SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ________ to ________
Commission File No.: 0-23962
TEAM RENTAL GROUP, INC.
(Exact name of registrant as specified in its charter)
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Delaware 59-3227576
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
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125 Basin Street, Suite 210, Daytona Beach, FL 32114
(Address of principal executive offices)
(904) 238-7035
Registrant's telephone number, including area code
Not applicable
(Former name, former address, and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Se curities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was re quired to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes |X| No |_|
7,429,776 shares comprised of 5,493,176 shares of the registrant's Class A
common stock, par value $0.01, and 1,936,600 shares of the registrant's Class
B common stock, par value $0.01, were outstanding as of May 12, 1996.
The Exhibit Index, filed as a part of this report, appears on page 13.
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INDEX
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PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1996 (unaudited)
and December 31, 1995 3
Consolidated Statements of Operations for the Three-Month
Periods Ended March 31, 1996 and 1995 (unaudited) 4
Consolidated Statement of Changes in Stockholders' Equity
for the Three-Month Period Ended March 31, 1996 (unaudited) 5
Consolidated Statements of Cash Flows for the Three-Month
Periods Ended March 31, 1996 and 1995 (unaudited) 6
Notes to Unaudited Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities
Item 3. Default Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature Page
Team Rental Group, Inc.
Consolidated Balance Sheets
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(Dollar amounts in thousands) (Unaudited)
March 31, December 31,
ASSETS 1996 1995
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Cash and cash equivalents $4,674 $357
Restricted cash 24,197 67,731
Trade and vehicle receivables, net of
allowance for doubtful accounts 29,317 20,928
Accounts receivable, related parties 61 61
Vehicle Inventory 13,832 8,938
Revenue earning vehicles, net 314,591 219,927
Property and equipment, net 15,438 12,503
Franchise rights, net
of accumulated amortization 60,554 46,670
Deferred financing fees, net 2,092 2,266
Other assets 10,471 6,942
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Total assets $475,227 $386,323
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Notes payable $396,779 $318,233
Capital lease obligations 739 784
Accounts payable 11,870 14,698
Deferred income taxes 1,559 1,701
Accrued and other liabilities 18,684 9,315
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Total liabilities 429,631 344,731
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COMMON STOCK WARRANT 2,000 2,000
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STOCKHOLDERS' EQUITY
Common stock 74 72
Additional paid-in-capital 44,709 41,984
Accumulated deficit (857) (2,134)
Treasury stock (330) (330)
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Total stockholders' equity 43,596 39,592
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Total liabilities and stockholders' equity $475,227 $386,323
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See accompanying notes to unaudited consolidated financial statements.
APITAL PRINTING SYSTEMS]
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Team Rental Group, Inc.
Consolidated Statements of Operations
(Unaudited)
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(Dollar amounts in thousands except per share data) For the 3-month period ended March 31,
1996 1995
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Operating revenue:
Rental revenue $44,697 $17,354
Sales revenue 21,097 4,916
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Total operating revenue 65,794 22,270
Cost of car sales 17,840 4,258
Operating expenses:
Direct vehicle and operating 4,209 2,625
Depreciation - vehicles 11,804 5,126
Depreciation - nonvehicle 536 285
Advertising, promotion and selling 4,600 2,036
Facilities 4,328 2,076
Personnel 10,689 4,494
General and administrative 4,020 886
Amortization 514 112
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Total operating expenses 40,700 17,640
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Operating income 7,254 372
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Other (income) expense:
Interest expense - vehicles 5,027 2,616
Interest expense - other 254 67
Interest income - restricted cash (155) (400)
Related party interest
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Total other (income) expense 5,126 2,283
Income before provision for income taxes 2,128 (1,911)
Provision (credit) for income taxes 851 (765)
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Net income $1,277 ($1,146)
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Net income per common share $0.18 ($0.19)
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Weighted average shares outstanding 7,255,950 6,037,030
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See accompanying notes to unaudited consolidated financial statements.
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Team Rental Group, Inc.
Consolidated Statement of Changes in Stockholders' Equity
For the three month period ended March 31, 1996
(Unaudited)
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Additional Total
Common Paid-In Accumulated Treasury Stockholders'
(Dollar amounts in thousands) Stock Capital Deficit Stock Equity
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Balance at December 31, 1995 $72 $41,984 ($2,134) ($330) $39,592
Net income 1,277 $1,277
Shares issued in conjunction with acquisition
of Arizona Rent A Car Systems, Inc. 2 2,725 $2,727
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Balance at March 31, 1996 $74 $44,709 ($857) ($330) $43,596
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Team Rental Group, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
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(Dollar amounts in thousands) For the 3-month period ended March 31,
1996 1995
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Cash flows from operating activities:
Net income (loss) $1,277 ($1,146)
Adjustments to reconcile net income(loss) to net
cash provided by operating activities :
Depreciation 12,340 5,411
Amortization 514 296
Deferred income tax benefit (142) (520)
Changes in operating assets and liabilities:
Accounts receivable (8,389) (2,790)
Car sales inventory (4,894)
Other assets (3,529) (3,650)
Accounts payable (2,828) 3,679
Other liabilities 9,369 7,172
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Total adjustments 2,441 9,598
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Net cash provided by operating activities 3,718 8,452
Cash flows from investing activities:
Restricted cash 43,534 14,925
Proceeds from sale of
revenue-earning vehicles 43,878 60,831
Purchases of revenue-earning vehicles (106,812) (109,091)
Purchase of rental vehicle franchise rights (11,497) (7,103)
Purchases of equipment and improvements (3,471) (2,176)
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Net cash used in investing activities (34,368) (42,614)
Cash flows from financing activities:
Proceeds from vehicle financing 63,278
Repayment of vehicle financing (49,738) 29,112
Proceeds from notes payable 21,472 6,950
Principal payments:
Notes payable (58)
Capital leases (45) (177)
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Net cash provided by financing activities 34,967 35,827
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Net increase in cash and cash equivalents 4,317 1,665
Cash and cash equivalents, beginning of period 357 878
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Cash and cash equivalents, end of period $4,674 $2,543
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TEAM RENTAL GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Team Rental
Group, Inc. (the "Company") for the three-month periods ended March 31, 1996
and 1995 reflect all adjustments (consisting of normal recurring adjustments)
which, in the opinion of management, are necessary to present fairly the
Company's consolidated financial condition, results of operations and cash
flows for the periods presented. Operating results for the three-month period
ended March 31, 1996 are not necessarily indicative of the results that may
be expected for the entire year ending December 31, 1996.
The consolidated financial statements for the three-month period ended March
31, 1995 give effect to the Company's acquisition of all of the outstanding
stock of the Budget franchises in Dayton, Ohio, Charlotte, North Carolina, and
Hartford, Connecticut. The accompanying statement of operations and statement
of cash flows only give effect to these operations for the period from their
respective dates of acquisition through March 31, 1995. The consolidated
financial statements as of March 31, 1996 and for the three-month period then
ended give effect to the Company's acquisition of all of the outstanding stock
of the Budget franchise in Phoenix, Arizona and VPSI, Inc., both of which were
acquired in February 1996. The accompanying statement of operations and
statement of cash flows only give effect to these operations for the period
from their respective dates of acquisition through March 31, 1996.
2. ACQUISITIONS
Dayton Franchise - In January 1995, the Company purchased all of the
outstanding stock of Don Kremer, Inc. located in Dayton, Ohio, for $1.3
million. The acquisition funding consisted of $650,000 cash and two notes
totaling $650,000.
Charlotte Franchise - In January 1995, the Company purchased all of the
outstanding stock of MacKay Car & Truck Rentals, Inc. located in Charlotte,
North Carolina for approximately $8.4 million consisting of cash of $8.3
million and 13,483 shares of Class A common stock.
Hartford Franchise - In March 1995, the Company purchased all of the
outstanding stock of Rental Car Resources, Inc. located in Hartford,
Connecticut for approximately $1.5 million by issuing 157,333 shares of Class
A common stock.
OPCO Franchise - In October 1995, the Company purchased all of the outstanding
stock of BRAC- OPCO, Inc. which operates Budget franchises in the greater Los
Angeles area, excluding the vehicle rental operations at Los Angeles
International Airport, for approximately $11.2 million by issuing 1,050,000
shares of Class A common stock.
Acquisition of Van Pool Operations - In February 1996, the Company purchased
for a nominal amount all of the outstanding stock of VPSI, Inc. ("VPSI")
located in Detroit, Michigan. VPSI provides commuter van pooling services to
business commuters in 22 states, operating a rental fleet of approximately
3,300 vans as of March 31, 1996.
Acquisition of Phoenix Franchise - In February 1996, the Company purchased all
of the outstanding stock of Arizona Rent-A-Car Systems, Inc. located in
Phoenix, Arizona for approximately $18 million consisting of cash of
approximately $5.0 million, a promissory note of $10.0 million and 272,727
shares of Class A common stock.
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If the acquisitions had occurred at the beginning of 1995, the Company's
results of operations would be as shown in the following table. These
unaudited pro forma results are not necessarily indicative of the ac tual
results of operations that would have occurred had the acquisitions actually
been made at the beginning of the respective years.
Three-month period ended March 31, 1996 1995
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(Dollars in thousands)
Operating revenue $ 76,831 $ 63,019
Income (loss) before provision for
income taxes (921) 764
Net income (loss) (553) 458
Earnings (loss) per common share (0.07) 0.06
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's original operation, acquired in April 1987, was the Budget
franchise for the San Diego metropolitan area, exclusive of the airport
location, which it acquired in 1988. The Company acquired the Albany and
Rochester, New York franchises and the Richmond, Virginia franchise in 1991.
Concurrent with the Company's initial public offering on August 25, 1994, the
Company purchased the Budget operations in Philadelphia and Pittsburgh,
Pennsylvania and Cincinnati, Ohio. In November 1994, the Com pany acquired the
Fort Wayne, Indiana Budget franchise and opened its first retail car sales
facility in San Diego, California. The Company acquired the Dayton, Ohio and
Charlotte, North Carolina Budget franchises in January 1995, the Hartford,
Connecticut Budget franchise in March 1995 and the Los Angeles Budget
franchise in October 1995. During 1995, the Company opened four retail car
sales facilities, in cluding locations in Philadelphia, Pennsylvania; Richmond,
Virginia; Charlotte, North Carolina; and a second location in San Diego,
California; and acquired retail car sales facilities in Dayton, Ohio and
Ontario, California. In February 1996, the Company acquired the Phoenix,
Arizona Budget franchise territory and VPSI, Inc., a commuter van pooling
service with operations in many regions throughout the United States.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's operations have been funded by cash provided from
operating activities and by financing provided by banks, automobile
manufacturers' captive finance companies and leasing companies. The Company's
existing indebtedness at March 31, 1996 has interest rates ranging from 6.0%
to 15.25%. The Company intends to fund its operations through the credit
facilities described below, as well as through other similar facilities and
through placements or offerings of additional debt and/or equity securities.
MEDIUM TERM NOTES - At March 31, 1996, medium term notes were comprised of
$105.7 million of notes issued by Team Fleet Financing Corporation in August
1994 ("TFFC notes") and $40 million of notes assumed by the Company in
connection with the acquisition of BRAC-OPCO, Inc. in October 1995 ("OPCO
notes"). These notes are utilized to finance vehicles eligible for certain
manufacturers' guaranteed repur chase programs. Proceeds from the notes that
are temporarily unutilized for vehicle financing are main tained in restricted
cash accounts with the trustee. The notes are collateralized by the secured
vehicles and the restricted cash accounts.
The TFFC notes are comprised of senior notes requiring monthly interest
payments at an average LIBOR, as defined, plus 0.75% (6.2% at March 31, 1996).
Monthly principal payments of $16,667,000 commence in June 1999 with the last
payment due in November 1999. The subordinated notes require monthly interest
payments at average LIBOR, as defined, plus 1.30% per annum (6.7% at March 31,
1996) and are payable in full in December 1999.
The OPCO notes are comprised of senior notes requiring monthly interest
payments at an average LIBOR, as defined, plus 0.60% (6.0% at March 31, 1996).
Monthly principal payments of $4,812,000 commence in November 1997 with the
last payment due in June 1998. The subordinated notes require monthly inter-
est payments at average LIBOR, as defined, plus 1.0% per annum (6.4% at March
31, 1996) and are pay able in full in December 1998.
VEHICLE OBLIGATIONS - Vehicle obligations consist of outstanding lines of
credit to purchase rental fleet and retail car sales inventory. Collateralized
lines of credit at March 31, 1996 consist of $200 million for rental vehicles
and $25.7 million for retail car sales inventory with maturity dates ranging
from April 1996 to April 1997. Vehicle obligations are collateralized by
revenue earning vehicles financed under these credit facilities and proceeds
from the sale, lease or rental of rental vehicles and retail car sales
inventory.
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Rental vehicle obligations are generally amortized over 5 to 15 months with
monthly principal payments ranging from 2% to 3% of the capitalized vehicle
cost. When rental vehicles are sold, the related unpaid obligation is due.
Interest payments for rental fleet facilities are due monthly at annual
interest rates rang ing from 6.8% to 15.25% at March 31, 1996. Management
expects vehicle obligations will generally be repaid within one year from the
balance sheet date with proceeds received from either the repurchase of the
vehicles by the manufacturers in accordance with the terms of the
manufacturers' rental fleet programs or from the sale of the vehicles.
Monthly payments of interest only for retail car sales inventory obligations
are required at an annual interest rate of 8.5% at March 31, 1996. Retail car
sales inventory obligations are paid when the inventory is sold but in no
event later than 120 days after the date of purchase.
WORKING CAPITAL FACILITIES - Working capital facilities of up to $20,000,000
are for the purchase of retail car sales inventory and working capital, and
require monthly interest payments on the outstanding balance at LIBOR plus
1.85% (7.2% at March 31, 1996). One such facility in the amount of $7 million
expires May 27, 1996; the remaining balance expires November 1996. The
facilities are collateralized by accounts receivable, inventory, equipment,
general intangibles, investments and all other personal property of the
Company and guarantees of the Company's subsidiaries. Under the terms of one
of the agreements, the Company is required to pay commitment fees quarterly
equal to 0.125% per annum on the maximum amount of credit available under the
credit facility and an annual agent fee of $50,000 as long as the facility
has an outstanding balance. This agreement is subject to certain covenants
which require the Company to maintain certain financial ratios and minimum
tangible net worth and prohibits the payment of cash dividends. At March 31,
1996, the Company was not in compliance with certain covenants under these
facilities. In April 1996, certain covenants were amended and the Company is
in compliance with the amended terms of the agreements.
OTHER NOTES PAYABLE - Other notes payable consist primarily of a secured
promissory note that bears interest at 8% per annum payable in annual
installments of $750,000, due August 1999, collateralized by personal
guarantees from the previous owners of Southern California operations; a
business credit note due November 1996 bearing interest at prime (8.25% March
31, 1996) collateralized by real estate property and secured by personal
guarantees of certain stockholders of the Company; a collateralized promissory
note that bears interest at 8% per annum, payable in monthly installments of
$7,000 plus interest, due September 2010, collateralized by real estate
property and personal guarantees of certain stockholders of the Company; a
mortgage note bearing interest at 9.10% per annum, payable in monthly
installments ranging from $5,400 to $7,800 plus interest, due September 2000
with an option to extend to September 2005, collateralized by real estate
property; and a mortgage note bearing interest rate of 7.5% per annum, payable
in monthly installments of $8,300 plus interest, due June 1998, collateralized
by real estate property.
CHANGE IN FINANCIAL CONDITION
Total assets increased $88.9 million, or 23.0% from $386.3 million at December
31, 1995 to $475.2 million at March 31, 1996. This increase resulted primarily
from increases in revenue-earning vehicles of $94.7 million, franchise rights
of $13.9 million and other assets of $19.5 million that were primarily the
result of the acquisition activity discussed above, which was somewhat offset
by a decrease in cash and cash equivalents and restricted cash of $39.2
million resulting from the use of cash to finance vehicle purchases in the
first quarter of 1996. Total liabilities increased $84.9 million, or 24.6%
from $344.7 million at December 31, 1995 to $429.6 million at March 31, 1996
due primarily to an additional $78.5 million of borrowings for financing
vehicle acquisitions and for financing the acquisitions in the first quarter
of 1996 and increases in accounts payable and other accrued liabilities of
$6.4 million relating to the increased size of the Com pany at March 31, 1996.
The increase in stockholders' equity of approximately $4.0 million resulted
from
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the additional shares issued in conjunction with the Arizona Rent a Car
Systems, Inc. acquisition totaling $2.7 million and net income of $1.3 million
earned in the first quarter.
RESULTS OF OPERATIONS
General Operating Results. Net income for the first quarter of 1996 of $0.18
per share represented a $.37 increase from the $0.19 per share loss
experienced in the first quarter of 1995. Income before taxes increased $4.0
million from a $1.9 million loss in the first quarter of 1995 to $2.1 million
income in the first quarter of 1996. This increase was due to the Company's
February acquisitions of Arizona Rent-A-Car Systems, Inc. and VPSI, Inc., both
of which combined contributed pre-tax income of $2.0 million to the Company,
and to incentives received from manufacturers that reduced vehicle
depreciation by approximately $2.0 million in the first quarter of 1996.
Operating income increased over 19 times to $6.9 million in the first three
months of 1996 as compared to the comparable period of 1995. The increase in
operating income was somewhat offset by an increase in interest expense of
$2.8 million, or 125%, due primarily to an increase in the vehicle fleet due
to the acquisitions of the Budget franchises in Arizona and Southern
California and VPSI, and due to an increase in the provision for income taxes of
$1.6 million due to the en hanced profitability of the Company in 1996.
Operating Revenues. Vehicle rental revenues increased $27.3 million, or 158%,
in the first three months of 1996 as compared to the comparable period of
1995. The increase in rental revenues is due primarily to the increase in the
size of the Company from operating 85 rental locations in eight franchise
areas at March 31, 1995 to operating 157 locations in thirteen franchise
territories at March 31, 1996 and to the acquisition of VPSI, Inc. in February
1996. This increased size resulted in an increase in the number of rental
revenue days from 438,000 in the first quarter of 1995 to 955,000 days in
1996. The daily average rental rate increased 10.5% from $36.97 in the first
quarter of 1995 to $40.87 for 1996. The average rental term in creased from
3.63 days in the first three months of 1995 to 4.02 days in the comparable
period of 1996. Vehicle rental revenues also increased in the first quarter of
1996 due to the inclusion of $5.7 million of revenues earned by VPSI since its
acquisition. Revenues from the Company's retail car sales operations increased
$16.2 million from $4.9 million in 1995 to $21.1 million in 1996, due to the
expansion of the Company's car sales facilities from two locations at March
31, 1995 to seven locations at March 31, 1996.
Operating Expenses. Operating expenses increased approximately $23.1 million,
or 131% to $40.7 million for the three-month period ended March 31, 1996 as
compared to $17.6 million for the same period in 1995. The growth of the
Company's vehicle rental operations through the acquisitions discussed above
was the principal cause of all of the increases to the Company's operating
expenses. Vehicle depreciation increased approximately $6.7 million, or 130%,
due to an increase in fleet of 6,300 vehicles which increased vehicle
depreciation by approximately $8.7 million, which was offset in part by
incentives received from manufacturers that reduced vehicle depreciation by
approximately $2.0 million. Personnel costs increased approximately 138% in
the first quarter of 1996 as compared to the comparable period of 1995 due to
an increase of approximately 900 employees since March 31, 1995. Advertising
expenses increased from $2.0 million to $4.3 million due to the increase in
the size of the rental operations and due to the growth of the retail car
sales operations from two markets at March 31, 1995 to six markets at March
31, 1996. The retail car sales business typically incurs greater advertising
expense than the car rental business. Facilities expense increased $2.3
million, or 108% due to the addition of 72 locations since March 31, 1995.
Other operating expense increases were due to the increased volume of rental
business resulting from the 1995 and 1996 acquisitions.
Other (Income) Expense, net. Vehicle interest expense, net, increased
approximately $2.4 million in the first quarter of 1996 due to the increase in
the size of the Company's rental fleet from approximately 6,300 vehicles at
March 31, 1995 to approximately 12,600 vehicles at March 31, 1996. The
Company's cost of funds decreased approximately 0.6% per annum in the first
quarter of 1996 as compared to the first quarter of 1995, due primarily to the
decrease in the LIBOR rate, upon which most of the Company's debt is based.
Nonvehicle interest and other expense, net of interest income, increased
approximately $357,000 in 1996,
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from approximately $333,000 income in 1995 to $24,000 expense in the first
quarter of 1996 due primarily to a $245,000 reduction in interest earned on
the excess proceeds from the medium term note program remaining available for
vehicle financing in the first quarter, as the Company had utilized a larger
portion of its medium term note funds in 1996. In addition, the Company's
borrowings under its working capital facilities increased from $7 million at
March 31, 1995 to $20 million at March 31, 1996 due primarily to borrowings to
fund the acquisitions of the Budget franchises in Southern California and
Arizona.
Provision for income taxes. The provision for income taxes increased $1.6
million from a $765,000 benefit for the first quarter of 1995 to a provision
of $851,000 or the first quarter of 1995. The $1.6 million change represents
a 40% tax provision for the enhanced profitability of the Company.
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PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
There are no material pending legal proceedings to which Team Rental
Group, Inc. nor any of its subsidiaries is a party or to which any of
their property is subject.
ITEM 2 CHANGES IN SECURITIES
Not applicable.
ITEM 3 DEFAULT UPON SENIOR SECURITIES
Not applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5 OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
2.1 Stock Purchase Agreement by and among the Company, Arizona Rent-A-Car
Systems, Inc., David Katzin, Bob Katzin, Jon David Katzin, Gabrielle De
Lavigne, the David Katzin Irrevocable Trust (dated November 17, 1989), and
Katzin Investments, L.C., dated as of December 21, 1995 (incorporated by refer
ence to Exhibit 2.1 to the Company's Current Report on Form 8-K dated December
21, 1995).
2.2 Share Purchase Agreement dated January 11, 1996 between Chrysler
Corporation and the Company. The exhibits and schedules which are referenced in
the table of contents and elsewhere are hereby incorporated by reference. Such
exhibits and schedules have been omitted for purposes of this filing, but will
be furnished to the Commission supplementally upon request.
4.1 Registration Rights Agreement among the Company and Katzin
Investments L.C., dated February 27, 1996 (incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 27,
1996).
10.1 Term Note dated February 27, 1996 from NationsBank, N.A. (South) to
the Company (incorporated by reference to Exhibit 10.48 to the Company's
Annual Report on Form 10-K dated December 31, 1995).
10.2 Amendment No. 1 to Term Note dated April 2, 1996 from NationsBank,
N.A. (South) to the Company.
10.3 Fifth Amendment dated March 28, 1996 to First Amended and Restated
Credit Agreement among Team Fleet Services Corporation, the Company and NBD
Bank, N.A.
10.4 Revolving Credit Agreement by and between VPSI, Inc. and
NationsBank, N.A. (South) dated February 6, 1996.
10.5 Amendment and Waiver No. 1 to Revolving Credit Agreement and
Security Agreement by and between VPSI, Inc. and NationsBank, N.A. (South)
dated March 28, 1996.
<PAGE>
(b) Reports on Form 8-K
In a Form 8-K dated February 29, 1996, the Company reported under Item 7 that
it would restate its earnings for certain periods. No financial statements
were filed.
In a Form 8-K dated December 21, 1995 and filed on January 5, 1996, the
Company reported under Item 5 the execution of an agreement to acquire Arizona
Rent-A-Car Systems, Inc.
In a Form 8-K dated February 27, 1996, the Company reported under Item 2 the
acquisition of Arizona Rent-A-Car Systems, Inc. The required financial
statements and pro forma financial information were subsequently filed on a
Form 8-K/A by the Company under Item 7 on May 13, 1996.
In a Form 8-K/A dated October 20, 1995 and filed on January 4, 1996, the
Company filed under Item 7 the financial statements of BRAC-OPCO, Inc. and the
required pro forma financial information.
<PAGE>
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.
TEAM RENTAL GROUP, INC.
(Registrant)
Dated: May 14, 1996 By: /s/ Sanford Miller
-------------------
Sanford Miller
Chairman of the Board and
Chief Executive Officer
Dated: May 14, 1996 By: /s/ Jeffrey D. Congdon
--------------------
Jeffrey D. Congdon
Chief Financial Officer
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT (this "Agreement") dated January 11, 1996
between CHRYSLER CORPORATION, a Delaware corporation ("Chrysler" or the
"Seller") and TEAM RENTAL GROUP, INC., a Delaware corporation (the "Buyer"),
(collectively the "Parties"), for the stock of VPSI, Inc., a Delaware
corporation (the "Company").
RECITALS
WHEREAS, the Company is engaged in vanpooling and related
administrative services and certain long-term leasing operations in various
locations in the United States; and
WHEREAS, Seller owns all of the outstanding capital stock, consisting
of 50 shares of common stock, par value $100 per share (the "Shares"), of the
Company; and
WHEREAS, on the terms and subject to the conditions set forth in this
Agreement, Seller wishes to sell to Buyer, and Buyer wishes to purchase from
Seller, all of the Shares.
<PAGE>
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AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Parties agree as follows:
Article 1. TRANSFER OF SHARES, PAYMENT AND CLOSING
1.1. Purchase and Sale of the Shares; Purchase Price. On the terms and
subject to the conditions of this Agreement, on the Closing Date (as defined in
Section 1.4.), Seller shall sell, transfer and deliver to Buyer, and Buyer shall
purchase, acquire and accept from Seller, the Shares, for the consideration of
U.S. $100 plus any amount by which the Buyer's Debt Payment (as defined below)
exceeds the Fleet Debt (as defined below) (the "Purchase Price"). Payment of the
Purchase Price shall be made on the Closing Date in the form of a cashier's or
certified bank check payable or endorsed to Seller.
1.2 Payment of Fleet Debt. The "Buyer's Debt Payment"
means a payment calculated according to the formula set forth in
Section 1.1 of the Schedule. "Fleet Debt" means the amount of the
Company's debt to Chrysler Financial Corporation ("CFC") as of
the Closing Date.
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(a) Contemporaneously with the Closing (as defined in Section 1.4), the
Buyer shall pay, or shall pay to the Company and then cause the Company to pay,
an amount equal to the Buyer's Debt Payment to CFC, in full or partial
satisfaction (as the case may be) of the Fleet Debt. Such payment shall be made
by wire transfer of immediately available funds to CFC's Treasurer's Account
#144-0-29574 at Chemical Bank, New York (ABA #021000128) or, if another account
is designated by the Seller at least five Business Days (as defined in Section
7.13) prior to the Closing Date, then to such account.
(b) In the event that the Fleet Debt is greater than the Buyer's Debt
Payment, the Seller will pay the difference to CFC immediately prior to the
Closing. It is the intention of Buyer and Seller that Seller's payment of Fleet
Debt will take place prior to a change of ownership.
(c) In the event that the Buyer's Debt Payment is greater than the
Fleet Debt, the Buyer will pay the difference to the Seller on the Closing Date
as part of the Purchase Price as provided in Section 1.1.
1.3. (This section intentionally omitted.)
1.4. Closing. The closing of the purchase and sale of the
Shares and of the other transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of
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Chrysler in Highland Park, Michigan, or at such other place as the Seller and
the Buyer may agree, at 10:00 A.M. three Business Days following notification
that the Hart-Scott-Rodino waiting period has ended (the "Closing Date"). At the
Closing:
1.4.1 Buyer's Deliveries. The Buyer will take the
following actions and make the following deliveries:
(a) The Buyer will pay the Purchase Price to the
Seller.
(b) The Buyer will pay, or will pay to the Company and then
cause the Company to pay, the Buyer's Debt Payment to CFC.
(c) The Buyer will provide confirmation, dated as of the
Closing Date, to the Seller that the Company has obtained replacement insurance
coverage and surety bonds as provided in Section 5.3.5. of this Agreement.
(d) The Buyer will deliver all other documents required to be
delivered by the Purchaser pursuant to this Agreement.
1.4.2. Seller's Deliveries. The Seller will take the
following actions and make the following deliveries:
(a) The Seller will deliver a stock certificate representing
the Shares being bought by Buyer from Seller under
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this Agreement, accompanied by stock powers duly executed in blank and otherwise
in a form acceptable for transfer on the books of the Company.
(b) The Seller will pay to CFC the amount, if any, by which
the Fleet Debt is greater than the Buyer's Debt Payment, as provided in Section
1.2(b).
(c) The Seller will deliver a document which releases CFC's
liens on vehicles owned by the Company; provided, however, that the Buyer shall
bear all costs associated with reissuing the titles of the Company's vehicles to
remove the reference to CFC's lien.
(d) The Seller will deliver all other documents required to be
delivered by the Seller pursuant to this Agreement.
Article 2. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of Seller. Seller
represents and warrants to Buyer as follows, with such exceptions
as are set forth in the Schedule:
2.1.1. Organization, Power, etc., of Seller. Seller
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all
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requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement.
2.1.2. Validity and Effect of Agreement. The execution,
delivery and performance of this Agreement by Seller have been duly and
effectively authorized by all requisite corporate action and this Agreement
constitutes the legal, valid and binding obligation of Seller enforceable in
accordance with its terms.
2.1.3. Ownership and Delivery of Shares. The Shares are owned,
of record and beneficially, by Seller, free and clear of any and all pledges,
security interests, liens, charges, and calls, and at the Closing, Seller shall
transfer valid title to the Shares to Buyer, free and clear of any and all
pledges, security interests, liens, charges and calls. Subject to Section
2.1.4.(b), there are no outstanding options, warrants, calls, subscriptions,
agreements or commitments of any character affecting the Shares, except as set
forth in this Agreement, the Articles and By-Laws of the Company and such
restrictions imposed by applicable federal, state and local laws, rules and
regulations.
2.1.4. No Conflicts, Consents, etc. The execution,
delivery and performance of this Agreement by the Seller will
not:
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(a) result in any conflict with or result in any violation of
any statute, law, regulation, judgment, order or decree by which the Seller or
the Company or any of their respective properties or assets are bound;
(b) except as set forth in Section 2.1.4. of the Schedule,
conflict with or result in any breach or default under (with or without notice
or lapse of time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or to loss of a benefit under, or result in
the creation of a lien or encumbrance on any of the properties or assets of the
Company under (i) any provision of the Articles or Certificate of Incorporation
or By-Laws of the Company or the Seller, or (ii) any Material Contract (as
defined in Section 2.1.9. of this Agreement hereof) to which the Company is a
party or by which the Company or any of its properties or assets are bound; and
(c) except as set forth in Section 2.1.4. of the Schedule, no
consent, approval or authorization of or filing with any governmental authority
is required on the part of the Seller in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
by this Agreement.
2.1.5. Employment Agreements and Plans. Section
2.1.5. of the Schedule lists all agreements, contracts and
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commitments of the following types to which the Company is a party and which are
applicable to Employees (as defined in Section 3.4. hereof): (a) employment and
consulting agreements (including severance and retention agreements) providing
for compensation in excess of $50,000 per year (the "Personnel Agreements"), (b)
collective bargaining agreements (the "Collective Bargaining Agreements") and
(c) profit sharing, pension, savings, health care, group insurance, layoff,
bonus, incentive compensation, stock option, deferred compensation, or other
plans, agreements, trusts or funds (the "Plans") for the benefit of Employees.
2.1.6. Litigation. Except as set forth in Section 2.1.6. of
the Schedule, there is no judicial or administrative action, proceeding or
investigation pending or, to the best knowledge of the Seller, threatened,
against the Company which (a) questions the validity of this Agreement or any
action taken or to be taken by the Seller in connection with this Agreement or
(b) individually and in the aggregate, would reasonably be expected to have a
material adverse effect on the business or operations of the Company.
2.1.7. No Brokers. All negotiations relative to this
Agreement and the transactions contemplated by this Agreement
have been carried on by Seller with Buyer and its representatives
without the intervention of any person as a result of any act of
Seller so as to give rise to any valid claim against any of the
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Parties for a brokerage commission, finder's fee or other like payment.
2.1.8. Tax Returns and Payments.
(a) Except as otherwise set forth in Schedule 2.1.8. or
as reserved against in the Closing Statement of Net Assets:
(i) the Company has filed or caused to be filed
all federal and state Returns (as defined in this Section 2.1.8) and all
material local Returns relating to all periods ended on or before the date of
this Agreement and will file or cause to be filed all federal and state Returns
and all material local Returns relating to all periods ended on or before the
Closing Date; and
(ii) all federal and state Income Taxes (as
defined in this Section 2.1.8.) and all material local Income Taxes, all state
and local sales and use Taxes, and all other federal, state and material local
Taxes relating to the business or assets of the Company, in each case required
to be shown as due on such Returns, have been or as of the Closing Date will be
paid.
(b) For purposes of this Agreement, the following terms shall
have the meanings set forth below:
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(i) "Tax" means any federal, state, local,
foreign and other income, profits, franchise, capital, withholding, unemployment
insurance, social security, occupational, production, severance, gross receipts,
value added, sales, use, excise, real and personal property, ad valorem,
occupancy, transfer, employment, disability, workers' compensation or other
similar tax, duty or other governmental charge (including all interest and
penalties thereon and additions thereto);
(ii) "Income Tax" means any Tax computed in whole
or in part by reference to net income (including all interest and
penalties thereon and additions thereto); and
(iii) "Return" means any federal, state, local or
foreign Tax return, report, declaration or form required to be
filed by the Company.
2.1.9. Material Contracts. Section 2.1.9. of the
Schedule contains a complete and correct list of all Material
Contracts to which the Company is a party. The term "Material
Contract" shall mean each contract and agreement with respect to
which the annual amount reasonably expected to be received or
paid in the future exceeds $50,000.
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2.2. Representations and Warranties of Buyer. Buyer
represents and warrants to Seller as follows, with such
exceptions as are set forth in the Schedule:
2.2.1. Organization, Power, etc., of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate power and authority to enter into
this Agreement and to consummate the transaction contemplated by this Agreement.
2.2.2. Validity and Effect of Agreement. The execution,
delivery and performance of this Agreement have been duly and effectively
authorized by all requisite corporate action, and such agreement has been duly
executed by Buyer and constitutes the legal, valid and binding obligation of
Buyer, enforceable in accordance with its terms.
2.2.3. No Conflicts, Consents, etc.
The execution, delivery and performance of this Agreement by
the Buyer will not:
(a) result in any conflict with or result in any violation of
statute, law, regulation, judgment, order or decree by which the Buyer or any of
its properties or assets are bound;
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(b) except as set forth in Section 2.2.3. of the Schedule,
conflict with or result in any breach or default under (with or without notice
or lapse of time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or to loss of a benefit under, or result in
the creation of a lien or encumbrance on any of the properties or assets of the
Company under (i) any provision of the Articles or Certificate of Incorporation
or By-Laws of the Buyer, or (ii) any contract to which the Buyer is a party or
by which the Buyer or any of its properties or assets are bound which is
material to its business; and
(c) except as set forth on Section 2.2.3. of the Schedule, no
consent, approval or authorization of or filing with any governmental authority
is required on the part of the Buyer in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
by this Agreement.
2.2.4. Litigation. There is no judicial or admin istrative
action, proceeding or investigation pending or, to the best knowledge of the
Buyer, threatened, which (a) questions the validity of this Agreement or any
action taken or to be taken by the Buyer in connection with this Agreement or
(b) would reasonably be expected to have a material adverse effect on the
business, operations or financial condition of the Buyer.
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2.2.5. Financial Ability to Consummate Transactions. The Buyer
has sufficient funds to enable it to consummate the transactions contemplated in
this Agreement, including the payment of the Purchase Price and the Buyer's Debt
Payment. The Buyer acknowledges that it will be responsible for providing
working capital and all other capital requirements to allow the Company to
operate on and after the Closing Date, and the Buyer will have sufficient funds
to do so.
2.2.6. No Other Representations. Except for the
representations and warranties contained in Sections 2.1.1 - 2.1.9 above, the
Buyer acknowledges that no representations or warranties have been made by the
Seller with respect to the Company, its business or prospects. Without limiting
the generality of the foregoing, the Buyer expressly understands that the
financial statements of the Company have not been maintained on a basis in
accordance with U.S. generally accepted accounting principles, and that any
projections or forecasts which may have been provided to it in connection with
the negotiation of this Agreement were prepared for the Company's own use and
not for the Buyer's reliance and that such projections and forecasts cannot be
used as reliable predictors of actual operating results.
2.2.7. No Brokers. All negotiations relative to this
Agreement and the transactions contemplated by this Agreement
have been carried on by Buyer with Seller and its representatives
without the intervention of any person as a result of any act of
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Buyer so as to give rise to any valid claim against any of the Parties for a
brokerage commission, finder's fee, or other like payment.
2.2.8. Purchase for Investment. The Buyer acknowledges that
the Seller has informed the Buyer that the Shares have not been registered under
the Securities Act of 1933, as amended, or under any state or foreign securities
laws. The Buyer is purchasing the Shares for its own account and not with a view
to the distribution of the Shares. The Buyer further acknowledges that the
Seller and the Company have provided the Buyer with such access to the books,
records, facilities and personnel of the Company as the Buyer has deemed
necessary and appropriate in order for the Buyer to investigate to its
satisfaction the business, affairs and properties of the Company sufficiently to
make an informed investment decision to purchase the Shares and to enter into
this Agreement and that it has been afforded the opportunity to ask questions
of, and receive answers from representatives of the Company and the Seller
concerning the terms and conditions of the transactions contemplated by this
Agreement and to obtain any additional information necessary to verify the
accuracy of the information obtained.
2.2.9. Insurance. The Buyer acknowledges and agrees
that the Seller has made no representations or warranties and has
given no assurances as to the accuracy or adequacy of any
historical data, claim history, projections, assumptions or
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methodologies (including the report prepared by Alexander and Alexander),
regarding the Company's insurance coverage.
2.2.10. Cost of Services. The Buyer understands that the
intercompany expense allocation of the management and other services currently
being provided to the Company by the Seller and its affiliates may not reflect
the actual cost of such services nor the cost that the Company will incur after
the Closing to obtain such services elsewhere or through other means. The Buyer
further understands that the Company has in the past received discounts on
certain goods and services offered by third-party vendors to Chrysler and its
affiliates (including long distance and local telephone service, office
equipment, tire purchases and repair, car wash systems, insurance claims
adjusting services and financial, legal, accounting and other professional
services) and that such discounts may not be offered or made available following
the Closing Date.
Article 3. CERTAIN COVENANTS
3.1. Obligations of the Parties. The Parties shall apply for and
diligently prosecute all applications for, and shall use reasonable efforts
promptly to obtain, such consents, authorizations and approvals from such
governmental authorities as shall be necessary to permit the consummation of the
transactions contemplated by this Agreement, and shall use reasonable best
efforts to bring about the satisfaction as soon as practicable of
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all the conditions contained in Article 5. and to effect the
consummation of the transactions contemplated by this Agreement.
3.2. Conduct of Business. Until and including the Closing Date, except
as contemplated by this Agreement or as described in Section 3.2 of the Schedule
or as otherwise consented to by the Buyer in writing, such consent not to be
unreasonably withheld or delayed, the Seller shall cause the Company to carry on
its business in the ordinary course in substantially the same manner in which it
previously has been conducted and, to the extent consistent with such business,
use reasonable efforts to preserve intact its present business organization and
to preserve its relationships with customers, suppliers and others having
business dealings with it.
3.3. Access and Information; Public Announcements. Prior to the
Closing, the Seller shall give the Buyer and its representatives access at all
reasonable times to the properties, books and records of the Company and furnish
such additional information and documents, all as the Buyer may reasonably
request. All such information and documents obtained by the Buyer shall be
subject to the terms of the Confidentiality Agreement, dated May 24, 1995 (the
"Confidentiality Agreement"), between the Buyer and the Seller. The Seller and
the Buyer shall consult in advance with the other concerning the timing and
content of any announcements, press releases and public statements concerning
this Agreement and shall not make any such
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announcement, release or statement without the other's consent; provided,
however, that either Party may make any public statement concerning this
Agreement without the other's consent, if, in the opinion of counsel for such
party, such statement or announcement is required to comply with applicable law.
3.4. Employee Matters; Employee Benefit Plans and
Arrangements.
3.4.1. General Obligations. Effective 12:01 a.m. on the day
following the Closing Date, the Buyer agrees that the Buyer shall cause the
Company to continue the employment of all the employees listed in Section 3.4.1.
of the Schedule ("Employees") at the same salary in effect as of the Closing
Date and at such fringe, welfare and other benefit levels and otherwise in
accordance with such terms and conditions which in the aggregate are
substantially comparable to those provided by Buyer to its similarly situated
employees. Following the Closing Date, the provisions of Section 3.4.6. will be
effective. Each Employee who is a participant in any Seller-sponsored employee
benefit plans, pay practices and compensation programs shall cease to be an
active participant in such plans, practices and programs effective on the day
following the Closing Date.
3.4.2. Savings Plans. The Buyer shall cause the
Company to establish or provide a successor 401(k) retirement
savings plan (the "Buyer's Savings Plan") which satisfies the
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requirements of the Employee Retirement Income Security Act of 1974 ("ERISA")
and the Internal Revenue Code of 1986, as amended (the "Code"). The Buyer's
Savings Plan will provide for rollovers in cash (including direct rollovers as
described in Section 401(a)(31) of the Code) from Employees who participated in
the Chrysler Salaried Employees' Savings Plan (the "Chrysler Savings Plan").
Such rollovers may be effected by Employees after the Closing Date. The Seller
shall amend the Chrysler Savings Plan to provide that effective as of the date
of a rollover distribution, such Employee shall be fully vested in his or her
Chrysler Savings Plan account.
3.4.3. Health Care and Group Insurance. Effective 12:01 a.m.
the day following the Closing Date, all Employees who participate in health care
and group insurance plans sponsored by the Seller or the Company prior to the
Closing Date (the "Seller's Welfare Plans") shall be covered by the Buyer's
health care and group insurance plans (the "Buyer's Welfare Plans"). Such plans
(i) shall cover all employees of the Company as of the day following the Closing
with continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985 and subsequent enactments ("COBRA"), and their dependents (if
applicable), (ii) shall provide coverage effective as of the Closing, (iii)
shall otherwise ensure that there will be no loss of coverage (as such term is
used in the COBRA) by any such employee covered by the Seller's Welfare Plans as
of the Closing Date or by any such former employee with COBRA continuation
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coverage. In the event the Buyer later determines to terminate such successor
plan, (i) the Company shall comply with all COBRA notification requirements and
shall provide continuation coverage, if required, under COBRA, and (ii) the
Buyer and the Company shall indemnify and hold the Seller harmless from and
against any and all Damages which the Seller may incur as a result of any
failure by the Company to comply with the requirements of COBRA. The Buyer
agrees that the Buyer's Welfare Plans shall (i) waive all preexisting health
conditions under the Buyer's Welfare Plans, and (ii) credit each Employee with
the same service credited to the benefit of such Employee under the Seller's or
the Company's Welfare Plans as of the Closing Date.
3.4.4. Post-Closing Service. The Buyer shall provide
Seller with such records and information with respect to the
Employees' post-closing service with the Buyer as the Seller
shall reasonably request from time to time.
3.4.5. Indemnification. The Buyer shall be solely responsible
for, and shall indemnify and hold harmless the Seller pursuant to Article 6
hereof, from and against, all direct and indirect damages, costs, expenses, and
other liabilities, including, without limitation, any claims, interest,
penalties and attorneys' fees asserted against, resulting to, imposed upon or
incurred by the Seller arising from or relating in any way to any claim for
wages and benefits or any other liabilities resulting from or relating in any
way to the Buyer's performance
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of the Buyer's obligations set forth in Sections 3.4.1 (subject
to 3.4.6.), 3.4.2, 3.4.3.
3.4.6. Seller's Obligations. The Seller will reimburse the
Buyer for the cost of separation payments calculated as provided on Exhibit B
associated with termination of up to 20% of the Employees during the 90-day
period following the Closing. All other costs associated with termination of
Employees following the Closing will be borne by the Buyer. The Seller will make
available a COBRA coverage election to former employees of the Company whose
employment with the Company terminated on or prior to the Closing Date, and
dependants of such former employees who are eligible to elect such coverage. The
Seller will also make available a COBRA coverage election to dependants of
active employees of the Company who are eligible to elect such coverage on or
before the Closing Date. Section 3.4.6. of the Schedule sets forth all former
employees of the Seller who have elected COBRA coverage or are eligible to elect
such coverage on or before the Closing Date.
3.5. Corporate Names; Proprietary Rights. Neither the Buyer
nor any entity controlled by it shall, after the Closing Date, unless authorized
in writing by the owner or licensor, make any use of any software owned by
Chrysler or any third party licensed to Chrysler, or of the name "Chrysler" or
of any other trade names, trademarks or service marks owned or used, whether
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exclusively or jointly, by the Seller or any of its affiliates
other than the names "VPSI" and "VPSI, Inc."
3.6. Vehicle Insurance; Other Insurance and Surety Bonds.
(a) Within 15 Business Days following the date of this Agreement, (i)
Seller will send or cause to be sent notices of termination of vehicle insurance
to each of the Company's customers to whom it has provided a certificate of
insurance, and (ii) Buyer will provide the Seller with evidence satisfactory to
the Seller that Buyer has replacement insurance for the vehicle and other
insurance currently provided by the Company to its customers. Buyer's
replacement insurance will be at such limits and contain such terms and
conditions as are required by the respective agreements between the Company and
its customers, and will be effective on the Closing Date. Buyer will mail
replacement certificates to customers of the Company at least 5 Business Days
prior to the Closing.
In the event that the termination of insurance provided by the Seller
is not effective prior to the Closing Date with respect to any customer due to
the notice requirements contained in any agreement between the Company and such
customer, the Buyer's insurance coverage will be primary and the insurance
provided by the Seller will be contingent and secondary until such time as
termination becomes effective. As provided in Section 6.2.2. (c), the Buyer will
indemnify the Seller with
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respect to any claim against the Seller or any of its affiliates arising out of
any incident, transaction or occurrence involving any of the Company's vehicles
after the Closing Date.
(b) The Buyer understands and agrees that all insurance (including
worker's compensation and vehicle insurance) provided by the Seller and Seller's
affiliates with respect to the Company and its customers will terminate at 12:01
a.m. the day following the Closing Date (except in situations contemplated by
the second paragraph of subsection (a) above). The Seller will cause the Company
and its customers to be removed as insured parties under all insurance policies
with such termination of coverage to be effective solely as to events occurring
from and after 12:01 a.m. on the day immediately following the Closing Date.
Buyer shall cause the Company, at its sole expense, to obtain replacement
coverage for each of the insurance policies and other insuring agreements with
respect to events occurring after the Closing Date, and shall provide evidence
thereof to the Seller within 15 Business Days of the date hereof.
(c) With respect to the outstanding surety bonds on
Section 3.6. of the Schedule issued on behalf of or for the
account of the Company, the Parties agree as follows:
(i) The Seller shall cause each of the surety
bonds on Section 3.6. of the Schedule to be maintained and
continued in full force and effect with respect to events
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occurring on or prior to the Closing Date for a period of sixty days from the
Closing Date.
(ii) Within sixty (60) days after the Closing,
the Buyer shall cause the Company to replace each of the surety bonds on Section
3.6. of the Schedule. Upon replacement, the Seller shall be entitled to cancel
each of such surety bonds. Until so replaced, the Seller will cause each of such
surety bonds to be maintained in full force and effect, provided such
maintenance does not involve any cost or expense to the Seller and provided that
Seller will cancel all surety bonds sixty (60) days after the Closing, whether
or not they have been replaced. Any premium refunds arising from such
cancellation shall be payable to the Seller. As provided in Section 6.2.2.(c),
the Buyer will indemnify the Seller with respect to any claim against the Seller
or any of its affiliates under the surety bonds arising out of any incident,
transaction or occurrence following the Closing Date.
(e) The Parties agree that the resolution and payment of
liability claims (and related self-insurance retention amounts or matching
deductibles, adjusting fees, required escrow fund deposits, legal fees and
expenses) under insurance policies covering events occurring on or prior to the
Closing Date shall be the responsibility of Seller.
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3.7. Philadelphia Paratransit Operation. Until recently, the Company
was engaged in the provision of transportation services for passengers with
special needs in Philadelphia, Pennsylvania (the "Philadelphia Paratransit
Operation"). Buyer and Seller agree that all proceeds from the Philadelphia
Paratransit Operation, including the sale of its assets, will be paid by the
Company to the Seller when received by the Company, whether before or after the
Closing. The Seller will be responsible for all costs and expenses associated
with the transfer of these assets. At Seller's request, Buyer will furnish
reasonably satisfactory evidence of checks, invoices, receipts and other
documentation related to the payments contemplated by this Section 3.7.
3.8. Amendment of Schedule. The Seller will supplement or amend
Sections 2.1.4 through 2.1.9 of the Schedule prior to the Closing with respect
to (a) any matter hereafter arising or discovered which, if existing or known at
the date of this Agreement, would have been required to be set forth or
described in the Schedule and (b) any errors or omissions in the Schedule based
on information or events of which the Seller becomes aware after the date of
this Agreement.
3.9. Intercompany Account. Effective as of the Closing
Date, the Company will apply all cash reflected on the Closing
Statement of Net Assets (other than petty cash in an amount not
to exceed U.S. $20,000) to its intercompany loan with the Seller.
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Except as set forth above, the Seller will forgive the intercompany account with
the Company effective as of the Closing Date.
3.10. Post-Closing Services.
(a) Following the Closing, the Seller will continue to purchase from
the Company the services currently provided to the Seller by the Company for
management of approximately 40 vanpool groups for employees of the Seller for a
five-year period following the Closing, provided that the Company continues to
offer such services at commercially reasonable rates and provided the vanpool
groups continue. The current rates at which such services are provided are
deemed to be reasonable commercial rates.
(b) Buyer understands that all services currently performed by the
Seller for the Company will terminate the day following the Closing Date. The
Seller will provide reasonable assistance to the Buyer for a period of up to 90
days following the Closing to effect an orderly transition.
3.11. Non-Compete. For a period of five years following
the Closing Date neither the Seller nor any of its subsidiaries
(while owned by the Seller) will:
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(a) establish a separate, for profit, legal entity in the
United States, that is organized for the primary purpose of establishing a
commuter vanpool service business that includes the provision of vehicles,
marketing, maintenance and program administration, in the United States, of the
type provided by the Company on the date hereof; provided, however, that the
foregoing will not be interpreted or construed so as to prohibit the Seller or
any of its subsidiaries from conducting their respective businesses and
operations as now conducted or as may be conducted in the future, including,
without limitation, the sale or lease of vehicles and fleets of vehicles and the
provision of related administrative services, whether or not the Seller or any
of its subsidiaries are in direct or indirect competition with Buyer or any of
its subsidiaries and affiliates; and provided further, that the foregoing will
not prohibit the Seller or any of its subsidiaries from acquiring, merging or
combining with any company unless its principal source of revenues is generated
from providing services of the type provided by the Company on the date hereof;
and provided further, that an acquisition as a result of a foreclosure or
similar proceeding in connection with the enforcement of a debt proceeding, is
not prohibited by this section;
(b) cause or attempt to cause (i) any customer of the
Company's business to terminate or materially reduce its vanpool business with
Buyer or (ii) any consultant of the Company engaged in the Company's business to
resign or sever a relationship with
<PAGE>
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the Company, other than in connection with the enforcement of any
contract right that Seller or its subsidiaries may have; or
(c) disclose (unless compelled by judicial or administrative
process) or use any confidential, proprietary or secret information that is
clearly identified as confidential, relating to the Company's vanpool business
or any customer of the Company in any manner that would substantially harm the
Company.
The Parties recognize that the laws and public policies of the
various states of the United States may differ as to the validity and
enforceability of covenants similar to those set forth in this Section. It is
the intention of the Parties that the provisions of this Section be enforced to
the fullest extent permissible under the laws and policies of each jurisdiction
in which enforcement may be sought, and that the unenforceability (or the
modification to conform to such laws or policies) of any provisions of this
Section shall not render unenforceable, or impair, the remainder of the
provisions of this Section. Accordingly, if any provision of this Section shall
be determined to be invalid or unenforceable, such invalidity or
unenforceability shall be deemed to apply only with respect to the operation of
such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
<PAGE>
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Article 4. TAXES
4.1. Tax Sharing. On the Closing Date, all Tax sharing agreements and
arrangements, whether formal or informal, between the Company and the Seller
shall be terminated, and no additional payments shall at any time be made under
those Tax sharing arrangements or agreements.
4.2. Payments.
4.2.1 The Seller shall pay or cause to be paid (without
duplication of amounts otherwise payable, and excluding any interest, penalties
and additions to Tax arising from any act or omission after the Closing by the
Buyer, if such act or omission was not caused by an act or omission of the
Seller):
(a) all federal Income Taxes payable with respect to which the
Company has filed or is required to file pursuant to Section 4.3.1. hereof a
consolidated federal Income Tax Return with the consolidated group of which the
Seller is a member (the "Seller's Group"), payable with respect to the Company
for all periods ending on or prior to the Closing Date:
(b) all state, local and foreign Income Taxes with respect to
which the Company has filed or is required to file pursuant to Section 4.3.1. a
combined, consolidated or unitary state, local or foreign Income Tax Return with
the Seller,
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payable with respect to the Company for all periods ending on or
prior to the Closing Date;
(c) all other Taxes for which the Company may be held liable
as a member of the Seller's Group pursuant to Treasury Regulation Section
1.1502-6(a) or as a member of any combined, consolidated or unitary group of
which the Seller is a member pursuant to any similar provision of any state,
local or foreign law with respect to Income Taxes for periods ending on or prior
to the Closing Date; and
(d) all state, local and foreign Income Taxes with respect to
which the Company has filed or is required to file a return pursuant to Section
4.3.2 which relate to the business or assets of the Company for periods ended on
or before the Closing Date.
4.2.2. The Buyer shall pay or cause to be paid all Taxes
payable with respect to the Company that are not described as being the
responsibility of the Seller in Section 4.2.1.
above.
4.3. Returns.
4.3.1. The Seller and the Buyer shall cause the
Company, to the extent permitted by law, to join, for all taxable
periods ending on or prior to the Closing Date, in (a) the
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consolidated federal Income Tax Returns of the Seller's group and (b) the
combined, consolidated or unitary Returns for state, local and foreign Income
Taxes with respect to which the Company (i) filed such a Return for the most
recent taxable period for which a Return has been filed prior to the Closing
Date and may file such a Return for subsequent taxable periods or (ii) is
required to file such a Return. The income, deductions and credits of the
Company for periods on or prior to the Closing Date shall be included in the
consolidated federal Income Tax Returns of the Seller's Group and in such
combined, consolidated and unitary Returns where applicable. The Seller shall
file, or cause to be filed, all other Returns relating to the business or assets
of the Company required to be filed on or before the Closing Date.
4.3.2. The Buyer shall file, or cause to be filed, all Returns
relating to the business or assets of the Company, other than those Returns
described in Section 4.3.1. above (including any federal Income Tax Return filed
by the consolidated group of which the Buyer is a member with respect to any
taxable period ending after the Closing Date). The income, deductions and
credits of the Company, other than those required to be included in the Returns
described in Section 4.3.1., shall be included in the Returns described in the
immediately preceding sentence, including (a) items for periods on or prior to
the Closing Date with respect to state, local and foreign Income Taxes that are
not required to be included in combined, consolidated or unitary
<PAGE>
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Returns or in Returns required to be filed on or before the Closing Date
pursuant to Section 4.3.1. and (b) all items for periods after the Closing Date.
Any such Returns for which the Buyer is responsible shall, insofar as they
relate to items for periods ended on or prior to the Closing Date and to the
extent permitted by applicable Tax law, be on a basis consistent with the last
previous such Returns filed in respect of the Company.
4.3.3. The Buyer, the Seller and the Company shall cooperate
with each other with respect to the preparation and filing of any Return for
which the other is responsible pursuant to this Section 4.3.
4.4. Refunds. Subject to the provisions of this Section 4.4., (a) the
Seller shall be entitled to retain, or receive immediate payment from the
Company or the Buyer (to the extent received or utilized by the Company or the
Buyer) of, any refund or credit with respect to Taxes (including refunds and
credits arising by reason of amended Returns filed after the Closing Date), plus
any interest received with respect thereto from the applicable taxing
authorities, relating to the Company that are described as being the
responsibility of the Seller in Section 4.2.1. hereof, and (b) the Buyer or the
Company shall be entitled to retain, or receive immediate payment from the
Seller (to the extent received or utilized by the Seller) of, any refund or
credit with respect to Taxes, plus any interest received with respect thereto
from the applicable taxing authorities, relating
<PAGE>
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to the Company that are described as being the responsibility of the Buyer in
Section 4.2.2., provided that the Company shall not elect to carry back any item
of loss, deduction or credit from a Return described as being the responsibility
of the Buyer in Section 4.3.2. to a Return described as being the responsibility
of the Seller in Section 4.3.1. hereof (other than the last sentence thereof)
and, notwithstanding any other provision of this Section 4.4, the Seller shall
be entitled to retain any refund or credit with respect to Taxes that results
from any such item that the Company nevertheless elects to so carry back, and
the Buyer or the Company shall be entitled to receive immediate payment from the
Seller of any refund or credit with respect to Taxes that results from any such
item that the Company was required to so carry back unless such requirement
resulted from a carryback election by the Buyer or the Company. The Buyer and
the Seller shall cooperate, and the Buyer shall cause the Company to cooperate
with the Seller, with respect to claiming any refund or credit with respect to
Taxes referred to in this Section 4.4. Such cooperation shall include providing
all relevant information available to the Seller or the Buyer (through the
Company or otherwise), as the case may be, with respect to any such claim;
filing and diligently pursuing such claim (including by litigation, if
appropriate); paying over to the Seller or the Buyer, as the Case may be, and in
accordance with this provision, any amount received by the Buyer (or the
Company) or the Seller, as the case may be, with respect to such claim; and, in
the case of the party filing such a claim, consulting with the other party
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prior to agreeing to any disposition of such claim; provided that the foregoing
shall be done in a manner so as not to interfere unreasonably with the conduct
of the business of the parties. The party that is to enjoy the economic benefit
of a refund or credit under the Section 4.4 shall bear the out-of-pocket
expenses of the other party reasonably incurred in seeking such refund or
credit. If one party is to enjoy the economic benefit of a refund or credit
under this Section 4.4, but the refund or credit involves an issue that could
have a material adverse effect on the other party, the party that would enjoy
the economic benefit shall give notice to the other party of such issue, with
respect to which the parties, each at its own expense, shall jointly pursue such
issue, and any disagreement between them as to such issue shall be resolved
pursuant to the Tax Dispute Resolution Mechanism provided in Section 4.8 hereof.
4.5. Audits. Each of the Buyer and the Seller shall promptly notify the
other in writing within ten (10) days from its receipt of notice of (a) any
pending or threatened Tax audits or assessments of the Company, as long as any
taxable periods ending on or prior to the Closing Date remain open, and (b) any
pending or threatened Tax audits or assessments of the Buyer or the Seller, or
any of the affiliates thereof, that may affect the tax liabilities of the
Company, in each case for taxable periods ending on or prior to the Closing
Date. The Seller shall have the right to represent the interests of the Company
in any Tax audit or administrative or court proceeding to the extent
<PAGE>
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relating to Taxes that are described as being the responsibility of the Seller
in Section 4.2.1., and to employ counsel of its choice at its expense; provided
that the Seller shall give notice to the Buyer with respect to any issue
relating to such audit or proceeding that could have a material adverse effect
on the Buyer, or the Company, with respect to which issue the Seller and the
Buyer, each at its own expense, shall jointly have the right to represent the
interests of the Company, and any disagreement between the Seller and the Buyer
as to such issue shall be resolved pursuant to the Tax Dispute Resolution
Mechanism provided in Section 4.8. The Buyer shall have the right to represent
the interests of the Company in any Tax audit or administrative or court
proceeding not described in the immediately preceding sentence and to employ
counsel of its choice at is expense; provided that the Buyer shall give notice
to the Seller with respect to any issue relating to such audit or proceeding
that could have a material adverse effect on the Seller or the Company, with
respect to which issue the Seller and Buyer, each at his own expense, shall
jointly have the right to represent the interest of the Company and any
disagreement between the Seller and the Buyer as to such issue shall be resolved
pursuant to the Tax Dispute Resolution Mechanism. The Buyer and the Seller shall
cooperate, and the Buyer shall cause the Company to cooperate with the Seller,
with respect to any Tax audit or administrative or court proceeding relating to
Taxes referred to in this Section 4.5. Such cooperation shall include providing
all relevant information available to the Seller or the
<PAGE>
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Buyer (through the Company or otherwise), as the case may be, with respect to
any such audit or proceeding and making personnel available at and for
reasonable times; provided that the foregoing shall be done in a manner so as
not to interfere unreasonably with the conduct of the business of the parties.
4.6. Conduct of Business; Section 338 Election. Notwithstanding any
other provision of this Agreement, the Buyer shall be responsible for, and the
Seller shall not bear (a) any Taxes that arise due to the failure of the Buyer
after the Closing Date, to cause the Company to carry on its business on the
Closing Date only in the ordinary course and in substantially the same manner as
heretofore conducted and (b) any taxes that relate to an election or deemed
election pursuant to Section 338 of the Code or any similar provision under any
state or local tax with respect to the purchase and sale of the Shares pursuant
to this Agreement.
The Parties agree to cooperate in good faith considering, within a
reasonable period from the Closing Date, the mutual advisability of making an
election under section 338(h)(10) of the Internal Revenue Code with respect to
the Company.
4.7. Transaction-Related Taxes. Any Taxes that relate to
the purchase and sale of the Shares pursuant to this Agreement
(other than applicable stock transfer Taxes and Income Taxes
<PAGE>
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resulting directly from such sale, which shall be borne by the Seller) shall be
borne equally by the Seller and the Buyer.
4.8. Tax Dispute Resolution Mechanism. Wherever in this Article VIII it
shall be provided that a dispute shall be resolved pursuant to the "Tax Dispute
Resolution Mechanism," such dispute shall be resolved as follows: (a) the
parties will in good faith attempt to negotiate a settlement of the dispute; (b)
if the parties are unable to negotiate a resolution of the dispute within thirty
(30) days, the dispute will be submitted for resolution by independent certified
public accountants of nationally recognized standing mutually selected by the
parties (the "Tax Dispute Accountants"); (c) the parties will present their
arguments to the Tax Dispute Accountants within fifteen (15) days after
submission of the dispute to the Tax Dispute Accountants; (d) the Tax Dispute
Accountants will be requested to resolve the dispute, in a fair and equitable
manner and in accordance with the applicable Tax law, within thirty (30) days
after the parties have presented their arguments to the Tax Dispute Accountants;
(e) the decision of the Tax Dispute Accountants will be final, conclusive and
binding on the parties; (f) any payment to be made as result of the resolution
of a dispute shall be made, and any other action to be taken as a result of the
resolution of a dispute shall be taken, on or before the later of (i) the date
on which such payment or action would otherwise be required or (ii) the third
business day following the date on which the dispute is resolved (in the case
<PAGE>
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of a dispute resolved by the Tax Dispute Accountants, such date being the date
on which the parties receive written notice from the Tax Dispute Accountants of
their resolution); and (g) the reasonable fees and expenses of the Tax Dispute
Accountants in resolving a dispute will be borne equally by the Seller and the
Buyer.
4.9. Indemnification; Survival of Obligations. From and after the
Closing, (i) the Seller shall indemnify the Buyer and the Company and hold each
of them harmless from and against any Damages (as defined in Section 6.2.1.)
resulting from, arising out of or relating to the failure by the Seller to
perform any of its obligations contained in this Article 4, and (ii) the Buyer
and the Company shall indemnify the Seller from and against any Damages
resulting from, arising out of or relating to the failure by the Buyer or the
Company to perform any of their respective obligations contained in this Article
4. The respective indemnification obligations of the Buyer, the Seller and the
Company, as the case may be, contained in this Section 4.9 shall be subject to
the procedural provisions of Section 6.2.3. hereof. Notwithstanding anything to
the contrary contained in this Agreement, the respective covenants and
agreements of the Buyer, the Seller and the Company, as the case may be,
contained in this Article 4. shall survive the Closing for an indefinite period.
<PAGE>
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Article 5. CONDITIONS PRECEDENT
5.1. General. The respective obligations of the Seller and the Buyer to
consummate the sale and purchase of the Shares and the other transactions to be
consummated at the Closing are subject to the fulfillment, on or before the
Closing Date, in the case of the Seller, of the conditions set forth in Sections
5.2 and 5.3, and in the case of the Buyer, of the conditions set forth in
Section 5.2 and 5.4, provided that a Party shall be precluded from asserting
that a condition hereinafter set forth in this Article 5. has not been satisfied
by reason of any matter, fact, failure or circumstance reflected in the Schedule
or disclosed in writing to such Party not later than seven Business Days prior
to the Closing Date and not objected to by such Party within four Business Days
thereafter.
5.2. Condition to Obligations of Both Parties.
5.2.1. Governmental Action. The applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"Hart-Scott-Rodino Act") shall have expired or been terminated. All other
requisite governmental approvals and actions necessary to consummate the
purchase and sale of the Shares shall have been obtained.
<PAGE>
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5.3. Conditions to Obligations of the Seller.
5.3.1. Representations and Warranties and Covenants of the
Buyer. The Buyer's representations and warranties in Article 2. shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date. The Buyer shall have duly performed and complied in all
material respects with all agreements and obligations required by this Agreement
to be performed or complied with by it on or prior to the Closing Date.
5.3.2. Litigation. No action, suit or proceeding shall have
been commenced between the date of this Agreement and the Closing Date against
the Seller or the Buyer, or any of their respective affiliates, which results
in, or in the opinion of special counsel to the Seller, presents a reasonable
possibility of resulting in, the issuance of an injunction or other equitable
remedy prohibiting or materially delaying consummation of the transactions
contemplated by this Agreement.
5.3.3. Officer's Certificate. The Buyer shall have delivered
to the Seller in a certificate, dated the Closing Date and signed by its
President or a Vice President, (a) as to fulfillment of the conditions set forth
in Section 5.3.1 and (b) certifying that the Buyer has no actual knowledge of
any misrepresentation by the Seller under this Agreement.
<PAGE>
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5.3.4 Sufficient Funds. The Buyer shall have
sufficient funds to enable it to pay the Purchase Price and
Buyer's Debt Payment.
5.4. Conditions to Obligations of the Buyer.
5.4.1. Representations and Warranties and Covenants of the
Seller. The Seller's representations and warranties in Article 2 shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date without giving effect to any amendment of the Schedule pursuant
to Section 3.8 (except for amendments to Section 2.1.9 (Material Contracts)).
The Buyer will not be obligated to close if the Seller amends any Section of the
Schedule other than 2.1.9, but if Buyer does close, Buyer shall have no claim or
cause of action against the Seller based upon any matter disclosed pursuant to
Section 3.8. The Seller shall have duly performed and complied in all material
respects with all agreements and obligations required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
5.4.2. Litigation. No action, suit or proceeding
shall have been commenced between the date of this Agreement and
the Closing Date against the Seller or the Buyer, or any of their
respective affiliates, which results in, or in the opinion of
counsel to the Buyer, presents a reasonable possibility of
resulting in, the issuance of an injunction or other equitable
<PAGE>
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remedy prohibiting or materially delaying consummation of the
transactions contemplated by this Agreement.
5.4.3. Officer's Certificate. The Seller shall have
delivered to the Buyer a certificate, dated the Closing Date and
signed by the Company's President or a Vice President, as to the
fulfillment of the conditions set forth in Section 5.4.1.
Article 6. INDEMNIFICATION
6.1. Survival of Representations and Warranties. The representations
and warranties contained in Articles 2. and 3. of this Agreement shall survive
until a date which is 365 days following the date of this Agreement, whereupon
they shall expire, except for the provisions of Section 2.1.3, which shall
survive until the expiration of the applicable statute of limitations. No claim
for indemnification under this Article 6. in respect of such representations and
warranties shall be valid unless asserted in writing prior to a date that is 365
days following the date of this Agreement date, such writing to specify in
reasonable detail (i) the representation or warranty that is alleged to have
been inaccurate or to have been breached and (ii) the basis for such allegation,
including, without limitation, the provision of supporting documentation.
<PAGE>
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6.2. Indemnification.
6.2.1. By the Seller. From and after the Closing and subject
to the notice provisions of Section 6.1, the Seller shall indemnify the Buyer
and hold the Buyer harmless on an after-tax basis from and against any and all
losses, damages, costs and expenses, including reasonable attorneys' fees
(collectively, "Damages"), incurred by the Buyer as a result of (i) any
inaccuracy or breach of any representation or warranty on the part of the Seller
under this Agreement (except to the extent corrected or disclosed in writing to
the Buyer prior to the Closing as provided in Section 5.4.1), (ii) the
nonperformance, partial or total, of any covenant or agreement of the Seller
contained in this Agreement (except to the extent corrected or disclosed in
writing to, and consented to in writing by, the Buyer prior to the Closing), or
(iii) the matters set forth in subsection (g) of this Section 6.2.1.
The Buyer's rights to indemnification under this
Article 6. shall be limited as follows:
(a) All indemnity payments under this Agreement shall be
treated as an adjustment of the Purchase Price, except as may be otherwise
required by any applicable taxing authority. The phrase "on an after-tax basis"
shall include the concept that the amount of any Damages incurred by the Buyer
shall be (i) reduced by an amount equal to the Tax benefits, if any,
attributable to
<PAGE>
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such Damages and (ii) increased by an amount equal to the Taxes, if any,
attributable to the receipt of any indemnity payment pursuant to the provisions
of this Agreement in respect of such Damages, but only to the extent that such
Tax benefits are actually realized, or such Taxes are actually paid, as the case
may be, by the Buyer or any consolidated, combined or unitary group of which it
is a member, during any taxable period after the Closing Date.
(b) The amount of any Damages incurred by the Buyer shall be
reduced by the net amount the Buyer recovers (after deducting all attorneys'
fees, expenses and other costs of recovery) from any insurer or other third
party liable for such Damages, and the Buyer shall use reasonable efforts to
effect any such recovery; provided, however, that nothing herein shall prohibit
the Buyer from claiming Damages from the Seller without first proceeding against
any other third party, provided that the Seller is subrogated to be Buyer's
claim against such third party. There shall be no duplicate payments or
indemnities by the Seller.
(c) The aggregate amount payable in respect of
indemnification under clauses (i) or (ii) of Section 6.2.1. shall
not exceed a cap of U.S. $1,500,000; provided, however, that
there shall be no limit on Damages with respect to a breach of
the representations and warranties contained in Section 2.1.3. or
<PAGE>
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with respect to the indemnity provided in paragraph (g) of this
Section 6.2.1.
(d) The indemnity provided in this Section 6.2.1 shall be the
sole and exclusive remedy of the Buyer after the Closing to recover damages with
respect to this Agreement.
(e) If the amount of any limitation pursuant to this Section
6.2.1 is determined after payment by the Seller of any amount otherwise required
to be paid pursuant to this Article 6., the Buyer shall repay to the Seller,
promptly after such determination, any amount that the Seller would not have had
to pay pursuant to this Article 6. had such determination been made at the time
of such payment.
(f) The Seller shall not have any liability under any
provision of this Agreement for any Damages to the extent that any such Damages
arise from actions taken by the Buyer after the Closing Date. In no event shall
the Seller be liable for unforeseen or consequential damages. The Buyer shall
take all reasonable steps to mitigate any Damages upon becoming aware of any
event which could reasonably be expected to give rise thereto.
(g) The Seller shall indemnify and hold each of the Buyer and
the Company harmless, without limitation on time or dollar amounts, on an
after-tax basis, from and against any and
<PAGE>
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all Damages incurred by Buyer or Company as a result of (i) any litigation,
suit, action, investigation, grievance, arbitration, mediation, proceeding or
claim before any court, administrative agency or other governmental authority
against the Buyer or the Company or any of their officers, employees or
representatives, existing or arising out of any incident, transaction or
occurrence with respect to the Company occurring on or prior to the Closing
Date, (ii) as provided in Section 4.9., (iii) claims against the Company under
the Assignment of Agreement dated November 9, 1995 between the County of
Westchester, New York, the Company and Suburban Paratransit Service, Inc., or
(iv) provided that Buyer fulfills its obligations under Section 3.4, claims by
any Employee based on the fact that such Employee's coverage under any of the
Seller's employee benefit plans terminates on the Closing Date.
6.2.2. By the Buyer. After the Closing Date and subject to the
notice provisions of Section 6.1, the Buyer shall and shall cause the Company
to, indemnify the Seller and hold the Seller harmless on an after-tax basis from
and against any Damages incurred by the Seller or any affiliate of the Seller as
a result of (i) any inaccuracy or breach of any representation or warranty on
the part of the Buyer under this Agreement (except to the extent corrected or
disclosed in writing to, and consented to in writing by, the Seller prior to the
Closing), (ii) the nonperformance, partial or total, of any covenant or
agreement of the Buyer contained in this Agreement (except to the extent
<PAGE>
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corrected or disclosed in writing to, and consented to in writing by, the Seller
prior to Closing), (iii) any operations or business conducted, or any action or
failure to take action, by the Buyer or the Company after the Closing Date, or
(iv) the matters set forth in subsection (d) of this Section 6.2.2.
The Seller's rights to indemnification under this
Article 6. shall be limited as follows:
(a) All indemnity payments under this Agreement shall be
treated as an adjustment of the Purchase Price, except as may be otherwise
required by any applicable taxing authority. The phrase "on an after-tax basis"
shall include the concept that the amount of any Damages incurred by the Seller
shall be (i) reduced by an amount equal to the Tax benefits, if any,
attributable to such Damages and (ii) increased by an amount equal to the Taxes,
if any, attributable to the receipt of any indemnity payment pursuant to the
provisions hereof in respect of such Damages, but only to the extent that such
Tax benefits are actually realized, or such Taxes are actually paid, as the case
may be, by the Seller or any consolidated, combined or unitary group of which
the Seller is a member.
(b) The amount of any Damages incurred by the Seller shall be
reduced by the net amount the Seller recovers (after deducting all attorneys'
fees, expenses and other costs of recovery) from any insurer or other third
party liable for such
<PAGE>
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Damages, and the Seller shall use reasonable efforts to effect any such
recovery; provided, however, that nothing herein shall prohibit the Seller from
claiming Damages from the Buyer without first proceeding against any other third
party, provided that the Buyer is subrogated to the Seller's claim against such
third parties. There shall be no duplicate payments or indemnities by the Buyer.
(c) The aggregate amount payable in respect of
indemnification for a breach under clauses (i) or (ii) of Section
6.2.2. which results in a failure of the Closing to occur shall
be U.S. $4,000,000. The aggregate amount payable in respect of
other breaches under clauses (i) or (ii) of Section 6.2.2. shall
be U.S. $1,500,000; provided, however, that there shall be no
limit on Damages payable by the Buyer with respect to the
indemnification set forth in clause (iii) of Section 6.2.2. or
Section 6.2.2.(d), or a breach of the Buyer's obligations under
Section 3.5. or Section 3.6.
(d) The Buyer and the Company shall indemnify and hold the
Seller and its affiliates harmless, without limitation on time or dollar
amounts, on an after-tax basis, from and against any and all Damages incurred by
Seller as a result of (i) any litigation, suit, action, investigation,
grievance, arbitration, mediation, proceeding or claim before any court,
administrative agency or other government authority against the Seller or the
Company or any of its officers, employees or representatives,
<PAGE>
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existing or arising out of any incident, transaction or occurrence after the
Closing Date, (including, without limitation, as provided in Section 3.6), (ii)
as provided in Section 4.9. or (iii) any liability arising under the Worker
Adjustment and Retraining Notification Act ("WARN") for any plant closing or
mass layoffs, as defined therein, occurring on or after the Closing Date.
6.2.3. Indemnification Procedures. A Party entitled to
indemnification under this Agreement shall be referred to as an "Indemnitee." A
Party obligated to indemnify an Indemnitee under this Agreement shall be
referred to as an "Indemnitor." Promptly after receipt by an Indemnitee of
notice of any claim or the commencement of any action, or upon discovery of any
facts that an Indemnitee believes may give rise to a claim for indemnification
from an Indemnitor under this Agreement, such Indemnitee shall, if a claim is to
be made against an Indemnitor under this Article 6., notify such Indemnitor in
writing in reasonable detail of the claim or the commencement of such action.
During the 90-day period following the provision of such notice to the
Indemnitor, the Indemnitee shall not take any action or incur any expenses with
respect to such claim except to the extent such action is (a) legally required,
(b) reasonably necessary in the operation of the business of the Indemnitee or
(c) approved by the Indemnitor, which approval shall not be unreasonably
withheld. If any such claim or action shall be asserted or brought against such
Indemnitee, it shall notify such
<PAGE>
-49-
Indemnitor of such claim or action, and the Indemnitor shall be entitled to
participate in the claim or action, to assume the defense of the claim or action
with counsel reasonably satisfactory to the Indemnitee, and to settle or
compromise such claim or action. After notice to the Indemnitee of the
Indemnitor's election to assume the defense of such claim or action, the
Indemnitor shall not be liable to the Indemnitee under this Article 6. for any
legal or other expenses subsequently incurred by the Indemnitee in connection
with the defense of the claim or action other than reasonable costs of
investigation, provided that the Indemnitee shall have the right to employ
counsel to represent it if, in the Indemnitee's reasonable judgment, it is
advisable for the Indemnitee to be represented by separate counsel, and in that
event the fees and expenses of such separate counsel shall be paid by the In
demnitee. If the Indemnitor does not elect to assume the defense of such claim
or action, the Indemnitee shall act reasonably and in accordance with its good
faith business judgment with respect to the claim or action, and shall not
settle or compromise any such claim or action without the written consent of the
Indemni tor, which consent shall not be unreasonably withheld. The Parties agree
to render to each other such assistance as may reasonably be requested in order
to insure the proper and adequate defense of any such claim or proceeding,
including the granting of powers of attorney.
<PAGE>
-50-
Article 7. GENERAL PROVISIONS
7.1. Modification; Waiver. This Agreement may be modified
only by a written instrument executed by each of the Parties.
Any of the terms and conditions of this Agreement may be waived
in writing at any time on or prior to the Closing Date by the
Party entitled to the benefits thereof.
7.2. Entire Agreement. This Agreement, the Schedule, the Exhibits and
the other agreements and documents specifically referred to in this Agreement
that form a part of this Agreement or are marked for identification by the
Parties as part of this Agreement, contain the entire understanding of the
Parties in respect of the subject matter of this Agreement. This Agreement, the
Schedule, the Exhibits and the other agreements and documents specifically
referred to in this Agreement contain all the terms, conditions, covenants,
undertakings, promises, restrictions and representations and warranties agreed
upon by the Parties and supersede all other prior agreements, negotiations,
correspon dence, undertakings, communications, memoranda, understandings,
representations and warranties, oral or written, between the Parties in respect
of the subject matter of this Agreement.
7.3. Termination.
7.3.1. Termination by the Parties. This Agreement may
be terminated:
<PAGE>
-51-
(a) at any time prior to the Closing Date by
mutual consent of the Buyer and the Seller,
(b) by either the Buyer or the Seller, if the
Closing shall not have taken place on or before February 16, 1996, or such later
date as the Parties may have agreed to in writing, provided that the
nonoccurrence of the Closing is not attributable to a material breach of any
representation or warranty by, or failure to materially perform any covenant or
other undertaking on the part of, the Party seeking termination, or
(c) by either the Buyer or the Seller, if there
has been a material default, misrepresentation or breach on the part of the
other Party in its representations and warranties set forth in Article 2
(without giving effect to any amendment of the Schedule pursuant to Section 3.8,
except for amendments to Section 2.1.9 (Material Contracts)), the due and timely
performance of any of its covenants and agreements in Article 1, Article 3 or
Article 4 and such default, misrepresentation or breach cannot be cured by the
Closing Date and has not been waived, or any failure to meet of the conditions
precedent to Closing set forth in Section 5.3. or 5.4. hereof.
7.3.2. Continuing Obligations. If this Agreement is
terminated pursuant to Section 7.3.1, the obligations of the
Parties under this Agreement shall terminate, except that the
<PAGE>
-52-
representations and warranties and the obligations set forth in the
Confidentiality Agreement and Sections 2.6 and 3.4 (Brokers), and 7.4 (Expenses)
hereof shall survive, provided that, if this Agreement is terminated by one
Party because one or more of the conditions to such Party's obligations under
this Agreement is not satisfied as a result of the other Party's failure to
comply with any provision of this Agreement, the terminating Party's right to
pursue all legal remedies for breach of contract and damages shall also survive
such termination unimpaired, subject to the provisions of this Agreement.
7.4 Expenses. Whether or not the transactions contemplated in this
Agreement shall be consummated, each Party shall pay its own expenses incident
to the preparation and performance of this Agreement.
7.5. Further Actions. Each Party shall execute and deliver
such certificates and other documents and take such other actions
as may reasonably be requested by the other Party in order to
consummate or implement the transactions contemplated by this
Agreement.
7.6. Post-Closing Access. In connection with any matter
relating to any period prior to, or any period ending on, the
Closing Date, the Buyer shall, upon the request and at the
expense of the Seller, permit the Seller and its representatives
full access at all reasonable times to the books and records of
<PAGE>
-53-
the Seller which shall have been transferred to the Buyer to the extent that
such access is reasonably required by the Seller in connection with (a) the
preparation of any required Returns or financial reports or (b) any claim,
litigation, audit or investigation or any other proper purpose arising out of
the Seller's ownership of the Shares prior to the Closing, provided that the
foregoing shall be done in a manner so as not to unreasonably interfere with the
conduct of the business of the Buyer. The Buyer shall not dispose of such books
and records during the seven-year period beginning with the Closing Date without
first giving 60 days' prior written notice to the Seller offering to surrender
the same to the Seller at the Seller's expense. The Buyer shall have the same
rights, and the Seller the same obligations, as are set forth in this Section
7.6 with respect to any books and records of the Seller pertaining to the
Company, copies of which are retained by the Seller.
7.7. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered or mailed, certified or registered mail, first-class postage
paid, return receipt requested, or any other delivery service with proof of
delivery;
if to the Seller:
Chrysler Corporation
1000 Chrysler Drive
Auburn Hills, Michigan 48326-2766
Attention: Secretary
<PAGE>
-54-
with a copy to: Assistant Treasurer, Mergers,
Acquisitions and Divestitures
if to the Buyer:
Team Rental Group, Inc.
125 Basin Street
Suite 210
Daytona Beach, FL 32114
Attention: Chairman
with a copy to:
or to such other address or to such other person as either Party shall have last
designated by notice to the other Party.
7.8. Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective
successors and permitted assigns, but shall not be assignable, by
operation of law or otherwise, by either Party without the prior
written consent of the other Party.
7.9. No Third Party Beneficiaries. Except as otherwise
provided in this Agreement, nothing in this Agreement shall
confer any rights upon any person or entity which is not a Party
or a successor or permitted assignee of a Party to this
Agreement.
7.10. Severability. If any provision of this Agreement is
held to be unenforceable for any reason, it shall be modified
rather than voided, if possible, in order to achieve the intent
of the Parties to this Agreement to the extent possible. In any
<PAGE>
-55-
event, all other provisions to this Agreement shall be deemed valid and
enforceable to the fullest extent possible.
7.11. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall constitute one and the
same instrument.
7.12. Headings; Table of Contents. The article and section headings of
this Agreement and the table of contents at the forepart of this Agreement are
for convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.
7.13. Business Day. "Business Day" shall mean any day
which is not a Saturday, Sunday or other day on which banking
institutions in New York, New York are authorized or required by
law or executive order to close.
7.14. Best Knowledge of the Seller. All references to "the
best knowledge of the Seller" or "to the best of Seller's
knowledge" refer to the actual knowledge, after due inquiry, of
the President and Chief Executive Officer, Vice President - Field
Operations, Controller-Treasurer and Director-Field Operations of
the Company.
<PAGE>
-56-
7.15. Defined Terms. The definitions provided in this
Agreement shall be equally applicable to both the singular and
plural forms of the terms defined.
7.16. Governing Law and Jurisdiction. This Agreement shall be
construed, performed and enforced in accordance with the laws of the State of
Michigan applicable to agreements made and to be performed wholly within such
jurisdiction. Each of the Parties irrevocably submits to the exclusive
jurisdiction of any U.S. Federal court located in Michigan or Michigan state
court in any action or proceeding arising out of or relating to this Agreement.
(The remainder of this page intentionally left
blank.)
<PAGE>
-57-
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the date first above written.
CHRYSLER CORPORATION
By /s/
____________________________
Name:
Title:Assistant Treasurer
TEAM RENTAL GROUP, INC.
By/s/
____________________________
Name: Sanford Miller
Title: Chairman and CEO
AMENDMENT NO. 1 TO
TERM NOTE
THIS AMENDMENT NO. 1 TO TERM NOTE (the "Amendment Agreement") is made
and entered into as of this 2nd day of April, 1996 by and between TEAM RENTAL
GROUP, INC., a Delaware corporation (the "Borrower"), and NATIONSBANK,
NATIONAL ASSOCIATION (SOUTH), a national banking association (the "Lender").
Unless the context otherwise requires, all terms used herein without
definition shall have the definition provided therefor in the Note (defined
below).
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender have entered into the Term Note
dated as of February 27, 1996 whereby the Lender has made to the Borrower a
term loan (such note, as at any time amended, restated, modified or
supplemented, being referred to as the "Note"); and
WHEREAS, the Borrower and the Lender have agreed that the Note shall
be amended in the manner set forth herein;
NOW, THEREFORE, in consideration of the premises and conditions
herein set forth, it is hereby agreed as follows:
1. AMENDMENTS TO NOTE. Subject to the conditions hereof,
the Note is hereby amended as follows, effective as of the date
hereof:
a. The Maximum Amount is hereby amended to read
"$17,000,000".
b. The Interest Rate Options line is hereby amended by
deleting such line in its entirety, and the following
inserted in lieu thereof:
"Interest Rate Option: Prime Rate plus 3%".
c. The last sentence of the first paragraph of the Note is
hereby deleted and the following inserted in lieu
thereof:
"The proceeds of the Loan shall be used (i) to
finance Borrower's acquisition of Arizona Rent-A-
Car Systems, Inc., a Delaware corporation ("ARAC"),
(ii) to pay outstanding amounts due to City
National Bank and Budget Rent-A-Car of Southern
California for the acquisition by the Borrower of
Brac-Opco, Inc. and (iii) to pay certain fees due
to the Bank."
d. Section 1.2 of the Note is hereby amended by deleting
such Section in its entirety and the following inserted
in lieu thereof:
<PAGE>
"1.2 Making the Loan. $7,000,000 of The Loan shall
be made on the Closing Date and $10,000,000 of the
Loan shall be made on April 26, 1996. Lender shall
on the Closing Date, in immediately available
funds, deliver the proceeds of the Loan to be made
on such date to the persons and locations listed on
Schedule 1 and on April 26, 1996, in immediately
available funds, deliver the proceeds of the Loan
to be made on such date, (i) in the following
amounts to the following accounts:
To: Budget SOCAL $4,800,000
Account Name: Budget Rent a Car of SOCAL
Account No. 030109740
Routing Symbol: 122016066
To: City National Bank $4,700,000
Attention: Rod Teague
Westside CBC #67
Routing Symbol: 122016066
Ref. Team Rental of Southern California
and (ii) in the amount of $500,000 to the Bank."
e. Section 1.5 of the Note is hereby amended by adding a new
paragraph (c) thereto as follows and changing the
lettering of the remainder of the paragraphs to reflect
such addition:
"(c) Prime Rate Loans. The unpaid principal
balance of the Loan shall bear interest at the
Prime Rate plus 3%. Interest on the Loan shall be
payable on the Termination Date."
f. Section 1.5 of the Note is hereby amended by deleting new
paragraph (f) therefrom.
g. The Note is hereby globally amended by deleting all
references to "Applicable LIBOR Rate", "Base Rate", "Base
Rate Loans", "Federal Funds Effective Rate", "Interest
Period", "LIBOR Rate", "LIBOR Rate Loans", "Margin" and
"Type Loan".
h. Section 1.7 of the Note is hereby amended by deleting
paragraph (l) therefrom and inserting the following in
lieu thereof:
"(l) INTENTIONALLY DELETED".
i. The definition of "Default Rate" in Article VI is hereby
amended to read as follows:
2
<PAGE>
"'Default Rate' shall mean a rate of interest per
annum which shall be seven percent (7%) above the
Prime Rate".
j. The definition of "Loan" in Article VI is hereby amended
to read as follows:
"'Loan' shall mean the Loan made hereunder in the
aggregate principal amount of $17,000,000."
k. The definition of "Loan Documents" in Article VI is
hereby amended by inserting after the word "Guaranty" the
phrase "Warrant".
l. The following new definitions are hereby added to Article
VI in the appropriate alphabetical order:
"'Side Letter' shall mean the Side Letter between
the Borrower and the Lender dated April 26, 1996.
'Warrant' shall mean any Warrant Agreement or other
instrument, document or consideration given
pursuant to the Side Letter."
2. REPRESENTATIONS AND WARRANTIES. In order to induce the
Lender to enter into this Amendment Agreement, the Borrower hereby
represents and warrants that the Note has been re-examined by the
Borrower and that:
(a) The representations and warranties made by the
Borrower in Article II thereof are true on and as of the date
hereof;
(b) There has been no material change in the condition,
financial or otherwise, of the Borrower and its Subsidiaries since
February 27, 1996 other than changes in the ordinary course of
business;
(c) The business and properties of the Borrower and its
Subsidiaries are not, and since February 27, 1996 have not been,
adversely affected in any substantial way as the result of any fire,
explosion, earthquake, accident, strike, lockout, combination of
workers, flood, embargo, riot, activities of armed forces, war or
acts of God or the public enemy, or cancellation or loss of any major
contracts; and
(d) After giving effect to this Amendment Agreement no
condition exists which, upon the effectiveness of the amendment
contemplated hereby, would constitute a Default or an Event of
Default on the part of the Borrower under the Note or any other Loan
Document, either immediately or with the lapse of time or the giving
of notice, or both.
3
<PAGE>
3. CONSENT OF GUARANTORS. The Guarantors have joined in the
execution of this Amendment Agreement for the purposes of
consenting hereto and for the further purpose of confirming their
guaranty of Obligations of Borrower as provided in the Guaranty.
4. CONDITIONS PRECEDENT. The effectiveness of this Amendment
Agreement is subject to the receipt by the Lender of the following:
(i) executed originals of this Amendment Agreement
and the Side Letter;
(ii) resolutions of the boards of directors or
other appropriate governing body (or of the appropriate
committee thereof) of the Borrower certified by its
secretary or assistant secretary as of the date hereof,
approving and adopting this Amendment Agreement and any
other documents to be executed by the Borrower, and
authorizing the execution and delivery thereof;
(iii) evidence satisfactory to the Lender of
Borrower's payment of $9,500,000 of the indebtedness
incurred in connection with the acquisition of Brac-Opco,
Inc.;
(iv) an opinion of counsel to the Borrower and the
Guarantors in a form acceptable to the Lender;
(v) $500,000 of the commitment fees referred to in
the engagement letter dated April 3, 1996 shall have been
paid to the Bank; and
(vi) such other documents, instruments and
certificates as the Lender may reasonably request on or
prior to the effective date hereof in connection with
consummation of the transactions contemplated hereby.
All proceedings of the Borrower and each Subsidiary relating to the matters
provided for herein shall be satisfactory to the Lender and its counsel.
5. FEES. The Borrower shall promptly reimburse the Lender
for the aggregate reasonable legal fees incurred by the Lender in
connection with the negotiation, review and execution of this
Amendment Agreement.
6. ENTIRE AGREEMENT. This Amendment Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relative to such subject matter. No promise, condition, representation
or warranty, express or implied, not herein set forth shall bind any party
hereto, and no one of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto
4
<PAGE>
acknowledges that, except as in this Amendment Agreement otherwise expressly
stated, no representations, warranties or commitments, express or implied,
have been made by any party to the other. None of the terms or conditions of
this Amendment Agreement may be changed, modified, waived or canceled orally
or otherwise, except by writing, signed by all the parties hereto, specifying
such change, modification, waiver or cancellation of such terms or conditions,
or of any proceeding or succeeding breach thereof.
7. FULL FORCE AND EFFECT OF AGREEMENT. Except as hereby specifically
amended, modified or supplemented, the Note and all other Loan Documents are
hereby confirmed and ratified in all respects and shall remain in full force
and effect according to their respective terms.
8. COUNTERPARTS. This Amendment Agreement may be executed
in any number of counterparts, each of which shall be deemed an
original as against any party whose signature appears thereon, and
all of which shall together constitute one and the same instrument.
9. GOVERNING LAW. THIS AMENDMENT AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY THE INTERNAL LAWS AND JUDICIAL DECISIONS OF THE STATE OF FLORIDA.
THE BORROWER AND THE GUARANTOR HEREBY SUBMIT TO THE JURISDICTION AND VENUE OF
THE STATE AND FEDERAL COURTS OF FLORIDA FOR THE PURPOSES OF RESOLVING DISPUTES
HEREUNDER OR FOR THE PURPOSES OF COLLECTION.
10. ENFORCEABILITY. Should any one or more of the provisions
of this Amendment Agreement be determined to be illegal or
unenforceable as to one or more of the parties hereto, all other
provisions nevertheless shall remain effective and binding on the
parties hereto.
11. NOTE. All references in any of the Loan Documents to the
Note shall mean and include such agreement as amended hereby.
12. SUCCESSORS AND ASSIGNS. This Amendment Agreement shall be binding
upon and inure to the benefit of each of the Borrower, the Guarantors and the
Lender and their respective successors, assigns and legal representatives;
provided, however, that the Borrower and the Guarantors, without the prior
consent of the Lender, may not assign any rights, powers, duties or
obligations hereunder.
[Remainder of page intentionally left blank.]
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
BORROWER:
TEAM RENTAL GROUP, INC.
By: /s/ Jeffrey D. Congdon
-------------------------------
Name: Jeffrey D. Congdon
Title: Chief Financial Officer
WITNESS:
- ----------------------------
[CORPORATE SEAL]
LENDER:
NATIONSBANK, NATIONAL ASSOCIATION
(SOUTH)
By: /s/ David E. Spalding
-------------------------------
Name: David E. Spalding
Title: Assistant Vice President
SIGNATURE PAGE 1 OF 2
<PAGE>
GUARANTORS:
VPSI, INC.
By: /s/ Sanford Miller
-------------------------------
Name: Sanford Miller
Title: Vice President
TEAM CAR SALES OF SOUTHERN
CALIFORNIA, INC.
TEAM FLEET SERVICES CORPORATION
TEAM CAR SALES OF DAYTON, INC.
TEAM RENTAL OF CONNECTICUT, INC.
DON KREMER, INC.
TEAM RENTAL OF FT. WAYNE, INC.
TEAM RENTAL OF SOUTHERN
CALIFORNIA, INC.
TEAM RENTAL OF ROCHESTER, INC.
ARIZONA RENT-A-CAR SYSTEMS, INC.
TEAM RENTAL OF PHILADELPHIA, INC.
TEAM CAR SALES OF CHARLOTTE, INC.
TEAM RENTAL OF PITTSBURGH, INC.
TEAM CAR SALES OF PHILADELPHIA, INC.
TEAM CAR SALES OF RICHMOND, INC.
TEAM CAR SALES OF SAN DIEGO, INC.
LEE-AL, INC.
MACKAY CAR & TRUCK RENTALS, INC.
WESTEAM ENTERPRISES, INC.
TRANEX RENTALS OF NEW YORK, INC.
CAPITAL CITY LEASING, INC.
TEAM RENTAL OF CINCINNATI, INC.
By: /s/ Sanford Miller
-------------------------------
Name: Sanford Miller
Title: President
<PAGE>
ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF
TEAM RENTAL GROUP, INC.
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
Before me, the undersigned, a Notary Public in and for said County
and State on this 26th day of April, 1996 A.D., personally appeared Jeffrey D.
Congdon known to be the Chief Financial Officer of Team Rental Group, Inc.
(the "Borrower"), who, being by me duly sworn, says he works at 7050 West
Washington Street, Indianapolis, Indiana 46241 and that by authority duly
given by, and as the act of, the Borrower, the foregoing and annexed Amendment
No. 1 to Term Note dated as of April 2, 1996, was signed by him as said Chief
Financial Officer on behalf of the Borrower.
Witness my hand and official seal this 26th day of April, 1996.
/s/ Patricia L. Romus
- -------------------------------------
Notary Public
(SEAL)
My Commission Expires: 2-5-2000
---------
<PAGE>
AFFIDAVIT OF DAVID E. SPALDING
The undersigned, being first duly sworn, deposes and says that:
1. He is an Assistant Vice President of NationsBank, National
Association (South) (the "Bank") and works at NationsBank Tower, 100 Southeast
2nd Street, 14th Floor, Miami, Florida 33131.
2. The Amendment No. 1 to Term Note of Team Rental Group,
Inc. to the Bank increasing the principal amount of the Note from
$7,000,000 to $17,000,000, among other things, dated as of April 2,
1996 was executed before him and delivered to him, on behalf of the
Bank in Charlotte, North Carolina on April 26, 1996.
This the 26th day of April, 1996.
/s/ David E. spalding
- ---------------------------------------
David E. Spalding
Acknowledgment of Execution
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
Before me, the undersigned, a Notary Public in and for said County
and State on this 26th day of April, 1996 A.D., personally appeared David E.
Spalding who before me affixed his signature to the above Affidavit.
Witness my hand and official seal this 26th day of April, 1996.
/s/ Patricia L. Romus
- -------------------------------------
Notary Public
(SEAL)
My Commission Expires: 2-5-2000
--------
<PAGE>
GUARANTORS:
VPSI, INC.
By: /s/ Sanford Miller
-------------------------------
Name: Sanford Miller
Title: Vice President
TEAM CAR SALES OF SOUTHERN
CALIFORNIA, INC.
TEAM FLEET SERVICES CORPORATION
TEAM CAR SALES OF DAYTON, INC.
TEAM RENTAL OF CONNECTICUT, INC.
DON KREMER, INC.
TEAM RENTAL OF FT. WAYNE, INC.
TEAM RENTAL OF SOUTHERN
CALIFORNIA, INC.
TEAM RENTAL OF ROCHESTER, INC.
ARIZONA RENT-A-CAR SYSTEMS, INC.
TEAM RENTAL OF PHILADELPHIA, INC.
TEAM CAR SALES OF CHARLOTTE, INC.
TEAM RENTAL OF PITTSBURGH, INC.
TEAM CAR SALES OF PHILADELPHIA, INC.
TEAM CAR SALES OF RICHMOND, INC.
TEAM CAR SALES OF SAN DIEGO, INC.
LEE-AL, INC.
MACKAY CAR & TRUCK RENTALS, INC.
WESTEAM ENTERPRISES, INC.
TRANEX RENTALS OF NEW YORK, INC.
CAPITAL CITY LEASING, INC.
TEAM RENTAL OF CINCINNATI, INC.
By: /s/ Sanford Miller
-------------------------------
Name: Sanford Miller
Title: President
- -------------------------------------------------------------------------------
FIFTH AMENDMENT TO
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
- -------------------------------------------------------------------------------
among
TEAM FLEET SERVICES CORPORATION,
TEAM RENTAL GROUP, INC.
and
NBD BANK, N.A.
- -------------------------------------------------------------------------------
DATED AS OF MARCH 28, 1996
- -------------------------------------------------------------------------------
<PAGE>
FIFTH AMENDMENT TO
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIFTH AMENDMENT, dated as of the 28th day of March, 1996, is
among TEAM FLEET SERVICES CORPORATION, TEAM RENTAL GROUP, INC.
and NBD BANK, N.A. The parties agree as follows:
WITNESSETH:
WHEREAS, on January 12, 1995, the parties entered into a certain
First Amended and Restated Credit Agreement, as amended May 23, 1995, July 11,
1995, December 29, 1995 and February 27, 1996 (the "Original Agreement"); and
WHEREAS, the parties desire to further amend the Original
Agreement as herein provided;
NOW, THEREFORE, in consideration of the premises, and the promises
herein contained, the parties agree that the Original Agreement shall be, and
it hereby is, amended as follows:
PART I. AMENDATORY PROVISIONS
SECTION 1
DEFINITIONS
1.1. Defined Terms.
(a) Section 1.1 of the Original Agreement is hereby
amended by substituting the following new definitions in lieu
of the existing like definitions:
"Floor Plan Line" means the secured floor plan
revolving credit in the maximum principal amount of Forty-One Million
Dollars ($41,000,000) from the date hereof to and including April 30,
1996, and Thirty-One Million Dollars ($31,000,000) on and after May
1, 1996, governed by this Agreement, including any renewal or
extension thereof.
"Working Capital Line" means the secured working
capital revolving credit in the maximum principal amount of Thirteen
Million Dollars ($13,000,000) from the date hereof to and including
April 30, 1996, and Seven Million Dollars ($7,000,000) on and after
May 1, 1996, governed by this Agreement, including any renewal or
extension thereof.
SECTION 2
CREDIT
2.1. Commitments. Section 2.1 of the Original Agreement is
hereby amended as follows:
<PAGE>
2.1.1. Floor Plan Line. Section 2.1.1 of the Original
Agreement is hereby amended by substituting "April 30" in lieu
of "March 31" in subparagraph (b) therein.
2.1.2. Working Capital Line. Section 2.1.2 of the
Original Agreement is hereby amended by substituting "April
30" in lieu of "March 31" in subparagraph (b) therein.
2.1.3. Letters of Credit.
(a) Commitment. Section 2.1.3(a) of the
Original Agreement is hereby amended by
substituting "April 30" in lieu of "March 31" in
subparagraph (ii) therein.
2.4. Prepayment. Section 2.4 of the Original Agreement is
hereby amended by substituting the following new Section 2.4.1A in
lieu of the existing Section 2.4.1A and adding the following new
Section 2.4.1B:
2.4.1A. Mandatory Prepayment(Floor Plan Line).
Notwithstanding any other provision of this Agreement, on or before
April 30, 1996, Borrowers shall make principal payments in amounts
sufficient that the outstanding principal balance of the Floor Plan
Line shall not exceed Thirty-One Million Dollars ($31,000,000).
2.4.1B. Mandatory Prepayment(Working Capital Line).
Notwithstanding any other provision of this Agreement, on or before
April 30, 1996, Borrowers shall make principal payments in amounts
sufficient that the outstanding principal balance of the Working
Capital Line shall not exceed Seven Million Dollars ($7,000,000).
PART II. CONTINUING EFFECT
Capitalized terms used herein and not specifically herein defined
shall have the meanings ascribed to such terms in the Original Agreement. All
other terms, conditions, representations, warranties and covenants contained
in the Original Agreement shall remain the same and shall continue in full
force and effect. In consideration hereof, the Borrowers represent and warrant
that each representation and warranty set forth in the Original Agreement, as
hereby amended, remains true and correct as of the date hereof, except to the
extent that such representation and warranty is expressly intended to apply
solely to an earlier date and that, to its knowledge, there currently exists
no offsets, counterclaims or defenses to the performance of the Obligations,
nor, except as disclosed on Schedule 1 to the Original Agreement has there
occurred any Default or Unmatured Default thereunder, and no Default or
Unmatured Default, after giving effect to the transactions contemplated or
otherwise covered by this Fifth Amendment, is or shall be occasioned thereby.
The representations and warranties contained in the Original Agreement
originally shall
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survive this Fifth Amendment in their original form, except as expressly
herein modified, and shall survive as the continuing representations and
warranties of the Borrowers, except to the extent that such representation and
warranty is expressly intended to apply solely to an earlier date. Except as
expressly herein provided, the Original Agreement and this Fifth Amendment
shall be interpreted, wherever possible, in a manner consistent with one
another, but in the event of any irreconcilable inconsistency, this Fifth
Amendment shall control. The parties each hereby agree to cooperate in all
reasonable requests of each other party hereto, including, without limitation,
the execution of financing statements and other documents, which the
requesting party deems reasonable, necessary, appropriate or expedient to
carry out the intents and purposes of this Fifth Amendment.
PART III. CONDITIONS PRECEDENT
Notwithstanding anything contained in this Fifth Amendment to the
contrary, the Bank shall have no obligation under this Fifth Amendment, and
this Fifth Amendment shall not be effective, until each of the following
conditions precedent have been fulfilled to the satisfaction of the Bank:
(a) Each of the conditions set forth in Section 6.2 of
the Original Agreement shall have been satisfied;
(b) The Bank shall have received each of the following,
in form and substance satisfactory to the Bank:
(i) The Loan Documents, as amended, including,
without limitation, this Fifth Amendment, duly executed
in the form approved by the Bank;
(ii) A duly executed certificate of the Secretary
or any Assistant Secretary of each Borrower (A) certifying
as to attached copies of resolutions of the Boards of
Directors of each Borrower authorizing the execution,
delivery and performance, respectively, of the Loan
Documents, as amended, and any other documents provided for
in this Fifth Amendment to which the Borrowers are a party,
and (B) certifying as complete and correct as to attached
copies of the Articles of Incorporation and ByLaws of the
Borrowers, or certifying that such Articles of Incorporation
or By-Laws have not been amended (except as shown) since the
previous delivery thereof to the Bank; and
(iii) All reasonable expenses of the Bank, shall
have been reimbursed by the Borrowers, other than the Bank's
closing attorneys' fees; and
(c) All legal matters incident to this Fifth Amendment
shall be reasonably satisfactory to the Bank and its counsel.
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IN WITNESS WHEREOF, the Borrowers and the Bank have caused this Fifth
Amendment to be executed by their respective officers duly authorized as of
the date first above written.
TEAM FLEET SERVICES CORPORATION
By: Jeffrey Congdon
---------------------------------------
Its: Chief Financial Officer
---------------------------------------
TEAM RENTAL GROUP, INC.
By: Jeffrey Congdon
---------------------------------------
Its: Chief Financial Officer
---------------------------------------
NBD BANK, N.A.
By: Steven P. Clemens
---------------------------------------
Its: Vice President
---------------------------------------
REVOLVING CREDIT AGREEMENT
by and between
VPSI, INC., as Borrower,
and
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as Lender
February 6, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Terms
1.01 Definitions................................................ 2
1.02 Accounting Terms........................................... 20
ARTICLE II
The Loans
2.01 Revolving Credit Facility.................................. 21
2.02 Payment of Interest........................................ 22
2.03 Payment of Principal....................................... 22
2.04 Mandatory Repayments....................................... 24
2.05 Note .................................................... 24
2.06 Reductions................................................. 24
2.07 Conversions and Elections of Subsequent Interest
Periods............................................. 24
2.08 Fees .................................................... 25
2.09 Use of Proceeds............................................ 26
2.10 Adjustment of Advance Rate................................. 26
ARTICLE III
Yield Protection and Illegality
3.01 Additional Costs........................................... 27
3.02 Suspension of Loans........................................ 28
3.03 Illegality................................................. 29
3.04 Compensation............................................... 29
3.05 Taxes .................................................... 30
ARTICLE IV
Conditions to Making Loans
4.01 Conditions of Initial Advance.............................. 32
4.02 Conditions of Loans........................................ 33
ARTICLE V
Representations and Warranties
5.01 Representations and Warranties............................. 35
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Page
ARTICLE VI
SECURITY
6.01 Security................................................... 43
6.02 Further Assurances......................................... 43
6.03 Certificates of Title...................................... 43
ARTICLE VII
Affirmative Covenants
7.01 Financial Reports, Etc..................................... 44
7.02 Additional Financial Reports, Etc.......................... 45
7.03 Maintain Properties........................................ 45
7.04 Existence, Qualification, Etc.............................. 46
7.05 Regulations and Taxes...................................... 46
7.06 Insurance. ............................................... 46
7.07 True Books................................................. 46
7.08 Pay Indebtedness to Lenders and Perform Other
Covenants........................................... 46
7.09 Right of Inspection........................................ 46
7.10 Observe all Laws........................................... 46
7.11 Officer's Knowledge of Default or Other Events............. 47
7.12 Suits or Other Proceedings................................. 47
7.13 Notice of Discharge of Hazardous Material or
Environmental Complaint. .......................... 47
7.14 Environmental Compliance................................... 47
7.15 Indemnification............................................ 48
7.16 Further Assurances......................................... 48
7.17 ERISA Requirement.......................................... 48
7.18 Continued Operations....................................... 49
7.19 Use of Proceeds............................................ 49
7.20 Repurchase Party........................................... 49
7.21 Vehicle Turn-in; Vehicle Records........................... 49
7.22 New Repurchase Agreements.................................. 49
ARTICLE VIII
Additional Negative Covenants
8.01 Indebtedness............................................... 50
8.02 Transfer of Assets......................................... 50
8.03 Investments; Acquisitions.................................. 50
8.04 Liens .................................................... 50
8.05 Merger or Consolidation.................................... 51
8.06 Change in Control.......................................... 51
8.07 Transactions with Affiliates............................... 51
8.08 ERISA .................................................... 51
8.09 Fiscal Year................................................ 52
8.10 Dissolution, etc........................................... 52
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Page
8.11 Rate Hedging Obligations................................... 52
ARTICLE IX
Events of Default and Acceleration
9.01 Events of Default.......................................... 53
9.02 Lender to Act.............................................. 56
9.03 Cumulative Rights.......................................... 56
9.04 No Waiver.................................................. 56
ARTICLE X
Miscellaneous
10.01 Participations............................................. 57
10.02 Notices.................................................... 57
10.03 Setoff .................................................... 58
10.04 Survival................................................... 58
10.05 Expenses................................................... 59
10.06 Amendments................................................. 60
10.07 Counterparts............................................... 60
10.08 Waivers by Borrower........................................ 60
10.09 Termination................................................ 60
10.10 Governing Law.............................................. 61
10.11 Headings and References.................................... 61
10.12 Severability............................................... 61
10.13 Entire Agreement........................................... 61
10.14 Agreement Controls......................................... 62
EXHIBIT A Notice of Appointment (or Revocation) of
Authorized Representative........................... 65
EXHIBIT B Form of Borrowing Base Certificate............................. 66
EXHIBIT 1 TO BORROWING BASE CERTIFICATE SALES AND ADVANCE
RATE ADJUSTMENT REPORT.............................. 68
EXHIBIT D Form of Interest Rate Selection Notice......................... 73
EXHIBIT E Form of Revolving Note......................................... 74
EXHIBIT F Form of Opinion of Borrower's and Guarantor's
Counsel............................................. 79
EXHIBIT G Form of Guaranty and Suretyship Agreement...................... 80
Schedule 1 Repurchase Agreements.................. 95
Schedule 2 Closing Date Vehicles.................. 96
Schedule 5.01(d) Subsidiaries and Investments........... 97
Schedule 5.01(f) Contingent Liabilities................. 98
Schedule 5.01(g) Liens.................................. 99
Schedule 5.01(j) Litigation.............................100
Schedule 7.05 Existing Insurance.....................101
Schedule 8.01 Indebtedness...........................102
iii
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of February 6, 1996 (the
"Agreement"), is made by and between:
VPSI, INC., a Delaware corporation having its principal place of
business in Troy, Michigan (the "Borrower"); and
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking
association organized and existing under the laws of the United States of
America (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender make available to
the Borrower a revolving credit facility of up to $50,000,000, the proceeds of
which shall be used to finance the Borrower's van fleet; and
WHEREAS, the Lender is willing to make such facility available to the
Borrower upon the terms and conditions set forth herein;
NOW, THEREFORE, the Borrower and the Lender hereby agree as follows:
<PAGE>
ARTICLE I
Definitions and Terms
1.01 Definitions. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acquire" or "Acquisition", as applied to a Person, means
the acquiring or acquisition of a controlling interest in such Person
by purchase (including all or substantially all of the assets),
exchange, issuance of stock or other securities, or by merger,
reorganization or other method;
"Advance" means a borrowing under the Revolving Credit
Facility consisting of the aggregate principal amount of a Floating
Loan or a Eurodollar Loan, as the case may be;
"Advance Rate" means 94%, as such rate may be adjusted
downward from time to time pursuant to Section 2.10 hereof;
"Affiliate" means a Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or
is under common control with the Borrower; (ii) which beneficially
owns or holds 10% or more of any class of the outstanding voting
stock (or in the case of a Person which is not a corporation, 10% or
more of the equity interest) of the Borrower; (iii) 10% or more of
any class of the outstanding voting stock of which is beneficially
owned or held by the Borrower. The term "control" means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through ownership of voting stock, by contract or otherwise;
"Applicable Margin" means (a) with respect to Eurodollar
Loans, 1.25% per annum, and (b) with respect to CD Loans, 1.35% per
annum;
"Applicable Reserve Percentage" means, for any day, for any
CD Loan or Eurodollar Loan with respect thereto, that percentage
(expressed as a decimal) which is in effect from time to time under
Regulation D of the Board, as such regulation may be amended from
time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
(i) Eurocurrency liabilities as that term is defined in Regulation D
(or against any other category of liabilities that includes deposits
by reference to which the interest rate of Eurodollar Loans is
determined) in the case of any Eurodollar Loan, or (ii) non-personal
Dollar time deposits in an amount of $100,000 or more in the case of
any CD Loan, in each case
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whether or not the Lender has any Eurocurrency liabilities or Dollar
time deposits subject to such reserve requirement at that time.
Eurodollar Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve
requirements without benefits of credit for proration, exceptions or
offsets that may be available from time to time to the Lender. The
Eurodollar Rate or CD Rate, as the case may be, shall be adjusted
automatically on and as of the effective date of any change in the
Applicable Reserve Percentage;
"Assessment Rate" means the rate per annum (rounded upward
to the nearest 1/100 of 1%) determined in good faith by the Lender in
accordance with its usual procedures for its customers generally
(which determination shall be conclusive absent manifest error) to be
the current net assessment rate per annum payable by the Lender to
the Federal Deposit Insurance Corporation (or any successor) on such
day of determination for insurance on Dollar time deposits of the
Lender in the United States. The CD Rate shall be adjusted
automatically as of the effective date of each change in the
Assessment Rate;
"Assignment of Indebtedness" means the Assignment of
Indebtedness and Liens dated as of the date hereof, among CFC, the
Borrower and the Lender, pursuant to which CFC has assigned to the
Lender the CFC Indebtedness, CFC Indebtedness Documents and CFC's
Lien on each of the Closing Date Vehicles;
"Assignment of Repurchase Agreement" means each of the
Collateral Assignments of Repurchase Agreement substantially in the
form of Exhibit A to the Security Agreement, given by the Borrower in
favor of the Lender, whereby the Borrower assigns to the Lender all
of its rights under a Repurchase Agreement;
"Authorized Representative" means any of the President, the
Chief Executive Officer, the Treasurer, the Chief Operating Officer
or the Vice President of the Borrower or any other person expressly
designated by the Board of Directors of the Borrower (or the
appropriate committee thereof) as an Authorized Representative of the
Borrower, as set forth from time to time in a certificate in the form
attached hereto as Exhibit A;
"Board" means the Board of Governors of the Federal
Reserve System (or any successor body);
"Book-Value-to-Proceeds Ratio" means, with respect to any
calendar month, the ratio (as reported in the Sales and Advance Rate
Adjustment Report for such month) of (i) the aggregate Eligible Net
Book Value of Eligible Risk Vehicles and Closing Date Eligible
Vehicles sold by the Borrower during
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<PAGE>
such month to (ii) the aggregate of actual net proceeds received by
the Borrower on the sales of such Eligible Risk Vehicles and Closing
Date Eligible Vehicles;
"Borrowing Base" shall mean, at any time, an amount equal to
the aggregate (without duplication) of the following:
(a) with respect to each Closing Date Eligible
Vehicle, the lesser of (i) the Capitalized Cost of such
Closing Date Eligible Vehicle, or (ii) the product of the
Closing Date Advance Rate and the Eligible Net Book Value of
such Closing Date Eligible Vehicle, plus
(b) with respect to each Eligible Repurchase
Vehicle (other than a Closing Date Vehicle), the Eligible
Net Book Value of such Eligible Repurchase Vehicle, plus
(c) with respect to each Eligible Risk Vehicle
(other than a Closing Date Vehicle), the product of the
Advance Rate and the Eligible Net Book Value of such
Eligible Risk Vehicle, plus
(d) the Eligible Repurchase Receivables;
"Borrowing Base Certificate" means a certificate of an
Authorized Representative in the form attached hereto as
Exhibit B;
"Borrowing Notice" means the notice delivered by an
Authorized Representative in connection with an Advance, in the form
attached hereto as Exhibit C;
"Business Day" means any day which is not a Saturday, Sunday
or a day on which banks in the States of Florida and North Carolina
are authorized or obligated by law, executive order or governmental
decree to be closed;
"Capital Leases" means all leases which have been or should
be capitalized in accordance with Generally Accepted Accounting
Principles as in effect from time to time including Statement No. 13
of the Financial Accounting Standards Board and any successor
thereof;
"Capitalized Cost" means for each Vehicle, the price paid
for such Vehicle by the Borrower to the Dealer, including dealer
profit not to exceed $200 and delivery charges but excluding taxes
and any registration or titling fees (or, in the case of a Vehicle
which was not new when acquired by the Borrower, if less, the
purchase price thereof exclusive of taxes and any registration or
titling fees or other charges), provided that the Capitalized Cost
for a Closing Date Vehicle shall be the amount set forth for such
Vehicle on Schedule 2 attached hereto (as such Schedule shall be
revised by the
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<PAGE>
Borrower pursuant to Section 7.01(g), provided that the aggregate
Capitalized Cost of all of the Closing Date Vehicles shall be
$36,280,649);
"CD Base Rate" means, for any CD Loan, the rate of interest
expressed as a percentage and rounded upwards if necessary to the
nearest 1/100 of 1%) determined in good faith by the Lender in
accordance with the usual procedures for its customers generally
(which determination shall be conclusive absent manifest error) to be
the average of the secondary market bid rates at approximately 10:00
A.M. Charlotte, North Carolina time on each day of at least two
dealers of recognized standing in negotiable certificates of deposit
for the purchase at face value of negotiable certificates of deposit
of major money center banks for delivery on such day in an amount
approximately equal to the principal amount of such CD Loan for a
period of 90 days;
"CD Loan" means a Loan for which the rate of interest is
determined by reference to the CD Rate;
"CD Rate" means, for any CD Loan, the rate of interest per
annum determined by the following formula:
CD Rate = CD Base Rate
--------------------------------- + Assessment + Applicable
1- Applicable Reserve Percentage Rate Margin
"Certificate of Title" means, for each Vehicle, the
manufacturer's certificate or statement of origin, the certificate of
title, certificate of ownership, bill of sale or any such other
instrument evidencing the ownership of such Vehicle and, where the
context requires, the one such instrument evidencing the ownership of
such Vehicle;
"CFC" means Chrysler Financial Corporation, a Michigan
corporation;
"CFC Indebtedness" means any and all Indebtedness owed by
the Borrower to CFC (i) the proceeds of which were used to finance or
refinance any of the Closing Date Vehicles or (ii) which Indebtedness
is secured by any of the Closing Date Vehicles;
"CFC Indebtedness Documents" means, collectively, all notes,
agreements, security agreements, lien documents, and other
instruments relating to the CFC Indebtedness or any Liens securing
such Indebtedness;
"Clear Certificate of Title" means, with respect to any
Vehicle, the Certificate of Title for such vehicle if the Lender (or
an agent designated by the Lender) shall have received, in form and
substance satisfactory to the Lender, the Certificate of Title and
duly executed and authorized
5
<PAGE>
releases or assignments, together with a copy of the duly executed
power of attorney, if applicable, with respect to any Liens of third
Persons which appear on the records of any jurisdiction or which have
been filed with respect to such vehicle or which have otherwise been
granted to, or created in favor of, the applicable lienholder,
including, without limitation, any Lien noted on the Certificate of
Title for such Vehicle;
"Closing Date" means the date as of which this Agreement is
executed by the Borrower and the Lender and on which the conditions
set forth in Section 4.01 hereof have been satisfied;
"Closing Date Advance Rate" means 100%, as such rate may be
adjusted downward from time to time pursuant to Section 2.10 hereof;
"Closing Date Vehicles" means, collectively, each of the
Vehicles identified on Schedule 2 attached hereto;
"Closing Date Eligible Vehicles" means, collectively,
each of the Closing Date Vehicles which is an Eligible
Vehicle;
"Closing Date Indebtedness" means any and all Indebtedness
(including without limitation the CFC Indebtedness, but excluding the
Obligations under this Agreement) which (i) was incurred on or prior
to the Closing Date by the Borrower to finance or refinance any of
the Closing Date Vehicles, or (ii) is secured by any of the Closing
Date Vehicles;
"Closing Date Indebtedness Documents" means, collectively,
all notes, agreements, security agreements, lien documents, and other
instruments relating to any Closing Date Indebtedness or any Liens
securing such Indebtedness;
"Code" means the Internal Revenue Code of 1986, as
amended, any successor provision or provisions and any
regulations promulgated thereunder;
"Collateral" means, collectively, the Vehicles, the
Repurchase Agreements, the Repurchase Receivables, the Closing Date
Indebtedness, the Closing Date Indebtedness Documents, and any other
property of the Borrower or any other Person from time to time
securing any of the Obligations;
"Consistent Basis" in reference to the application of
Generally Accepted Accounting Principles means the accounting
principles observed in the period referred to are comparable in all
material respects to those applied in the preparation
6
<PAGE>
of the audited financial statements of the Borrower referred
to in Section 5.01(f)(i) hereof;
"Dealer" means any Person (including a Repurchase Party)
from whom the Borrower purchases Eligible Vehicles, and shall include
dealers of Repurchase Parties whose vehicles, when sold to the
Borrower, constitute Eligible Vehicles;
"Default" means any event or condition which, with the
giving or receipt of notice or lapse of time or both, would
constitute an Event of Default hereunder;
"Depreciation Rate" means, (a) with respect to each
Repurchase Vehicle, the monthly depreciation charge, if any, set
forth in the respective Repurchase Agreement, or, if there is no such
charge, then a monthly depreciation charge of 1.65% per month, and
(b) with respect to each Risk Vehicle, a monthly depreciation charge
of 1.65% per month;
"Dollars" and the symbol "$" means dollars constituting
legal tender for the payment of public and private debts in the
United States of America;
"Eligible Net Book Value" means, as to any Eligible Vehicle
as of any date of determination, the total of (a) its Capitalized
Cost, less (b) accrued depreciation for such Eligible Vehicle using a
depreciation rate which is not less than 100% of the Depreciation
Rate applicable thereto;
"Eligible Repurchase Party" means a Repurchase Party
which is not the subject of a Repurchase Party Default or a
Repurchase Party Adverse Change;
"Eligible Repurchase Receivables" means, at any time of
determination, all payments due from and payable by an Eligible
Repurchase Party, the amount of which shall be deemed to be the sum
of the Eligible Net Book Values of the related Eligible Repurchase
Vehicles on their respective Repurchase Dates, resulting from the
acceptance of such Eligible Repurchase Vehicles by the Repurchase
Party for repurchase under a Repurchase Agreement with such
Repurchase Party, which, in any case, are assigned to the Lender
under the Security Agreement and are not unpaid for more than ninety
(90) days after the respective Repurchase Dates for such Eligible
Vehicles. Payments which would otherwise constitute Eligible
Repurchase Receivables shall not constitute Eligible Repurchase
Receivables if they are due from and payable by a Repurchase Party
which has become subject to a Repurchase Party Default;
"Eligible Repurchase Vehicles" means, collectively,
Eligible Vehicles that are Repurchase Vehicles;
7
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"Eligible Risk Vehicles" means, collectively, Eligible
Vehicles that are Risk Vehicles;
"Eligible Securities" means the following obligations:
(a) Government Securities;
(b) the following debt securities of the following
agencies or instrumentalities of the United States of
America if at all times the full faith and credit of the
United States of America is pledged to the full and timely
payment of all interest and principal thereof:
(i) all direct or fully guaranteed
obligations of the United States Treasury; and
(ii) mortgage-backed securities and
participation certificates guaranteed by the
Government National Mortgage Association;
(c) the following obligations of the following
agencies or instrumentalities of the United States of
America:
(i) participation certificates and debt
obligations of the Federal Home Loan Mortgage
Corporation;
(ii) consolidated debt obligations, and
obligations secured by a letter of credit, of the
Federal Home Loan Banks; and
(iii) debt obligations and mortgage-backed
securities of the Federal National Mortgage
Association which have not had the interest portion
thereof severed therefrom;
(d) obligations of any corporation organized under
the laws of any state of the United States of America or
under the laws of any other nation, payable in the United
States of America, expressed to mature not later than 92
days following the date of issuance thereof and rated in an
investment grade rating category by S&P and Moody's;
(e) interest bearing demand or time deposits issued
by the Lender or certificates of deposit maturing within one
year from the date of acquisition issued by a bank or trust
company organized under the laws of the United States or of
any state thereof having capital surplus and undivided
profits aggregating at least $400,000,000 and being rated
A-3 or better by S&P or A or better by Moody's;
8
<PAGE>
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in
obligations described in paragraphs (a) through (g) above,
the shares of which mutual funds are at all times rated
"AAA" by S&P; and
(h) asset-backed remarketed certificates of
participation representing a fractional undivided interest
in the assets of a trust, which certificates are rated at
least "A-1" by S&P and "P-1" by Moody's;
Obligations listed in paragraphs (a), (b) and (c) above
which are in book-entry form must be held in a trust account with the
Federal Reserve Bank or with a clearing corporation or chain of
clearing corporations which has an account with the Federal Reserve
Bank;
"Eligible Vehicles" means, collectively, vehicles owned by
the Borrower (not to include vehicles leased to Borrower) and
included in the Borrower's vehicle rental fleet the purchase of which
was financed or refinanced with the proceeds of an Advance hereunder,
and with respect to which, in each case, the Borrower has granted to
the Lender (or an agent designated by the Lender) a first priority
Lien under the Security Agreement and:
(a) such Lien has become perfected and is of first
priority in accordance with the priority and perfection
rules of each applicable jurisdiction (such perfection to
include, without limitation (except for Liens on vehicles
subject to Certificates of Title issued by states where the
lien of a creditor cannot be indicated on the Certificate of
Title, but where the security interest in which can be
perfected notwithstanding such absence of indication), the
due notation on the Vehicle's Certificate of Title of the
Lien of the Lender (or an agent designated by the Lender) in
the form and otherwise as required by the applicable
jurisdiction; or
(b) the Borrower has delivered to the Lender (or an
agent designated by the Lender) Clear Certificates of Title,
which Clear Certificates of Title are held by the Lender (or
an agent designated by the Lender) on behalf of the Lender
in the Restricted Space;
provided, however, that if the respective Repurchase Party for an
Eligible Repurchase Vehicle becomes subject to a Repurchase Party
Default, then such Vehicle shall no longer be an Eligible Vehicle;
"Environmental Laws" means, collectively, the
Comprehensive Environmental Response, Compensation and
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Liability Act of 1980, as amended, the Superfund Amendments and
Reauthorization Act of 1986, the Resource Conservation and Recovery
Act, the Toxic Substances Control Act, as amended, the Clean Air Act,
as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other federal, or applicable state or
applicable published local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material;
"ERISA" means, at any date, the Employee Retirement Income
Security Act of 1974, as amended, and the regulations thereunder, all
as the same shall be in effect at such date;
"Eurodollar Business Day" means a Business Day on which the
relevant international financial markets are open for the transaction
of the business contemplated by this Agreement in London, England and
New York, New York;
"Eurodollar Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate;
"Eurodollar Rate" means, for the Interest Period for any
Eurodollar Loan, the rate of interest per annum determined pursuant
to the following formula:
Interbank Offered Rate
Eurodollar Rate = ---------------------------------- + Applicable
1 - Applicable Reserve Percentage Margin
"Event of Default" means any of the occurrences set forth
as such in Section 9.01 hereof;
"Existing Credit Agreement" means the First Amended and
Restated Credit Agreement dated as of January 12, 1995, among
Team Fleet Services Corporation, the Guarantor and NBD Bank,
N.A.;
"Federal Funds Effective Rate" means, for any day, the rate
per annum (rounded upward to the nearest 1/100% of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day, provided that (a)
if such day is not a Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding
Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be
the average rate quoted to the Lender on such day on transactions of
similar tenor,
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credit and amount as the tenor, credit and amount of the
applicable Loan hereunder;
"Fiscal Year" means the fiscal year of the Borrower
ending on December 31st of each year;
"Floating Rate" means (i) in the case of a Reference Loan,
the Reference Rate, and (ii) in the case of a CD Loan, the CD Rate;
"Floating Rate Loan" means a Loan which is either a
Reference Loan or a CD Loan;
"Generally Accepted Accounting Principles" means those
principles of accounting set forth in pronouncements of the Financial
Accounting Standards Board, the American Institute of Certified
Public Accountants or which have other substantial authoritative
support and are applicable in the circumstances as of the date of a
report, as such principles are from time to time supplemented and
amended;
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of
America;
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, agency or instrumentality or political subdivision
thereof or any entity or officer exercising executive, legislative or
judicial, regulatory or administrative functions of or pertaining to
any government or any court, in each case whether of a state of the
United States, the United States or a foreign governmental entity;
"Guarantor" means Team Rental Group, Inc., a Delaware
corporation;
"Guaranty" means the Guaranty and Suretyship Agreement of
even date herewith by the Guarantor in favor of the Lender, in the
form of Exhibit G attached hereto, as the same may be amended,
modified or supplemented from time to time;
"Hazardous Material" means and includes any hazardous, toxic
or dangerous waste, substance or material, the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law;
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property, all indebtedness secured
by any Lien on the property of such
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Person whether or not such indebtedness is assumed, all liability of
such Person by way of endorsements (other than for collection or
deposit in the ordinary course of business), all Contingent
Obligations, all Rate Hedging Obligations and other items which in
accordance with Generally Accepted Accounting Principles is
classified as a liability on a balance sheet other than accrued
expenses and accrued taxes; but excluding all accounts payable in the
ordinary course of business so long as payment therefor is due within
one year; provided that in no event shall the term Indebtedness
include partners' capital, surplus and retained earnings, minority
interest in Subsidiaries, lease obligations (other than pursuant to
Capital Leases), reserves for current and deferred income taxes and
investment credits, other deferred credits and reserves, and deferred
compensation obligations;
"Indebtedness for Money Borrowed" means all indebtedness in
respect of money borrowed, including without limitation all Capital
Leases and the deferred purchase price of any property or asset,
evidenced by a promissory note, bond or similar written obligation
for the payment of money (including, but not limited to, conditional
sales or similar title retention agreements);
"Interbank Offered Rate" means, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the
average (rounded upward to the nearest one-sixteenth (1/16th) of one
percent) per annum rate of interest determined by the office of the
Lender then determining such rate (each such determination to be
conclusive and binding) as of two Eurodollar Business Days prior to
the first day of such Interest Period, as the effective rate at which
deposits in immediately available funds in Dollars are being, have
been, or would be offered or quoted by the Lender to major banks in
the applicable interbank market for Eurodollar deposits at any time
during the Eurodollar Business Day which is the second Business Day
immediately preceding the first day of such Interest Period, for a
term comparable to such Interest Period and in the amount of the
Eurodollar Loan. If no such offers or quotes are generally available
for such amount, the Lender shall be entitled to determine the
Eurodollar Rate by estimating in its reasonable judgment the per
annum rate (as described above) that would be applicable if such
quote or offers were generally available;
"Interest Period" for each Eurodollar Loan means a period
commencing on the date such Eurodollar Loan is made or converted and
each subsequent period commencing on the last day of the immediately
preceding Interest Period for such Eurodollar Loan, and ending, at
the Borrower's option, on the date one, two or three months
thereafter as notified to the Lender by the Authorized Representative
three (3) Eurodollar
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Business Days prior to the beginning of such Interest Period;
provided, that,
(i) if the Authorized Representative fails to notify
the Lender of the length of an Interest Period three (3)
Eurodollar Business Days prior to the first day of such
Interest Period, the Loan for which such Interest Period was
to be determined shall be deemed to be a Reference Loan as
of the first day thereof;
(ii) if an Interest Period for a Eurodollar Loan would
end on a day which is not a Eurodollar Business Day such
Interest Period shall be extended to the next Eurodollar
Business Day (unless such extension would cause the
applicable Interest Period to end in the succeeding calendar
month, in which case such Interest Period shall end on the
next preceding Eurodollar Business Day); and
(iii) there shall not be more than five (5) Interest
Periods in effect on any day;
"Interest Rate Selection Notice" means the telephonic or
telefacsimile request of an Authorized Representative to elect a
subsequent Interest Period for or to convert a Loan or Loans of any
type hereunder, as such election or conversion shall be otherwise
permitted herein. Any Interest Rate Selection Notice shall be binding
on and irrevocable by the Borrower and if telephonic shall be
confirmed by facsimile transmission delivered to the Lender,
effective upon receipt, on the same Business Day upon which the
telephonic request is made, by the Authorized Representative in the
form attached hereto as Exhibit D;
"Investment Grade Rating" means, with respect to a Person, a
rating of the senior, unsecured long-term debt of such Person or, if
such Person does not have a senior, unsecured long-term debt rating
from Moody's and S&P, such Person's parent corporation, of Baa3 or
higher by Moody's and BBB- or higher by S&P;
"Lien" means any interest in property securing any
obligation owed to, or a claim by, a Person other than the owner of
the property, whether such interest is based on the common law,
statute or contract, and including but not limited to the lien or
security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. For the purposes of
this Agreement, the Borrower and its Subsidiaries shall be deemed to
be the owners of any property which either of them have acquired or
hold subject to a conditional sale agreement, financing lease, or
other arrangement pursuant to which title to the property has been
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retained by or vested in some other Person for security
purposes;
"Loan" or "Loans" means any of the Eurodollar Loans or
Floating Rate Loans;
"Loan Documents" means this Agreement, the Note, the
Guaranty, the Security Agreement, the Assignments of Repurchase
Agreements, the Assignment of Indebtedness, and all other instruments
and documents heretofore or hereafter executed or delivered to and in
favor of the Lender (or an agent designated by the Lender) in
connection with the Loans made under this Agreement, as the same may
be amended, modified or supplemented from the time to time;
"Moody's" means Moody's Investors Service, Inc., a
Delaware corporation;
"Multi-employer Plan" means an employee pension benefit plan
covered by Title IV of ERISA and in respect of which the Borrower or
any Subsidiary is an "employer" as described in Section 4001(b) of
ERISA, which is also a multi-employer plan as defined in Section
4001(a)(3) of ERISA;
"Note" means the promissory note of the Borrower evidencing
Loans executed and delivered to the Lender as provided in Section
2.05 hereof substantially in the form attached hereto as Exhibit E;
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Note, (ii) the payment and
performance of all other obligations, liabilities and Indebtedness of
the Borrower to the Lender hereunder, under any one or more of the
other Loan Documents or with respect to the Loans, and (iii) the
payment and performance of all obligations of the Borrower to the
Lender under the Closing Date Indebtedness Documents or with respect
to the Closing Date Indebtedness (as assigned to the Lender pursuant
to the Assignment of Indebtedness);
"Person" means an individual, partnership, corporation,
trust, limited liability company, unincorporated organization,
association, joint venture or a government or agency or political
subdivision thereof;
"Pre-Refunded Municipal Obligations" means obligations of
any state of the United States of America or of any municipal
corporation or other public body organized under the laws of any such
state which are rated, based on the escrow, in the highest investment
rating category by both S&P and Moody's and which have been
irrevocably called for redemption and advance refunded through the
deposit in escrow of Government
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Securities or other debt securities which are (i) not callable at the
option of the issuer thereof prior to maturity, (ii) irrevocably
pledged solely to the payment of all principal and interest on such
obligations as the same becomes due and (iii) in a principal amount
and bear such rate or rates of interest as shall be sufficient to pay
in full all principal of, interest, and premium, if any, on such
obligations as the same becomes due as verified by a nationally
recognized firm of certified public accountants;
"Prime Rate" means the rate of interest per annum announced
publicly by the Lender as its prime rate from time to time. The Prime
Rate is not necessarily the best or the lowest rate of interest
offered by the Lender;
"Principal Office" means the office of the Lender at
Independence Center, 15th Floor, Charlotte, North Carolina
28255, Attention: Corporate Credit Services or such other
office and address as the Lender may from time to time
designate;
"Rate Hedging Obligations" means any and all obligations of
the Borrower, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (a) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts,
warrants and those commonly known as interest rate "swap" agreements;
and (b) any and all cancellations, buybacks, reversals, terminations
or assignments of any of the foregoing;
"Reference Rate" means the greater of (i) the Prime Rate or
(ii) the Federal Funds Effective Rate plus one-half percent (1/2%);
"Reference Loan" means a Loan which bears interest at the
Reference Rate. Any change in the Federal Funds Effective Rate or the
Prime Rate shall be effective as of 12:01 A.M. on the date of any
change in the Federal Funds Effective Rate or Prime Rate giving rise
thereto;
"Regulation D" means Regulation D of the Board as the
same may be amended or supplemented from time to time;
"Regulatory Change" means any change effective after the
Closing Date in United States federal or state laws or
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regulations (including Regulation D and capital adequacy regulations)
or foreign laws or regulations or the adoption or making after such
date of any interpretations, directives or requests applying to a
class of banks, which includes the Lender, under any United States
federal or state or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary
authority charged with the interpretation or administration thereof
or compliance by the Lender with any request or directive regarding
capital adequacy, including with respect to "highly leveraged
transactions," whether or not having the force of law, whether or not
failure to comply therewith would be unlawful and whether or not
published or proposed prior to the date hereof;
"Repurchase Agreement" means each fleet incentive program
offered through an Eligible Repurchase Party together with the
repurchase agreement or guaranteed depreciation agreement among the
Borrower and such Eligible Repurchase Party relating to such fleet
incentive program and pursuant to which such Eligible Repurchase
Party agrees to repurchase vehicles sold to the Borrower thereunder
or to reimburse the Borrower in respect of shortfalls in resale
prices of vehicles upon terms and conditions set forth therein, and
with respect to which the Borrower has complied with Sections 7.19
and 7.21 hereof, including the obtaining of such consent or approval
of the Lender as may be required thereby, including the Repurchase
Agreements in effect on the Closing Date as set forth on Schedule 1
hereto, together with any amendment, supplement or modification
thereto allowed pursuant to the terms hereof and thereof and any
similar agreements entered into from time to time for the purpose of
financing Vehicles hereunder by the Borrower and an Eligible
Repurchase Party with respect to which the Borrower has complied with
Sections 7.19 and 7.21 hereof; provided that (i) with respect to any
new repurchase agreement (including a repurchase agreement of a new
Repurchase Party) that is proposed for consideration after the date
hereof as a Repurchase Agreement, prior to such new repurchase
agreement constituting a "Repurchase Agreement" hereunder, the Lender
has been given not less than ten (10) days notice (or such shorter
period of time as shall be acceptable to the Lender) of a draft of
such new repurchase agreement as it then exists at the time of such
notice (and shall be provided a final copy of such new repurchase
agreement promptly upon its being available) and shall have consented
to the inclusion of such new repurchase agreement as a "Repurchase
Agreement" hereunder and (ii) with respect to any change in the terms
of any existing Repurchase Agreement, prior to such Repurchase
Agreement constituting a "Repurchase Agreement" hereunder, the Lender
shall have been provided in writing a copy of such change and shall
have consented to such change in the terms thereof;
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<PAGE>
"Repurchase Date" means, with respect to any Eligible
Vehicle, the date on which the applicable Repurchase Party accepts
such Eligible Vehicle for repurchase under the terms of the
applicable Repurchase Agreement and becomes obligated to pay the
Repurchase Price thereof;
"Repurchase Party" means any Person approved by the Lender
hereunder as a "Repurchase Party" in respect of Eligible Vehicles
acquired by the Borrower and which enters into a Repurchase Agreement
in accordance with Section 7.19 hereof;
"Repurchase Party Adverse Change" means, with respect to any
Repurchase Party, (a) the occurrence of any material adverse effect
upon the ability of such Person to perform, or a material default,
under one or more of its Repurchase Agreements, in any case,
resulting from any act, omission, situation, status, event or
undertaking, either singly or taken together (as determined by the
Lender); or (b) the failure of such Person to have an Investment
Grade Rating;
"Repurchase Party Default" means, with respect to any
Repurchase Party, (a) the filing of a petition, answer or consent by
or against such Person seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other
applicable Federal, state or foreign bankruptcy law or other United
States or foreign similar law, or the consenting by such Person to
the institution of proceedings thereunder against such Person or to
the filing of any such petition or to the appointment of or taking of
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of such Person, or of any
substantial part of its properties, or the making by such Person of a
general assignment for the benefit of creditors or such Person's
failure generally to pay its debts as they become due, or the taking
of any action in furtherance of any such action; or (b) the entry of
a decree or order for relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other
applicable Federal, state or foreign bankruptcy law or similar United
States of foreign law, with respect to such Person, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official for such Person, or for any substantial part of its
properties, or ordering the winding-up or liquidation of its affairs,
or the filing of an involuntary petition against such Person and the
entry of a temporary stay, which petition and stay is not being
diligently contested or which petition and stay has continued
undismissed for a period of sixty (60) consecutive days; or (c) a
proceeding shall be commenced by such person, or by any governmental
authority having jurisdiction over such Person, seeking to establish
the invalidity or unenforceability of all or any portion of any
Repurchase Agreement (exclusive of
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questions of interpretation of any provision thereof), or such Person
shall deny any obligation (i) to repurchase Eligible Vehicles or (ii)
to make any material payments, in each case, under any of its
Repurchase Agreements;
"Repurchase Price" means the price at which a Repurchase
Party is obligated, upon acceptance, to repurchase or has repurchased
an Eligible Vehicle pursuant to a Repurchase Agreement;
"Repurchase Receivable" means all payments due from and
payable by a Repurchase Party (i) in respect of the repurchase price
for a Vehicle tendered by or on behalf of the Borrower and accepted
by the Repurchase Party under the applicable Repurchase Agreement or
(ii) in respect of the deficiency of the resale price of a Vehicle
under the amount guaranteed or otherwise provided as the basis for
computing payments due the Borrower under the applicable Repurchase
Agreement;
"Repurchase Vehicles" means, collectively, Vehicles which
have been purchased under a Repurchase Agreement and are subject to
repurchase under a Repurchase Agreement (which Repurchase Agreements
have been consented to by the Lender);
"Restricted Space" shall have the meaning assigned
thereto in the Security Agreement;
"Revolving Credit Advance Account" means an account on
the books of the Lender in which
(i) each Advance by the Lender pursuant to Section 2.01
shall be debited thereto by recording therein on the date of
such Advance a debit entry in the amount of such Advance;
and
(ii) each payment made to the Lender for credit to the
Revolving Credit Advance Account shall be credited thereto
by recording therein on the date paid to the Lender a credit
entry in the amount of such payment;
"Revolving Credit Commitment" means the obligation of the
Lender to make Loans to the Borrower up to an aggregate principal
amount at any one time outstanding of $50,000,000;
"Revolving Credit Debit Balance" means an amount equal to
the excess, if any, of all debit entries over all credit entries
required to be recorded pursuant to Section 2.01 hereof in a
Revolving Credit Advance Account of the Lender up to and including
the date of computation;
"Revolving Credit Facility" means the facility described
in Article II hereof providing for Loans to the Borrower by
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the Lender in the aggregate principal amount of up to the
Revolving Credit Commitment;
"Revolving Credit Termination Date" means (i) July 6, 1996,
or (ii) such earlier date of termination of Lender's obligations
pursuant to Section 9.01 upon the occurrence of an Event of Default,
or (iii) such earlier date as the Borrower enters into a conduit
facility for the financing of any of the Eligible Vehicles, or (iv)
such date as the Borrower may voluntarily permanently terminate the
Revolving Credit Facility by payment in full of all Obligations;
"Risk Vehicles" means, collectively, all Vehicles other
than Repurchase Vehicles;
"S&P" means Standard & Poor's Ratings Group, a division
of McGraw-Hill;
"Sales and Advance Rate Adjustment Report" means a
certificate of an Authorized Representative in the form attached as
Exhibit 1 to Exhibit B hereto;
"Security Agreement" means the Security Agreement of even
date herewith between the Borrower and the Lender, as amended,
modified or supplemented from time to time;
"Single Employer Plan" means any employee pension benefit
plan covered by Title IV of ERISA and in respect of which the
Borrower or any Subsidiary is an "employer" as described in Section
4001(b) of ERISA, which is not a Multi-employer Plan;
"Solvent" means, when used with respect to any Person, that
at the time of determination:
(i) the fair value of its assets is in excess of
the total amount of its liabilities, including, without
limitation, contingent obligations; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding voting stock or more than 50% of all
equity interests is owned directly or indirectly by the Borrower
and/or by one or more of the Borrower's Subsidiaries;
"Swap Agreement" means one or more agreements with respect
to Indebtedness evidenced by the Note between the Borrower the
Lender, on terms mutually acceptable to such
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Borrower and such Person, which agreements create Rate Hedging
Obligations;
"Upfront Fee" means the fee payable by the Borrower to
the Lender pursuant to Section 2.08(b);
"Unused Fee" means the fee payable by Borrower to the
Lender pursuant to Section 2.08(a);
"Vehicles" shall mean all of the Borrower's now existing and
hereafter acquired motor vehicle inventory consisting of vans of all
types and descriptions, whether held for sale, lease or rental
purposes, the acquisition or refinancing of which are financed
pursuant to this Agreement.
1.02 Accounting Terms. All accounting terms not specifically defined
herein shall have the meanings assigned to such terms and shall be interpreted
in accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis.
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ARTICLE II
The Loans
2.01 Revolving Credit Facility
(a) Commitment. Subject to the terms and conditions of this
Agreement, the Lender agrees to make Advances to the Borrower, from time to
time from the Closing Date until the Revolving Credit Termination Date,
provided, however, that each Advance shall be used to purchase the CFC
Indebtedness and related Eligible Vehicles on the Closing Date, or to purchase
Eligible Vehicles after the Closing Date, and the amount of an Advance shall
be no greater than the Borrower's actual purchase price for the respective
Indebtedness or Vehicles (as specified on the respective Borrowing Notice);
provided, further that the Borrower's purchase price for an Eligible Vehicle
shall be no greater than the Eligible Net Book Value of such Vehicle; provided
further, that the Lender will not be required and shall have no obligation to
make any Advance (i) so long as a Default or an Event of Default has occurred
and is continuing or (ii) if the Lender has accelerated the maturity of the
Note as a result of an Event of Default; and provided further that immediately
after giving effect to each Advance, the principal amount of outstanding Loans
shall not exceed the lesser of the Revolving Credit Commitment or the
Borrowing Base. Within such limits, the Borrower may borrow, repay and
reborrow hereunder, on a Business Day in the case of a Floating Rate Loan and
on a Eurodollar Business Day in the case of a Eurodollar Loan, from the
Closing Date until, but (as to borrowings and reborrowings) not including, the
Revolving Credit Termination Date; provided, however, that (x) no Eurodollar
Loan shall be made which has an Interest Period that extends beyond the
Revolving Credit Termination Date and (y) each Eurodollar Loan may, subject to
the provisions of Section 2.07, be repaid only on the last day of the Interest
Period with respect thereto.
(b) Amounts. Except as otherwise permitted by the Lender from time to
time, the aggregate unpaid principal amount of the Loans shall not exceed at
any time, an amount equal to the lesser of the Total Revolving Credit
Commitment or the Borrowing Base. Each Loan hereunder and each conversion
under Section 2.07 shall be in an amount of at least $100,000 or an integral
multiple of $10,000.
(c) Advances. (i) An Authorized Representative shall give the Lender
(1) at least three (3) Eurodollar Business Days' irrevocable telephonic or
telefacsimile notice of each Eurodollar Loan (whether representing an
additional borrowing hereunder or the conversion of borrowing hereunder from
Floating Rate Loans to Eurodollar Loans or the continuation of a Eurodollar
Loan for an additional Interest Period) prior to 10:30 A.M., Charlotte, North
Carolina time; and (2) irrevocable telephonic notice of each Floating Rate
Loan representing an additional borrowing hereunder
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prior to 10:30 A.M. Charlotte, North Carolina time on the day of such proposed
Floating Rate Loan. Each such Borrowing Notice, which shall be effective upon
receipt by the Lender, shall specify the amount of the borrowing, the type
(Reference, CD or Eurodollar) of Loan, the date of borrowing and, if a
Eurodollar Loan, the Interest Period to be used in the computation of
interest. The Authorized Representative shall provide the Lender written
confirmation of each such telephonic notice on the same day by telefacsimile
transmission in the form attached hereto as Exhibit C or D, as applicable,
with appropriate insertions but failure to provide such confirmation shall not
affect the validity of such telephonic notice.
(ii) Not later than 2:00 P.M., Charlotte, North Carolina time on the
date specified for each borrowing under this Section 2.01, the Lender shall,
pursuant to the terms and subject to the conditions of this Agreement, make
the amount of the Loan or Loans to be made by it on such day available to the
Borrower by delivery of the proceeds thereof to the respective Dealer (or
finance source of a Dealer) as required pursuant to Section 2.09 hereof and as
directed in the applicable Borrowing Notice by the Authorized Representative.
2.02 Payment of Interest. (a) The Borrower shall pay interest to the
Lender on the outstanding and unpaid principal amount of each Loan made by the
Lender for the period commencing on the date of such Loan until such Loan
shall be due at the then applicable Reference Rate for Reference Loans,
applicable CD Rate for CD Loans or applicable Eurodollar Rate for Eurodollar
Loans, as designated by the Authorized Representative pursuant to Section 2.01
hereof or as otherwise provided herein; provided, however, that if any amount
shall not be paid when due (at maturity, by acceleration or otherwise), all
amounts outstanding hereunder shall bear interest thereafter (i) in the case
of a Eurodollar Loan, until the end of the Interest Period with respect to
such Eurodollar Loan, at a rate of two percent (2%) above such Eurodollar Rate
and (ii) thereafter, and with respect to Floating Rate Loans, at a rate of
interest per annum which shall be two percent (2%) above the Reference Rate or
the maximum rate permitted by applicable law, whichever is lower, from the
date such amount was due and payable until the date such amount is paid in
full.
(b) Interest on each Loan shall be computed on the basis of a year of
360 days and calculated for the actual number of days elapsed. Interest on
each Loan shall be paid (a) quarterly in arrears on the last Business Day of
each calendar quarter commencing March 31, 1996, on each Floating Rate Loan,
(b) on the last day of the applicable Interest Period for each Eurodollar
Loan, and (c) upon payment in full of the principal amount of the Loan at the
Revolving Credit Termination Date.
2.03 Payment of Principal. (a) The principal amount of each
Loan shall be due and payable to the Lender in full on the
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Revolving Credit Termination Date. The duration of the initial Interest Period
for each Loan that is a Eurodollar Loan shall be as specified in the initial
Borrowing Notice. The Borrower shall have the option to elect the duration of
subsequent Interest Periods and to convert the Loans in accordance with
Section 2.07 hereof. If the Lender does not receive a notice of election of
duration of an Interest Period or to convert by the time prescribed by Section
2.07 hereof, the Borrower shall be deemed to have elected to convert such Loan
to (or continue such Loan as) a Reference Loan until the Borrower notifies the
Lender in accordance with Section 2.07. If Borrower shall elect that a Loan
bear interest at the Floating Rate, then such Floating Rate Loan shall
continue until converted by Borrower as provided in Section 2.07.
(b) Each payment of principal (including any prepayment) and payment
of interest shall be made to the Lender at the Principal Office in Dollars and
in immediately available funds before 2:00 P.M. Charlotte, North Carolina time
on the date such payment is due. The Lender may at the written direction of
the Borrower, but shall not be obligated to, debit the amount of any such
payment which is not made by such time to any ordinary deposit account, if
any, of the Borrower with the Lender. Except for permanent reductions of the
Revolving Credit Facility as provided in Section 2.06, the Borrower shall give
the Lender one (1) Business Day prior telephonic notice of any payment of
principal, such notice to be given by not later than 11:00 a.m. Charlotte,
North Carolina time, on the date of such payment.
(c) The Lender shall deem any payment by or on behalf of the Borrower
hereunder that is not made both (a) in Dollars and in immediately available
funds and (b) prior to 2:00 P.M. Charlotte, North Carolina time to be a
non-conforming payment. Any such payment shall not be deemed to be received by
the Lender until the time such funds become available funds. Any
non-conforming payment may constitute or become a Default or Event of Default.
The Lender shall give prompt telephonic notice to the Authorized
Representative (confirmed in writing) if any payment is non-conforming. If (i)
a non-conforming payment is made and the Lender gives the Borrower the notice
required by this Section, and (ii) Borrower fails to make a conforming payment
prior to 4:00 P.M. on such day, then interest shall continue to accrue on any
principal as to which a non-conforming payment is made until such funds become
available funds (but in no event less than the period from the date of such
payment to the next succeeding Business Day) at a rate of interest per annum
which shall be two percent (2%) above the Reference Rate or the maximum rate
permitted by applicable law, whichever is lower, from the date such amount was
due and payable until the date such amount is paid in full.
(d) In the event that any payment hereunder or under the Note becomes
due and payable on a day other than a Business Day, then such due date shall
be extended to the next succeeding Business
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Day; provided that interest shall continue to accrue during the period of any
such extension.
2.04 Mandatory Repayments.
(a) Depreciation Payments. Within ten (10) days after the end of each
calendar month, the Borrower shall pay to the Lender an amount equal to the
aggregate of the depreciation on each Eligible Vehicle during such month,
calculated over the course of such month at the Applicable Depreciation Rate
multiplied by the Eligible Net Book Value (as at the beginning of such month)
for each Eligible Vehicle. Such payments shall be applied by the Lender to any
outstanding principal or accrued interest on the Loans.
(b) Vehicle Sales. Immediately after the sale of any
Eligible Vehicle, the Borrower shall pay to the Lender an amount
equal to the Eligible Net Book Value of such Vehicle immediately
prior to such sale.
(c) All amounts paid to the Lender pursuant to Section 2.04(a) or (b)
above may be applied by the Lender to any outstanding principal or accrued
interest on the Loans, or to any other amount then due and owing pursuant to
this Agreement or any other Loan Documents.
2.05 Note. Loans made by the Lender shall be evidenced by, and be
repayable with interest in accordance with the terms of, the promissory note
payable to the order of the Lender in the amount of the Revolving Credit
Commitment, which Note shall be dated the Closing Date and shall be duly
completed, executed and delivered by the Borrower.
2.06 Reductions. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time (but not more frequently than
once during each fiscal quarter), upon not less than two (2) Business Days
written notice to the Lender to reduce the Revolving Credit Commitment. Each
such reduction shall be in the aggregate amount of $500,000 or such greater
amount which is in an integral multiple of $500,000, and shall permanently
reduce the Revolving Credit Commitment. No such reduction shall result in the
payment of any Eurodollar Loan other than on the last day of the Interest
Period of such Loan unless such prepayment is accompanied by amounts due, if
any, under Section 3.04. Each reduction of the Revolving Credit Commitment
shall be accompanied by payment of the Note to the extent that the sum of the
Revolving Credit Debit Balance exceeds the lesser of the Revolving Credit
Commitment or the Borrowing Base, after giving effect to such reduction,
together with accrued and unpaid interest on the amounts prepaid.
2.07 Conversions and Elections of Subsequent Interest
Periods. Provided that no Default or Event of Default shall have
occurred and be continuing and subject to the limitations set forth
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below and in Sections 3.01(b), 3.02 and 3.03 hereof, the Borrower
may:
(a) upon notice to the Lender on or before 10:30 A.M. Charlotte,
North Carolina time on any Business Day convert all or a part of Eurodollar
Loans to Floating Rate Loans on the last day of the Interest Period for such
Eurodollar Loans;
(b) on three (3) Eurodollar Business Days' notice to the Lender on or
before 10:30 A.M. Charlotte, North Carolina time:
(i) elect a subsequent Interest Period for all or a portion
of Eurodollar Loans to begin on the last day of the current Interest
Period for such Eurodollar Loans;
(ii) convert Floating Rate Loans to Eurodollar Loans on any
date.
(c) upon notice to the Lender on or before 10:30 A.M. Charlotte,
North Carolina time on any Business Day convert any type of Floating Rate Loan
(Reference or CD) to another type of Floating Rate Loan on any date;
Notice of any such elections or conversions shall be in the form of
Exhibit D attached hereto and shall specify the effective date of such
election or conversion and the Interest Period to be applicable to the Loan as
continued or converted, it being understood that conversions may be made by
telephonic notice to Lender, immediately confirmed in writing in the form of
Exhibit D. Each election and conversion pursuant to this Section 2.07 shall be
subject to the limitations on Eurodollar Loans set forth in the definition of
"Interest Period" herein and in Sections 2.01, 2.02 and Article IV hereof.
2.08 Fees.
(a) Unused Fee. For the period beginning on the Closing Date and
ending on the Revolving Credit Termination Date (or such earlier date on which
the Revolving Credit Facility has terminated), the Borrower agrees to pay to
the Lender an Unused Fee equal to three-tenths of one percent (.30%) per annum
times the sum of the daily amount by which the Revolving Credit Commitment
exceeds the sum of the average daily Revolving Credit Debit Balance. Such
payments of fees provided for in this Section shall be due in arrears on the
last Business Day of each calendar quarter beginning March 31, 1996 to and on
the Revolving Credit Termination Date (or such earlier date on which the
Revolving Credit Facility has terminated). Such fee shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed.
(b) Upfront Fee. In addition to the foregoing, the Borrower shall pay
to the Lender on or before the Closing Date the Upfront
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(the "Upfront Fee") required pursuant to a letter agreement of even date
herewith between the Borrower and the Lender.
2.09 Use of Proceeds. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower (i) to
finance its purchase of Eligible Vehicles, and (ii) to purchase the entire CFC
Indebtedness and the CFC Indebtedness Documents. The proceeds of Loans used to
purchase the CFC Indebtedness and CFC Indebtedness Documents shall be paid
directly by NationsBank to CFC. The proceeds of Loans used to finance the
purchase of Eligible Vehicles shall be paid directly by NationsBank to the
Dealer (or the financing source of the Dealer) selling such Vehicles to the
Borrower (as specified in the respective Borrowing Notice).
2.10 Adjustment of Advance Rate. Within ten (10) days after the end
of each calendar month (each, a Determination Month"), the Borrower shall
deliver to the Lender a Sales and Advance Rate Adjustment Report pursuant to
Section 7.01(e) hereof. Commencing on the date of the Lender's receipt of such
report, the Advance Rate for Eligible Risk Vehicles (other than Closing Date
Vehicles) and the Closing Date Advance Date for Closing Date Eligible Vehicles
(as used in the Borrowing Base) shall each be adjusted as follows: If the
Book-Value-to-Proceeds Ratio for such month is greater than or equal to .98 to
1.00, then the Advance Rate shall be 94% and the Closing Date Advance Rate
shall be 100%. If the Book-Value-to-Proceeds Ratio is less than .98 to 1.00,
then the Advance Rate shall be a percentage calculated according to the
following equation:
Advance Rate = 94% - (1.00 - Book-Value-to-Proceeds Ratio)1
and the Closing Date Advance Rate shall be a percentage calculated according
to the following equation:
Closing Date Advance Rate = 100% - (1.00 - Book-Value-to- Proceeds
Ratio)1
- --------
(1) Expressed as a percentage.
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ARTICLE III
Yield Protection and Illegality
3.01 Additional Costs. (a) The Borrower shall promptly pay to the
Lender from time to time, without duplication, such amounts as the Lender may
determine to be necessary to compensate it for any costs incurred by the
Lender which it determines are attributable to its making or maintaining any
Loan or its obligation to make any Loans, or any reduction in any amount
receivable by the Lender under this Agreement or the Note in respect of any of
such Loans or such obligation, including reductions in the rate of return
(without any mark-up) on a Lender's capital (such increases in costs and
reductions in amounts receivable and returns being herein called "Additional
Costs"), in each case resulting from any Regulatory Change which: (i) changes
the basis of taxation of any amounts payable to the Lender under this
Agreement or the Note in respect of any of such Loans (other than taxes
imposed on or measured by the income, revenues or assets); or (ii) imposes or
modifies any reserve, special deposit, or similar requirements relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, the Lender (other than any such reserve, deposit or
requirement reflected in the Prime Rate, the Federal Funds Effective Rate or
the Eurodollar Rate, in each case computed in accordance with the respective
definitions of such terms set forth in Section 1.01 hereof); or (iii) has or
would have the effect of reducing the rate of return on capital of any the
Lender to a level below that which the Lender could have achieved but for such
Regulatory Change (taking into consideration the Lender's policies with
respect to capital adequacy); or (iv) imposes any other condition adversely
affecting the Lender under this Agreement or the Note (or any of such
extensions of credit or liabilities) which condition has been imposed upon the
Lender as well as other lending institutions that are similarly situated for
general purposes and not as a penalty or fine for the Lender's action or
failure to act. The Lender will notify the Authorized Representative of any
event occurring after the Closing Date which would entitle it to compensation
pursuant to this Section 3.01(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation.
(b) Without limiting the effect of the foregoing provisions of this
Section 3.01, in the event that, by reason of any Regulatory Change, the
Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of the Lender which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in this Agreement
or a category of extensions of credit or other assets of the Lender which
includes Eurodollar Loans or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets which it may hold, then, if
the Lender so elects by notice to the Borrower, the obligation hereunder of
the Lender to make,
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and to convert Floating Rate Loans into, Eurodollar Loans that are the subject
of such restrictions shall be suspended until the date such Regulatory Change
ceases to be in effect and the Borrower shall, on the last day(s) of the then
current Interest Period(s) for outstanding Eurodollar Loans convert such
Eurodollar Loans into Floating Rate Loans.
(c) Determinations by the Lender for purposes of this Section 3.01 of
the effect of any Regulatory Change on its costs of making or maintaining, or
being committed to make, Loans hereunder, or on amounts receivable by the
Lender in respect of Loans, and of the additional amounts required to
compensate the Lender in respect of any Additional Costs, shall be conclusive
absent manifest error, provided that such determinations are made on a
reasonable basis taking into account the Lender's reasonable policies as to
the allocation of capital, costs and other items. The Lender requesting such
compensation shall furnish to the Authorized Representative an explanation of
the Regulatory Change and calculations, in reasonable detail, setting forth
the Lender's determination of any such Additional Costs.
3.02 Suspension of Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate for
any Eurodollar Loan for any Interest Period, the Lender determines (which
determination made on a reasonable basis shall be conclusive absent manifest
error) that:
(a) quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Rate" in Section 1.01
hereof are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining the rate of interest
for such Eurodollar Loan as provided in this Agreement; or
(b) the relevant rates of interest referred to in the
definition of "Interbank Offered Rate" in Section 1.01 hereof upon
the basis of which the Eurodollar Rate for such Interest Period is to
be determined do not adequately reflect the cost to the Lender of
making or maintaining such Eurodollar Loan for such Interest Period
or such Eurodollar Loan (which determination shall be made on a
reasonable basis by the Lender, and the Person making such
determination shall furnish the Authorized Representative evidence of
the facts leading to such determination);
then the Lender shall give the Authorized Representative prompt (and in any
event within two (2) Business Days) notice thereof, and so long as such
condition remains in effect, the Lender shall be under no obligation to make
Eurodollar Loans that are subject to such condition, or to convert Loans into
Eurodollar Loans, and the Borrower shall on the last day(s) of the then
current Interest Period(s) for outstanding Eurodollar Loans, as applicable,
convert such Eurodollar Loans into a Eurodollar Loan if such Eurodollar
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Loan is not subject to the same or similar condition, or Floating Rate Loans,
if available hereunder. The Lender shall give the Authorized Representative
notice describing in reasonable detail any event or condition described in
this Section 3.02 promptly following the determination by the Lender that the
availability of Eurodollar Loans is, or is to be, suspended as a result
thereof, it being understood that if possible the Lender shall provide such
notice prior to such suspension. At such time when such condition is no longer
in effect, the Lender shall promptly notify the Borrower and the availability
of Eurodollar Loans shall be reinstated.
3.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for the Lender to honor its
obligation to make or maintain Eurodollar Loans hereunder, then the Lender
shall promptly (and in any event within two (2) Business Days) notify the
Borrower thereof and the Lender's obligation to make or continue Eurodollar
Loans, or convert Floating Rate Loans into Eurodollar Loans, shall be
suspended until such time as the Lender may again make and maintain Eurodollar
Loans, and the Lender's outstanding Eurodollar Loans shall be converted into
Reference Loans in accordance with Section 2.07 hereof, it being understood
that such Eurodollar Loans shall be converted to Reference Loans immediately
only to the extent required by law and shall otherwise continue to be
Eurodollar Loans until the end of the then current Interest Period. At such
time as it becomes lawful for the Lender to make or maintain Eurodollar Loans,
the Lender shall promptly notify the Borrower and the availability of
Eurodollar Loans shall be reinstated.
3.04 Compensation. The Borrower shall promptly pay to the Lender,
upon the request of the Lender, such amount or amounts as shall be sufficient
(in the reasonable determination of Lender) to compensate it for any loss,
cost or expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar
Loan on a date other than the last day of the Interest Period for
such Eurodollar Loan, including without limitation any conversion
required pursuant to Section 3.03; or
(b) any failure by the Borrower to borrow a Eurodollar Loan
on the date for such borrowing specified in the relevant Borrowing
Notice under Article II hereof;
such compensation to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or converted or not borrowed for the period
from the date of such payment, prepayment or conversion or failure to borrow
or convert to the last day of the then current Interest Period for such
Eurodollar Loan (or, in the case of a failure to borrow or convert, the
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Interest Period for such Loan which would have commenced on the date scheduled
for such borrowing or conversion) at the applicable rate of interest for such
Eurodollar Loan provided for herein over (ii) the Interbank Offered Rate (as
reasonably determined by the Lender) for Dollar deposits of amounts comparable
to such principal amount and maturities comparable to such period; provided,
however, that the Lender shall mitigate the amount of such compensation by
re-investing the fund so received or the funds to be so borrowed (as the case
may be) in a commercially reasonable manner designed to obtain the highest
rate of return possible. A determination of a Lender as to the amounts payable
pursuant to this Section 3.04 shall be conclusive, provided that such
determinations are made on a reasonable basis. The Lender shall furnish to the
Authorized Representative calculations in reasonable detail setting forth the
Lender's determination of the amount of such compensation.
3.05 Taxes. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future excise,
stamp or other taxes, fees, duties, levies, imposts, charges, deductions,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding (i) franchise taxes, (ii) any taxes (other than
withholding taxes) that would not be imposed but for a connection between the
Lender and the jurisdiction imposing such taxes (other than a connection
arising solely by virtue of the activities of the Lender pursuant to or in
respect of this Agreement or any other Loan Document), (iii) any withholding
taxes payable with respect to payments hereunder or under any other Loan
Document under laws (including, without limitation, any statute, treaty,
ruling, determination or regulation) in effect on the Closing Date, (iv) any
taxes imposed on or measured by the Lender's assets, net income, receipts or
branch profits and (v) any taxes arising after the Closing Date solely as a
result of or attributable to the Lender changing its designated lending office
after the date hereof (such non-excluded items being collectively called
"Taxes"). In the event that any withholding or deduction from any payment to
be made by the Borrower hereunder is required in respect of any Taxes pursuant
to any applicable law, rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(b) promptly forward to the Lender an official receipt
or other documentation satisfactory to the Lender evidencing
such payment to such authority; and
(c) pay to the Lender such additional amount or amounts as
is necessary to ensure that the net amount actually received by the
Lender will equal the full amount the Lender would have received had
no such withholding or deduction been required.
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If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Lender the required receipts or
other required documentary evidence, the Borrower shall indemnify the Lender
for any incremental Taxes, interest or penalties that may become payable by
the Lender as a result of any such failure. For purposes of this Section 3.05,
a distribution hereunder by the Lender to or for the account of the Lender
shall be deemed a payment by the Borrower.
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ARTICLE IV
Conditions to Making Loans
4.01 Conditions of Initial Advance. The obligation of the Lender to
make the initial Advance pursuant to this Agreement is subject to the
conditions precedent that the Lender shall have received on the Closing Date,
in form and substance satisfactory to the Lender, the following:
(a) executed originals of each of this Agreement, the Note
and the other Loan Documents, together with all schedules and
exhibits thereto;
(b) favorable written opinions of special counsel to the
Borrower and the Guarantor dated the Closing Date, addressed to the
Lender substantially in the form of Exhibit F attached hereto;
(c) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee thereof)
of the Borrower and the Guarantor certified by its secretary or
assistant secretary as of the Closing Date, appointing (in the case
of the Borrower) the initial Authorized Representative and approving
and adopting the Loan Documents to be executed by such Person, and
authorizing the execution and delivery thereof;
(d) specimen signatures of officers of the Borrower and the
Guarantor executing the Loan Documents on behalf of such Person,
certified by the secretary or assistant secretary of the Borrower or
Guarantor, as applicable;
(e) the charter documents of the Borrower and the Guarantor
certified as of a recent date by the Secretary of State of its state
of incorporation;
(f) the by-laws of the Borrower and the Guarantor certified
as of the Closing Date as true and correct by the secretary or
assistant secretary of the Person to whom such by-laws relate;
(g) certificates issued as of a recent date by the
Secretaries of State of the jurisdiction of incorporation of the
Borrower and the Guarantor, as the case may be, as to the due
existence and good standing of the Borrower and the Guarantor
therein;
(h) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to conduct
business under assumed name, issued in respect of the Borrower and
the Guarantor as of a recent date by the Secretary of State or
comparable official of each jurisdiction
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in which the failure to be qualified to do business or authorized so
to conduct business could materially adversely affect the business,
operations or conditions, financial or otherwise, of the Borrower or
any Guarantor;
(i) notice of appointment of the initial Authorized
Representative;
(j) evidence of insurance required by the Loan Documents;
(k) evidence satisfactory to the Lender of the Borrower's
purchase in full of the entire CFC Indebtedness using proceeds of the
Loans, and the assignment of such Indebtedness by CFC (at the
direction and with the consent of the Borrower) to the Lender
pursuant to the Assignment of Indebtedness;
(l) assignments of any UCC financing statements in favor of
CFC relating to the CFC Indebtedness;
(m) all Closing Date Indebtedness Documents;
(n) copies of all Eligible Repurchase Agreements;
(o) evidence satisfactory to Lender that the Borrower has
delivered the original Certificate of Title for each Closing Date
Vehicle to the Lender at the Restricted Space;
(p) the initial Borrowing Base Certificate;
(q) a letter agreement with respect to the Upfront Fee, and
payment of the Upfront Fee;
(r) the appointment of CFC as nominee lienholder (on behalf
of the Lender) with respect to each Closing Date Vehicle;
(s) a power-of-attorney signed by CFC, authorizing the
Lender to release CFC's Lien on the Vehicles or assign same to the
Lender (and to cause appropriate notations on the respective
Certificates of Title); and
(t) such other documents, instruments, certificates and
opinions as the Lender may reasonably request on or prior to the
Closing Date in connection with the consummation of the transactions
contemplated hereby.
4.02 Conditions of Loans. The obligations of the Lender to make any
Loans hereunder on or subsequent to the Closing Date are subject to the
satisfaction of the following conditions:
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(a) the Lender shall have received a notice of such
borrowing or request if required by Article II hereof;
(b) the representations and warranties of the Borrower and
the Guarantor set forth in Article V hereof and in each of the other
Loan Documents shall be true and correct in all material respects on
and as of the date of such Advance, with the same effect as though
such representations and warranties had been made on and as of such
date, except to the extent that such representations and warranties
expressly relate to an earlier date and except that the financial
statements referred to in Section 5.01(f)(i) shall be deemed to be
those financial statements most recently delivered to the Lender
pursuant to Section 7.01 hereof;
(c) With respect to any Loans to be used by the Borrower to
finance the purchase of vehicles under Repurchase Agreements, the
Borrower shall have complied with Sections 7.19 and 7.21 hereof;
(d) at the time of each such Advance, no Default or Event of
Default specified in Article IX hereof, shall have occurred and be
continuing; and
(e) immediately after giving effect to a Loan the aggregate
principal balance of all outstanding Loans in the aggregate shall not
exceed the lesser of the Revolving Credit Commitment or the Borrowing
Base.
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ARTICLE V
Representations and Warranties
5.01 Representations and Warranties. The Borrower represents and
warrants with respect to itself (which representations and warranties shall
survive the delivery of the documents mentioned herein and the making of
Loans), that:
(a) Organization and Authority.
(i) the Borrower is a corporation duly organized
and validly existing under the laws of the jurisdiction of
its incorporation;
(ii) the Borrower (x) has the requisite power and
authority to own its properties and assets and to carry on
its business as now being conducted and as contemplated in
the Loan Documents, and (y) is qualified to do business in
every jurisdiction in which failure so to qualify would have
a material adverse effect on the business or operations of
the Borrower;
(iii) the Borrower has the power and authority to
execute, deliver and perform this Agreement and the Note,
and to borrow hereunder, and to execute, deliver and perform
each of the other Loan Documents to which it is a party; and
(iv) when executed and delivered, each of the Loan
Documents to which Borrower is a party will be the legal,
valid and binding obligation or agreement, as the case may
be, of the Borrower, enforceable against the Borrower in
accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the
effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding
at law or in equity);
(b) Loan Documents. The execution, delivery and
performance by the Borrower of each of the Loan Documents to
which the Borrower is a party:
(i) have been duly authorized by all requisite
corporate action (including any required shareholder
approval) of the Borrower required for the lawful execution,
delivery and performance thereof;
(ii) do not violate any provisions of (1)
applicable law, rule or regulation, (2) any order of any
court or other agency of government binding on the Borrower
or its
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respective properties, or (3) the charter documents or
by-laws of Borrower;
(iii) will not be in conflict with, result in a breach of
or constitute an event of default, or an event which, with
notice or lapse of time, or both, would constitute an event
of default, under any indenture, agreement or other
instrument to which Borrower is a party, or by which the
properties or assets of Borrower are bound;
(iv) will not result in the creation or imposition of
any Lien, charge or encumbrance of any nature whatsoever
upon any of the properties or assets of Borrower except any
liens in favor of the Lender created by the Loan Documents.
(c) Solvency. Borrower is Solvent after giving effect to the
transactions contemplated by this Agreement and the other Loan
Documents.
(d) Subsidiaries and Stockholders. Borrower has no
Subsidiaries other than those Persons listed as Subsidiaries in
Schedule 5.01(d) hereto; Schedule 5.01(d) to this Agreement states as
of the date hereof the authorized and issued capitalization of each
Subsidiary listed thereon, the number of shares or other equity
interests of each class of capital stock or interest issued and
outstanding of each such Subsidiary and the number and/or percentage
of outstanding shares or other equity interest (including options,
warrants and other rights to acquire any interest) of each such class
of capital stock or equity interest owned by Borrower or by any such
Subsidiary; the outstanding shares or other equity interests of each
such Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable; and Borrower and each such Subsidiary
owns beneficially and of record all the shares and other interests it
is listed as owning in Schedule 5.01(d), free and clear of any Lien.
(e) Ownership Interests. Borrower owns no interest in any
Person other than the Persons listed in Schedule 5.01(d) hereto;
(f) Financial Condition. (i) The Borrower has heretofore
furnished to the Lender the unaudited balance sheet of the Borrower
as at December 31, 1995, and the notes thereto and the related
statements of income, stockholders' equity and cash flows for the
Fiscal Year then ended. Except as set forth therein, such financial
statements (including the notes thereto) present fairly the financial
condition of the Borrower as of the end of such Fiscal Year and
results of its operations and the changes in its stockholders' equity
for the
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Fiscal Year then ended, all in conformity with Generally Accepted
Accounting Principles applied on a Consistent Basis;
(ii) since December 31, 1995, there has been no material adverse
change in the condition, financial or otherwise, of the Borrower or
in the businesses, properties and operations of the Borrower, nor
have such businesses or properties, taken as a whole, been materially
adversely affected as a result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo or
act of God;
(iii) except as set forth in the financial statements referred to
in Section 5.01(f)(i) or in Schedule 5.01(f) or Schedule 5.01(j)
hereto, neither Borrower nor any Subsidiary has incurred, other than
in the ordinary course of business, any material indebtedness,
obligations, commitments or other liability contingent or otherwise
which remain outstanding or unsatisfied;
(g) Title to Properties. The Borrower has title to all its
real and personal properties, subject to no transfer restrictions or
Liens of any kind, except for (x) the transfer restrictions and Liens
described in Schedule 5.01(g)-Liens attached hereto and incorporated
herein by reference, and (y) Liens permitted under Section 8.04;
(h) Taxes. The Borrower has filed or caused to be filed all
federal, state and local tax returns which are required to be filed
by it and except for taxes and assessments being contested in good
faith and against which reserves satisfactory to the Borrower's
independent certified public accountants have been established, has
paid or caused to be paid all taxes as shown on said returns or on
any assessment received by it, to the extent that such taxes have
become due;
(i) Other Agreements. The Borrower is not
(i) a party to any judgment, order, decree or any
agreement or instrument or subject to restrictions
materially adversely affecting the business, properties or
assets, operation or condition (financial or otherwise) of
the Borrower; or
(ii) in default in the performance, observance or
fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which
the Borrower is a party, which default has, or if not
remedied within any applicable grace period could have, a
material adverse effect on the business, operations or
condition, financial or otherwise, of the Borrower;
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(j) Litigation. Except as set forth in Schedule 5.01(j)
hereto, there is no action, suit or proceeding at law or in equity or
by or before any governmental instrumentality or agency or arbitral
body pending, or, to the knowledge of the Borrower, threatened by or
against the Borrower or affecting the Borrower or any properties or
rights of the Borrower, which could reasonably be expected to
materially adversely affect the financial condition, business or
operations of the Borrower;
(k) Margin Stock. The Borrower does not own any "margin
stock" as such term is defined in Regulation U, as amended (12 C.F.R.
Part 221), of the Board. The proceeds of the borrowings made pursuant
to Article II hereof will be used by the Borrower only for the
purposes set forth in Section 2.09 hereof. None of such proceeds will
be used, directly or indirectly, for the purpose of purchasing or
carrying any margin stock or for the purpose of reducing or retiring
any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of
the Loans under this Agreement a "purpose credit" within the meaning
of said Regulation U or Regulation X (12 C.F.R. Part 224) of the
Board. Neither the Borrower nor any agent acting in its behalf has
taken or will take any action which might cause this Agreement or any
of the documents or instruments delivered pursuant hereto to violate
any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or
any state securities laws, in each case as in effect on the date
hereof;
(l) Investment Company. The Borrower is not an "investment
company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined
in the Investment Company Act of 1940, as amended (15 U.S.C. ss.
80a-1, et seq.). The application of the proceeds of the Loans and
repayment thereof by the Borrower and the performance by the Borrower
of the transactions contemplated by this Agreement will not violate
any provision of said Act, or any rule, regulation or order issued by
the Securities and Exchange Commission thereunder, in each case as in
effect on the date hereof;
(m) Patents, Etc. Except as set forth in Schedule 5.01(j),
the Borrower owns or has the right to use, under valid license
agreements or otherwise, all material patents, licenses, franchises,
trademarks, trademark rights, trade names, trade name rights, trade
secrets and copyrights necessary to the conduct of its business as
now conducted, without known conflict with any patent, license,
franchise, trademark, trade secrets and confidential commercial or
proprietary information, trade name, copyright, rights to trade
secrets or other proprietary rights of any other Person;
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(n) No Untrue Statement. Neither this Agreement nor any
other Loan Document or certificate or document executed and delivered
by or on behalf of the Borrower in accordance with or pursuant to any
Loan Document contains any misrepresentation or untrue statement of
material fact or omits to state a material fact necessary, in light
of the circumstance under which it was made, in order to make any
such representation or statement contained therein not misleading in
any material respect;
(o) No Consents, Etc. Neither the respective businesses or
properties of the Borrower, nor any relationship between the Borrower
and any other Person, nor any circumstance in connection with the
execution, delivery and performance of the Loan Documents and the
transactions contemplated hereby is such as to require a consent,
approval or authorization of, or filing, registration or
qualification with, any governmental or other authority or any other
Person on the part of the Borrower as a condition to the execution,
delivery and performance of, or consummation of the transactions
contemplated by, this Agreement or the other Loan Documents or if so,
such consent, approval, authorization, filing, registration or
qualification has been obtained or effected, as the case may be;
(p) ERISA.
(i) None of the employee benefit plans maintained
at any time by the Borrower or the trusts created thereunder has
engaged in a prohibited transaction which could subject any such
employee benefit plan or trust to a material tax or penalty on
prohibited transactions imposed under Internal Revenue Code Section
4975 or ERISA;
(ii) None of the employee benefit plans maintained at
any time by the Borrower which are employee pension benefit plans and
which are subject to Title IV of ERISA or the trusts created
thereunder has been terminated so as to result in a material
liability of the Borrower under ERISA nor has any such employee
benefit plan of the Borrower incurred any material liability to the
Pension Benefit Guaranty Corporation established pursuant to ERISA,
other than for required insurance which have been paid or are not yet
due and payable; the Borrower has not withdrawn from or caused a
partial withdrawal to occur with respect to any Multi-employer Plan
resulting in any assessed and unpaid withdrawal liability; the
Borrower has made or provided for all contributions to all such
employee pension benefit plans which they maintain and which are
required as of the end of the most recent fiscal year under each such
plan; the Borrower has not incurred any accumulated funding
deficiency with respect to any such plan, whether or not waived; nor
has there been any reportable event, or other event or condition,
which presents a material
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risk of termination of any such employee benefit plan by such
Pension Benefit Guaranty Corporation;
(iii) The present value of all vested accrued benefits
under the employee pension benefit plans which are subject to Title
IV of ERISA, maintained by the Borrower did not, as of the most
recent valuation date for each such plan, exceed the then current
value of the assets of such employee benefit plans allocable to such
benefits;
(iv) The consummation of the Loans provided for in
Article II will not involve any prohibited transaction under ERISA
which is not subject to a statutory or administrative exemption;
(v) To the best of the Borrower's knowledge, each
employee pension benefit plan subject to Title IV of ERISA,
maintained by the Borrower, has been administered in accordance with
its terms in all material respects and is in compliance in all
material respects with all applicable requirements of ERISA and other
applicable laws, regulations and rules;
(vi) There has been no withdrawal liability incurred and
unpaid with respect to any Multi-employer Plan to which the Borrower
is or was a contributor;
(vii) As used in this Agreement, the terms "employee
benefit plan," "employee pension benefit plan," "accumulated funding
deficiency," "reportable event," and "accrued benefits" shall have
the respective meanings assigned to them in ERISA, and the term
"prohibited transaction" shall have the meaning assigned to it in
Code Section 4975 and ERISA;
(viii) The Borrower has no liability not disclosed on any
of the financial statements furnished to the Lenders pursuant to
Section 6.01(f) hereof, contingent or otherwise, under any plan or
program or the equivalent for unfunded post-retirement benefits,
including pension, medical and death benefits, which liability would
have a material adverse effect on the financial condition of the
Borrower.
(q) No Default. As of the date hereof, there does not exist
any Default or Event of Default hereunder;
(r) Hazardous Materials. The Borrower is in compliance with
all applicable Environmental Laws in all material respects and the
Borrower has not been notified of any action, suit, proceeding or
investigation which calls into question compliance by the Borrower
with any Environmental Laws or which seeks to suspend, revoke or
terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous
Material;
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(s) RICO. The Borrower is not engaged in and has not engaged
in any course of conduct that could subject any of their respective
properties to any Lien, seizure or other forfeiture under any
criminal law, racketeer influenced and corrupt organizations law,
civil or criminal, or other similar laws;
(t) Employment Matters. Except as set forth on Schedule
5.01(t), the Borrower is in compliance in all material respects with
all applicable laws, rules and regulations pertaining to labor or
employment matters, including without limitation those pertaining to
wages, hours, occupational safety and taxation and there is neither
pending or threatened any material litigation, administrative
proceeding nor, to the knowledge of the Borrower, any investigation,
in respect of such matters.
(u) Eligible Vehicles. Each vehicle identified as or
included as an Eligible Vehicle (including any Eligible Risk Vehicle
or Eligible Repurchase Vehicle) in any Borrowing Base Certificate or
other Loan Document was new when purchased by the Borrower (or, if
not new, has been purchased under, and is subject to repurchase under
a Repurchase Agreement which has been consented to by the Lender),
and otherwise satisfies the criteria applicable to "Eligible
Vehicles." Each vehicle identified as or included as an Eligible
Repurchase Vehicle in any Borrowing Base Certificate or other Loan
Document is eligible for repurchase under an Eligible Repurchase
Agreement for a purchase price of not less than the Eligible Net Book
Value for such vehicle, and otherwise satisfies the criteria
applicable to "Eligible Repurchase Vehicles." Each amount identified
as or included as an Eligible Repurchase Receivable in any Borrowing
Base Certificate or other Loan Document satisfies the criteria
applicable to an "Eligible Repurchase Receivable" and is owed in an
amount at least equal to the amount so set forth or included in such
Borrowing Base Certificate or other Loan Document. All vehicles
purchase or financed with the proceeds of any Advance are Eligible
Vehicles. The Repurchase Agreements in effect as of the Closing Date
are those certain agreements described on Schedule 1 hereto. A
current list of the sites at which Eligible Vehicles may be tendered
to a Repurchase Party for repurchase under a Repurchase Agreement is
included in such Repurchase Agreement.
(v) Closing Date Vehicles. As of the Closing Date, the
Borrower owns each of the Vehicles identified on Schedule 2 attached
hereto, free and clear of any Liens other than Liens in favor of the
Lender pursuant to the Loan Documents.
(w) Closing Date Indebtedness. There is no Closing Date
Indebtedness other than the CFC Indebtedness, and no Closing
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Date Indebtedness Documents other than the CFC Indebtedness
Documents.
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ARTICLE VI
SECURITY
6.01 Security. As security for the full and timely payment and
performance of all Obligations, the Borrower shall on or before the Closing
Date grant for the benefit of the Lender and to its satisfaction a first
priority security interest in all of the Vehicles, Repurchase Agreements,
Repurchase Receivables, Closing Date Indebtedness, Closing Date Indebtedness
Documents and all other Collateral, and execute for such purposes of the
Security Agreement and the Assignment of Indebtedness and do all things
necessary in the opinion of the Lender and its counsel to grant to the Lender
a first priority security interest in all Collateral subject to no prior Lien,
and which security interest (in the case of Collateral other than Vehicles,
subject to Section 6.03 below) shall be perfected.
6.02 Further Assurances. At the request of the Lender, the Borrower
will execute, by its duly authorized officers, any certificate, instrument,
statement or document, or to procure any such certificate, instrument,
statement or document, or to take such other action (and pay all connected
costs) which the Lender deems necessary from time to time to create, continue
or preserve the Liens of the Lender in the Collateral (and the perfection and
priority thereof) contemplated hereby and by the other Loan Documents.
6.03 Certificates of Title. On the Closing Date, the Borrower shall
deliver to the Lender, at the Restricted Space, the Certificate of Title for
each Closing Date Vehicle. Thereafter, prior to any Vehicle becoming an
Eligible Vehicle, the Borrower shall deliver to the Lender, at the Restricted
Space, the Certificate of Title for such Vehicle. In addition, the Borrower
shall take all actions necessary to perfect the Lien of the Lender on each
Vehicle (including without limitation causing a notation on such Lien of the
Lender (or an agent designated by the Lender) to be made on the respective
Certificate of Title), according to the following timetable: (a) perfection of
the Lender's Lien on 90% of the Vehicles within sixty (60) days after the
Closing Date, and (b) perfection of the Lender's Lien on 100% of the Vehicles
within ninety (90) days after the Closing Date.
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ARTICLE VII
Affirmative Covenants
In addition to the foregoing, until the Obligations have been paid
and satisfied in full and this Agreement has been terminated in accordance
with the terms hereof, unless the Lender shall otherwise consent in writing,
the Borrower will and will cause each Subsidiary to:
7.01 Financial Reports, Etc. (a) as soon as practical and in any
event within 90 days after the end of each Fiscal Year of the Borrower,
deliver or cause to be delivered to the Lender consolidating balance sheets of
the Borrower and its Subsidiaries, and the notes thereto, and the related
consolidating statements of income, stockholders' equity and cash flows and
the respective notes thereto, for such Fiscal Year, setting forth comparative
financial statements for the preceding Fiscal Year, all prepared in accordance
with Generally Accepted Accounting Principles applied on a Consistent Basis
and containing opinions of Deloitte & Touche, or other such independent
certified public accountants selected by the Borrower and approved by the
Lender, which are unqualified as to the scope of the audit performed and as to
the "going concern" status of the Borrower;
(b) as soon as practical and in any event within 45 days after the
end of each fiscal quarter (except the last of the Fiscal Year), deliver to
the Lender (i) consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such reporting period, the related consolidating
statements of income, stockholders' equity and cash flows for such reporting
period and for the period from the beginning of the Fiscal Year through the
end of such reporting period, accompanied by a certificate of an Authorized
Representative to the effect that such financial statements present fairly the
financial position of the Borrower and its Subsidiaries as of the end of such
reporting period and the results of their operations and the changes in their
financial position for such reporting period, in conformity with the standards
set forth in Section 5.01(f)(i) with respect to interim financials;
(c) together with each delivery of the financial statements required
by Section 7.01(a)(i) hereof, deliver to the Lender a letter from the
Borrower's accountants specified in Section 7.01(a)(i) hereof stating that in
performing the audit necessary to render an opinion on the financial
statements delivered under Section 7.01(a)(i), they obtained no knowledge of
any Default or Event of Default by the Borrower in the fulfillment of the
terms and provisions of this Agreement insofar as they relate to financial
matters (which at the date of such statement remains uncured); and if the
accountants have obtained knowledge of such Default or Event of Default, a
statement specifying the nature and period of existence thereof;
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(d) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Lender a copy of (i) all regular or special
reports or effective registration statements which Borrower or any Subsidiary
shall file with the Securities and Exchange Commission (or any successor
thereto) or any securities exchange, (ii) any proxy statement distributed by
the Borrower to its shareholders, bondholders or the financial community in
general, and (iii) any management letter or other report submitted to the
Borrower or any of its Subsidiaries by independent accountants in connection
with any annual, interim or special audit of the Borrower or any of its
Subsidiaries;
(e) as soon as practical and in any event within ten (10) days after
the end of each calendar month, deliver to the Lender a Borrowing Base
Certificate and a Sales and Advance Rate Adjustment Report, in each case as of
the end of such calendar month;
(f) as soon as practical and in any event within ten (10) days after
the end of each calendar month, deliver to the Lender a list of the Eligible
Vehicles sold by the Borrower during such month, identifying each Eligible
Vehicle by make, model, vehicle identification number and Eligible Net Book
Value immediately prior to such sale;
(g) as soon as practical and in any event within fourteen (14) days
after the date hereof, a revised Schedule 2 to this Credit Agreement, stating
the Capitalized Cost of each Closing Date Vehicle; and
(h) promptly, from time to time, deliver or cause to be delivered to
the Lender such other information regarding Borrower's and each Subsidiary's
operations, business affairs and financial condition as the Lender may
reasonably request. The Lender is hereby authorized to deliver a copy of any
such financial information delivered hereunder to the Lender (or any affiliate
of the Lender), to any regulatory authority having jurisdiction over the
Lender pursuant to any written request therefor, to any other Person who shall
acquire or consider the acquisition of a participation interest in or
assignment of any Loan permitted by this Agreement and to any Affiliate of the
Lender.
7.02 Additional Financial Reports, Etc. Cause the Guarantor to
deliver to the Lender each of the financial statements, accountants' letters,
registration statements and other documents required by Sections 7 and 8 of
the Guaranty, when and as required by such provisions.
7.03 Maintain Properties. Maintain all material properties necessary
to its operations in good working order and condition (ordinary wear and tear
excepted) and make all needed repairs, replacements and renewals as are
necessary to conduct its business in accordance with customary business
practices.
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7.04 Existence, Qualification, Etc. Do or cause to be done all things
necessary to preserve and keep in full force and effect its existence and all
material rights and franchises, trade names, trademarks and permits and
maintain its license or qualification to do business as a foreign corporation
and good standing in each jurisdiction in which the failure to so maintain or
qualify would have a material adverse affect on the Borrower.
7.05 Regulations and Taxes. Comply with or contest in good faith all
material statutes and governmental regulations and pay all material taxes,
assessments, governmental charges, claims for labor, supplies, rent and any
other obligation which, if unpaid, might become a Lien against any of its
properties except liabilities being contested in good faith and against which
adequate reserves have been established in accordance with Generally Accepted
Accounting Principles and liabilities which do not in the aggregate at any
time exceed $500,000.
7.06 Insurance. Maintain all insurance required by the
Security Agreement or any other Loan Document.
7.07 True Books. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions,
and set up on its books such reserves as may be required by Generally Accepted
Accounting Principles with respect to doubtful accounts and all taxes,
assessments, charges, levies and claims and with respect to its business in
general, and include such reserves in interim as well as year-end financial
statements.
7.08 Pay Indebtedness to Lenders and Perform Other Covenants. (a)
Make full and timely payment of the principal of and interest on the Note and
all other Obligations whether now existing or hereafter arising; and (b) duly
comply with all the terms and covenants contained in all Loan Documents and
other instruments and documents given to the Lender pursuant hereto or
thereto.
7.09 Right of Inspection. Permit the Lender and accountants,
attorneys or other consultants designated by the Lender at the Lender's
expense to visit and inspect any of the properties, corporate books and
financial reports of the Borrower and its Subsidiaries, and to discuss their
respective affairs, finances and accounts with their principal officers and
independent certified public accountants, all at times reasonably convenient
to the Borrower, at reasonable intervals and with reasonable prior notice.
Subject to Section 7.01(f), the Lender and such accountants, attorneys or
other consultants shall treat all information received by it pursuant to this
Section as confidential to the extent such information is not generally
available to other Persons and shall, at the request of Borrower, execute a
confidentiality agreement.
7.10 Observe all Laws. Conform to and duly observe in all
material respects all laws, rules and regulations and all other
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valid requirements of any regulatory authority with respect to the
conduct of its business.
7.11 Officer's Knowledge of Default or Other Events. Upon
the President, the Chief Executive Officer, the Treasurer, the
Chief Operating Officer or the Vice President of the Borrower
obtaining knowledge of any of the following:
(a) any Default or Event of Default hereunder or under
the Existing Credit Agreement or any other obligation of the
Borrower or any Subsidiary described in Section 9.01(e),
(b) any change in the list of inspection sites at which
Eligible Vehicles may be tendered for repurchase under the
terms of any Repurchase Agreement, or
(c) the occurrence of any Repurchase Party Default or
Repurchase Party Adverse Change,
cause such officer or an Authorized Representative to promptly notify the
Lender of the nature thereof, the period of existence thereof, and what action
the Borrower proposes to take with respect thereto.
7.12 Suits or Other Proceedings. Upon the President, Chief Financial
Officer or the Controller of the Borrower obtaining knowledge of any
litigation or other proceedings being instituted against the Borrower or any
Subsidiary, or any attachment, levy, execution or other process being
instituted against any assets of the Borrower or any Subsidiary, in an
aggregate amount greater than $500,000 not otherwise covered by insurance,
promptly deliver to the Lender written notice thereof stating the nature and
status of such litigation, dispute, proceeding, levy, execution or other
process.
7.13 Notice of Discharge of Hazardous Material or Environmental
Complaint. Promptly provide to the Lender true, accurate and complete copies
of any and all notices, complaints, orders, directives, claims, or citations
received by the Borrower or any Subsidiary relating to any material (a)
violation or alleged violation by the Borrower or any Subsidiary of any
applicable Environmental Laws or OSHA; (b) release or threatened release by
the Borrower or any Subsidiary of any Hazardous Material, except where
occurring legally; or (c) liability or alleged liability of the Borrower or
any Subsidiary for the costs of cleaning up, removing, remediating or
responding to a release of Hazardous Materials.
7.14 Environmental Compliance. If the Borrower or any
Subsidiary shall receive notice from any governmental authority
that the Borrower or any Subsidiary has violated any applicable
Environmental Laws, the Borrower shall to the extent required by
law and after expiration of all valid appeals and administrative
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proceedings (and in any event within the time period permitted by the
applicable governmental authority) remove or remedy, or cause the applicable
Subsidiary to remove or remedy, such violation.
7.15 Indemnification. The Borrower hereby agrees to defend, indemnify
and hold the Lender harmless from and against any and all claims, losses,
liabilities, damages and expenses (including, without limitation, cleanup
costs and reasonable attorneys' fees) arising directly or indirectly from, out
of or by reason of the handling, storage, treatment, emission or disposal of
any Hazardous Material by or in respect of the Borrower or any Subsidiary or
property owned or leased or operated by the Borrower or any Subsidiary. The
provisions of this Section 7.15 shall survive repayment of the Obligations,
occurrence of the Revolving Credit Termination Date and expiration or
termination of this Agreement.
7.16 Further Assurances. At its cost and expense, upon request of the
Lender, duly execute and deliver or cause to be duly executed and delivered,
to the Lender such further instruments, documents, certificates, financing and
continuation statements, and applications for lien notation and do and cause
to be done such further acts that may be reasonably necessary or advisable in
the reasonable opinion of the Lender to carry out more effectively the
provisions and purposes of this Agreement and the other Loan Documents.
7.17 ERISA Requirement. Comply in all material respects with all
requirements of ERISA applicable to it and furnish to the Lender as soon as
possible and in any event (i) within thirty (30) days after the Borrower knows
or has reason to know that any reportable event with respect to any employee
benefit plan subject to Title IV of ERISA maintained by the Borrower or any
Subsidiary which could give rise to termination or the imposition of any
material tax or penalty has occurred, written statement of an Authorized
Representative describing in reasonable detail such reportable event and any
action which the Borrower or applicable Subsidiary proposes to take with
respect thereto, together with a copy of the notice of such reportable event
given to the Pension Benefit Guaranty Corporation ("PBGC") or a statement that
said notice will be filed with the annual report of the United States
Department of Labor with respect to such plan if such filing has been
authorized, (ii) promptly after receipt thereof, a copy of any notice that the
Borrower or any Subsidiary may receive from the PBGC relating to the intention
of the PBGC to terminate any employee benefit plan or plans of the Borrower or
any Subsidiary or to appoint a trustee to administer any such plan, and (iii)
within 10 days after a filing with the PBGC pursuant to Section 412(n) of the
Code of a notice of failure to make a required installment or other payment
with respect to a plan, a certificate of an Authorized Representative setting
forth details as to such failure and the action that the Borrower or its
affected Subsidiary, as applicable, proposes to take with respect thereto,
together with a copy of such notice given to the PBGC.
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7.18 Continued Operations. Continue at all times (i) to conduct its
business and engage principally in a line or lines of business involving the
furnishing of personnel related services, and (ii) preserve, protect and
maintain free from Liens its material patents, copyrights, licenses,
trademarks, trademark rights, trade names, trade name rights, trade secrets
and know-how necessary or useful in the conduct of its operations, except to
the extent Borrower or its Subsidiaries is otherwise permitted hereunder to
dispose of assets.
7.19 Use of Proceeds. Use the proceeds of the Loans solely
for the purposes specified in Section 2.09 hereof.
7.20 Repurchase Party. In the event the Lender consents to the
designation hereunder as Eligible Vehicles of vehicles purchased or to be
purchased by the Borrower under a Repurchase Agreement, the Borrower agrees to
provide to the Lender (a) an assignment of such Repurchase Agreement in favor
of the Lender (or an agent designated by the Lender) and consented to by the
applicable Repurchase Party, substantially in the form of the Assignments of
Repurchase Agreement, (b) a repurchase agreement executed by the applicable
Repurchase Party which shall be in a form acceptable to the Lender, and (c)
such other agreements and documents as may be reasonably requested by the
Lender.
7.21 Vehicle Turn-in; Vehicle Records. The Borrower will tender each
Eligible Vehicle to the applicable Repurchase Party prior to (i) the last day
on which such Eligible Vehicle is eligible for repurchase under the Repurchase
Agreement applicable to such Eligible Vehicle and (ii) such Eligible Vehicle
exceeding the mileage limitation, if any, under the Repurchase Agreement
applicable to such Eligible Vehicle. The Borrower will maintain up-to-date
records as to the vehicle identification number, make, model, invoice price,
depreciation, mileage, location and activity status of each of its vehicles.
7.22 New Repurchase Agreements. Promptly upon receipt, copies of any
new Repurchase Agreements, or any changes in existing Repurchase Agreements,
if the Borrower desires that vehicles purchased thereunder constitute Eligible
Vehicles hereunder. Notwithstanding the foregoing, the prior written consent
of the Lender shall be required in order to constitute as Eligible Vehicles
hereunder vehicles subject to any such new or changed Repurchase Agreement.
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ARTICLE VIII
Additional Negative Covenants
Until the Obligations have been paid and satisfied in full and this
Agreement has been terminated in accordance with the terms hereof, unless the
Lender shall otherwise consent in writing, the Borrower will not, nor will it
permit any Subsidiary to:
8.01 Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, howsoever evidenced, except
(i) Indebtedness existing as of the date hereof and as set
forth in Schedule 8.01 attached hereto and incorporated herein by
reference;
(ii) the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business;
(iii) Indebtedness of up to an aggregate outstanding
principal amount of $1,000,000 incurred to acquire fixed assets which
may or may not be secured;
8.02 Transfer of Assets. Sell, lease, transfer or otherwise dispose
of (i) any interest in any Guarantor, or (ii) any other asset of Borrower or
any Guarantor except (a) assets sold in the ordinary course of business, (b)
assets which are worn out, obsolete or no longer necessary or (c) other assets
in any Fiscal Year having an aggregate book value not exceeding $500,000.
8.03 Investments; Acquisitions. Purchase, own, invest in or otherwise
Acquire, directly or indirectly, any stock or other securities or all or
substantially all of the assets, or make or permit to exist any interest
whatsoever in any other Person or permit to exist any loans or advances to any
Person; provided, Borrower and its Subsidiaries may maintain investments or
invest in or Acquire
(i) Eligible Securities;
(ii) investments existing as of the date hereof and as
set forth in Schedule 6.01(d) attached hereto; and
(iii) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss.
8.04 Liens. Except for Liens permitted under Section 8.01, incur,
create or permit to exist any pledge, Lien, charge or other encumbrance of any
nature whatsoever with respect to any Vehicle or
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any other property or assets of the Borrower or any Subsidiary to secure
Indebtedness owed to any other Person.
8.05 Merger or Consolidation. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it; or (c)
liquidate, wind-up or dissolve or sell, transfer or lease or otherwise dispose
of all or a substantial part of its assets (other than sales in the ordinary
course of business); provided, however, (i) any Subsidiary of the Borrower may
merge or transfer all or substantially all of its assets into or consolidate
with any wholly-owned Subsidiary of the Borrower, (ii) any Person may merge
with the Borrower if the Borrower shall be the survivor thereof and such
merger shall not cause, create or result in the occurrence on any Default or
Event of Default hereunder.
8.06 Change in Control. Cause, suffer or permit any Person or group
of Persons acting in concert other than Sanford Miller, Jeffrey D. Congdon or
John P. Kennedy, to own or control, directly or indirectly, more than 10% of
the outstanding securities (on a fully diluted basis and taking into account
any outstanding securities or contract rights exercisable, exchangeable or
convertible into equity interests) of the Borrower having voting rights in the
election of directors.
8.07 Transactions with Affiliates. Enter into any transaction after
the date hereof, including, without limitation, the purchase, sale, leasing or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of the Borrower, except (a) that such Persons may render
services to the Borrower or its Subsidiaries for compensation at the same
rates generally paid by Persons engaged in the same or similar businesses for
the same or similar services and (b) in the ordinary course of and pursuant to
the reasonable requirements of the Borrower's (or any Subsidiary's) business
consistent with past practice of the Borrower and its Subsidiaries.
8.08 ERISA. With respect to all employee pension benefit
plans maintained by the Borrower or any Subsidiary:
(i) terminate any of such employee pension benefit plans so
as to incur any liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA;
(ii) allow or suffer to exist any prohibited transaction
involving any of such employee pension benefit plans or any trust
created thereunder which would subject the Borrower or a Subsidiary
to any material tax or penalty or other liability on prohibited
transactions imposed under Internal Revenue Code Section 4975 or
ERISA;
(iii) fail to pay to any such employee pension benefit plan
any contribution which it is obligated to pay under the terms of such
plan;
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(iv) allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such
employee pension benefit plan;
(v) allow or suffer to exist any occurrence of a reportable
event or any other event or condition, which presents a material risk
of termination by the Pension Benefit Guaranty Corporation of any
such employee pension benefit plan that is a Single Employer Plan,
which termination could result in any liability to the Pension
Benefit Guaranty Corporation; or
(vi) incur any withdrawal liability with respect to any
Multi-employer Plan.
8.09 Fiscal Year. Change its Fiscal Year.
8.10 Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with the merger or
consolidation of Subsidiaries into each other or into a Borrower permitted
pursuant to Section 8.06.
8.11 Rate Hedging Obligations. Without the prior written consent of
the Lender, incur any Rate Hedging Obligations or enter into any agreements,
arrangements, devices or instruments relating to Rate Hedging Obligations.
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ARTICLE IX
Events of Default and Acceleration
9.01 Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan or Reimbursement Obligation, when and as
the same shall be due and payable whether at maturity, by
acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan or of any fees or other amounts
payable to the Lender under the Loan Documents on the date on which
the same shall be due and payable and such default shall continue for
a period of three (3) Business Days; or
(c) if default shall be made in the performance or
observance of any covenant set forth in Sections 7.06, 7.07(a), 7.08,
7.10 or Article VIII hereof;
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Note (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for 30 or more days after the earlier of receipt of notice
of such default by the Authorized Representative from the Lender or
the Borrower becomes aware of such default, or if a default shall be
made in the performance or observance of, or shall occur under, any
covenant, agreement or provision contained in (including without
limitation any covenant incorporated by reference into) the Guaranty
or in any of the other Loan Documents (beyond any applicable grace
period, if any, contained therein) or in any instrument or document
delivered to the Lender in connection with or pursuant to this
Agreement or any of the Obligations evidencing or creating any
obligation or guaranty in favor of the Lender, or if any Loan
Document ceases to be in full force and effect (other than by reason
of any action by the Lender), or if without the written consent of
the Lender, this Agreement or any other Loan Document shall be
disaffirmed or shall terminate, be terminable or be terminated or
become void or unenforceable for any reason whatsoever (other than in
accordance with its terms in the absence of default or by reason of
any action by the Lender); or
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(e) if a default shall occur, which is not waived, (i) in
the payment of any principal, interest, premium or other amounts with
respect to any Indebtedness (other than the Loans) of the Borrower or
of any Subsidiary in an amount not less than $500,000 in the
aggregate outstanding, or (ii) in the performance, observance or
fulfillment of any term or covenant contained in any agreement or
instrument under or pursuant to which any such Indebtedness may have
been issued, created, assumed, guaranteed or secured by the Borrower
or any Subsidiary, and such default shall continue for more than the
period of grace, if any, therein specified, or if such default shall
permit the holder of any such Indebtedness to accelerate the maturity
thereof; or
(f) if a Default (as defined in the Existing Credit
Agreement, as amended, modified or supplemented from time to
time) shall occur; or
(g) if any representation, warranty or other statement of
fact contained herein or any other Loan Document or in any writing,
certificate, report or statement at any time furnished to the Lender
by or on behalf of the Borrower or the Guarantor pursuant to or in
connection with this Agreement or the other Loan Documents, or
otherwise, shall be false or misleading in any material respect when
given; or
(h) if the Borrower or any Subsidiary shall be unable to pay
its debts generally as they become due; file a petition to take
advantage of any insolvency statute; make an assignment for the
benefit of its creditors; commence a proceeding for the appointment
of a receiver, trustee, liquidator or conservator of itself or of the
whole or any substantial part of its property; file a petition or
answer seeking reorganization or arrangement or similar relief under
the federal bankruptcy laws or any other applicable law or statute;
or
(i) if a court of competent jurisdiction shall enter an
order, judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or any Subsidiary or of the
whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of
sixty (60) days, or approve a petition filed against the Borrower or
any Subsidiary seeking reorganization or arrangement or similar
relief under the federal bankruptcy laws or any other applicable law
or statute of the United States of America or any state, which
petition is not dismissed within sixty (60) days; or if, under the
provisions of any other law for the relief or aid of debtors, a court
of competent jurisdiction shall assume custody or control of the
Borrower or any Subsidiary or of the whole or any substantial part of
its properties, which control is not relinquished within sixty
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(60) days; or if there is commenced against the Borrower or any
Subsidiary any proceeding or petition seeking reorganization,
arrangement or similar relief under the federal bankruptcy laws or
any other applicable law or statute of the United States of America
or any state which proceeding or petition remains undismissed for a
period of sixty (60) days; or if the Borrower or any Subsidiary takes
any action to indicate its consent to or approval of any such
proceeding or petition; or
(j) if (i) any judgment where the amount not covered by
insurance (or the amount as to which the insurer denies liability) is
in excess of $500,000 is rendered against the Borrower or any
Subsidiary, or (ii) there is any attachment, injunction or execution
against any of the Borrower's or any Subsidiary's properties for any
amount in excess of $500,000; and such judgment, attachment,
injunction or execution remains unpaid, unstayed, undischarged,
unbonded or undismissed for a period of thirty (30) days; or
(k) if the Borrower or any Subsidiary shall, other than in
the ordinary course of business (as determined by past practices),
suspend all or any part of its operations material to the conduct of
the business of the Borrower or such Subsidiary, taken as a whole; or
(l) if the Borrower or any Subsidiary shall breach any of
the terms or conditions of any agreement under which any Rate Hedging
Obligation permitted pursuant to Section 8.16 is created and such
breach shall continue beyond any grace period, if any, relating
thereto pursuant to the terms of such Obligation, or the Borrower or
any Subsidiary shall disaffirm or seek to disaffirm any such
agreement or any of its obligations thereunder;
then, and in any such event and at any time thereafter, if such Event of
Default or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be
taken: (i) the Lender may declare any obligation of the
Lender to make further Loans terminated, whereupon the
obligation of the Lender to make further Loans hereunder
shall terminate immediately, and (ii) the Lender shall, at
its option, declare by notice to the Borrower any or all of
the Obligations to be immediately due and payable, and the
same, including all interest accrued thereon and all other
obligations of the Borrower to the Lender, shall forthwith
become immediately due and payable without presentment,
demand, protest, notice or other formality of any kind, all
of which are hereby expressly waived, anything contained
herein or in any instrument evidencing the Obligations to
the contrary notwith-
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standing; provided, however, that notwithstanding the above,
if there shall occur an Event of Default under clause (h) or
(i) above, then the obligation of the Lender to lend
hereunder shall automatically terminate and any and all of
the Obligations shall be immediately due and payable without
the necessity of any action by the Lender or notice to the
Lender;
(B) the Lender shall have all of the rights and
remedies available under the Loan Documents or under any
applicable law.
9.02 Lender to Act. In case any one or more Events of Default shall
occur and not have been waived, the Lender may proceed to protect and enforce
its rights or remedies either by suit in equity or by action at law, or both,
whether for the specific performance of any covenant, agreement or other
provision contained herein or in any other Loan Document, or to enforce the
payment of the Obligations or any other legal or equitable right or remedy.
9.03 Cumulative Rights. No right or remedy herein conferred upon the
Lender is intended to be exclusive of any other rights or remedies contained
herein or in any other Loan Document, and every such right or remedy shall be
cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity
or by statute, or otherwise.
9.04 No Waiver. No course of dealing between the Borrower and the
Lender or any failure or delay on the part of the Lender in exercising any
rights or remedies under any Loan Document or otherwise available to it shall
operate as a waiver of any rights or remedies and no single or partial
exercise of any rights or remedies shall operate as a waiver or preclude the
exercise of any other rights or remedies hereunder or of the same right or
remedy on a future occasion.
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ARTICLE X
Miscellaneous
10.01 Participations. The Lender may sell participations at its
expense to one or more banks or other entities as to all or a portion of its
rights and obligations under this Agreement; provided, that (i) the Lender's
obligations under this Agreement shall remain unchanged, (ii) the Lender shall
remain solely responsible to the Borrower for the performance of such
obligations, (iii) the Lender shall remain the holder of any Note issued to it
for the purpose of this Agreement, (iv) such participations shall be in a
minimum amount of $1,000,000, and (v) Borrower shall continue to deal solely
and directly with the Lender in connection with the Lender's rights and
obligations under this Agreement and with regard to any and all payments to be
made under this Agreement, and (vi) the sale of any such participations which
require Borrower to file a registration statement with the United States
Securities and Exchange Commission or under the securities regulations or laws
of any state shall not be permitted.
10.02 Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective on the day on which delivered to
such party (against receipt therefor) at the address set forth below or such
other address as such party shall specify to the other parties in writing (or,
in the case of telephonic notice or notice by telecopy, telegram or telex
(where the receipt of such message is verified by return) expressly provided
for hereunder, when received during normal business hours at such telephone,
telecopy or telex number as may from time to time be specified in written or
verbal notice to the other parties hereto or otherwise received), or if sent
prepaid by certified or registered mail return receipt requested on the third
Business Day after the day on which mailed, or by overnight courier or express
mail on the day following the date sent, addressed to such party at said
address:
(a) if to the Borrower:
VPSI, Inc.
1220 Rankin St.
Troy, Michigan 48083-6004
Attention: J.R. Henning
Telephone: 810-597-3523
Telefacsimile: 810-597-3501
with a copy to:
Team Rental Group, Inc.
125 Basin Street, Suite 210
Daytona, Florida 32114
Attention: Sanford Miller, President
Telephone: (904) 238-7035
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Telefacsimile: (904) 238-7461
(b) if to the Lender:
NationsBank, National Association (South)
NationsBank Tower
100 Southeast 2nd Street
14th Floor
Miami, Florida 33131
Attention: Corporate Finance
Telephone: (305) 533-2417
Telefacsimile: (305) 533-2437
with a copy to:
NationsBank, National Association (South)
Independence Center, 15th Floor
101 North Tryon Street
Charlotte, North Carolina 28255
Attention: Barbara Pollock
Corporate Credit Support
Telephone: (704) 388-1112
Telefacsimile: (704) 386-8694
10.03 Setoff. The Borrower agrees that the Lender shall have a lien
for all the Obligations of the Borrower upon all deposits or deposit accounts,
of any kind, or any interest in any deposits or deposit accounts thereof, now
or hereafter pledged, mortgaged, transferred or assigned to the Lender or
otherwise in the possession or control of the Lender (other than for
safekeeping) for any purpose for the account or benefit of the Borrower and
including any balance of any deposit account or of any credit of the Borrower
with the Lender, whether now existing or hereafter established, hereby
authorizing the Lender at any time or times with or without prior notice to
apply such balances or any part thereof to such of the Obligations of the
Borrower to the Lender then past due and in such amounts as they may elect,
and whether or not the collateral or the responsibility of other Persons
primarily, secondarily or otherwise liable may be deemed adequate. For the
purposes of this paragraph, all remittances and property shall be deemed to be
in the possession of the Lender as soon as the same may be put in transit to
it by mail or carrier or by other bailee.
10.04 Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lender of the Loans and
the execution and delivery to the Lender of this Agreement and the Note and
shall continue in full force and effect so long as any of Obligations remain
outstanding or the Lender has any commitment hereunder or the Borrower has
continuing obligations hereunder unless otherwise provided herein. Whenever in
this Agreement, any of the parties hereto is referred to, such reference shall
be deemed to include the successors and permitted assigns of
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such party and all covenants, provisions and agreements by or on behalf of the
Borrower which are contained in this Agreement, the Note and the other Loan
Documents shall inure to the benefit of the successors and permitted assigns
of the Lender.
10.05 Expenses. The Borrower agrees (a) to pay or reimburse the
Lender for all its reasonable and customary out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation and execution of,
this Agreement or any of the other Loan Documents (including travel expenses
relating to closing), and the consummation of the transactions contemplated
hereby and thereby, including, without limitation, the reasonable and
customary fees and disbursements of counsel to the Lender as well as all such
expenses and costs arising in connection with any amendment, supplement or
modification to this Agreement or any other Loan Documents, (b) to pay or
reimburse the Lender for all their reasonable costs and expenses incurred in
connection with the enforcement (only from and after the occurrence of a
Default or Event of Default) or preservation of any rights under this
Agreement and the other Loan Documents, including without limitation, the
reasonable fees and disbursements of its counsel, (c) to pay, indemnify and
hold the Lender harmless from any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any failure to pay or
delay in paying, documentary, stamp, excise and other similar taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of this Agreement or any other Loan Documents, or
consummation of any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement or any other Loan Documents,
and (d) to pay, indemnify, and hold the Lender harmless from and against any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance
and administration of this Agreement, the other Loan Documents and any
indemnity agreement or undertaking made by the Lender to facilitate the
processing of checks, payroll or otherwise, of Borrower, or in any respect
relating to the transactions contemplated hereby or thereby, (all the
foregoing, collectively, the "indemnified liabilities"); provided, however,
that the Borrower shall have no obligation hereunder with respect to
indemnified liabilities arising from (i) the willful misconduct or gross
negligence of or the willful breach of the Loan Documents by the party seeking
indemnification, (ii) legal proceedings commenced against the Lender by any
security holder or creditor thereof arising out of and based upon rights
afforded any such security holder or creditor solely in its capacity as such,
(iii) any taxes imposed upon the Lender other than the documentary, stamp,
excise and similar taxes described in clause (c) above or any tax resulting
from any Regulatory Change, which tax would be payable to Lender by Borrower
pursuant to Article III hereof, it being understood that the Lender shall have
the affirmative obligation, so long as no Default or Event of Default exists
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hereunder, to take all reasonable steps to ensure such documentary, stamp or
similar taxes are not required to be paid, (iv) taxes imposed and costs and
expenses incurred as a result of a transfer or assignment of any Note,
participation or assignment of a portion of its rights or (v) any taxes
imposed upon or any costs or expenses incurred by any transferee of the Note.
The agreements in this subsection shall survive repayment of the Note and all
other Obligations hereunder and termination of this Agreement.
10.06 Amendments. No amendment, modification or waiver of any
provision of this Agreement or any of the Loan Documents and no consent by the
Lender to any departure therefrom by the Borrower shall be effective unless
such amendment, modification or waiver shall be in writing and signed by the
Lender.
10.07 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
10.08 Waivers by Borrower. In any litigation in any court with
respect to, in connection with, or arising out of this Agreement, the Loans,
any of the Note, any of the other Loan Documents, the Obligations, or any
instrument or document delivered pursuant to this Agreement or the other Loan
Documents, or the validity, protection, interpretation, collection or
enforcement thereof, or any other claim or dispute howsoever arising between
the Borrower and the Lender, the Borrower and the Lender hereby waive, to the
extent permitted by applicable law, trial by jury in connection with any such
litigation.
10.09 Termination. The termination of this Agreement shall not affect
any rights of the Borrower or the Lender or any obligation of the Borrower or
the Lender, arising prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into or rights created or obligations incurred prior to such
termination have been fully disposed of, concluded or liquidated and the
Obligations arising prior to or after such termination have been irrevocably
paid in full. The rights granted to the Lender hereunder and under the other
Loan Documents shall continue in full force and effect, notwithstanding the
termination of this Agreement, until all of the Obligations have been paid in
full after the termination hereof (other than Obligations in the nature of
continuing indemnities or expense reimbursement obligations not yet due and
payable) or the Borrower has furnished the Lender with an indemnification
satisfactory to the Lender with respect thereto. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
termination hereof until payment in full of the Obligations unless otherwise
provided herein. Notwithstanding the foregoing, if after receipt of any
payment of all or any part of the Obligations, the Lender is for any reason
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compelled to surrender such payment to any Person because such payment is
determined to be void or voidable as a preference, impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall
continue in full force and the Borrower shall be liable to, and shall
indemnify and hold the Lender harmless for, the amount of such payment
surrendered until the Lender shall have been finally and irrevocably paid in
full. The provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been taken by the Lender in
reliance upon such payment, and any such contrary action so taken shall be
without prejudice to the Lender's rights under this Agreement and shall be
deemed to have been conditioned upon such payment having become final and
irrevocable.
10.10 GOVERNING LAW. ALL DOCUMENTS EXECUTED PURSUANT TO THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING, WITHOUT LIMITATION, THIS
AGREEMENT AND EACH OF THE LOAN DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE
UNDER, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS AND JUDICIAL DECISIONS OF THE STATE OF FLORIDA; PROVIDED THAT
THIS SECTION 10.10 SHALL NOT AFFECT THE APPLICABILITY OF, AND INTERPRETATION
OR CONSTRUCTION OF APPROPRIATE TERMS AND PROVISIONS UNDER THE UNIFORM
COMMERCIAL CODE OF ANY JURISDICTION WHICH GOVERN THE LIENS ON ANY OF THE
COLLATERAL. THE BORROWER HEREBY SUBMITS TO THE JURISDICTION AND VENUE OF THE
STATE AND FEDERAL COURTS OF FLORIDA FOR THE PURPOSES OF RESOLVING DISPUTES
HEREUNDER OR FOR THE PURPOSES OF COLLECTION.
10.11 Headings and References. The headings of the Articles and
Sections of this Agreement are inserted for convenience of reference only and
are not intended to be a part of, or to affect the meaning or interpretation
of this Agreement. Words such as "hereof", "hereunder", "herein" and words of
similar import shall refer to this Agreement in its entirety and not to any
particular Section or provisions hereof, unless so expressly specified. As
used herein, the singular shall include the plural, and the masculine shall
include the feminine or a neutral gender, and vice versa, whenever the context
requires.
10.12 Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more
of the parties hereto, then such provision shall remain in effect with respect
to all parties, if any, as to whom such provision is neither illegal nor
invalid, and in any event all other provisions hereof shall remain effective
and binding on the parties hereto.
10.13 Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes all previous proposals,
negotiations, representations, commitments and other communications between or
among the parties, both oral and written, with respect thereto.
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10.14 Agreement Controls. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any term of this
Agreement, the terms and provisions of this Agreement shall control.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the
day and year first above written.
VPSI, INC.
WITNESS:
__________________________ By:________________________________
Name: Sanford Miller
__________________________ Title: Vice President
SIGNATURE PAGE 1 OF 2
<PAGE>
NATIONSBANK, NATIONAL ASSOCIATION
(SOUTH)
WITNESS:
__________________________ By:________________________________
Name: David E. Spalding
__________________________ Title: Assistant Vice President
SIGNATURE PAGE 2 OF 2
<PAGE>
EXHIBIT A
Notice of Appointment (or Revocation) of Authorized
Representative
Reference is hereby made to the Revolving Credit Agreement dated as
of February 6, 1996 (the "Agreement") between VPSI, Inc. (the "Borrower") and
NationsBank, National Association (South) ("the Lender"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrower hereby nominates, constitutes and appoints each
individual named below as an Authorized Representative under the Loan
Documents, and hereby represents and warrants that (i) set forth opposite each
such individual's name is a true and correct statement of such individual's
office (to which such individual has been duly elected or appointed), a
genuine specimen signature of such individual and an address for the giving of
notice, and (ii) each such individual has been duly authorized by the Borrower
to act as Authorized Representative under the Loan Documents:
Name and Address Office Specimen Signature
- ----------------- ------------------- -------------------
- -----------------
- -----------------
- -----------------
- -----------------
- ----------------- ------------------- --------------------
Borrower hereby revokes (effective upon receipt hereof by the Lender) the
prior appointment of ________________ as an Authorized Representative.
This the ___ day of __________________, 19__.
VPSI, INC.
By:
--------------------------------------
Name:
Title:
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EXHIBIT B
Form of Borrowing Base Certificate
NationsBank, National Association (South)
NationsBank Tower
100 Southeast 2nd Street
14th Floor
Miami, Florida 33131
Attention: Corporate Finance
Reference is hereby made to the Revolving Credit Agreement dated as
of February 6, 1996 (the "Agreement") between VPSI, Inc. (the "Borrower") and
NationsBank, National Association (South) (the "Lender"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement. The undersigned, a duly authorized and acting
Authorized Representative, hereby certifies to you as of __________ [insert
determination date] as follows:
Compliance with Borrowing Base Requirement
A. Advance Rate (per Schedule 1
attached hereto)
[Not greater than 94%] __________%
B. Closing Date Advance Rate
(per Schedule 1 attached hereto) __________%
C. Aggregate for each Closing Date
Eligible Vehicle of the lesser of
(i) Capitalized Cost of such
Eligible Vehicle and (ii) Closing
Date Advance Rate (Item B) times
Eligible Net Book Value of such
Eligible Vehicle [Determine
separately for each Closing Date
Eligible Vehicle and then calculate
the aggregate sum.] $__________
D. Aggregate of Eligible Net Book
Values for each Eligible Repurchase
Vehicle (other than Closing Date
Vehicles) $__________
E. Aggregate of Eligible Net Book
Values of each Eligible Risk
Vehicle (other than Closing Date
Vehicles) $__________
F. E x Advance Rate (Item A) $__________
G. Eligible Repurchase Receivables $__________
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H. C + D + F + G $__________
I. Revolving Credit Debit Balance $__________
J. G - H $__________
Line J must be greater than 0. If Line J is negative, the
Revolving Credit Debit Balance must be reduced immediately
by an amount not less than the absolute value of Line J.
VPSI, INC.
By: __________________________
Authorized Representative
Date: __________________
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EXHIBIT 1
TO BORROWING BASE CERTIFICATE
SALES AND ADVANCE RATE ADJUSTMENT REPORT
I, ____________________, an Authorized Representative of VPSI, Inc.,
a Delaware corporation (the "Borrower"), hereby certify, pursuant to the
provisions of that certain Revolving Credit Agreement dated as of February 6,
1996 (as the same may be amended, modified, restated and supplemented from
time to time, the "Credit Agreement") among the Borrower and NationsBank,
National Association (South) (the "Lender"), that the information set forth
herein is true, complete and correct (except for immaterial discrepancies of
which the Borrower has no knowledge) as of the date hereof.
1. SALES OF ELIGIBLE RISK VEHICLES AND CLOSING DATE ELIGIBLE
VEHICLES. The number of Eligible Risk Vehicles and Closing Date
Eligible Vehicles sold in the calendar month ending __________ was
as follows:
Eligible
Net Book
Number Value
of Total of
Vehicles Net Vehicles
Sold Proceeds Sold
A. Vehicles
(i) [make/model]
(a) casualty sales
(b) other sales
(ii) [itemize for all
others]
B. Total
2. RATIO CALCULATION; MODIFIED ADVANCE RATES.
A. Aggregate Eligible Net Book Value of Eligible Risk
Vehicles and Closing Date Eligible Vehicles sold:
B. Aggregate actual net proceeds realized on such Vehicle
resales:
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C. Ratio of B to A:
Permitted Ratio: .98 to 1.00
[If Ratio of B to A is greater than or equal to .98 to 1.00,
Advance Rate is 94%, and Closing Date Advance Rate is 100%. If
Ratio of B to A is less than .98 to 1.00, calculate new Advance
Rate and new Closing Date Advance Rate:]
94% - (1.0 - B/A)1 = Advance Rate
100% - (1.0 - B/A)1 = Closing Date Advance Rate
Capitalized terms used in this Sales and Advance Rate Adjustment
Report and not otherwise defined or limited herein are used as defined in the
Credit Agreement.
Done as of the _____ day of __________, 199_.
VPSI, INC.
BY ______________________________
Name _________________________
Title ________________________
- --------
1expressed as a percentage
69
<PAGE>
EXHIBIT C
Form of Borrowing Notice--Loans
To: NationsBank, National Association (South)
Independence Center, 15th Floor
101 North Tryon Street
Charlotte, North Carolina 28255
Telefacsimile: (704) 386-9923
Attention: Corporate Credit Support
Reference is hereby made to the Revolving Credit Agreement dated as
of February 6, 1996 (the "Agreement") between VPSI, Inc. (the "Borrower") and
NationsBank, National Association (South) (the "Lender"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrower through its Authorized Representative hereby confirms
its prior notice of borrowing given to the Lender by telephone at __________
__.m. on ____________, 19__ to the effect that Loans of the type and amount
set forth below be made on the date indicated:
Type of Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
Reference Loan ______
CD Loan ______
Eurodollar Loan ______
- -----------------------
(1) For any Eurodollar Loan, one, two or three months.
(2) Must be $100,000 or if greater an integral multiple of
$10,000.
(3) At least three (3) Eurodollar Business Days later if a
Eurodollar Loan;
The Borrower hereby requests that the proceeds of Loans described in
this Borrowing Notice be made available to the Borrower as follows: [insert
transmittal instructions] .
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after
giving effect to the borrowing described herein; and
2. All the representations and warranties set forth in
Article V of the Agreement and in the Loan Documents (other than
those expressly stated to refer to a particular date) are true and
70
<PAGE>
correct as of the date hereof except that the reference to the financial
statements in Section 5.01(f)(i) of the Agreement are to those financial
statements most recently delivered to you pursuant to Section 7.01 of the
Agreement.
3. After giving effect to Loans requested hereby, the principal
amount of outstanding Loans will not exceed the lesser of the Total Revolving
Loan Commitment or the Borrowing Base.
4. The proceeds of the Loans requested hereby will be used by the
Borrower to purchase the Vehicles identified on Exhibit 1 attached hereto,
each of which is an Eligible Vehicle. The Borrower's actual purchase price for
each Vehicle and the Eligible Net Book Value of each Vehicle is stated on
Exhibit 1.
5. The Borrower hereby instructs the Lender to pay the proceeds of
the Loans hereunder directly to the Vehicle Dealer (or the financing source of
such Dealer) identified on Exhibit 1, in accordance with the instructions set
forth in Exhibit 1.
VPSI, INC.
BY: ___________________________________
Authorized Representative
DATE: _________________________________
71
<PAGE>
EXHIBIT 1
TO BORROWING NOTICE
ELIGIBLE VEHICLES
Vehicle
Identifica Borrower's Eligible
tion Purchase Net Book
Make Model Number Price Value
Totals:
ADVANCE INSTRUCTIONS
Vehicle Dealer:
-------------------------------------------------
Finance Source
(for Vehicle Dealer):
-------------------------------------------------
Payment Instructions:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
72
<PAGE>
EXHIBIT D
Form of Interest Rate Selection Notice
To: NationsBank, National Association (South)
Independence Center, 15th Floor
101 North Tryon Street
Charlotte, North Carolina 28255
Telefacsimile: (704) 386-9923
Attention: Corporate Credit Support
Reference is hereby made to the Revolving Credit Agreement dated as
of February 6, 1996 (the "Agreement") between VPSI, Inc. (the "Borrower") and
NationsBank, National Association (South) (the "Lender"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrower through its Authorized Representative hereby confirms
its prior notice of a selection of a type of Loan and Interest Period given to
the Lender by telephone at __________ __.m. on _________________, 199__ to the
following effect:
Type of Loan Interest Effective
(Check One) Period (1) Amount(2) Date (3)
----------- ---------- --------- --------
Reference Loan ______
CD Loan ______
Eurodollar Loan ______
- -----------------------
(1) For any Eurodollar Loan, one, two or three months.
(2) Must be $100,000 or if greater an integral multiple of
$10,000.
(3) At least three (3) Eurodollar Business Days later if a
Eurodollar Loan.
VPSI, INC.
BY: ________________________
Authorized Representative
DATE: _______________________
73
<PAGE>
EXHIBIT E
Form of Revolving Note
$50,000,000.00 Charlotte, North Carolina
February 6, 1996
FOR VALUE RECEIVED, VPSI, INC., a Delaware corporation having its
principal place of business located in Troy, Michigan (the "Borrower"), hereby
promises to pay to the order of
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) (the "Lender"), in its
individual capacity, at the office of NationsBank, National Association
(South) located at Independence Center, 15th Floor, Charlotte, North Carolina
28255 (or at such other place or places as the Lender may designate) at the
times set forth in the Revolving Credit Agreement dated as of February 6, 1996
between the Borrower and the Lender (the "Agreement" -- all capitalized terms
not otherwise defined herein shall have the respective meanings set forth in
the Agreement), in lawful money of the United States of America, in
immediately available funds, the principal amount of
FIFTY MILLION AND NO/100 DOLLARS ($50,000,000.00) or, if less than
such principal amount, the aggregate unpaid principal amount of all Loans made
by the Lender to the Borrower pursuant to the Agreement on the Revolving
Credit Termination Date or such earlier date as may be required pursuant to
the terms of the Agreement, and to pay interest from the date hereof on the
unpaid principal amount hereof, in like money, at said office, on the dates
and at the rates provided in Article II of the Agreement. All or any portion
of the principal amount of Loans may be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms
of the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and accrued
but unpaid interest shall bear interest which shall be payable on demand (i)
in the case of a Eurodollar Loan, until the end of the Interest Period with
respect to such Eurodollar Loan, at a rate of two percent (2%) above the
Eurodollar Rate applicable to such Eurodollar Loan, and (ii) thereafter, and
with respect to Floating Rate Loans, at a rate two percent (2%) per annum in
excess of the Reference Rate or the maximum rate permitted under applicable
law, if lower, until such principal and interest have been paid in full.
Further, in the event of such acceleration, this Note, and all other
indebtedness of the Borrower to the Lender shall become immediately due and
payable, without presentation, demand, protest or notice of any kind, all of
which are hereby waived by the Borrower.
74
<PAGE>
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees,
and interest thereon at the rates set forth above.
Interest hereunder shall be computed on the basis of a 360 day year
for the actual number of days in the interest period.
This Note is the Note referred to in the Agreement and is issued
pursuant to and entitled to the benefits and security of the Agreement to
which reference is hereby made for a more complete statement of the terms and
conditions upon which the Loans evidenced hereby were or are made and are to
be repaid. This Note is subject to certain restrictions on transfer or
assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or
secondarily liable as principals, sureties, guarantors, endorsers or
otherwise, hereby waive to the full extent permitted by law the benefits of
all provisions of law for stay or delay of execution or sale of property or
other satisfaction of judgment against any of them on account of liability
hereon until judgment be obtained and execution issues against any other of
them and returned satisfied or until it can be shown that the maker or any
other party hereto had no property available for the satisfaction of the debt
evidenced by this instrument, or until any other proceedings can be had
against any of them, also their right, if any, to require the holder hereof to
hold as security for this Note any collateral deposited by any of said Persons
as security. Protest, notice of protest, notice of dishonor, diligence or any
other formality are hereby waived by all parties bound hereon.
75
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date
and year first above written, all pursuant to authority duly granted.
VPSI, INC.
WITNESS:
______________________ By: _________________________________
Name: ______________________________
______________________ Title: ______________________________
76
<PAGE>
ACKNOWLEDGEMENT OF EXECUTION ON BEHALF OF
VPSI, INC.
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
Before me, the undersigned, a Notary Public in and for said County
and State on this 6th day of February, 1996 A.D., personally appeared Sanford
Miller known to be the Vice President of VPSI, Inc. (the "Borrower"), who,
being by me duly sworn, says he works at 125 Basin Street, Suite 210, Daytona,
Florida 32114, and that by authority duly given by, and as the act of, the
Borrower, the foregoing and annexed Revolving Note dated February 6, 1996, was
signed by him as said Vice President on behalf of the Borrower.
Witness my hand and official seal this 6th day of June, 1995.
-----------------------------------
Notary Public
(SEAL)
My commission expires: __________
77
<PAGE>
AFFIDAVIT OF David E. Spalding
The undersigned, being first duly sworn, deposes and says that:
1. He is an Assistant Vice President of NationsBank, National
Association (South) (the "Bank") and works at NationsBank Tower, 100 Southeast
2nd Street, 14th Floor, Miami, Florida 33131.
2. The Revolving Note of VPSI, Inc. to the Bank in the
principal amount of $50,000,000.00, dated February 6, 1996 was
executed before him and delivered to him on behalf of the Bank in
Charlotte, North Carolina on February 6, 1996.
This the 6th day of February, 1996.
-----------------------------------
David E. Spalding
Acknowledgement of Execution
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
Before me, the undersigned, a Notary Public in and for said County
and State on this 6th day of February, 1996 A.D., personally appeared David E.
Spalding who before me affixed his signature to the above Affidavit.
Witness my hand and official seal this 6th day of February, 1996.
-----------------------------------
Notary Public
(SEAL)
My Commission Expires: __________
78
<PAGE>
EXHIBIT F
Form of Opinion of Borrower's and Guarantor's Counsel
See attached.
79
<PAGE>
[LETTERHEAD OF MONACO, SMITH, HOOD PERKINS, LOUCKS & STOUT]
February 6,1996
Nations Bank, National Association (South)
Independence Center, 15th Floor
Charlotte, North Carolina 28255
OPINION OF BORROWER'S COUNSEL
AND GUARANTOR'S COUNSEL
Re: $50,000,000.00 Revolving Credit Facility from
Nations Bank, National Association (South)
("Lender") to VPSI, Inc..('#Borrower'1)
Gentlemen:
We have acted as special counsel for VFSJ, Inc., a Delaware corporation (the
"borrower") and Team Rental Group, Inc. a Delaware corporation (the Guarantor')
in connection with tile above referenced Facility This opinion is furnished to
you in order to fulfill the requirement set forth in your Revolving Credit
Agreement dated February 6, 19% (the `Credit Agreement"). Capitalized terms not
otherwise defined herein hall have the meanings assigned in the Credit Agreement
In connection with rendering the opinions hereinafter expressed, we have
examined the following loan documents (the "Loan Documents") which evidence and
secure the referenced loan transaction:
1. Promissory Note from Borrower to Lender in the amount of Fifty
Million
($50,000,000) Dollars.
2. Revolving Credit Agreement dated February 6, 996, including the
Schedules and Exhibits thereto.
3. Guaranty Agreement of Team Rental Group, Inc., dated February 6,
1996.
4. Assignment of Indebtedness and Liens by Chrysler Financial Corp.
<PAGE>
MONACO, SMITH, HOOD, PERKINS,
LOUCKS & STOUT
Page 2
February 6,1996
5. Security Agreement dated February 6,1996.
6. UCC1 Financing Statement(s).
In addition, we have examined the following corporate documents:
a. A certified copy of the Articles of Incorporation of Borrower
and Guarantor, respectively, and all amendments thereto, together with
certificates from the Secretary of State, State of Delaware, attesting that
Borrower and Guarantor, respectively, are each presently active and in good
standing under the laws of the State of Delaware.
b. A copy of the By-Laws of the Borrower and Guarantor, certified
by an authorized officer of each of such corporations, respectively, to be
complete, accurate and currently in full force and effect.
Corporate resolutions, certified by an authorized office of
Borrower and Guarantor, respectively, authorizing the execution and delivery of
the Loan Documents.
We have also examined such other certificates, documents and materials and have
made such inquiries of the Borrower and Guarantor as we have deemed necessary in
connection with rendering the opinions hereinafter set forth.
Further, with your consent, we have relied upon the representations and
warranties expressly set forth in the Loan Documents.
Based upon the foregoing we are of the opinion that:
1. The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the power and
authority to own its properties and to carry on its business as presently
conducted by it in the State of Michigan and other jurisdictions where it does
business.
2. The Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the power and
authority to own its properties and to carry on its business as presently
conducted by it in the
<PAGE>
MONACO, SMITH1 HOOD, PERKINS,
LOUCKS & STOUT
Page3
February 6,19%
State of Florida and other jurisdictions where it does business.
3. The Borrower has the power to execute and deliver the Loan
Documents to which it is a party and to perform thereunder. The execution,
delivery and performance by the Borrower of the Loan Documents to which it is a
party have been duly authorized by all requisite corporate action of the
Borrower and the same will not violate any provision of the Articles of
Incorporation or the Bylaws of the Borrower or, to the best of our knowledge,
(i) any applicable law of the State of Florida or, (ii) any applicable law of
the United States, or (iii) any order of any court or governmental agency
binding upon the Borrower.
4. The following offer of the Borrower is duly authorized and
empowered to execute and deliver the Loan Documents to which it is a party on
behalf of the Borrower:
Name Title
Sanford Miller Vice President
5. The Guarantor has the power to execute and deliver the Loan
Documents to which it is a party and to perform thereunder. The execution,
delivery and performance by the Guarantor of the Loan Documents to which it is a
party have teen duly authorized by all requisite corporate action of the
Guarantor and the same will not violate any provision of the Articles of
Incorporation or the Bylaws of the Guarantor or, to the best of our knowledge,
(t) any applicable law of the State of Florida (ii) any applicable law of the
United States, or (iii) any order of any court or governmental agency binding
upon the Guarantor.
6. The following officer of the Guarantor is duly authorized and
empowered to execute and deliver the Loan Documents to which it is a party on
behalf of the Guarantor:
Name Title
Sanford Miller Chief Executive Officer
and Chair of the Board
<PAGE>
MONACO, SMITH, HOOD, PERKINS,
LOUCKS & STOUT
Page4
February 6,1996
7. To the best of our knowledge after due inquiry or in reliance upon the
warranties contained in the Loan Documents, the execution, delivery and
performance by the Borrower or the Guarantor of the Loan Documents to which each
is a party, respectively, will not, (i) violate the tens of any instrument,
document or agreement to which the Borrower or the Guarantor is a party or by
which it or its property is bound, or (ii) be in conflict with, result in a
breach of or constitute (with giving of notice and/or lapse of time, or both) a
default under any such instrument, document or agreement, or (iii) result in the
creation or imposition of any lien upon any of the property or assets of the
Borrower or the Guarantor, except for any liens in favor of the Lender created
under the Loan Documents.
8. The Loan Documents to which Borrower is a party have been duly
executed and delivered by the Borrower, and, assuming due authorization,
execution and delivery of the Loan Documents by the other parties thereto,
constitute the valid and legally binding obligations of the Borrower,
enforceable in accordance with their respective terns, except that
enforceability may be limited by:
A. Bankruptcy, insolvency, reorganization, moratorium or other
similar laws or court decisions of general applicable relating
to or affecting the enforcement of creditors' rights or the
enforcement of security interests, if any;
B. The unavailability of certain of the self-help and other
remedies provided for in the Loan Documents which are not
necessarily enforceable in the Federal courts or the Florida
courts; but, in our opinion, such limitation on the
unavailability or unenforceability of said self-help or other
remedies does not render other remedies available pursuant to
the provisions of the Loan Documents or by law inadequate for
the practical realization of the security afforded by the Loan
Documents;
C. The unavailability or unenforceability of those provisions in
the Loan Documents providing for the waiver of certain defenses
and exemption rights on the part of the Borrower to the extent
that a Federal court or Florida court might find a waiver of the
same to be invalid as being against public policy;
D. The unavailability, as a matter of strict right, of certain
equitable
<PAGE>
MONACO, SMITH, HOOD, PERKINS,
LOUCKS & STOUT
Page 5
February 6, 1996
remedies provided for in the Loan Documents, including, without
limitation, the right of the immediate appointment of a
receiver without notice, the right of specific performance and
the right to injunctive relief, as the availability of such
equitable rights and remedies are, under Federal and Florida
law, subject to and within the sole discretion of the court in
which any proceedings for enforcement may be brought.
9. The Loan Documents to which Guarantor is a party have been only
executed and delivered by the Guarantor, and, assuming due authorization,
execution and delivery of the Loan Documents by the other parties thereto,
constitute the valid and legally binding obligations of the Guarantor,
enforceable in accordance with their respective terms, except that
enforceability may be limited by;
A. Bankruptcy, insolvency, reorganization, moratorium or other
similar laws or court decisions of general applicable relating
to or affecting the enforcement of auditors' rights or the
enforcement of security interests, if any;
B. The unavailability of certain of the self-help and other
remedies provided for in the Loan Documents, if any, which are
not necessarily enforceable in the Federal courts or the Florida
courts; but, in our opinion, such limitation on the
unavailability or unenforceability of said self-help or other
remedies does not render other remedies available pursuant to
the provisions of the Loan Documents or by law inadequate for
the practical realization of the security afforded by the Loan
Documents;
C. The unavailability or unenforceability of those provisions in
the Loan Documents, if any, providing for the waiver of certain
defenses and exemption rights on the part of the Borrower to the
extent that a Federal court and Florida court might find a
waiver of the same to be invalid as being against public policy;
D. The unavailability, as a matter of strict right, of certain
equitable remedies provided for in the Loan Documents,
including, without limitation, the right of the immediate
appointment of a receiver
<PAGE>
MONACO, SMITH, HOOD, PERKINS,
LOUCKS & STOUT
Page 6
February 6,1996
without notice, the right of specific performance and the right
to injunctive relief, as the availability of such equitable rights and remedies
are, under Federal and Florida law, subject to and within the sole discretion of
the court in which any proceedings or enforcement may be brought.
10. No consent, license, approval or authorization of any Federal,
Florida or local Florida governmental authority, bureau or agency is required in
connection with the execution, delivery, performance, validity and
enforceability of the Loan Documents which has not been duly obtained on or
prior to the date hereof.
11. To the best of our knowledge, (i) there is no action, suit or
proceeding at law or in equity by or before any court, governmental inst-
rumentality or agency, or any arbitrator, now pending or threatened against or
affecting the Borrower or the Guarantor or any property or rights of the
Borrower or the Guarantor which calls into question the validity or
enforceability of any of the Loan Documents or the title to his or her office or
any officer of the Borrower or the Guarantor, or which, if decided adversely to
the Borrower or the Guarantor, would have a material adverse impact on the
business, operations, or financial condition of the Borrower or the Guarantor on
its ability to perform its obligations under the Loan Documents to which it is a
party; and (ii) there are no judgments, liens, contingent liabilities, claims or
counter claims which might materially adversely affect the Lender's rights under
the Loan Documents or the Collateral in which the Lender is granted a security
interest thereunder.
12. To the best of our knowledge, after due inquiry, neither the Borrower
nor the Guarantor is in default under any material document, instrument or
agreement to which it is a party or by which it is bound.
13. The making of the Loans pursuant to the provisions of the Loan
Documents, and the application of the proceeds thereof as provided in the Loan
Documents, do not violate Regulations G, U or X of the Board.
14. The Borrower is not a "holding company" or a "subsidiary" of a
"holding company" or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935.
15. The Borrower is not an "investment company" or a company "controlled"
by an "investment company" without the meaning of the Investment Company Act of
<PAGE>
MONACO, SMITH, HOOD, PERKINS,
LOUCKS & STOUT
Page 7
February 6, 1996
1940, as amended.
16. To the best of our knowledge, after due inquiry, neither the Borrower
nor the Guarantor has received any notice to the effect that it is not in full
compliance with any of the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the regulations promulgated
thereunder, and to the best of our knowledge, after due inquiry, there exists no
event of the type described in Section 4O43 of ERISA, excluding subsections
4043(b) (2) and 4043(B) (3) thereof.
17. To the best of our knowledge, after due inquiry, neither the Borrower
nor the Guarantor is in violation of any applicable federal or Florida statute,
regulation or ordinance of any government entity or of any agency thereof, which
is reasonably likely to have a material adverse effect on the financial
condition or operations of the Borrower or the Guarantor, or the ability of the
Borrower or the Guarantor to perform its obligations under the Loan Documents to
which each is a party, respectively.
18. The security interest in the Collateral granted in the Security
Agreement is a valid security interest. With respect to all personal property
Collateral other than fixtures and motor vehicles:
a. in which the Borrower currently has rights without the meaning of
Section 679.ZO3(1)(c) of the Florida Statutes (Florida Uniform Commercial Code);
b. in which a security interest is granted under the Security
Agreement;
c. for which a security interest may be perfected by the filing of one
or more financing statements in the financing statement records of the UCC
Bureau of the Michigan Department of State (the "Filing Office").
The lien created under the Security Agreement against the Collateral, other than
fixtures and motor vehicles, located in the State of Michigan will be perfected
upon the filing of duly completed and executed financing statement(s) with the
Filing Office. This letter does not opine as to the priority of such security
interest lien.
With respect to any motor vehicles titled in the State of Florida, the lien
will be perfected upon the filing of a duly completed application for notation
of the lien of the Lender (or an agent on behalf of the Lender) with the
Department of Motor Vehicles of the State of Florida.
<PAGE>
MONACO, SMITH, HOOD, PERKINS,
LOUCKS & STOUT
Page 8
February 6, 1996
19. No documentary stamp, intangibles, excise or other duty, fee or
impost is required by the State of Florida to be paid in connection with the
execution and delivery of, or enforcement by the Lender of its rights under the
Loan Documents.
20. The Borrower has full capacity, power and authority to own the
Borrower's property, to conduct the Borrower's business, to execute and deliver
the Loan Documents, and to perform all of the Borrower's obligations under the
Loan Documents.
21. Except as otherwise specifically set forth in this opinion letter,
the execution and delivery of the Loan Documents do not and shall not (a)
violate any provisions of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the Borrower, nor (b)
to the best knowledge of Borrower's Counsel after due inquiry result in a
breach of, or constitute a default under, any indenture, bond, mortgage, lease,
installment, loan agreement or other agreement to which the Borrower is a party
or by which the Borrower or the Property may be bound or affected.
22. The Loan Documents will be governed by the usury laws of the State of
Florida pursuant to the express choice of the parties. The subject Loan
Documents are not usurious on their face, and the Loans will not violate
applicable Florida civil usury laws provided the Lender does not charge or
collect interest on the Loans (taking into account as interest and charges,
however labeled, that are charges for the use of money) at an effective rate in
excess of twenty five (25%) percent per annum, simple interest, calculated on
the basis of a 365 (or 366 as applicable) day year.
23. The extension of credit represented by the Loans are exempt from the
provisions of the Federal Consumer Credit Protection Act (Truth-in-Lending Act)
and Regulation "Z" of the Board of Governors of the Federal Reserve System
because the Loans are only for the business or commercial purposes of the
Borrower and the proceeds of the Loan are not being used for personal, family,
household or agricultural purposes.
Wherever our opinion herein with respect to the existence or absence of fact is
qualified by the phrase "to the best of our knowledge", it is intended to
indicate that during the course of our representation of Borrower and Guarantor,
no information has come to our attention which would give us actual knowledge of
the existence or absence
<PAGE>
MONACO, SMITH, HOOD1 PERKINS,
LOUCKS & STOUT
Page 9
February 6,1996
of such facts. Whenever it is indicated that our opinion is given after "due
inquiry", it is intended to indicate that we have made such inquiry of the
corporate officers and directors of the Borrower and Guarantor as we deemed
appropriate or necessary in order to render the stated opinion. Our opinions are
limited to Federal and Florida laws and the general corporation laws of
Delaware. We are licensed to practice only in Florida and before the Federal
courts.
This opinion has been rendered at the request of Borrower and Guarantor in
satisfaction of the requirements of the Credit Agreement. It is intended for
your use and benefit solely in connection with the referenced loan transaction,
and accordingly, it is not to be used, published, quoted, copied or relied upon
by any party other than you or in connection with any other transaction without
our prior written consent.
Respectfully submitted,
MONACO, SMITH, HOOD, PERKINS,
LOUCKS & STOUT, P.A.
By: /s/ William E. Loucks
---------------------------
William E. Loucks
<PAGE>
EXHIBIT G
Form of Guaranty and Suretyship Agreement
THIS GUARANTY AND SURETYSHIP AGREEMENT, dated as of February 6, 1996
(the "Guaranty"), is made by Team Rental Group, Inc., a Delaware corporation
(the "Guarantor"), to the parties named in Section 1 hereof. Except as
otherwise defined herein, terms used herein defined in the Revolving Credit
Agreement (defined below) shall be used herein as so defined.
W I T N E S S E T H:
WHEREAS, arrangements have been made pursuant to a Revolving Credit
Agreement dated as of February 6, 1996 (as the same may be amended,
supplemented or modified, the "Credit Agreement") between VPSI, Inc. (the
"Company") and NationsBank, National Association (South) (the "Lender") under
the Credit Agreement and the Lender to extend and to make available to the
Company a revolving credit facility in the aggregate principal amount of up to
$50,000,000; and
WHEREAS, the Lender is unwilling to extend the revolving credit
facility pursuant to the Credit Agreement unless the Guarantor executes and
delivers this Guaranty; and
WHEREAS, the Company is a direct, wholly-owned Subsidiary of the
Guarantor, and will materially benefit from the Loans made to the Borrower
pursuant to the Credit Agreement;
NOW, THEREFORE, in consideration of the premises, the Guarantor
hereby agrees as follows:
1. GUARANTY AND SURETY. The Guarantor does hereby absolutely and
unconditionally for the benefit of the Lender under the Credit Agreement
guarantee and become surety for the full and timely payment when due (whether
by acceleration or otherwise) (including amounts which, but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy Code (or any
successor statute), would become due) of all Obligations as defined in the
Credit Agreement whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, now or hereafter existing, extended,
renewed, replaced, refinanced or restructured, whether or not from time to
time decreased or extinguished and later increased, created or incurred (all
indebtedness, obligations and liabilities of the Borrower described in this
Section 1 are collectively referred to as the "Guarantied Obligations").
2. GUARANTY OF PAYMENT. This is a guaranty of payment and
not merely of collection. In the event of any default by the
original obligor in payment or otherwise on any of the Guarantied
Obligations, the Guarantor will pay all or any portion of the
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Guarantied Obligations due or thereafter becoming due, whether by acceleration
or otherwise, without offset of any kind whatsoever, without the Lender first
being required to make demand upon the original obligor or pursue any of its
rights against the original obligor, or against any other Person, including
other guarantors (whether or not party to this Guaranty); and without being
required to liquidate or to realize on any collateral security. In any right
of action accruing to the Lender, the Lender may elect to proceed against (a)
the Guarantor together with the original obligor or obligors; (b) the
Guarantor and the original obligor or obligors individually; or (c) the
Guarantor only, after giving ten (10) days prior written notice to the
Borrower, without having first commenced any action against the original
obligor or obligors.
3. RIGHT TO DEAL WITH GUARANTIED OBLIGATIONS. Subject to the terms
and conditions of the Credit Agreement, the Lender, without notice to
Guarantor, may deal with any Guarantied Obligations and any collateral
security therefor in such manner as it may deem advisable and may renew or
extend the Guarantied Obligations or any part thereof; accept partial payment,
or settle, release, compound, or compromise the same; demand additional
collateral security therefor, and substitute or release the same; and may
compromise or settle with or release and discharge from liability any other
guarantor of any Guarantied Obligation, or any other Person liable to the
Lender for all or any portion of the obligations of any original obligor; all
without impairing the liability of the Guarantor hereunder.
4. OTHER WAIVERS. Guarantor hereby unconditionally waives with
respect to this Guaranty: (a) notice of acceptance of this Guaranty by the
Lender and any notice of the incurring by either or both of the Borrowers of
any Guarantied Obligation; (b) presentment for payment, protest, notice of
protest and notice of dishonor to any party including either of the Borrowers
or the Guarantor; (c) any disability of the original obligor or obligors or
defense available to the original obligor or obligors, including absence or
cessation of any original obligor's liability for any reason whatsoever; (d)
any defense or circumstances which might otherwise constitute a legal or
equitable discharge of a guarantor or surety except final and irrevocable
payment in full of the Guaranteed Obligations; and (e) all rights under any
state or federal statute dealing with or affecting the rights of creditors.
5. SUBORDINATION. Until the Guarantied Obligations are paid in full
and the Lender is under no further obligation to lend or extend funds or
credit which would constitute Guarantied Obligations, Guarantor hereby
unconditionally subordinates all present and future debts, liabilities or
obligations of the Borrower to such Guarantor to the Guarantied Obligations,
and all amounts due under such debts, liabilities, or obligations shall, upon
the occurrence and during the continuance of an Event of Default, be collected
and paid over forthwith to the Lender on
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account of the Guarantied Obligations and, pending such payment, shall be held
by the Guarantor as agent and bailee of the Lender separate and apart from all
other funds, property and accounts of the Guarantor. Guarantor, at the
reasonable request of the Lender, shall execute such further documents in
favor of the Lender to further evidence and support the purpose of this
Section 5. Guarantor hereby irrevocably waives and releases any right or
rights of subrogation or contribution existing at law, by contract or
otherwise to recover all or any portion of any payment made hereunder from
either of the Borrowers or any other guarantor.
6. REPRESENTATIONS AND WARRANTIES. The Guarantor represents
and warrants (which representations and warranties shall survive
the delivery of this Guaranty and the making of the Loans), that:
(a) Organization and Authority.
(i) it is a corporation duly organized and validly
existing under the laws of the jurisdiction of its
incorporation;
(ii) it (x) has the requisite power and authority to own
its properties and assets and to carry on its business as
now being conducted and as contemplated in the Loan
Documents, and (y) is qualified to do business in every
jurisdiction in which failure so to qualify would have a
material adverse effect on its business or operations;
(iii) it has the power and authority to execute, deliver
and perform this Guaranty, and to execute, deliver and
perform each of the other Loan Documents to which it is a
party;
(iv) when executed and delivered, each of the Loan
Documents to which it is a party will be the legal, valid
and binding obligation or agreement, as the case may be, of
such Guarantor, enforceable against such Guarantor in
accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the
effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding
at law or in equity);
(b) Loan Documents. The execution, delivery and
performance by Guarantor of each of the Loan Documents to
which it is a party:
(i) have been duly authorized by all requisite
corporate action (including any required shareholder
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approval) by Guarantor required for the lawful execution,
delivery and performance thereof;
(ii) do not violate any provisions of (x) applicable
law, rule or regulation, (y) any order of any court or other
agency of government binding on Guarantor or its properties,
or (z) the charter documents or by-laws of Guarantor;
(iii) will not be in conflict with, result in a breach of
or constitute an event of default, or an event which, with
notice or lapse of time, or both, would constitute an event
of default, under any indenture, agreement or other
instrument to which Guarantor is a party, or by which its
properties or assets are bound; and
(iv) will not result in the creation or imposition of
any Lien, charge or encumbrance of any nature whatsoever
upon any of its properties or assets except Liens in favor
of the Lender created by the Loan Documents;
(c) Solvency. It is Solvent after giving effect to the
transactions contemplated by this Guaranty and the other Loan
Documents;
(d) Subsidiaries and Stockholders. Guarantor has no
Subsidiaries other than those Persons listed as Subsidiaries in
Schedule 5.01(d) to the Credit Agreement; Schedule 5.01(d) to the
Credit Agreement states as of the date hereof the authorized and
issued capitalization of each Subsidiary listed thereon, the number
of shares or other equity interests of each class of capital stock or
interest issued and outstanding of each such Subsidiary and the
number and/or percentage of outstanding shares or other equity
interest (including options, warrants and other rights to acquire any
interest) of each such class of capital stock or equity interest
owned by Guarantor or by any such Subsidiary; the outstanding shares
or other equity interests of each such Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable;
and Guarantor and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in
Schedule 5.01(d), free and clear of any Lien.
(e) Ownership Interests. Guarantor owns no interest in
any Person other than the Persons listed in Schedule 5.01(d)
to the Credit Agreement;
(f) Financial Condition. (i) Guarantor has heretofore
furnished to the Lender the unaudited interim financial
statements of the Guarantor consisting of a balance sheet and
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related statements of income, stockholders' equity and cash flows for
and as of the end of the quarterly period ending September 30, 1995.
Except as set forth therein, such financial statements (including the
notes thereto) present fairly the financial condition of the
Guarantor as of the end of such quarterly period and results of its
operations and the changes in its stockholders' equity for the
interim period then ended, all in conformity with Generally Accepted
Accounting Principles applied on a Consistent Basis, subject,
however, to year end adjustments;
(ii) since September 30, 1995, there has been no
material adverse change in the condition, financial or otherwise, of
the Guarantor or in the businesses, properties and operations of the
Guarantor, considered as a whole, nor have such businesses or
properties, taken as a whole, been materially adversely affected as a
result of any fire, explosion, earthquake, accident, strike, lockout,
combination of workers, flood, embargo or act of God;
(iii) except as set forth in the financial
statements referred to in Section 6(f)(i) or in Schedule 5.01(f) to
the Credit Agreement or Schedule 5.01(j) to the Credit Agreement,
neither the Guarantor nor any Subsidiary has incurred, other than in
the ordinary course of business, any material indebtedness,
obligations, commitments or other liability contingent or otherwise
which remain outstanding or unsatisfied;
(g) Title to Properties. Guarantor has title to all of its
real and personal properties, subject to no transfer restrictions or
Liens of any kind, except for (x) the transfer restrictions and Liens
described in Schedule 5.01(g)-Liens of the Credit Agreement, and (y)
Liens permitted under Section 8.04 of the Credit Agreement;
(h) Taxes. Guarantor has filed or caused to be filed all
federal, state and local tax returns which are required to be filed
by it and, except for taxes and assessments being contested in good
faith and against which reserves satisfactory to Guarantor's
independent certified public accountants have been established, has
paid or caused to be paid all taxes as shown on said returns or on
any assessment received by it, to the extent that such taxes have
become due;
(i) Other Agreements. Guarantor is not:
(i) a party to any judgment, order, decree or any
agreement or instrument or subject to restrictions
materially adversely affecting its business, properties or
assets, operation or condition (financial or otherwise); or
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(ii) in default in the performance, observance or
fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which
it is a party, which default has, or if not remedied within
any applicable grace period could have, a material adverse
effect on its business, operations or condition (financial
or otherwise);
(j) Litigation. Except as set forth in Schedule 5.01(j) to
the Credit Agreement, there is no action, suit or proceeding at law
or in equity or by or before any governmental instrumentality or
agency or arbitral body pending, or, to the knowledge of Guarantor,
threatened by or against Guarantor or affecting Guarantor or any of
its properties or rights, which could reasonably be expected to
materially adversely affect its financial condition, business or
operations;
(k) Margin Stock. Guarantor does not own any "margin
stock" as such term is defined in Regulation U, as amended (12
C.F.R. Part 221), of the Board;
(l) Investment Company. Guarantor is not an "investment
company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as
amended (15 U.S.C. ss. 80a-1, et seq.);
(m) Patents, Etc. Guarantor owns or has the right to use,
under valid license agreements or otherwise, all material patents,
licenses, franchises, trademarks, trademark rights, trade names,
trade name rights, trade secrets and copyrights necessary to the
conduct of its business as now conducted, without known conflict with
any patent, license, franchise, trademark, trade secrets and
confidential commercial or proprietary information, trade name,
copyright, rights to trade secrets or other proprietary rights of any
other Person;
(n) No Untrue Statement. Neither this Guaranty nor any other
Loan Document or certificate or document executed and delivered by or
on behalf of Guarantor in accordance with or pursuant to any Loan
Document contains any misrepresentation or untrue statement of
material fact or omits to state a material fact necessary, in light
of the circumstance under which it was made, in order to make any
such representation or statement contained therein not misleading in
any material respect;
(o) No Consents, Etc. Neither the business or
properties of Guarantor, nor any relationship between
Guarantor and any other Person, nor any circumstance in
connection with the execution, delivery and performance of the
Loan Documents to which Guarantor is a party and the
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transactions contemplated thereby is such as to require a consent,
approval or authorization of, or filing, registration or
qualification with, any governmental or other authority or any other
Person on the part of Guarantor as a condition to the execution,
delivery and performance of, or consummation of the transactions
contemplated by, this Guaranty or the other Loan Documents to which
Guarantor is a party or if so, such consent, approval, authorization,
filing, registration or qualification has been obtained or effected,
as the case may be;
(p) ERISA.
(i) None of the employee benefit plans maintained
at any time by Guarantor or the trusts created thereunder has engaged
in a prohibited transaction which could subject any such employee
benefit plan or trust to a material tax or penalty on prohibited
transactions imposed under Internal Revenue Code Section 4975 or
ERISA;
(ii) None of the employee benefit plans maintained at
any time by Guarantor which are employee pension benefit plans and
which are subject to Title IV of ERISA or the trusts created
thereunder has been terminated so as to result in a material
liability of Guarantor under ERISA nor has any such employee benefit
plan of Guarantor incurred any material liability to the Pension
Benefit Guaranty Corporation established pursuant to ERISA, other
than for required insurance premiums which have been paid or are not
yet due and payable; Guarantor has not withdrawn from or caused a
partial withdrawal to occur with respect to any Multi-employer Plan
resulting in any assessed and unpaid withdrawal liability; has made
or provided for all contributions to all such employee pension
benefit plans which it maintains and which are required as of the end
of the most recent fiscal year under each such plan; Guarantor has
not incurred any accumulated funding deficiency with respect to any
such plan, whether or not waived; nor has there been any reportable
event, or other event or condition, which presents a material risk of
termination of any such employee benefit plan by such Pension Benefit
Guaranty Corporation;
(iii) The present value of all vested accrued benefits
under the employee pension benefit plans which are subject to Title
IV of ERISA, maintained by Guarantor, did not, as of the most recent
valuation date for each such plan, exceed the then current value of
the assets of such employee benefit plans allocable to such benefits;
(iv) The consummation of the Loans provided for in Article
II of the Credit Agreement and consummation of the transactions
contemplated hereby will not involve any
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prohibited transaction under ERISA which is not subject to a
statutory or administrative exemption;
(v) To the best of Guarantor's knowledge, each employee
pension benefit plan subject to Title IV of ERISA, maintained by
Guarantor, has been administered in accordance with its terms in all
material respects and is in compliance in all material respects with
all applicable requirements of ERISA and other applicable laws,
regulations and rules;
(vi) There has been no withdrawal liability incurred
and unpaid with respect to any Multi-employer Plan to which
Guarantor is or was a contributor;
(vii) As used in this Guaranty, the terms "employee
benefit plan," "employee pension benefit plan," "accumulated funding
deficiency," "reportable event," and "accrued benefits" shall have
the respective meanings assigned to them in ERISA, and the term
"prohibited transaction" shall have the meaning assigned to it in
Code Section 4975 and ERISA;
(viii) Guarantor has no liability not disclosed on any of
the financial statements furnished to the Lenders pursuant to Section
7.01(f) of the Credit Agreement, contingent or otherwise, under any
plan or program or the equivalent for unfunded post-retirement
benefits, including pension, medical and death benefits, which
liability would have a material adverse effect on the financial
condition of Guarantor;
(q) No Default. As of the date hereof, there does not
exist any Default or Event of Default hereunder;
(r) Hazardous Materials. Guarantor is in compliance with all
applicable Environmental Laws in all material respects and has not
been notified of any action, suit, proceeding or investigation which
calls into question compliance by Guarantor with any Environmental
Laws or which seeks to suspend, revoke or terminate any license,
permit or approval necessary for the generation, handling, storage,
treatment or disposal of any Hazardous Material;
(s) RICO. Guarantor is not engaged in and has not engaged in
any course of conduct that could subject any of its properties to any
Lien, seizure or other forfeiture under any criminal law, racketeer
influenced and corrupt organizations law, civil or criminal, or other
similar laws;
(t) Employment Matters. Guarantor is in compliance in all
material respects with all applicable laws, rules and regulations
pertaining to labor or employment matters, including without
limitation those pertaining to wages, hours, occupational safety and
taxation and there is neither pending nor threatened any material
litigation, administrative
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proceeding nor, to the knowledge of Guarantor, any
investigation, in respect of such matters;
(u) Other Agreements. No other agreement, representation or
special condition exists between such Guarantor and the Lender
regarding the liability of such Guarantor under this Guaranty; nor
does any understanding exist between such Guarantor and the Lender
that the obligations of the Guarantor under this Guaranty are or will
be other than as set out herein;
(v) Defenses. As of the date hereof, such Guarantor has
no defense whatsoever to any action or proceeding that may be
brought to enforce this Guaranty;
(w) Ratification of Representations and Warranties in
Existing Credit Agreement. The Guarantor hereby repeats and ratifies
each of the representations and warranties made in Section 4 of the
Existing Credit Agreement; and affirms with respect to itself and to
its Subsidiaries that each of the representations and warranties set
forth in Section 4 of the Existing Credit Agreement are true and
correct in all material respects on and as of the date hereof, with
the same effect as though such representations and warranties have
been made on and as of the date hereof, except to the extent that
such representations and warranties expressly relate to an earlier
date and except that the financial statements referred to in Section
4.5 of the Existing Credit Agreement shall be deemed to be those
financial statements of the Guarantor as at September 30, 1995, which
have been recently delivered to the Lender.
7. INCORPORATION OF COVENANTS.
(a) Covenants. Reference is made to the covenants contained
in Section 5 of the Existing Credit Agreement (hereinafter referred
to as the "Incorporated Covenants"). The Guarantor agrees with the
Lender that, effective as of the date hereof, the Incorporated
Covenants (and all other relevant provisions of the Existing Credit
Agreement related thereto) are hereby incorporated by reference into
this Agreement to the same extent as if set forth fully herein and
shall inure to the benefit of the Lender, without giving effect to
any waiver, amendment, modification or replacement of the Existing
Credit Agreement or any term or provision of the Incorporated
Covenants occurring subsequent to the date of this Agreement, except
to the extent otherwise specifically provided in the following
provisions of this paragraph. In the event a waiver is granted under
the Existing Credit Agreement or an amendment or modification is
executed with respect to the Existing Credit Agreement, and such
waiver, amendment or modification affects the Incorporated Covenants,
then such waiver, amendment or modification shall be effective
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with respect to the Incorporated Covenants as incorporated by
reference into this Agreement only if consented to in writing by the
Lender hereunder. In the event of any replacement of the Existing
Credit Agreement with a similar credit facility (the "New Facility")
the covenants contained in the New Facility which correspond to the
covenants contained in Section 5 of the Existing Credit Agreement
shall become the Incorporated Covenants hereunder only if consented
to in writing by the Lender hereunder and, if such consent is not
granted, then the covenants contained in Section 5 of the Credit
Agreement (together with any modifications or amendments approved in
accordance with this paragraph) shall continue to be the Incorporated
Covenants hereunder. If the Existing Credit Agreement (or any such
New Facility, as the case may be) is terminated and not replaced,
then the covenants contained in Section 5 of the Existing Credit
Agreement (together with any modifications or amendments approved in
accordance with this paragraph) shall continue to be the Incorporated
Covenants hereunder.
(b) Financial Information, Reports, Etc. The Guarantor shall
deliver or cause to be delivered (without duplication) to the Lender
hereunder any financial reports, accountant's letters, registration
statements, proxy statements, management letters and other reports,
documents and information required to be delivered by the Guarantor,
the Borrower or any other Person to the Bank pursuant to Section 5 of
the Existing Credit Agreement (as amended, modified or supplemented
from time to time), when and as required by such provision, to the
same extent as if the Lender were the Bank under the Existing Credit
Agreement.
8. FINANCIAL REPORTS, ETC. In addition to the foregoing, until the
Obligations have been paid and satisfied in full and the Credit Agreement has
been terminated in accordance with the terms thereof, unless the Lender shall
otherwise consent in writing, the Guarantor will and will cause each
Subsidiary to:
(a) as soon as practical and in any event within 90 days
after the end of each Fiscal Year of the Guarantor, deliver or cause
to be delivered to the Lender consolidated balance sheets of the
Guarantor and its Subsidiaries, and the notes thereto, and the
related consolidated statements of income, stockholders' equity and
cash flows and the respective notes thereto, for such Fiscal Year,
setting forth comparative financial statements for the preceding
Fiscal Year, all prepared in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis and containing
opinions of Deloitte & Touche, or other such independent certified
public accountants selected by the Guarantor and approved by the
Lender, which are unqualified as to the scope of the audit performed
and as to the "going concern" status of the Borrower;
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(b) as soon as practical and in any event within 45 days
after the end of each fiscal quarter (except the last of the Fiscal
Year), deliver to the Lender consolidated balance sheets of the
Guarantor and its Subsidiaries as of the end of such reporting
period, the related consolidated statements of income, stockholders'
equity and cash flows for such reporting period and for the period
from the beginning of the Fiscal Year through the end of such
reporting period, accompanied by a certificate of an Authorized
Representative to the effect that such financial statements present
fairly the financial position of the Guarantor and its Subsidiaries
as of the end of such reporting period and the results of their
operations and the changes in their financial position for such
reporting period, in conformity with the standards set forth in
Section 6(f)(i) hereof with respect to interim financials;
(c) together with each delivery of the financial statements
required by Section 8(a) hereof, deliver to the Lender a letter from
the Guarantor's accountants specified in Section 8(a) hereof stating
that in performing the audit necessary to render an opinion on the
financial statements delivered under Section 8(a), they obtained no
knowledge of any Default or Event of Default by the Guarantor in the
fulfillment of the terms and provisions of this Agreement insofar as
they relate to financial matters (which at the date of such statement
remains uncured); and if the accountants have obtained knowledge of
such Default or Event of Default, a statement specifying the nature
and period of existence thereof;
(d) promptly upon their becoming available to the Guarantor,
the Guarantor shall deliver to the Lender a copy of (i) all regular
or special reports or effective registration statements which
Guarantor or any Subsidiary shall file with the Securities and
Exchange Commission (or any successor thereto) or any securities
exchange, (ii) any proxy statement distributed by the Guarantor to
its shareholders, bondholders or the financial community in general,
and (iii) any management letter or other report submitted to the
Guarantor or any of its Subsidiaries by independent accountants in
connection with any annual, interim or special audit of the Guarantor
or any of its Subsidiaries; and
(e) promptly, from time to time, deliver or cause to be
delivered to the Lender such other information regarding Guarantor's
and each Subsidiary's operations, business affairs and financial
condition as the Lender may reasonably request. The Lender is hereby
authorized to deliver a copy of any such financial information
delivered hereunder to the Lender (or any affiliate of the Lender),
to any regulatory authority having jurisdiction over the Lender
pursuant to any written request therefor, to any other Person who
shall acquire or consider the acquisition of a participation interest
in or
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assignment of any Loan permitted by the Credit Agreement and
to any Affiliate of the Lender.
9. NO WAIVER BY THE LENDER. No failure or delay on the part of the
Lender in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege. Failure by the Lender to
insist upon strict performance hereof shall not constitute a relinquishment of
its right to demand strict performance at another time. Receipt by the Lender
of any payment by any person on any Guarantied Obligation, with knowledge of a
default on any Guarantied Obligation or of a breach of this Guaranty, or both,
shall not be construed as a waiver of the default or breach.
10. CONTINUING GUARANTY; TERMINATION. THIS GUARANTY IS A CONTINUING
GUARANTY AND SHALL CONTINUE IN FULL FORCE AND EFFECT UNTIL SUCH TIME AS ALL
GUARANTIED OBLIGATIONS SHALL HAVE BEEN INDEFEASIBLY PAID IN FULL AND THE
LENDER SHALL BE UNDER NO FURTHER OBLIGATION TO LEND OR TO ADVANCE FUNDS
CONSTITUTING GUARANTIED OBLIGATIONS.
11. BENEFITS OF AGREEMENT. This Guaranty is freely assignable and
transferable by the Lender to any permitted assignee and transferee of any
Guarantied Obligation; however, the duties and obligations of the Guarantor
may not be delegated or transferred by the Guarantor without the written
consent of the Lender. The rights and privileges of the Lender shall inure to
the benefit of their respective successors and assigns, and the duties and
obligations of the Guarantors shall bind its successors and assigns.
12. EXPENSES; INDEMNITY. The Guarantor will upon demand pay to the
Lender the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which it may
reasonably incur in connection with enforcement of this Guaranty or the
failure by the Guarantor to perform or observe any of the provisions hereof.
The Guarantor agrees to indemnify and hold harmless the Lender from and
against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, growing
out of or resulting from this Guaranty or the exercise by the Lender of any
right or remedy granted to it hereunder or under the other Loan Documents,
other than such items arising out of the bad faith, gross negligence or
willful misconduct on the part of the Lender. If and to the extent that the
obligations of the Guarantor under this Section 12 are unenforceable for any
reason, the Guarantor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable law.
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13. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver of any
provision of this Guaranty or consent to any departure by the Guarantor
herefrom shall in any event be effective unless the same shall be in writing
and signed as to the Obligations, by the Guarantor and the Lender, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, that no such
amendment, waiver or consent shall (a) deprive the Lender of the benefits
generally of this Guaranty without the written consent of the Lender, or (b)
alter the provisions of this Section 11 without the written consent of the
Lender.
14. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be given in the manner set forth in Section 10.02
of the Credit Agreement.
15. INTERPRETATION; PARTIAL INVALIDITY. Whenever possible each
provision of this Guaranty shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Guaranty shall be prohibited by or invalid under such law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Guaranty.
16. MISCELLANEOUS; REMEDIES CUMULATIVE. Unless the context of this
Guaranty otherwise clearly requires, references to the plural include the
singular, the singular the plural and the part the whole and "or" has the
inclusive meaning represented by the phrase "and/or." The section headings
used herein are for convenience of reference only and shall not define, limit
or extend the provisions of this Guaranty. All remedies hereunder are
cumulative and are not exclusive of any other rights and remedies of the
Lender provided by law or under the Credit Agreement, the other Loan
Documents, or other applicable agreements or instruments. The making of the
Loans to the Borrower pursuant to the Credit Agreement shall be presumed
conclusively to have been made or extended, respectively, in reliance upon the
obligations of the Guarantor incurred pursuant to this Guaranty.
17. GOVERNING LAW. THIS GUARANTY SHALL IN ALL RESPECTS BE GOVERNED BY
THE LAW OF THE STATE OF FLORIDA. GUARANTOR AND THE LENDER EACH HEREBY (I)
SUBMITS TO THE JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS OF
FLORIDA FOR THE PURPOSES OF RESOLVING DISPUTES HEREUNDER OR UNDER ANY OF THE
OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY OR FOR THE PURPOSE OF COLLECTION
AND (II) WAIVES TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION.
18. REPAYMENT OR RECOVERY. If claim is ever made upon the Lender for
repayment or recovery of any amount or amounts received in payment or on
account of any of the Guarantied Obligations and the Lender repays all or part
of said amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its
property, or
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(b) any settlement or compromise of any such claim effected by the Lender with
any such claimant (including the original obligor), then and in such event the
Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of any Note or other instrument evidencing any Guarantied
Obligation or any security therefor, and the Guarantor shall be and remain
liable to the Lender for the amount so repaid or recovered to the same extent
as if such amount had never originally been received by the Lender.
19. SET-OFF. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of an Event of Default (as defined in
either of the Agreements), Guarantor agrees that the Lender shall have a lien
for all the liabilities of the Guarantor upon all deposits or deposit
accounts, of any kind (other than deposits identified as being held for third
parties), or any interest in any deposits or deposit accounts thereof, now or
hereafter pledged, mortgaged, transferred or assigned to the Lender or
otherwise in the possession or control of the Lender (other than for
safekeeping) for any purpose for the account or benefit of the Guarantor and
including any balance of any deposit account or of any credit of the Guarantor
with the Lender, whether now existing or hereafter established, hereby
authorizing the Lender at any time or times, upon the occurrence and during
the continuance of an Event of Default, with or without prior notice (but with
notice with reasonable promptness after such set-off) to apply such balances
or any part thereof to such of the liabilities of the Guarantor to the Lender
then past due and in such amounts as they may elect, and whether or not the
collateral or the responsibility of other Persons primarily, secondarily or
otherwise liable may be deemed adequate. For the purposes of this Section 19,
all remittances and property shall be deemed to be in the possession of the
Lender as soon as the same may be put in transit to it by mail or carrier or
by other bailee.
20. REFERENCES TO CREDIT AGREEMENT DEFINITIONS. In the event that the
Credit Agreement shall no longer be in effect at any time while this Guaranty
shall continue in effect or there shall otherwise continue to remain
outstanding Guarantied Obligations, all references to the Credit Agreement,
including terms defined by reference to their respective definitions contained
in the Credit Agreement, shall be deemed to refer to the Credit Agreement as
in effect as of the date hereof, with such amendments thereto to which the
Lender shall have given express consent in accordance with the Loan Documents.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officers hereunto duly authorized as of the date
first above written.
WITNESS: TEAM RENTAL GROUP, INC.
_______________________ By:________________________________
Sanford Miller, President
- -----------------------
Address: 125 Basin Street
Suite 210
Daytona, Florida 32114
Attention: Sanford Miller,
President
Telephone No. (904) 238-7035
Telefacsimile No. (904) 238-7461
94
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Schedule 1
Repurchase Agreements
None.
95
<PAGE>
Schedule 2
Closing Date Vehicles
96
EXECUTION
AMENDMENT AND WAIVER NO. 1 TO
REVOLVING CREDIT AGREEMENT
AND SECURITY AGREEMENT
THIS AMENDMENT AND WAIVER NO. 1 TO REVOLVING CREDIT AGREEMENT AND
SECURITY AGREEMENT (the "Amendment Agreement") is made and entered into this
28th day of March, 1996 by and between VPSI, INC., a Delaware corporation
having its principal place of business in Troy, Michigan (the "Borrower"), and
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking association (the
"Lender"). Unless the context otherwise requires, all terms used herein
without definition shall have the definition provided therefor in the Credit
Agreement (defined below).
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender have entered into the Revolving
Credit Agreement dated as of February 6, 1996, whereby the Lender has made
available to the Borrower a revolving credit facility of up to $50,000,000
(such agreement, as at any time amended, restated, modified or supplemented,
being referred to as the "Credit Agreement"); and
WHEREAS, the Borrower and the Lender have agreed that the Credit
Agreement shall be amended in the manner set forth herein;
NOW, THEREFORE, in consideration of the premises and conditions
herein set forth, it is hereby agreed as follows:
1. AMENDMENTS TO CREDIT AGREEMENT. Subject to the
conditions hereof, the Credit Agreement is hereby amended as
follows, effective as of the date hereof:
a. Section 1.01 is hereby amended by adding the following
definition of "ARAC":
"'ARAC' means Arizona Rent-A-Car Systems, Inc.;"
b. Section 1.01 is hereby amended by adding the following
definition of "ARAC Security Agreement":
"'ARAC Asset Purchase Agreement' means the Asset Purchase
Agreement dated as of March 28, 1996, between ARAC and the Borrower,
as amended, modified or supplemented from time to time;"
c. Section 1.01 is hereby amended by adding the following
definition of "ARAC Lease":
<PAGE>
"'ARAC Lease' means the lease agreement dated as of March
28, 1996, between ARAC and the Borrower, pursuant to which the
Borrower has leased the ARAC Vehicles to ARAC, as such lease may be
amended, modified or supplemented from time to time;"
d. Section 1.01 is hereby amended by adding the following
definition of "ARAC Vehicles":
"'ARAC Vehicles' means all of the vehicles identified on
Schedule 4 hereto.
e. The definition of "Collateral" in Section 1.01 is hereby
amended in its entirety so that it shall read as follows:
"'Collateral' means, collectively, the Vehicles, the
Repurchase Agreements, the Repurchase Receivables, the Closing Date
Indebtedness, the Closing Date Indebtedness Documents, the ARAC
Lease, the ARAC Asset Purchase Agreement, and any other property of
the Borrower or any other Person from time to time securing any of
the Obligations;"
f. The definition of "Loan Documents" in Section 1.01 is
hereby amended in its entirety so that it shall read as follows:
"'Loan Documents' means this Agreement, the Note, the
Guaranty, the Security Agreement, the Assignments of Repurchase
Agreements, the Assignment of Indebtedness, the ARAC Lease, the ARAC
Asset Purchase Agreement and all other instruments and documents
heretofore or hereafter executed or delivered to and in favor of the
Lender (or an agent designated by the Lender) in connection with the
Loans made under this Agreement, as the same may be amended, modified
or supplemented from time to time;"
g. The definition of "Vehicles" in Section 1.01 is hereby amended by
inserting the phrase "(or, in the case of the ARAC Vehicles, automobiles or
light trucks)" after the word "vans" in the third line of such definition.
h. The Credit Agreement is amended by adding Schedule 4 in
the form attached hereto.
2. AMENDMENTS TO SECURITY AGREEMENT. Subject to the conditions
hereof, the Security Agreement is hereby amended as follow, effective as of
the date hereof:
a. Clauses (h) and (i) of Section 2.1 of the Security
Agreement are hereby replaced by the following clauses (h), (i),
(j) and (k):
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"(h) the ARAC Lease, and all of the Borrower's rights
thereunder, including without limitation all rights to rent and other
payments thereunder;
"(i) the ARAC Asset Purchase Agreement and all of the
Borrower's rights thereunder, including without limitation the
Borrower's rights with respect to the ARAC Vehicles and the
certificates of title for the ARAC Vehicles;
"(j) all accounts and general intangibles included in or
constituting or relating to the foregoing or deriving therefrom; and
"(k) all products, rents, issues, profits, returns, income
and proceeds of or rights with respect to any and all of the
foregoing Collateral, including proceeds of any loss or damage to or
destruction of the above, whether insured or not insured, and all
other proceeds of any sale, lease or other disposition of any
property or interest therein referred to in clauses (a) to (j) above,
together with any policies of insurance covering any or all of the
above, any rebates or refunds whether for insurance or otherwise, and
all proceeds of any such proceeds, whether now existing or hereafter
acquired, and, to the extent not otherwise included, all payments
under any indemnity, warranty, or guaranty payable by reason of loss
or damage to or otherwise with respect to any of the foregoing
Collateral."
b. Clause (g) of Section 2.5 of the Security Agreement is hereby
amended by inserting the phrase "for the Vehicles or on certificates of title
for the ARAC Vehicles" after the words "Certificates of Title" and before the
comma in the second line of such clause (g).
c. The following Section 4.8 is added to the Security Agreement:
"Section 4.8 ARAC Lease and ARAC Asset Purchase Agreement.
The Borrower shall insist on ARAC's strict compliance with the terms
of the ARAC Lease and the ARAC Asset Purchase Agreement. The Borrower
shall not amend, modify, supplement or terminate the ARAC Lease or
the ARAC Asset Purchase Agreement without the prior written consent
of the Lender. The Borrower shall instruct ARAC to make all payments
under the ARAC Lease directly to the Lender. In the event the
Borrower receives any payment under the ARAC Lease, the Borrower
shall hold such payment in trust for the Lender, segregated from all
other monies and property of the Borrower, and the Borrower shall
immediately deliver such payment to the Lender."
3. WAIVER. The Borrower has informed the Lender that the
Borrower wishes to lease the ARAC Vehicles to ARAC pursuant to the
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<PAGE>
ARAC Lease. Subject to the conditions hereof, the Lender consents to the ARAC
Lease and waives any noncompliance with Section 8.02 (Transfer of Assets) and
Section 8.07 (Transactions with Affiliates) that may be caused by the ARAC
Lease, provided that the Borrower retains title to the ARAC Vehicles and the
security interest of the Lender in the ARAC Vehicles remains perfected.
The waiver contained herein (i) is limited as specified herein and
(ii) shall not constitute an amendment or modification of the Credit Agreement
or any other Loan Document.
4. REPRESENTATIONS AND WARRANTIES. In order to induce the
Lender to enter into this Amendment Agreement, the Borrower hereby
represents and warrants that the Credit Agreement has been re-
examined by the Borrower and that:
a. The representations and warranties made by the Borrower
in Article V thereof are true on and as of the date hereof;
b. There has been no material change in the condition,
financial or otherwise, of the Borrower and its Subsidiaries since
February 6, 1996 other than changes in the ordinary course of
business;
c. The business and properties of the Borrower and its
Subsidiaries are not, and since February 6, 1996 have not been,
adversely affected in any substantial way as the result of any fire,
explosion, earthquake, accident, strike, lockout, combination of
workers, flood, embargo, riot, activities of armed forces, war or
acts of God or the public enemy, or cancellation or loss of any major
contracts; and
d. After giving effect to this Amendment Agreement no
condition exists which, upon the effectiveness of the amendment
contemplated hereby, would constitute a Default or an Event of
Default on the part of the Borrower under the Credit Agreement or any
other Loan Document, either immediately or with the lapse of time or
the giving of notice, or both.
5. CONSENT OF GUARANTORS. The Guarantor has joined in the
execution of this Amendment Agreement for the purposes of
consenting hereto and for the further purpose of confirming its
guaranty of Obligations of Borrower as provided in the Guaranty.
6. CONDITIONS PRECEDENT. The effectiveness of this Amendment
Agreement is subject to the receipt by the Lender of the following:
(i) executed originals of this Amendment Agreement,
the ARAC Lease, and the ARAC Asset Purchase Agreement;
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<PAGE>
(ii) resolutions of the boards of directors or
other appropriate governing body (or of the appropriate
committee thereof) of the Borrower, the Guarantor and ARAC
certified by its secretary or assistant secretary as of the
date hereof, approving and adopting this Amendment
Agreement, the ARAC Lease, the ARAC Asset Purchase
Agreement, and any other documents to be executed by such
Person, and authorizing the execution and delivery thereof;
(iii) evidence satisfactory to the Lender of
ARAC's consent to the Borrower's assignment and grant to the
Lender of a Lien in the ARAC Lease, the ARAC Vehicles and
the ARAC Asset Purchase Agreement;
(iv) evidence satisfactory to the Lender of ARAC's
payment in full, and termination, of the Bank of America
Facility and the Bank of America Credit Agreement;
(v) evidence satisfactory to the Lender of Bank of
America's release of any Lien in any property of the
Borrower or ARAC;
(vi) duly executed UCC financing statements,
perfecting the Lender's Lien on the Collateral under the
Security Agreement;
(vii) duly executed UCC financing statements with
respect to the ARAC Lease;
(viii) evidence satisfactory to the Lender that
Bank of America has delivered the original certificate of
title for each ARAC Vehicle to the Borrower;
(ix) a power-of-attorney signed by Bank of America,
authorizing the Borrower or the Lender to release Bank of
America's Lien on each ARAC Vehicle (and to cause
appropriate notations on the respective certificates of
title);
(x) payment of the Amendment Fee; and
(xi) such other documents, instruments and
certificates as the Lender may reasonably request on or
prior to the effective date hereof in connection with
consummation of the transactions contemplated hereby.
All proceedings of the Borrower and each Subsidiary relating to the matters
provided for herein shall be satisfactory to the Lender and its counsel.
5
<PAGE>
7. FEES.
a. AMENDMENT FEE. Without limiting the generality of
Section 2.08 of the Credit Agreement relating to the Unused Fee and
Upfront Fee, the Borrower shall pay to the Lender on the date
hereof an amendment fee (the "Amendment Fee") in the amount of
$15,000.
b. LEGAL FEES. In addition to the foregoing, the
Borrower shall promptly reimburse the Lender for the aggregate
legal fees incurred by the Lender in connection with the
negotiation, review and execution of this Amendment Agreement.
8. ENTIRE AGREEMENT. This Amendment Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relative to such subject matter. No promise, condition, representation
or warranty, express or implied, not herein set forth shall bind any party
hereto, and no one of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that,
except as in this Amendment Agreement otherwise expressly stated, no
representations, warranties or commitments, express or implied, have been made
by any party to the other. None of the terms or conditions of this Amendment
Agreement may be changed, modified, waived or canceled orally or otherwise,
except by writing, signed by all the parties hereto, specifying such change,
modification, waiver or cancellation of such terms or conditions, or of any
proceeding or succeeding breach thereof.
9. FULL FORCE AND EFFECT OF AGREEMENT. Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all other Loan
Documents are hereby confirmed and ratified in all respects and shall remain
in full force and effect according to their respective terms.
10. COUNTERPARTS. This Amendment Agreement may be executed in any
number of counterparts, each of which shall be deemed an original as against
any party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.
11. GOVERNING LAW. THIS AMENDMENT AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY THE INTERNAL LAWS AND JUDICIAL DECISIONS OF THE STATE OF FLORIDA.
THE BORROWER HEREBY SUBMITS TO THE JURISDICTION AND VENUE OF THE STATE AND
FEDERAL COURTS OF FLORIDA FOR THE PURPOSES OF RESOLVING DISPUTES HEREUNDER OR
FOR THE PURPOSES OF COLLECTION.
12. ENFORCEABILITY. Should any one or more of the provisions of this
Amendment Agreement be determined to be illegal or unenforceable as to one or
more of the parties hereto, all other provisions nevertheless shall remain
effective and binding on the parties hereto.
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13. CREDIT AGREEMENT. All references in any of the Loan
Documents to the Credit Agreement or the Security Agreement shall
mean and include such agreement as amended hereby.
14. SUCCESSORS AND ASSIGNS. This Amendment Agreement shall be binding
upon and inure to the benefit of each of the Borrower and the Lenders and
their respective successors, assigns and legal representatives; provided,
however, that the Borrower, without the prior consent of the secured party,
may not assign any rights, powers, duties or obligations hereunder.
[Remainder of page intentionally left blank.]
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
BORROWER:
WITNESS: VPSI, INC.
- ----------------------------
By:________________________________
____________________________ Name:______________________________
Title:_____________________________
LENDER:
WITNESS: NATIONSBANK, NATIONAL ASSOCIATION
(SOUTH)
- ----------------------------
By:________________________________
____________________________ Name:______________________________
Title:_____________________________
GUARANTOR:
WITNESS: TEAM RENTAL GROUP, INC.
- ----------------------------
By:________________________________
____________________________ Name:______________________________
Title:_____________________________
SIGNATURE PAGE 1 OF 1
<PAGE>
SCHEDULE 4
ARAC Vehicles
