14 Fixed Charge Coverage Ratio. The Company will
not permit (as of the end of any fiscal quarter) its Fixed Charge Coverage
Ratio to be less than 1.25 to 1, such ratio to be calculated as of the end of
each fiscal quarter of the Company based upon the four fiscal quarters
immediately preceding such date of determination.
SECTION 10.15 Interest Coverage Ratio. The Company will not
permit (as of the end of any fiscal quarter) its Interest Coverage Ratio to be
less than 2.50 to 1, such ratio to be calculated as of the end of each fiscal
quarter of the Company based upon the four fiscal quarters immediately
preceding such date of determination.
SECTION 10.16 Leverage Ratio. The Company shall not, at any
time, permit its Leverage Ratio to be greater than 2.0 to 1.
SECTION 10.17 Current Ratio. The Company shall not, at any
time, permit its Current Ratio to be less than 1.05 to 1.
SECTION 10.18 Notwithstanding the provisions of Section 10.1
and 10.2, the existence of Indebtedness owed to any lender providing floor plan
financing to the Borrowers (other than Borrowers who as of the Closing Date
were Floor Plan Borrowers) other than the Banks as of the Closing Date and the
Liens securing such Indebtedness shall not be prohibited (i) with respect to
any such indebtedness existing as of the Closing Date, until sixty (60) days
after the Closing Date or (ii) if at any time the Company provides written
notice to the Agent that (y) the conditions precedent for imposition of the
Reserve Commitment exist as of the date of such notice, and requesting therein
a reasonable increase in the Floor Plan Loan Commitment, and the Banks shall
not, within twenty (20) Business Days after the date of such notice, have
provided for such increase in the Floor Plan Loan Commitment, or (z) in
connection with a Permitted Acquisition, the Floor Plan Loan Commitment will
not, in the reasonable determination of the Company, be adequate for the floor
plan funding requirements of the Auto Dealer(s) to be acquired and the Banks
shall not, within twenty (20) Business Days after the date of such notice have
agreed to increase the Floor Plan Loan Commitment in the amount reasonably
requested by the Company upon closing of the acquisition of such Auto Dealers.
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ARTICLE XI
EVENTS OF DEFAULT
SECTION 11.1 Events of Default. In case of the happening of
any of the following events (herein called "Events of Default"):
(a) any representation or warranty made or deemed
made in or in connection with this Agreement, the Notes, the Swing Line Note,
any of the Loan Documents or any of the Borrowings hereunder or in any report,
certificate, financial statement or other instrument furnished in connection
with this Agreement or the execution and delivery of the Notes, the Swing Line
Note or any of the Loan Documents or the making of any of the Borrowings
hereunder shall prove to have been false or misleading in any material respect
when made or deemed made;
(b) Default shall be made in the payment of any
principal of any Loan when and as the same shall become due and payable
pursuant to the terms of this Agreement, whether at the due date thereof or at
a date fixed for prepayment thereof or by acceleration thereof or otherwise;
(c) Default shall be made in the payment of any
interest on any Loan or any Commitment Fee or any other amount due under this
Agreement, when and as the same shall become due and payable which shall remain
unremedied for a period of five (5) days;
(d) Default shall be made in the due observance or
performance of any covenant, condition or agreement contained in Sections 6.3
[Risk Participations, Drawings and Reimbursements], 9.1 [Existence], 9.3
[Insurance], 9.5[ Financial Statements; Reports], 9.6 [Litigation and Other
Notices], 9.8 [Books, Records and Access], 9.10 [Nature of Business], 9.13
[Demonstration, Service Rental or Loaner Vehicles] or in Article X [Negative
Covenants];
(e) except as provided in Sections 11.1(a) through
(d), inclusive, Default shall be made in the due observance or performance of
any other covenant, condition or agreement to be observed or performed pursuant
to this Agreement or any of the Loan Documents and such Default shall continue
unremedied for thirty (30) days after the earlier to occur of (i) any Borrower
obtaining knowledge thereof or (ii) written notice thereof having been given to
the Company;
(f) any Borrower shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code or any other federal or state bankruptcy, insolvency, liquidation
or similar law, (ii) consent to the institution of, or fail to contravene in a
timely and appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for such Borrower or for a
substantial part of such Borrower's property or assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
become unable, admit
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in writing its inability or fail generally to pay its debts as they become due
or (vii) take any corporate or other action for the purpose of effecting any of
the foregoing;
(g) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of any Borrower, or of a substantial part of the
property or assets of any Borrower, under Title 11 of the United States Code or
any other federal or state bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator or similar
official for any Borrower or for a substantial part of the property of any
Borrower or (iii) the winding-up or liquidation of any Borrower; and such
proceeding or petition shall continue undismissed for sixty (60) days or an
order or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for sixty (60) days;
(h) default or defaults (other than defaults in the
payment of principal or interest) shall be made with respect to any
Indebtedness of any Borrower, if the total amount of such Indebtedness in
default exceeds in the aggregate, an amount equal to One Million Dollars
($1,000,000) and if the effect of any such default or defaults shall be to
accelerate, or to permit the holder or obligee of any such Indebtedness (or
any trustee on behalf of such holder or obligee) to accelerate (with or without
notice or lapse of time or both), the maturity of any such Indebtedness; or any
payment of principal or interest, regardless of amount, on any Indebtedness of
the Borrowers which exceeds in the aggregate, an amount equal to One Million
Dollars ($1,000,000) shall not be paid when due, whether at maturity, by
acceleration or otherwise (after giving effect to any period of grace as
specified in the instrument evidencing or governing such Indebtedness);
(i) a Reportable Event or Reportable Events shall
have occurred with respect to any Plan or Plans that reasonably could be
expected to result in a Material Adverse Effect.
(j) there shall be entered against the Company or any
of its Subsidiaries one or more judgments or decrees in excess of Five Million
Dollars ($5,000,000) in the aggregate at any one time outstanding for the
Company and all such Subsidiaries and all such judgments or decrees in the
amount of such excess shall not have been vacated, discharged, stayed or bonded
pending appeal within sixty (60) days from the entry thereof, excluding those
judgments or decrees for and to the extent which the Company or any such
Subsidiary is insured and with respect to which the insurer has assumed
responsibility in writing or for and to the extent which the Company or any
such Subsidiary is otherwise indemnified if the terms of such indemnification
are satisfactory to the Required Banks;
(k) there shall occur any material loss or change to
any Dealer Franchise Agreement between any Borrower and a Manufacturer, which
has a Material Adverse Effect;
(l) there occurs any Material Adverse Effect;
(m) any of the Loan Documents shall cease to be
legal, valid and binding agreements enforceable against the Person executing
the same in accordance with the respective
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terms thereof except as permitted by the terms hereof or thereof shall in any
way be terminated or become or be declared ineffective or inoperative or shall
in any way whatsoever cease to give or provide the respective Liens, security
interests, rights, titles, interests, remedies, powers or privileges intended
to be created thereby;
(n) an audit performed by the Floor Plan Agent
pursuant to the provisions of Section 9.12(a), reveals that Motor Vehicles
have, for a period of thirty consecutive (30) days been Out of Balance in an
amount equal to or greater than the Out of Balance Amount and none of the Floor
Plan Borrowers has delivered sufficient funds to restore Excess/Payments in
Process to an amount not less than the Out of Balance Amount;
(o) an audit performed by the Floor Plan Agent
pursuant to the provisions of Section 9.12(a) identifies any specific motor
vehicle by vehicle identification number as an exception to the payment
requirements of Section 2.5, and the Loan advanced to fund such Motor Vehicle
has not been repaid within thirty (30) days (except in the case of Fleet Motor
Vehicles, which shall be sixty (60) days) of such audit and the aggregate
amount of all such unpaid Loans exceeds $300,000; or
(p) a Change of Control occurs.
then, and in any such event (other than an event with respect to the Company
described in paragraph (f) or (g) above), and at any time thereafter during the
continuance of such event, (i) the Agent may, and at the request of the
Required Banks shall, by written or telegraphic notice to the Company, take any
of the following actions at the same or different times: (x) terminate
forthwith the Commitments of the Banks hereunder (if not theretofore
terminated) and any such termination shall automatically constitute a
termination of the Swing Line Commitment, (y) declare the Notes then
outstanding to be forthwith due and payable and any such declaration shall
automatically constitute a declaration that the Swing Line Note is due and
payable, whereupon the principal of the Notes, and the Swing Line Note,
together with accrued and unpaid interest thereon and any unpaid accrued
Commitment Fees and all other liabilities of the Borrowers accrued hereunder,
shall become forthwith due and payable both as to principal and interest,
without presentment, demand, protest, notice of protest, notice of intent to
accelerate, notice of acceleration or any other notice of any kind, all of
which are hereby expressly waived by the Borrowers, anything contained herein
or in any Note, the Swing Line Note or other Loan Document to the contrary
notwithstanding, or (z) pursue and enforce any of the rights and remedies of
the Agent on behalf of the Banks as provided in any of the Loan Documents or as
otherwise provided in the UCC or other applicable law and (ii) the Floor Plan
Agent in its sole discretion may, and at the request of the Required Banks
shall (and, to the extent the Commitments have been terminated, such request
shall be deemed to have been made), suspend and terminate all Drafting
Agreements; and in any event with respect to a Borrower described in paragraph
(f) or (g) above, the Commitments of the Banks shall automatically terminate
(if not theretofore terminated) and any such termination shall automatically
constitute a termination of the Swing Line Commitment, and the Notes and the
Swing Line Note shall automatically become due and payable, both as to
principal and interest, without presentment, demand, protest, notice of intent
to accelerate,
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notice of acceleration or other notice of any kind, all of which are hereby
expressly waived by the Borrowers, anything contained herein or in any Note,
the Swing Line Note or other Loan Document to the contrary notwithstanding and
the Company and the other Borrowers shall immediately deliver cash collateral
to the Agent in such amounts as are acceptable to the Agent to be held by the
Agent, for the benefit of the Swing Line Bank and the Banks as Collateral for
the payment and performance of Drafting Agreements until all such Drafting
Agreements are terminated according to their terms.
ARTICLE XII
THE AGENT AND FLOOR PLAN AGENT
SECTION 12.1 Authorization and Action of the Agent; Rights and
Duties Regarding Collateral.
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(a) In order to expedite the various transactions
contemplated by this Agreement, each Bank, the Floor Plan Agent and the Swing
Line Bank hereby irrevocably appoints and authorizes Chase to act as Agent on
its behalf. Each of the Banks, the Floor Plan Agent and the Swing Line Bank
and each subsequent holder of any Note or the Swing Line Note by its acceptance
thereof, hereby irrevocably authorizes and directs the Agent to take such
action on its behalf and to exercise such powers hereunder as are specifically
delegated to or required of the Agent by the terms and provisions hereof,
together with such powers as are reasonably incidental thereto. The Agent may
perform any of its duties hereunder by or through its agents and employees.
The duties of the Agent shall be mechanical and administrative in nature; the
Agent shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Bank, the Floor Plan Agent or the
Swing Line Bank; and nothing in this Agreement or any other Loan Document,
expressed or implied, is intended to, or shall be so construed as to, impose
upon the Agent any obligations in respect of this Agreement or any other Loan
Document except as expressly set forth herein or therein. The Agent is hereby
expressly authorized on behalf of the Banks, the Floor Plan Agent and the Swing
Line Bank, without hereby limiting any implied authority, (i) to receive on
behalf of each of the Banks any payment of principal of or interest on the
Notes outstanding hereunder and all other amounts accrued hereunder paid to the
Agent, and promptly to distribute to each Bank its proper share of all payments
so received; (ii) to give notice within a reasonable time on behalf of each of
the Banks and the Swing Line Bank to the Borrowers of any Default or Event of
Default specified in this Agreement of which the Agent has actual knowledge as
provided in Section 12.7; (iii) to distribute to each Bank and the Swing Line
Bank copies of all notices, agreements and other material as provided for in
this Agreement as received by the Agent; (iv) to distribute to the Borrowers
any and all requests, demands and approvals received by the Agent or from the
Banks, and (v) to distribute and receive all notices, agreements and other
material as provided in this Agreement with respect to Floor Plan Loans and to
deal with the Floor Plan Agent to the fullest extent required or contemplated
by the terms of their Agreement or any other Loan Document. As to any matters
not expressly provided for by this Agreement, the Notes, the Swing Line Note or
the other Loan Documents (including enforcement or collection of the Notes or
the Swing Line Note), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Banks, and such instructions shall be
binding upon all Banks and all holders of Notes, the Swing Line Note and the
Loans, the Floor Plan Agent and the Swing Line Bank; provided, however, that
the Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or applicable law.
(b) The Agent shall hold all of the Collateral along
with all payments and proceeds arising therefrom, for the benefit of all Banks
and the Swing Line Bank as ratable security for the payment of all the
Obligations. Upon payment in full of all the Obligations, the Agent shall
release all of the Collateral to the Borrowers. Except as otherwise expressly
provided for in Section 13.5, the Agent, in its own name or in the name of the
Borrowers, may enforce any of the Security Documents or the security therefor
by any mode provided under the Loan Documents or by
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applicable law, and may collect, receive and receipt for all proceeds
receivable on account of the Collateral.
(c) To the extent that the Collateral includes notes
or other instruments evidencing any monetary obligation to, or interest of any
Borrower, such Borrowers shall, if requested by the Agent, deliver to the Agent
letters, executed by such Borrower and approved by counsel for the Agent,
notifying the obligors to make payments directly to the Agent, such letters to
be held by the Agent and sent to such obligors at its discretion in accordance
with Section 12.1(d) below. All payments and proceeds of every kind from the
Collateral, when directly received by the Agent pursuant to Section 12.1(d)
(whether from payments on or with respect to the Collateral, from foreclosure
and sale to third parties, from sale of Collateral subsequent to a foreclosure
at which the Agent or another Bank was the purchaser, or otherwise) shall be
held by it as a part of the Collateral and, except as otherwise expressly
provided hereinafter, shall be applied to the Obligations in the manner set
forth in Section 12.1(d).
(d) Upon the occurrence of an Event of Default, and
pursuant to the procedures among the Banks set forth in Section 12.1(e), the
Agent, after giving written notice to the Borrowers and to all Banks and the
Swing Line Bank of the action(s) to be taken, may at any time or times
thereafter (i) deliver the various letters required by Section 12.1(c) hereof
and receive directly, for the pro rata benefit of the Banks and Swing Line Bank
and for reduction of the Obligations as provided hereafter in this Section
12.1(d), all payments and proceeds related to the Collateral and/or (ii) sell,
assign and deliver all of the Collateral or any part thereof, or any
substitution therefor or any additions thereto as provided hereafter. Any such
sale or assignment may be at any broker's board or at any public or private
sale, at the option of the Agent or of any officer or representative acting on
behalf of the Agent, without advertisement or any notice to the Borrowers or
any other Person except those required by applicable law (the Borrowers hereby
agreeing that ten (10) days' notice constitutes "reasonable notice"); and each
Bank (including the Agent), its officers and assigns, may bid and become
purchasers at any such sale, if public, or at any broker's board if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations. Sales
hereunder may be at such time or times, place or places, for cash or credit,
and upon such terms and conditions as the Agent may determine in its sole
discretion. Upon the completion of any sale, the Agent shall execute all
instruments of transfer necessary to vest in the purchaser(s) title to the
property sold, and shall deliver to such purchaser(s) any of the property so
sold which may be in the possession of the Agent.
In the case of any sale of Collateral, the purchase money
proceeds and avails, and all other proceeds which then may be held or recovered
by the Agent or the Floor Plan Agent for the benefit of the Banks and the Swing
Line Bank, shall be applied in the following order:
(i) First, to the payment of the reasonable
costs and expenses of such sale and of the collection or
enforcement of such Collateral, and of all reasonable expenses
(including attorneys fees) and liabilities incurred and
advances made by the Banks in connection therewith;
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(ii) Second, to the payment of any
amounts due to Swing Line Bank in the form of Swing Line
Overdraft Loans;
(iii) Third, to the payment ratably of the
amounts due to the Banks for principal of and interest on all
Obligations other than Swing Line Overdraft Loans then
outstanding, without preference or priority of such
indebtedness owing to one Bank over another, or of principal
over interest, or of interest over principal, including for
the purposes of this Section 12.1(d)(iii), (y) all Obligations
arising under any Hedging Agreement existing on the Effective
Date with respect to or covering Loans under this Agreement in
an aggregate amount for all such covered Loans not to exceed
at any time $75 Million (and any renewals, extensions or
replacements thereof provided that the aggregate amount of
Loans under this Agreement covered by such Hedging Agreement
does not exceed at any time $75 Million) and (z) Obligations
arising under any other Hedging Agreement covering Loans under
this Agreement; provided that the Bank entering into such
Hedging Agreement has delivered a written request for approval
of such Hedging Agreement to the Agent and each of the Banks
and the Required Banks approve such Hedging Agreement (and the
failure of any Bank to object in writing to such request
within five (5) business days of receipt of such request shall
be deemed approval) but excluding for the purposes of this
Section 12.1(d)(iii) all Obligations arising under any Hedging
Agreements which do not meet the requirements of subclauses
(y) and (z) above (the "Excess Hedging Agreement Liability");
and
(iv) Fourth, to the payment of Excess Hedging
Agreement Liability owing to any of the Banks without
preference or priority of such indebtedness owing to one Bank
over another; and
(v) Fifth, to the payment of the surplus, if
any, to the Borrowers, their successors or assigns, or to
whomsoever may be lawfully entitled to receive the same, or as
a court of competent jurisdiction may direct.
(e) After the occurrence and during the continuance
of a Default or an Event of Default, the Required Banks shall meet to establish
written procedures to be taken by the Agent for the protection, collection and
enforcement of the Collateral. The Agent shall not act with respect to the
Collateral except in accordance with the written procedures as established by
the Required Banks; however, if the Required Banks fail to agree upon and
establish such procedures, and the exigency of the circumstances requires, the
Agent, in its sole discretion and in good faith, may (but is not required to)
take whatever action it deems necessary to protect and enforce the Collateral
or the rights of the Banks and the Swing Line Bank under the Loan Documents.
The Borrowers shall acquire no rights or defenses under this Section 12.1(e).
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(f) No Bank or the Swing Line Bank may enforce, or
demand enforcement of, any rights or Liens with respect to the Collateral
except upon the terms and conditions elsewhere stated in this Agreement.
SECTION 12.2 Agent's Reliance, Etc.
(a) Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with this Agreement, the
Notes, the Swing Line Note or any of the other Loan Documents (i) with the
consent or at the request of the Required Banks or (ii) in the absence of its
or their own gross negligence or willful misconduct (it being the express
intention of the parties hereto that the Agent and its directors, officers,
agents and employees shall have no liability for actions and omissions under
this Section 12.2 resulting from their sole ordinary or contributory
negligence).
(b) Without limitation of the generality of the
foregoing, the Agent: (i) may treat the payee of each Note, the Swing Line
Note and the Obligations of each Borrower hereunder and the Swing Line Bank,
respectively, as the holder thereof until the Agent receives written notice of
the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (ii) may consult with legal counsel (including
counsel for any Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Bank,
the Swing Line Bank, or the Floor Plan Agent and shall not be responsible to
any Bank, the Swing Line Bank, or the Floor Plan Agent for any statements,
warranties or representations made in or in connection with this Agreement, any
Note, the Swing Line Note or any other Loan Document; (iv) except as otherwise
expressly provided herein, shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of this Agreement, any Note, the Swing Line Note or any other Loan
Document or to inspect the property (including the books and records) of any
Borrower; (v) shall not be responsible to any Bank, the Swing Line Bank or the
Floor Plan Agent for the due execution, legality, validity, enforceability,
collectibility, genuineness, sufficiency or value of this Agreement, any Note,
the Swing Line Note, any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; (vi) shall not be responsible to
any Bank, the Swing Line Bank or the Floor Plan Agent for the perfection or
priority of any Lien securing the Loans; and (vii) shall incur no liability
under or in respect of this Agreement, any Note, the Swing Line Note or any
other Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, telecopier, cable or telex)
reasonably believed by it to be genuine and signed or sent by the proper party
or parties.
SECTION 12.3 Agent and Affiliates; Chase and Affiliates.
Without limiting the right of any other Bank or the Swing Line Bank to engage
in any business transactions with any Borrower or any of its Affiliates, with
respect to their Commitments, the Loans, if any, made by them, the Notes, and
the Swing Line Note, if any, issued to them, Chase shall have the same rights
and powers under this Agreement, any Note, the Swing Line Note or any of the
other Loan Documents as any
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other Bank and may exercise the same as though it were not the Agent; and the
term "Bank" or "Banks" shall, unless otherwise expressly indicated, include
Chase in its individual capacity. Chase and its Affiliates may be engaged in,
or may hereafter engage in, one or more loan, letter of credit, leasing or
other financing activities not the subject of the Loan Documents (collectively,
the "Other Financings") with any of Borrowers or any of their Affiliates, or
may act as trustee on behalf of, or depositary for, or otherwise engage in
other business transactions with any of the Borrowers or any of their
Affiliates (all Other Financings and other such business transactions being
collectively, the "Other Activities") with no responsibility to account
therefor to the Banks or the Floor Plan Agent. Without limiting the rights and
remedies of the Banks, the Swing Line Bank, or the Floor Plan Agent
specifically set forth in the Loan Documents, no other Bank, the Swing Line
Bank, nor the Floor Plan Agent shall have any interest in (a) any Other
Activities, (b) any present or future guarantee by or for the account of any
Borrower not contemplated or included in the Loan Documents, (c) any present or
future offset exercised by the Agent in respect of any such Other Activities,
(d) any present or future property taken as security for any such Other
Activities or (e) any property now or hereafter in the possession or control of
the Agent which may be or become security for the Obligations of any Borrower
under the Loan Documents by reason of the general description of indebtedness
secured, or of property contained in any other agreements, documents or
instruments related to such Other Activities; provided, however, that if any
payment in respect of such guarantees or such property or the proceeds thereof
shall be applied to reduction of the Obligations evidenced hereunder and by the
Notes, then each Bank, the Swing Line Bank and the Floor Plan Agent shall be
entitled to share in such application according to its equitable portion of
such Obligations.
SECTION 12.4 Agent's Indemnity.
(a) The Agent shall not be required to take any
action hereunder or to prosecute or defend any suit in respect of this
Agreement, the Notes, the Swing Line Note or any other Loan Document unless
indemnified to the Agent's satisfaction by the Banks and the Swing Line Bank
against loss, cost, liability and expense. If any indemnity furnished to the
Agent shall become impaired, the Agent may call for additional indemnity and
cease to do the acts indemnified against until such additional indemnity is
given. In addition, the Banks and the Swing Line Bank agree to indemnify the
Agent (to the extent not reimbursed by the Borrowers), ratably according to the
respective aggregate principal amounts of the Notes and the Swing Line Note
then held by each of them (or if no Notes are at the time outstanding, ratably
according to the respective amounts of their Commitments, or if no Commitments
are outstanding, the respective amounts of the Commitments immediately prior to
the time the Commitments ceased to be outstanding), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Agent (or either of
them) in any way relating to or arising out of this Agreement or any action
taken or omitted by the Agent under this Agreement, the Notes, the Swing Line
Note and the other Loan Documents (including any action taken or omitted under
Article II of this Agreement). Without limitation of the foregoing, each Bank
and the Swing Line Bank agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses
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(including reasonable counsel fees) incurred by the Agent in connection with
the preparation, execution, administration, or enforcement of, or legal advice
in respect of rights or responsibilities under, this Agreement, the Notes, the
Swing Line Note and the other Loan Documents to the extent that the Agent is
not reimbursed for such expenses by the Borrowers. The provisions of this
Section 12.4 shall survive the termination of this Agreement, the payment of
the Loans and/or the assignment of any of the Notes and the Swing Line Note.
(b) Notwithstanding the foregoing, no Bank or the
Swing Line Bank shall be liable under this Section 12.4 to the Agent for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements due to the Agent resulting
from the Agent's gross negligence or willful misconduct. Each Bank and the
Swing Line Bank agrees, however, that it expressly intends, under this Section
12.4, to indemnify the Agent ratably as aforesaid for all such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements arising out of or resulting from the Agent's sole
ordinary or contributory negligence.
SECTION 12.5 Bank Credit Decision. Each Bank and the Swing
Line Bank acknowledges that it has, independently and without reliance upon the
Agent, the Floor Plan Agent or any other Bank or the Swing Line Bank and based
on the financial statements most recently delivered under either referred to
in Section 7.5 or Section 9.5 and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Bank and the Swing Line Bank also acknowledges that it
will, independently and without reliance upon the Agent, the Floor Plan Agent
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, the other Loan Documents, any
related agreement or any document furnished hereunder.
SECTION 12.6 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided herein, the Agent may resign at any
time by giving thirty (30) days written notice thereof to the Banks, the Swing
Line Bank, the Floor Plan Agent and the Company. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent, subject
to the approval of the Company, which approval shall not be unreasonably
withheld. If no successor Agent shall have been so appointed by the Required
Banks, approved by the Company and shall have accepted such appointment, all
within thirty (30) calendar days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized or licensed under
the laws of the United States or of any state thereof and having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000).
Upon the acceptance of any appointment as Agent hereunder and under the Notes
by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the Notes. After any retiring Agent's
resignation as the Agent hereunder and under the Notes, the
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provisions of this Article XII and Section 13.4 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this
Agreement and the Notes.
SECTION 12.7 Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Agent shall have received notice from a Bank, the
Swing Line Bank, the Floor Plan Agent or the Borrowers referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default" or "notice of event of default," as applicable.
If the Agent receives such a notice, the Agent shall give notice thereof to the
Banks, the Swing Line Bank and the Floor Plan Agent and, if such notice is
received from a Bank, the Swing Line Bank or the Floor Plan Agent, the Agent
shall give notice thereof to the other Banks, the Swing Line Bank and the
Company. The Agent shall be entitled to take action or refrain from taking
action with respect to such Default or Event of Default as provided in Section
12.1 and Section 12.2.
SECTION 12.8 Authorization and Action of the Floor Plan Agent.
(a) In order to expedite the various transactions
contemplated by this Agreement, each Bank, the Swing Line Bank and the Agent
hereby irrevocably appoint and authorize Comerica Bank to act as Floor Plan
Agent on its behalf. Each of the Banks, the Swing Line Bank and the Agent, and
each subsequent holder of any Note or the Swing Line Note by its acceptance
thereof, hereby irrevocably authorizes and directs the Floor Plan Agent to take
such action and to exercise such powers hereunder as are specifically delegated
to or required of the Floor Plan Agent by the terms and provisions hereof,
together with such powers as are reasonably incidental thereto. The Floor Plan
Agent may perform any of its duties hereunder by or through its agents and
employees. The duties of the Floor Plan Agent shall be mechanical and
administrative in nature; the Floor Plan Agent shall not have by reason of this
Agreement or any other Loan Document a fiduciary relationship in respect of any
Bank, the Swing Line Bank or the Agent; and nothing in this Agreement or any
other Loan Document, expressed or implied, is intended to, or shall be so
construed as to, impose upon the Floor Plan Agent any obligations in respect of
this Agreement or any other Loan Document except as expressly set forth herein
or therein. The Floor Plan Agent is hereby expressly authorized on behalf of
the Banks to (i) receive and distribute funds, (ii) to receive and distribute
all notices and agreements and other material and (iii) to take all actions and
perform such duties and make such determinations, all as provided in this
Agreement. As to any matters not expressly provided for by this Agreement or
any Loan Document, the Floor Plan Agent shall not be required to exercise any
discretion or take any action, but shall not be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Banks, and such instructions
shall be binding upon all Banks, the Swing Line Bank, the Agent and all holders
of Notes and the Swing Line Note and the Loans and the Floor Plan Agent;
provided, however, that the Floor Plan Agent shall not be required to take any
action which exposes it to personal liability or which is contrary to this
Agreement or applicable law.
(b) To the extent that any proceeds of the Motor
Vehicles includes notes or other instruments evidencing any monetary obligation
to, or interest of, any Borrower, such
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Borrower shall deliver or cause to be delivered to the Floor Plan Agent
letters, executed by such Borrower and approved by counsel for the Floor Plan
Agent, notifying the obligors to make payments directly to the Floor Plan
Agent, such letters to be held by the Floor Plan Agent and sent to such
obligors at its discretion. All payments and proceeds of every kind from such
Motor Vehicles, when directly received by the Floor Plan Agent (whether from
payments on or with respect to proceeds of Motor Vehicles, from foreclosure and
sale to third parties, from sale of Motor Vehicles subsequent to a foreclosure
at which the Floor Plan Agent or another Bank was the purchaser, or otherwise)
shall be, except as otherwise expressly provided hereinafter, applied to the
Obligations in the manner set forth in Section 12.1(d).
SECTION 12.9 Floor Plan Agent's Reliance, Etc.
(a) Neither the Floor Plan Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with this Agreement
(i) with the consent or at the request of the Required Banks acting by and
through the Agent or (ii) in the absence of its or their own gross negligence
or willful misconduct (it being the express intention of the parties hereto
that the Floor Plan Agent and its directors, officers, agents and employees
shall have no liability for actions and omissions under this Section 12.9
resulting from their sole ordinary or contributory negligence).
(b) Without limitation of the generality of the
foregoing, the Floor Plan Agent: (i) may treat the Agent as Agent hereunder
until the Floor Plan Agent receives written notice of the appointment of a
successor Agent as provided in Section 12.6; (ii) may consult with legal
counsel (including counsel for the Borrowers), independent public accountants
and other experts selected by it and shall not be liable for any action taken
or omitted to be taken in good faith by it in accordance with the advice of
such counsel, accountants or experts; (iii) makes no warranty or representation
to any Bank, the Swing Line Bank or the Agent and shall not be responsible to
any Bank, the Swing Line Bank or the Agent for any statements, warranties or
representations made in or in connection with this Agreement; (iv) except as
otherwise expressly provided herein, shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement, or to inspect the property (including the books
and records) of any Borrower; (v) shall not be responsible to any Bank, the
Swing Line Bank or the Agent for the due execution, legality, validity,
enforceability, collectability, genuineness, sufficiency or value of this
Agreement, or any other instrument or document furnished pursuant hereto or
thereto; (vi) except as otherwise expressly provided herein shall not be
responsible to any Bank, the Swing Line Bank or the Agent for the perfection or
priority of any Lien securing the Loans; and (vii) shall incur no liability
under or in respect of this Agreement, by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram,
telecopier, cable or telex) reasonably believed by it to be genuine and signed
or sent by the proper party or parties.
SECTION 12.10 Floor Plan Agent and Affiliates; Comerica Bank
and Affiliates. Without limiting the right of any other Bank, the Swing Line
Bank or the Agent to engage in any business transactions with any Borrower or
any of its Affiliates, with respect to their Commitments, the
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Loans, if any, made by them and the Notes, if any, issued to them, Comerica
Bank shall have the same rights and powers under this Agreement, any Note, the
Swing Line Note or any of the other Loan Documents as any other Bank and may
exercise the same as though it were not the Floor Plan Agent; and the term
"Bank" or "Banks" shall, unless otherwise expressly indicated, include Comerica
Bank in its individual capacity. Unless prohibited hereby, Comerica Bank and
its Affiliates may be engaged in, or may hereafter engage in, one or more Other
Financings with the Company, any other Borrower or any of their Affiliates, or
may act as trustee on behalf of, or depositary for, or otherwise engage in
Other Activities with no responsibility to account therefor to the Banks or the
Agent. Without limiting the rights and remedies of the Banks or the Agent
specifically set forth in the Loan Documents, no other Bank nor the Agent shall
have any interest in (a) any Other Activities, (b) any present or future
guarantee by or for the account of any of the Borrowers not contemplated or
included in the Loan Documents, (c) any present or future offset exercised by
the Floor Plan Agent in respect of any such Other Activities, (d) any present
or future property taken as security for any such Other Activities or (e) any
property now or hereafter in the possession or control of the Floor Plan Agent
which may be or become security for the Obligations of the Borrowers under the
Loan Documents by reason of the general description of indebtedness secured, or
of property contained in any other agreements, documents or instruments related
to such Other Activities; provided, however, that if any payment in respect of
such guarantees or such property or the proceeds thereof shall be applied to
reduction of the Obligations evidenced hereunder and by the Notes or the Swing
Line Note, then each Bank and the Swing Line Bank shall be entitled to share in
such application according to its equitable portion of such Obligations.
SECTION 12.11 Floor Plan Agent's Indemnity.
(a) The Floor Plan Agent shall not be required to
take any action hereunder or to prosecute or defend any suit in respect of this
Agreement, the Notes, the Swing Line Note, or any other Loan Document unless
indemnified to the Floor Plan Agent's satisfaction by the Banks and the Swing
Line Bank, against loss, cost, liability and expense. If any indemnity
furnished to the Floor Plan Agent shall become impaired, it may call for
additional indemnity and cease to do the acts indemnified against until such
additional indemnity is given. In addition, the Banks and the Swing Line Bank
agree to indemnify the Floor Plan Agent (to the extent not reimbursed by the
Borrowers), ratably according to the respective aggregate principal amounts of
the Notes then held by each of them (or if no Notes are at the time
outstanding, ratably according to the respective amounts of their Commitments,
or if no Commitments are outstanding, the respective amounts of the Commitments
immediately prior to the time the Commitments ceased to be outstanding), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Floor Plan Agent in any way relating to or arising out of this Agreement or any
action taken or omitted by the Floor Plan Agent under this Agreement, the
Notes, the Swing Line Note and the other Loan Documents (including action taken
or omitted under Article II or Article IV of this Agreement). Without
limitation of the foregoing, each Bank and the Swing Line Bank agrees to
reimburse the Floor Plan Agent promptly upon demand for its ratable share of
any out-of-pocket expenses (including reasonable counsel fees) incurred by the
Floor Plan Agent in connection with
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the preparation, execution, administration, or enforcement of, or legal advice
in respect of rights or responsibilities under, this Agreement, the Notes, the
Swing Line Note and the other Loan Documents to the extent that the Floor Plan
Agent is not reimbursed for such expenses by the Borrowers. The provisions of
this Section 12.11 shall survive the termination of this Agreement, the payment
of the Loans and/or the assignment of any of the Notes or the Swing Line Note.
(b) Notwithstanding the foregoing, no Bank nor the
Swing Line Bank shall be liable under this Section 12.11 to the Floor Plan
Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements due to
the Floor Plan Agent resulting from the Floor Plan Agent's gross negligence or
willful misconduct. Each Bank and the Swing Line Bank agrees, however, that it
expressly intends, under this Section 12.11, to indemnify the Floor Plan Agent
ratably as aforesaid for all such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements arising
out of or resulting from the Floor Plan Agent's sole ordinary or contributory
negligence.
SECTION 12.12 Bank Credit Decision. Each Bank acknowledges
that it has, independently and without reliance upon the Floor Plan Agent, the
Agent or any other Bank and based on the financial statements referred to in
Section 7.5 and Section 9.5 and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Bank and the Swing Line Bank also acknowledges that it
will, independently and without reliance upon the Floor Plan Agent, the Swing
Line Bank, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
decisions in taking or not taking action under or based upon this Agreement,
the other Loan Documents, any related agreement or any document furnished
hereunder.
SECTION 12.13 Successor Floor Plan Agent. Subject to the
appointment and acceptance of a successor Floor Plan Agent as provided herein,
the Floor Plan Agent may resign at any time by giving written thirty (30) days
notice thereof to the Banks, the Agent and the Company. Prior to the
effectiveness of the termination of the existing Floor Plan Agent, the Floor
Plan Agent shall also be terminated as Swing Line Bank and all Swing Line
Loans, Swing Line Overdraft Loans outstanding as of such date and all amounts
funded by the Floor Plan Agent pursuant to Section 2.11 hereof shall be
purchased by the Successor Floor Plan Agent, and all of the obligations of the
Floor Plan Agent pursuant to any drafting agreements issued by the Floor Plan
Agent pursuant to Section 2.8 hereof shall have been irrevocably assumed by the
Successor Floor Plan Agent, and the Successor Floor Plan Agent shall have
agreed to indemnify the existing Floor Plan Agent in connection with any costs,
liabilities or obligations arising out of, or in any way connected with, the
transfer of such drafting agreements to the Successor Floor Plan Agent. Upon
any such resignation or termination, the Required Banks shall have the right to
appoint a successor Floor Plan Agent, subject to the approval of the Company,
which approval shall not be unreasonably withheld. If no successor Floor Plan
Agent shall have been so appointed by the Required Banks, approved by the
Company and shall have accepted such appointment, all within thirty (30)
calendar days after the resignation or termination of the Floor Plan Agent,
then the Agent shall, on behalf of the Banks, appoint a successor Floor Plan
Agent, which shall be a commercial bank organized or licensed under the laws
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of the United States or of any state thereof and having a combined capital and
surplus of at least Five Hundred Million Dollars ($500,000,000). Upon the
acceptance of any appointment as Floor Plan Agent hereunder, such successor
Floor Plan Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Floor Plan Agent, and the
retiring Floor Plan Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Floor Plan Agent's resignation as the
Floor Plan Agent hereunder, the provisions of this Article XII and Section 13.4
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Floor Plan Agent under this Agreement.
SECTION 12.14 Notice of Default. The Floor Plan Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Floor Plan Agent shall have received
notice from a Borrower, a Bank or the Swing Line Bank, stating that such
Default or Event of Default has occurred and stating that such notice is a
"notice of default or "notice of event of default", as applicable. If the
Floor Plan Agent receives such a notice, the Floor Plan Agent shall give notice
thereof to the Banks, the Swing Line Bank and the Agent. If the Floor Plan
Agent receives such a notice, the Floor Plan Agent shall be entitled to take
action or refrain from taking action with respect to such Default or Event of
Default as provided in Sections 12.8 and 12.9.
SECTION 12.15 Documentation Agent; Co-Agent. None of the Banks
identified on the facing page or signature pages of this Agreement as
Documentation Agent or Co-Agent shall have any right, power, obligation,
liability or responsibility or duty under this Agreement other than those
applicable to all Banks as such. Without limiting the foregoing, none of the
Banks so identified shall have or be deemed to have any fiduciary relations
with any Bank. Each Bank acknowledges that it has not relied, and will not
rely, on any of the Banks so identified in deciding to enter into this
Agreement or in taking any action hereunder.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices, Etc. The Agent, any Bank, or the holder
of any of the Notes or Loans, the Floor Plan Agent, and the Swing Line Bank
giving consent or notice or making any request of the Company or any of the
other Borrowers provided for hereunder, shall notify each Bank, the Floor Plan
Agent and the Agent thereof. In the event that the holder of any Note
(including any Bank) shall transfer such Note, it shall promptly so advise the
Agent which shall be entitled to assume conclusively that no transfer of any
Note has been made by any holder (including any Bank) unless and until the
Agent receives written notice to the contrary. All notices, consents,
requests, approvals, demands and other communications (collectively,
"Communications") provided for herein shall be in writing (including telecopy
Communications) and mailed, telecopied or delivered:
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(a) if to the Company, at 950 Echo Lane, Suite #350,
Houston, Texas 77024, Attention of Scott Thompson, Chief Financial Officer
(Telecopy No. (713) 467-6268);
(b) if to the Borrowers, or any individual Borrower,
at the address of the Company specified in Section 13.1(a) above;
(c) if to the Agent, at 712 Travis Street, 5-CBBE-78,
Houston, Texas 77002, Attention of Mary Arnold, Vice President (Telecopy No.
(713) 216-6004) with a copy to Chase Securities, Inc., 707 Travis Street,
8-TCBN- 96, Houston, Texas 77002, Attention of Manager, Syndications (Telecopy
No. (713) 216-2291);
(d) if to any Bank, as specified on the signature
page for such Bank hereto or, in the case of any Person who becomes a Bank
after the date hereof, as specified on the Assignment and Acceptance executed
by such Person or in the Administrative Questionnaire delivered by such Person
or;
(e) in the case of any party hereto, such other
address or telecopy number as such party may hereafter specify for such purpose
by notice to the other parties;
(f) if to the Floor Plan Agent, at Comerica Bank
National Dealer Services, 1920 Main Street, Suite 1150 Irvine, California
92614, Attention of Bruce Nowel, (Telecopy No. 949-476-1222) with a copy to
Comerica Bank, Attention: Chris Stearns (Telecopy No. 313-222-9419).
All Communications shall, when mailed, telecopied or delivered, be effective
when (i) mailed by certified mail, return receipt requested to any party at its
address specified above, on the signature page hereof or on the signature page
of such Assignment and Acceptance (or other address designated by such party in
a Communication to the other parties hereto), or (ii) telecopied to any party
to the telecopy number set forth above, on the signature page hereof or on the
signature page of such Assignment and Acceptance (or other telecopy number
designated by such party in a Communication to the other parties hereto) and
confirmed by a transmission report verifying the correct telecopier number and
number of pages and that such transmission was well transmitted, or (iii)
delivered personally to any party at its address specified above, on the
signature page hereof or on the signature page of such Assignment and
Acceptance (or other address designated by such party in a Communication to the
other parties hereto); provided, however, Communications to the Agent pursuant
to Article VI or Article XI shall not be effective until received by the Agent.
SECTION 13.2 Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrowers herein and in
the other Loan Documents and in the certificates or other instruments prepared
or delivered in connection with this Agreement shall be considered to have been
relied upon by the Banks and shall survive the making by the Banks of the Loans
and the execution and delivery to the Banks of the Notes evidencing such Loans
and shall continue in full force and effect as long as the principal of or any
accrued interest on any Note or any
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Commitment Fee or any other fee or amount payable under the Notes or this
Agreement is outstanding and unpaid and so long as the Commitments have not
been terminated.
SECTION 13.3 Successors and Assigns; Participations.
(a) Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of the Borrowers, the Agent, the Floor Plan Agent or the Banks that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns. Except as permitted by Section 10.3, no
Borrower may assign or transfer any of its rights or Obligations hereunder
without the prior written consent of all the Banks.
(b) Each Bank may assign to one or more Eligible
Assignees all or a portion of its interests, rights and obligations under this
Agreement (including a portion of its Commitment and the same portion of the
Loans at the time owing to it and the Note held by it); provided, however, that
(i) except in the case of an assignment to a Bank or an Affiliate of a Bank,
the Company (except during the continuance of an Event of Default) and the
Agent must give their prior written consent by countersigning the Assignment
and Acceptance (which consent shall not be unreasonably withheld), (ii) each
such assignment shall be of a constant, and not a varying, percentage of all
the assigning Bank's rights and obligations to this Agreement, and be pro rata
between the Acquisition Loan Commitment and the Floor Plan Loan Commitment,
(iii) the amount of the Commitment of the assigning Bank subject to each such
assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall (A) be equal to the
entire amount of the Commitment of the assigning Bank or (B) if not equal to
the entire amount of the Commitment of the assigning Bank, in no event be less
than Five Million Dollars ($5,000,000) and shall be in an amount which is an
integral multiple of One Million Dollars ($1,000,000); provided, however, for
purposes of this Section 13.3(b)(iii)(B), that the retained Commitment of the
assigning Bank may not be less than Five Million Dollars ($5,000,000), (iv) the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance
substantially in the form of Exhibit M hereto (an "Assignment and Acceptance"),
together with any Note subject to such assignment and the assignor shall pay a
processing and recordation fee of Three Thousand Dollars ($3,000) payable by
the Bank's assignor thereunder, and (v) the assignee shall deliver to the Agent
an Administrative Questionnaire. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be no later than five (5) Business Days
after the execution thereof unless otherwise agreed to by the assigning Bank,
the Eligible Assignee thereunder and the Agent, (x) the assignee thereunder
shall be a party hereto and under the other Loan Documents and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of
a Bank hereunder and under the other Loan Documents and (y) the Bank thereunder
shall, to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement.
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(c) By executing and delivering an Assignment and
Acceptance, the assigning Bank thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i)
other than the representation and warranty contained in Section 5.14 and that
it is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (ii) such assigning Bank
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any of the Borrowers or the performance or
observance by any of the Borrowers of any of their Obligations under this
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements most recently delivered under either in Section 7.5 or Section 9.5
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 Agent, such Bank's assignor or any other Bank and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (v)
such assignee confirms that it is an Eligible Assignee and can make the
representation contained in Section 5.14 and has, to the extent required,
complied with the covenants contained therein; (vi) such assignee appoints and
authorizes the Agent and the Floor Plan Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent and the Floor Plan Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by it as a
Bank.
(d) The Agent shall maintain at its address referred
to in Section 13.1 a copy of each Assignment and Acceptance delivered to it and
a register for the recordation of the names and addresses of the Banks and the
Commitments of, and principal amount of the Loans owing to, each Bank from time
to time (the "Register"). The entries in the Register shall be conclusive, in
the absence of demonstrable error, and the Borrowers and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement and the Loan Documents. The Register shall be
available for inspection by the Borrowers or any Bank at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance
executed by an assigning Bank and an Eligible Assignee together with the Note
subject to such assignment, the processing and recordation fee referred to in
paragraph (b) above and, if required, the Company's written consent to such
assignment, the Agent shall (subject to the consent of the Company to such
assignment, if required), if such Assignment and Acceptance has been completed
and is in the form of Exhibit M, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and (iii) give
prompt notice thereof to the Company and the Banks. Within
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five (5) Business Days after receipt of notice, the Company, at its own
expense, shall execute and deliver and shall cause each of the other Borrowers
to execute and deliver to the Agent in exchange for the surrendered Note a new
Note to the order of such Eligible Assignee in an amount equal to the assigning
Bank's Commitment assumed by it pursuant to such Assignment and Acceptance, and
a new Note to the order of the assigning Bank in an amount equal to the portion
of its Commitment retained by the assigning Bank hereunder. Such new Notes
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 C-1 or C-2 hereto, as applicable. Each canceled Note shall be promptly
returned to the Company.
(f) Each Bank may without the consent of any Borrower
or the Agent sell participations to one or more banks or other entities in all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitment and the Loans owing to it and the Note held by
it); provided, however, that (i) such Bank's obligations under this Agreement
shall remain unchanged, (ii) such Bank shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to the cost protection
provisions and Tax indemnities contained in Article V only to the same extent
that the Bank from which such participating bank or other entity acquired its
participation would be entitled to the benefit of such cost protection
provisions and Tax indemnities and (iv) the Borrowers, the Agent and the other
Banks shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement, and such Bank
shall retain the sole right to enforce the Obligations of any of the Borrowers
relating to the Loans and to approve any amendment, modification or waiver of
any provision of this Agreement (other than amendments, modifications or
waivers with respect to any fees payable hereunder or the amount of principal
of or the rate at which interest is payable on the Loans, or the dates fixed
for payments of principal of or interest on the Loans).
(g) Any Bank or participant may, in connection with
any assignment or participation or proposed assignment or participation
pursuant to this Section 13.3, disclose to the assignee or participant or
proposed assignee or participant, any information relating to any Borrower
furnished to such Bank by or on behalf of any of the Borrowers; provided that
prior to any such disclosure, each such assignee or participant or proposed
assignee or participant shall agree (subject to customary exceptions) to
preserve the confidentiality of any confidential information relating to any
Borrower received from such Bank.
(h) Anything in this Section 13.3 to the contrary
notwithstanding, any Bank may at any time, without the consent of any Borrower
or the Agent, assign and pledge all or any portion of its Commitment and the
Loans owing to it to any Federal Reserve Bank (and its transferees) as
collateral security pursuant to Regulation A of the Board and any Operating
Circular issued by such Federal Reserve Bank. No such assignment shall release
the assigning Bank from its obligations hereunder.
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(i) All transfers of any interest in any Note
hereunder shall be in compliance with all federal and state securities laws, if
applicable. Notwithstanding the foregoing sentence, however, the parties to
this Agreement do not intend that any transfer under this Section 13.3 be
construed as a "purchase" or "sale" of a "security" within the meaning of any
applicable federal or state securities laws.
SECTION 13.4 Expenses of the Banks; Indemnity.
(a) The Borrowers agree to pay all reasonable
out-of-pocket expenses reasonably incurred by the Agent and the Floor Plan
Agent in connection with the preparation of this Agreement, the Notes and the
other Loan Documents or with any amendments, modifications or waivers of the
provisions hereof (whether or not the transactions hereby contemplated shall be
consummated) or reasonably incurred by the Agent, the Floor Plan Agent or any
Bank in connection with the enforcement or protection of their rights in
connection with this Agreement or with the Loans made or the Notes issued
hereunder, including the reasonable fees and disbursements of Jackson Walker
L.L.P., special counsel for the Agents and Bodman, Longley & Dahling, LLP,
special counsel for the Floor Plan Agent, and, in connection with such
enforcement or protection, the reasonable fees and disbursements of other
counsel for any Bank, including allocated staff counsel costs for any Bank that
elects to use the services of staff counsel in lieu of outside counsel. The
Borrowers agree to indemnify the Banks from and hold them harmless against any
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement or any of the Notes or
other Loan Documents.
(b) THE BORROWERS EACH AGREE TO INDEMNIFY THE AGENT,
THE FLOOR PLAN AGENT AND THE BANKS AND THEIR AFFILIATES, DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST,
AND TO HOLD THE BANKS AND SUCH OTHER INDEMNITEE HARMLESS FROM, ANY AND ALL
LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING REASONABLE
COUNSEL FEES AND EXPENSES, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE
ARISING OUT OF, IN ANY WAY CONNECTED WITH, OR AS A RESULT OF (I) THE EXECUTION
AND DELIVERY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONTEMPLATED
HEREBY, THE PERFORMANCE BY THE PARTIES HERETO AND THERETO OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER AND THEREUNDER (INCLUDING THE MAKING OF THE COMMITMENT OF
EACH BANK) AND CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY, (II) THE USE OF PROCEEDS OF THE LOANS OR (III) ANY CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER OR NOT
ANY INDEMNITEE IS A PARTY THERETO; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS
TO ANY BANK, APPLY TO ANY SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED
EXPENSES THAT ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND
NONAPPEALABLE JUDGMENT TO HAVE RESULTED
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FROM THE GROSS NEGLIGENCEOR WILLFUL MISCONDUCT OF SUCH INDEMNITEE. THE
BORROWERS AGREE, HOWEVER, THAT THEY EXPRESSLY INTEND TO INDEMNIFY EACH
INDEMNITEE FROM AND HOLD EACH OF THEM HARMLESS AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES OR EXPENSES ARISING OUT OF THE ORDINARY SOLE OR
CONTRIBUTORY NEGLIGENCE OF SUCH INDEMNITEE, BUT NOT THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR TO ANY OF THE FOREGOING ARISING SOLELY
BY REASON OF CLAIMS BETWEEN THE LENDERS OR ANY LENDER AND THE AGENT OR THE
FLOOR PLAN AGENT.
(c) The provisions of this Section 13.4 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the invalidity or unenforceability of any
term or provision of this Agreement or any Note, or any investigation made by
or on behalf of any Bank. All amounts due under this Section 13.4 shall be
payable within ten (10) days following receipt by the Company of a detailed
invoice or statement setting forth in reasonable detail the basis of such claim
and the amounts so expended or lost or the amount of damages so incurred.
(d) No Indemnitee may settle any claim to be
indemnified without prior written notice to the Company; provided however,
failure to provide such prior written notice shall in no way affect the
settlement of such claims.
(e) In the case of any indemnification hereunder, the
Indemnitee shall give notice to the Company of any such claim or demand being
made against the Indemnitee and the Company may participate in such proceeding
at its own expense if legal counsel to the Company is acceptable to the Agent.
SECTION 13.5 Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Bank and the Swing Line Bank are hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Bank, the Swing Line Bank or any branch Subsidiary or
Affiliate thereof to or for the credit or the account of the Borrowers against
any of and all the Obligations of the Borrowers now or hereafter existing under
this Agreement and the Note held by such Bank and the Swing Line Bank,
respectively, according to their respective rights as otherwise provided
herein, irrespective of whether or not such Bank shall have made any demand
under this Agreement or such Note and although such Obligations may be
unmatured. Each Bank and the Swing Line Bank agree promptly to notify the
Borrowers after any such setoff and application, but the failure to give such
notice shall not affect the validity of such setoff and application. The
rights of each Bank and the Swing Line Bank under this Section 13.5 are in
addition to other rights and remedies (including other rights of setoff) which
such Bank and the Swing Line Bank may have under applicable law.
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SECTION 13.6 Governing Law; Jurisdiction.
(a) This Agreement, the Notes, the other Loan
Documents and all other documents executed in connection herewith, shall be
deemed to be contracts and agreements executed by the Borrowers, the Agent, the
Floor Plan Agent and the Banks under the laws of the State of Texas and of the
United States of America and for all purposes shall be governed by, and
construed and interpreted in accordance with, the laws of said state and of the
United States of America. Without limitation of the foregoing, nothing in this
Agreement, the Notes or the other Loan Documents shall be deemed to constitute
a waiver of any rights which any Bank may have under applicable federal
legislation relating to the amount of interest which such Bank may contract
for, take, receive, or charge in respect of any Loans, including any right to
contract for, take, receive, reserve and charge interest at the rate allowed by
the law of the state where such Bank is located. If and to the extent the laws
of the State of Texas are applicable for purposes of determining the Highest
Lawful Rate, such term shall mean the "weekly ceiling" from time to time in
effect under Chapter 1D of the Texas Credit Title, as amended (the "Act"), or,
if permitted by applicable law and effective upon the giving of the notices
required by the Act (or effective upon any other date otherwise specified by
applicable law), the "monthly", "quarterly" or "annualized" ceiling from time
to time in effect under the Act, whichever Agent shall elect to substitute for
the "weekly ceiling," and vice versa, each such substitution to have the effect
provided in the Act, and Agent shall be entitled to make such election from
time to time one or more times and, without notice to Borrower, to leave any
such substitute rate in effect for subsequent periods in accordance with the
Act. The provisions of Chapter 346, Texas Finance Code, as amended, do not
apply to this Agreement or any Note issued hereunder.
(b) Each Borrower hereby irrevocably submits
generally and unconditionally for itself and in respect of its property to the
non-exclusive jurisdiction of any Texas state court, or any United States
federal court, sitting in the City of Houston or County of Harris, Texas, and
to the non-exclusive jurisdiction of any state or United States federal court
sitting in the state in which any of the Collateral is located, over any suit,
action or proceeding arising out of or relating to this Agreement or the
Obligations. Each Borrower hereby agrees and consents that, in addition to any
methods of service of process provided for under applicable law, all service of
process in any such suit, action or proceeding in any Texas state court, or any
United States federal court, sitting in the City of Houston or County of
Harris, Texas may be made by certified or registered mail, return receipt
requested, directed to such Borrower at its address stated in Section 13.1, or
at a subsequent address of which Administrative Agent received actual notice
from such Borrower in accordance with this Agreement, and service so made shall
be complete five (5) days after the same shall have been so mailed.
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SECTION 13.7 Waivers; Amendments.
(a) No failure or delay of the Agent, the Floor Plan
Agent or any Bank in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Agent, the Floor Plan
Agent and the Banks hereunder are cumulative and not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement, the Notes or the other Loan Documents or consent to any departure by
the Borrowers therefrom shall in any event be effective unless the same shall
be authorized as provided in paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on the Borrowers in any case shall
entitle the Borrowers to any other or further notice or demand in similar or
other circumstances. Each holder of any Note shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not
such Note shall have been marked to indicate such amendment, modification,
waiver or consent.
(b) Neither this Agreement, any Loan Document nor any
provision hereof or thereof may be waived, amended or modified except pursuant
to an agreement or agreements in writing entered into by the Borrowers and the
Required Banks; provided, however, that no such agreement shall (i) change the
principal amount of, or extend or advance the maturity of or any date for the
payment of any principal of or interest on, any Loan, or waive or excuse any
such payment or any part thereof, or, except as provided in this Agreement,
change the rate of interest on any Loan, or the amount of any fees payable to
any Bank without the written consent of each Bank affected thereby, (ii) change
the Commitment of any Bank without the written consent of such Bank or change
the Commitment Fees of any Bank without the written consent of each Bank, or
change the amount of the Total Commitment without the consent of each Bank,
(iii) release or defer the granting or perfecting of a Lien in any Collateral
or release any guaranty or similar undertaking provided by any Person or modify
any indemnity provided to the Banks hereunder or under the other Loan Documents
without the written consent of each Bank; provided however the Agent or the
Floor Plan Agent, as the case may be, shall be entitled to release any
Collateral or any guaranty which a Borrower is permitted to sell or transfer or
otherwise release under the terms of this Agreement or any Loan Document
without notice to or any further action or consent of the Banks; or (iv) amend
or modify the provisions of this Section 13.7, Section 13.3, Section 4.6(c),
Section 12.1(d), Section 6.7(a) or the definition of the "Required Banks,"
without the written consent of each Bank; and provided further that no such
agreement shall amend, modify, waive or otherwise affect the rights or duties
of the Agent or the Floor Plan Agent hereunder without the written consent of
the Agent or the Floor Plan Agent, respectively. Each Bank and each holder of
any Note shall be bound by any modification or amendment authorized by this
Section 13.7 regardless of whether its Note shall be marked to make reference
thereto, and any consent by any Bank or holder of a Note pursuant to this
Section 13.7 shall bind any Person subsequently acquiring a Note from it,
whether or not such Note shall be so marked.
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SECTION 13.8 Interest. Each provision in this Agreement and
each other Loan Document is expressly limited so that in no event whatsoever
shall the amount contracted for, charged, paid, or otherwise agreed to be paid,
or received to the Agent or any Bank for the use, forbearance or detention of
the money to be loaned under this Agreement or any Loan Document or otherwise
(including any sums paid as required by any covenant or obligation contained
herein or in any other Loan Document which is for the use, forbearance or
detention of such money), exceed that amount of money which would cause the
effective rate of interest to exceed the Highest Lawful Rate, and all amounts
owed under this Agreement and each other Loan Document shall be held to be
subject to reduction to the effect that such amounts so paid or agreed to be
paid which are for the use, forbearance or detention of money under this
Agreement or such Loan Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Anything in this Agreement or any Note or any other Loan Document to the
contrary notwithstanding, none of the Borrowers shall ever be required to pay
unearned interest on any Note and shall never be required to pay interest on
such Note at a rate in excess of the Highest Lawful Rate, and if the effective
rate of interest which would otherwise be payable under this Agreement, such
Note and the other Loan Documents would exceed the Highest Lawful Rate, or if
the holder of such Note shall receive any unearned interest or shall receive
monies that are deemed to constitute interest which would increase the
effective rate of interest payable by the Borrowers under this Agreement and
such Note to a rate in excess of the Highest Lawful Rate, then (a) the amount
of interest which would otherwise be payable by the Borrowers under this
Agreement, such Note or any Loan Document shall be reduced to the amount
allowed under applicable law, and (b) any unearned interest paid by the
Borrowers or any interest paid by the Borrowers in excess of the Highest Lawful
Rate shall be credited on the principal of such Note (or, if the principal
amount of such Note shall have been paid in full, refunded to the Borrowers).
It is further agreed that, without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received by any
Bank under the Notes held by it, or under this Agreement, are made for the
purpose of determining whether such rate exceeds the Highest Lawful Rate
applicable to such Bank (such Highest Lawful Rate being such Bank's "Maximum
Permissible Rate"), and shall be made, to the extent permitted by usury laws
applicable to such Bank (now or hereafter enacted), by amortizing, prorating
and spreading in equal parts during the period of the full stated term of the
Loans evidenced by said Notes all interest at any time contracted for, charged
or received by such Bank in connection therewith. If at any time and from time
to time (i) the amount of interest payable to any Bank on any date shall be
computed at such Bank's Maximum Permissible Rate pursuant to this Section 13.8
and (ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Bank would be less than the amount of
interest payable to such Bank computed at such Bank's Maximum Permissible Rate,
then the amount of interest payable to such Bank in respect of such subsequent
interest computation period shall continue to be computed at such Bank's
Maximum Permissible Rate until the total amount of interest payable to such
Bank shall equal the total amount of interest which would have been payable to
such Bank if the total amount of interest had been computed without giving
effect to this Section 13.8.
SECTION 13.9 Severability; Conflicts.
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(a) In the event any one or more of the provisions contained
in this Agreement, the Notes or any other Loan Document should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions, the economic effect of which comes as close
as possible to that of the invalid, illegal or unenforceable provisions.
(b) In the event any of the terms and provisions of
any other Loan Document are inconsistent with the terms and provisions set
forth in this Agreement, the terms and provisions set forth in this Agreement
shall prevail.
SECTION 13.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 13.11.
SECTION 13.11 Binding Effect. This Agreement shall become
effective on the Closing Date, and thereafter shall be binding upon and inure
to the benefit of each Borrower, the Agent, the Floor Plan Agent and each Bank
and their respective successors and assigns, except that no Borrower shall have
the right to assign its rights hereunder or any interest herein except as
provided in Section 13.3(a).
SECTION 13.12 Further Assurances. Each Borrower shall make,
execute or endorse, and acknowledge and deliver or file or cause the same to be
done, all such vouchers, invoices, notices, certifications and additional
agreements, undertakings, conveyances, deeds of trust, mortgages, transfers,
assignments, financing statements or other assurances, and take any and all
such other action, as the Agent or the Floor Plan Agent may, from time to time,
deem reasonably necessary or proper in connection with any of the Loan
Documents, the Obligations of the Borrowers thereunder or for better assuring
and confirming unto the Banks all or any part of the security for any of such
Obligations.
SECTION 13.13 Subsidiary Solvency Savings Clause. Each of the
Borrowers acknowledges the receipt and acceptance of valuable consideration as
of the Closing Date and thereafter in connection with this Agreement; and each
such Borrower further acknowledges and agrees that the direct benefits and
enrichment it derives from being a party to this Agreement constitute a
reasonably equivalent value to it in exchange for the joint and several
liability it has incurred pursuant to this the Agreement. Further, each of the
Borrowers acknowledges the interdependence by and among the other Borrowers in
successfully carrying out their business operations. Each of the Borrowers
represents that it is solvent prior to entering into this Agreement and that
the transactions completed hereby will not render it insolvent and will not
cause it to become financially non-viable in the future; provided, however in
the event that the Indebtedness incurred by any Borrower pursuant to this
Agreement or the transactions contemplated hereby would constitute a
"fraudulent transfer"as to any such Borrower under Section 548 of the Federal
Bankruptcy Code or pursuant to any applicable state law governing "fraudulent
transfers" because
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<PAGE> 122
such Borrower is deemed to have become insolvent as a result of incurring such
Indebtedness, then, in such event, the liability of any such Borrower hereunder
shall be deemed for all purposes to be equal to one dollar less than that
amount of Indebtedness which would not render such Borrower insolvent.
SECTION 13.14 Joint and Several Liability and Related Matters.
(a) Each of Floor Plan Borrowers other than the
Company authorizes the Company with full power and authority as
attorney-in-fact, to execute and deliver Requests for Borrowings, requests for
issuance of Letters of Credit and each other instrument, certificate and report
to be delivered by any Floor Plan Borrower to the Agent, the Floor Plan Agent
and the Banks pursuant to this Agreement or any Loan Document. Each of the
Floor Plan Borrowers other than the Company agrees that it shall be bound by
any action taken by the Company on its behalf pursuant to such appointment.
(b) The obligations of each of the Ford Borrowers
under this Agreement and the Loan Documents shall be joint and several only
with all other Ford Borrowers and the liability of each of the Ford Borrowers
shall be limited to an amount equal to the Ford Borrower Liability Amount. The
obligations of each of the GM Borrowers under this Agreement and the Loan
Documents shall be joint and several with all the Borrowers and (except as
provided in the Guaranty of each of the GM Borrowers) the liability of each of
the GM Borrowers shall be limited to an amount equal to the GM Borrower
Liability Amount. The obligations of all other Borrowers under this Agreement
and the other Loan Documents are joint and several and not limited in any way
whatsoever.
(c) Except as herein provided, each Borrower
acknowledges and agrees that it is the intent of the parties that each Borrower
be primarily liable for the obligations as a joint and several obligor. It is
the intention of the parties that, except as herein provided, with respect to
liability of any Borrower hereunder arising solely by reason of its being
jointly and severally liable for Loans and Letter of Credit Obligations and
other extensions of credit taken by other Borrowers, the obligations of such
Borrower shall be absolute, unconditional and irrevocable irrespective of:
(i) any lack of validity, legality or
enforceability of this Agreement, any Note or any Loan
Document as to any other Borrower;
(ii) the failure of any Bank or any
holder of any Note:
(A) to enforce any right or remedy
against any Borrower or any other Person
(including any surety) under the
provisions of this Agreement, such Note
or otherwise, or
(B) to exercise any right or remedy
against any surety of, or Collateral
securing, any obligations;
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<PAGE> 123
(iii) any change in the time, manner or place
of payment of, or in any other term of, all or any of the
Obligations, or any other extension, compromise or renewal of
any Obligations;
(iv) any reduction, limitation, impairment or
termination of any Obligations with respect to any other
Borrower for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be
subject to (and each Borrower hereby waives any right to or
claim of) any defense (other than the defense of payment in
full of the Obligations) or setoff, counterclaim, recoupment
or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence
affecting, any Obligations with respect to any other Borrower;
(v) any addition, exchange, release,
surrender or nonperfection of any Collateral, or any amendment
to or waiver or release or addition of, or consent to
departure from, any guaranty, held by any Bank or any holder
of the Notes securing any of the Obligations; or
(vi) any other circumstance which might
otherwise constitute a defense (other than the defense of
payment in full of the Obligations) available to, or a legal
or equitable discharge of, any other Borrower, any surety or
any guarantor.
(d) Each Borrower agrees that its liability hereunder
including, without limitation, any joint and several liability of such
Borrower, shall continue to be effective or be reinstated, as the case may be,
if at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must be restored by any Bank or any holder of any Note, upon the
insolvency, bankruptcy or reorganization of any Borrower as though such payment
had not been made.
(e) Each Borrower hereby expressly waives: (i) notice
of the Banks' acceptance of this Agreement; (ii) notice of the existence or
creation or non payment of all or any of the Obligations other than notices
expressly provided for in this Agreement; (iii) presentment, demand, notice of
dishonor, protest, and all other notices whatsoever other than notices
expressly provided for in this Agreement; and (iv) all diligence in collection
or protection of or realization upon the Obligations or any part thereof, any
obligation hereunder, or any security for or guaranty of any of the foregoing,
subject, however, in the case of Collateral in the possession of the Agent or a
Bank to such Person's duty to use reasonable care in the custody and
preservation of such Collateral.
(f) No delay on any of the Banks' part in the
exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by any of the Banks of any right or remedy shall
preclude other or further exercise thereof or the exercise of any other right
or
122
<PAGE> 124
remedy. No action of any of the Banks permitted hereunder shall in any way
affect or impair any such Banks' rights or any Borrower's Obligations under
this Agreement.
(g) Each Borrower hereby represents and warrants to
each of the Banks that it now has and will continue to have independent means
of obtaining information concerning the Borrowers' affairs, financial condition
and business. Banks shall not have any duty or responsibility to provide any
Borrower with any credit or other information concerning the Borrowers'
affairs, financial condition or business which may come into the Banks'
possession.
SECTION 13.15 WAIVER OF JURY TRIAL. THE BANKS, THE AGENT, THE
FLOOR PLAN AGENT AND EACH OF THE BORROWERS 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 LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTION OF ANY OF THEM. NEITHER THE
BANKS, THE AGENT, FLOOR PLAN AGENT NOR ANY OF THE BORROWERS SHALL SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY
TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED
IN ANY RESPECT OR RELINQUISHED BY THE BANKS, THE AGENT, THE FLOOR PLAN AGENT OR
ANY OF THE BORROWERS EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
SECTION 13.16 Loans Under Prior Credit Agreement. On the
Closing Date:
(a) The Company shall pay all accrued and unpaid
commitment fees outstanding under the Revolving Credit Agreement dated as of
December 31, 1997 (the "Prior Credit Agreement") for the account of each
"lender" under the Prior Credit Agreement;
(b) Each "Alternate Base Rate Loan", "Swing Line
Loan" and "Swing Line Overdraft Loan" under the Prior Credit Agreement shall be
deemed to be repaid with the proceeds of a new Alternate Base Rate Loan, Swing
Line Loan or Swing Line Overdraft Loan, as the case may be, under this
Agreement;
(c) each Letter of Credit outstanding under the Prior
Credit Agreement shall be deemed to have been issued under this Agreement
without further consideration or any fees under this Agreement; and
(d) the Prior Credit Agreement and the commitments
thereunder shall be superseded by this Agreement and such commitments shall
terminate.
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<PAGE> 125
SECTION 13.17 FINAL AGREEMENT OF THE PARTIES. THIS WRITTEN
AGREEMENT (INCLUDING THE EXHIBITS AND SCHEDULES HERETO), THE NOTES, THE AGENT'S
LETTER, THE FLOOR PLAN AGENT'S LETTER AND THE OTHER LOAN DOCUMENTS CONSTITUTE A
"LOAN AGREEMENT" AS DEFINED IN SECTION 26.2(a) OF THE TEXAS BUSINESS AND
COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING
TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING
TO THE SUBJECT MATTER HEREOF AND THEREOF. Any previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
* * *
Signatures following on succeeding pages
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<PAGE> 126
IN WITNESS HEREOF, the Borrowers, the Banks listed on the signature
pages hereto, the Agent and the Floor Plan Agent have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
<TABLE>
<S> <C>
BORROWERS: GROUP 1 AUTOMOTIVE, INC., a Delaware corporation
By: /s/ Scott Thompson
-------------------------------------------------------------------
Name: Scott Thompson
Title: Senior Vice President
COURTESY NISSAN, INC., a Texas corporation; FOYT MOTORS, INC., a
Texas corporation; BOB HOWARD AUTOMOTIVE-H, INC., an Oklahoma
corporation; BOB HOWARD DODGE, INC., an Oklahoma corporation; BOB
HOWARD MOTORS, INC., an Oklahoma corporation; HOWARD PONTIAC-GMC,
INC., an Oklahoma corporation; ROUND ROCK NISSAN, INC., a Texas
corporation; SMC LUXURY CARS, INC., a Texas corporation; MIKE SMITH
AUTOPLAZA, INC., a Texas corporation; SMITH, LIU & CORBIN, INC., a
Texas corporation; SMITH, LIU & KUTZ, INC., a Texas corporation;
SOUTHWEST TOYOTA, INC., a Texas corporation; TOWN NORTH IMPORTS,
INC., a Texas corporation; TOWN NORTH NISSAN, INC., a Texas
corporation; TOWN NORTH SUZUKI, INC., a Texas corporation; COURTESY
FORD, INC., a Florida corporation; GROUP 1 FORD, INC., a Texas
corporation; BOB HOWARD NISSAN, INC., an Oklahoma corporation; KOONS
FORD, INC., a Florida corporation; PERIMETER FORD, INC., a Delaware
corporation; MIKE SMITH AUTOMOTIVE N, INC., a Texas corporation; MIKE
SMITH AUTOPLEX, INC., a Texas corporation; MIKE SMITH AUTOPLEX BUICK,
INC., a Texas corporation; MIKE SMITH AUTOPLEX DODGE, INC., a Texas
corporation; MIKE SMITH AUTOPLEX-GERMAN IMPORTS, INC., a Texas
corporation; MIKE SMITH AUTOPLEX-V, INC., a Texas corporation; CASA
CHRYSLER PLYMOUTH JEEP, INC., a New Mexico corporation; CASA
CHEVROLET, INC., a New Mexico corporation; FLAMINGO FORD, INC., a
Florida corporation; HIGHLAND AUTOPLEX, INC., a Texas corporation;
SMITH AUTOMOTIVE GROUP, INC., a Texas
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 127
<TABLE>
<S> <C>
corporation; J. CARROLL MANAGEMENT GROUP, INC., a Florida
corporation; MMK INTERESTS, INC., a Texas corporation; BOB HOWARD
CHEVROLET, INC., an Oklahoma corporation; HOWARD AUTOMOTIVE GROUP,
INC., an Oklahoma corporation; PRESTIGE CHRYSLER PLYMOUTH, INC., a
Texas corporation; MAXWELL CHRYSLER PLYMOUTH DODGE, INC., a Texas
corporation; MIKE SMITH L/M, INC., a Delaware corporation; MIKE SMITH
GM, INC., a Delaware corporation
By: /s/ Scott Thompson
-------------------------------------------------------------------
Name: Scott Thompson
Title: Vice President
MAXWELL CHRYSLER, PLYMOUTH, DODGE, JEEP, EAGLE, LTD., a Texas limited
partnership
By: MAXWELL CHRYSLER PLYMOUTH DODGE, INC., a Texas corporation
By: /s/ Scott Thompson
-------------------------------------------------------------
Name: Scott Thompson
Title: Vice President
PRESTIGE CHRYSLER PLYMOUTH SOUTH, LTD., a Texas limited partnership
By: PRESTIGE CHRYSLER PLYMOUTH, INC., a Texas corporation
By: /s/ Scott Thompson
--------------------------------------------------------------
Name: Scott Thompson
Title: Vice President
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 128
<TABLE>
<S> <C>
PRESTIGE CHRYSLER PLYMOUTH NORTHWEST, LTD.,
a Texas limited partnership
By: MMK INTERESTS, INC., a Texas corporation
By: /s/ SCOTT THOMPSON
-------------------------------------------------------------
Name: Scott Thompson
Title: Vice President
PRESTIGE MAXWELL, INC., a Delaware corporation
By: /s/ ROBERT E. HOWARD II
--------------------------------------------------------------
Name: Robert E. Howard II
Title: President
AGENT AND ISSUING BANK: CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
By: /s/ MARY C. ARNOLD
-------------------------------------------------------------------
Name: Mary C. Arnold
Title: Vice President
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 129
<TABLE>
<S> <C>
FLOOR PLAN AGENT COMERICA BANK
AND SWING LINE BANK
By: /s/ JOSEPH A. MORAN
-------------------------------------------------------------------
Name: Joseph A. Moran
Title: Senior Vice President
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 130
<TABLE>
<S> <C>
BANKS: NATIONSBANK, N.A.
By: /s/ BRUCE CLAY
-------------------------------------------------------------------
Name: Bruce Clay
Title: Vice President
Address: 140 Cypress Station #208
Houston, Texas 77090
Telecopy No.: 281-537-3246
Domestic Lending Office
Attention: Bruce Clay
Eurodollar Lending Office
Attention: Bruce Clay
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 131
<TABLE>
<S> <C>
BANKS U.S. BANK NATIONAL ASSOCIATION
By: /s/ MICHAEL F. LUITEN
-------------------------------------------------------------------
Name: Michael F. Luiten
Title: Senior Vice President
Address: 131 East Main Street
Medford, Oregon 97501
Telecopy No.: (800) 962-0059
Domestic Lending Office
Attention:
------------------------------------------------------------
Eurodollar Lending Office
Attention:
------------------------------------------------------------
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 132
<TABLE>
<S> <C>
CHASE BANK OF TEXAS, N.A.
By: /s/ MARY C. ARNOLD
------------------------------------------------------------
Name: Mary C. Arnold
Title: Vice President
Address: 712 Main Street
5-CBBE-78
Houston, Texas 77002
Telecopy No.: (713) 216-6004
Domestic Lending Office
Attention: Gale Manning
Eurodollar Lending Office
Attention: Gale Manning
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 133
<TABLE>
<S> <C>
COMERICA BANK
By: /s/ JOSEPH A. MORAN
-------------------------------------------------------------------
Name: Joseph A. Moran
Title: Senior Vice President
Address: 411 W. Lafayette, MC3519, 8th Fl.
Detroit, Michigan 48243
Telecopy No.: (313) 222-9419
Domestic Lending Office
Attention: Joe Moran
Eurodollar Lending Office
Attention: Joe Moran
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 134
<TABLE>
<S> <C>
BANKBOSTON, N.A.
By: /s/ MARK MAZMANIAN
-------------------------------------------------------------------
Name: Mark Mazmanian
Title: Vice President
Address: 100 Rust Kraft Road
MS: MA EAS 77-01-14
Dedham, MA 02026
Telecopy No.: (781) 320-2880
Domestic Lending Office
Attention: MARK MAZMANIAN
------------------------------------------------------------
Eurodollar Lending Office
Attention: MARK MAZMANIAN
------------------------------------------------------------
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 135
<TABLE>
<S> <C>
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By: /s/ M. PATRICIA KAY
------------------------------------------------------------------
Name: M. Patricia Kay
Title: Vice President
Address: 500 N. Akard, 24th Floor
Dallas, Texas 75201
Telecopy No.: (214) 758-4739
Domestic Lending Office
Attention:
------------------------------------------------------------
Eurodollar Lending Office
Attention:
------------------------------------------------------------
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 136
<TABLE>
<S> <C>
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: /s/ JEFF EDGE
------------------------------------------------------------------
Name: Jeff Edge
Title: Vice President
Address: 451 Florida Street
12th Floor North Tower
Baton Rouge, LA 70801
Telecopy No.: (504) 332-7282
Domestic Lending Office
Attention:
------------------------------------------------------------
Eurodollar Lending Office
Attention:
------------------------------------------------------------
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 137
<TABLE>
<S> <C>
GOLDMAN SACHS CREDIT PARTNERS, L.P.
By: /s/ John Urban
-------------------------------------------------------------------
Name: John Urban
Title: Managing Director
Address: 85 Broad Street
27th Floor
New York, NY 10004
Telecopy No.: (212) 902-3757
Domestic Lending Office
Attention:
------------------------------------------------------------
Eurodollar Lending Office
Attention:
------------------------------------------------------------
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 138
<TABLE>
<S> <C>
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Kevin L. Anderson
-------------------------------------------------------------------
Name: Kevin L. Anderson
Title: Vice President
Address: National City Tower, 37th Floor
101 S. Fifth Street
Louisville, KY 40202
Telecopy No.: (502) 581-5122
Domestic Lending Office
Attention:
------------------------------------------------------------
Eurodollar Lending Office
Attention:
------------------------------------------------------------
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 139
<TABLE>
<S> <C>
WORLD OMNI FINANCIAL CORP.
By: /s/ William J. Shope
-------------------------------------------------------------------
Name: William J. Shope
Title: Asst. Secretary
Address: 120 NW 12th Avenue
Deerfield Beach, FL 33442
Telecopy No.: (800) 422-6704
Domestic Lending Office
Attention:
------------------------------------------------------------
Eurodollar Lending Office
Attention:
------------------------------------------------------------
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<PAGE> 140
<TABLE>
<S> <C>
THE BANK OF NOVA SCOTIA
By: /s/ Brian Allen
-------------------------------------------------------------------
Name: Brian Allen
Title: Senior Relationship Manager
Address: One Liberty Plaza, 26th Floor
New York, NY 10006
Telecopy No.: (212) 225-5090
Domestic Lending Office
Attention:
------------------------------------------------------------
Eurodollar Lending Office
Attention:
------------------------------------------------------------
Amended and Restated Revolving Credit Agreement
Signature Page
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 69,571
<SECURITIES> 0
<RECEIVABLES> 16,938
<ALLOWANCES> 0
<INVENTORY> 185,877
<CURRENT-ASSETS> 285,851
<PP&E> 34,969
<DEPRECIATION> 0
<TOTAL-ASSETS> 422,415
<CURRENT-LIABILITIES> 238,627
<BONDS> 57,050
0
0
<COMMON> 178
<OTHER-SE> 119,448
<TOTAL-LIABILITY-AND-EQUITY> 422,415
<SALES> 665,508
<TOTAL-REVENUES> 19,958
<CGS> 589,092
<TOTAL-COSTS> 589,092
<OTHER-EXPENSES> 75,115
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,242
<INCOME-PRETAX> 14,969
<INCOME-TAX> 6,234
<INCOME-CONTINUING> 8,735
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,735
<EPS-PRIMARY> .54
<EPS-DILUTED> .52
</TABLE>
