--------------------------------------------------------------------------------
AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
COPART, INC.
AND
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
U.S. BANK OF CALIFORNIA
AND
FLEET NATIONAL BANK
AND
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
AS AGENT
March 7, 1997
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . 2
SECTION 1.1. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . . 11
SECTION 1.3. LENDER DISCRETION . . . . . . . . . . . . . . . . . . . 12
SECTION 1.4. CERTAIN INTERPRETATIONS . . . . . . . . . . . . . . . . 12
SECTION 1.5. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II
THE CREDITS . . . . . . . . . . . . . 12
SECTION 2.1. REVOLVING REDUCING TERM LINE OF CREDIT. . . . . . . . . 12
SECTION 2.2. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . 13
SECTION 2.3. NOTICE OF BORROWING . . . . . . . . . . . . . . . . . . 16
SECTION 2.4. INTEREST/FEES . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.5. CONVERSION OF INTEREST OPTIONS. . . . . . . . . . . . . 20
SECTION 2.6. OTHER PAYMENT TERMS . . . . . . . . . . . . . . . . . . 21
SECTION 2.7. PREPAYMENT. . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.8. FUNDING . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.9. PRO RATA TREATMENT. . . . . . . . . . . . . . . . . . . 23
SECTION 2.10. GUARANTIES. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.11. CHANGE OF CIRCUMSTANCES . . . . . . . . . . . . . . . . 25
SECTION 2.12. TAXES ON PAYMENTS . . . . . . . . . . . . . . . . . . . 27
SECTION 2.13. FUNDING LOSS INDEMNIFICATION. . . . . . . . . . . . . . 28
SECTION 2.14. LIMITATION ON REIMBURSEMENT AND INDEMNITY OBLIGATIONS . 28
SECTION 2.15. AUTHORIZED REPRESENTATIVES. . . . . . . . . . . . . . . 28
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . 29
SECTION 3.1. LEGAL STATUS. . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.2. AUTHORIZATION AND VALIDITY. . . . . . . . . . . . . . . 29
SECTION 3.3. NO VIOLATION. . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.4. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.5. CORRECTNESS OF FINANCIAL STATEMENTS . . . . . . . . . . 30
SECTION 3.6. OTHER OBLIGATIONS; LIENS. . . . . . . . . . . . . . . . 30
SECTION 3.7. PERMITS, FRANCHISES . . . . . . . . . . . . . . . . . . 31
SECTION 3.8. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.9. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . 31
SECTION 3.10. INCOME TAX RETURNS. . . . . . . . . . . . . . . . . . . 31
SECTION 3.11. NO SUBORDINATION. . . . . . . . . . . . . . . . . . . . 32
SECTION 3.12. SUBSIDIARIES AND OTHER INVESTMENTS. . . . . . . . . . . 32
SECTION 3.13. GOVERNMENTAL REGULATION . . . . . . . . . . . . . . . . 32
SECTION 3.14. TRUTH, ACCURACY OF INFORMATION. . . . . . . . . . . . . 32
ARTICLE IV
CONDITIONS . . . . . . . . . . . . . 32
SECTION 4.1. CONDITIONS TO INITIAL EXTENSION OF CREDIT . . . . . . . 32
SECTION 4.2. CONDITIONS TO EACH EXTENSION OF CREDIT. . . . . . . . . 34
i
TABLE OF CONTENTS
(continued)
Page
----
ARTICLE V
AFFIRMATIVE COVENANTS. . . . . . . . . . . 34
SECTION 5.1. PUNCTUAL PAYMENTS . . . . . . . . . . . . . . . . . . . 34
SECTION 5.2. ACCOUNTING RECORDS. . . . . . . . . . . . . . . . . . . 34
SECTION 5.3. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . 35
SECTION 5.4. COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.5. FACILITIES. . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.6. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . 36
SECTION 5.7. NOTICE TO AGENT . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.8. INDEMNITY OF GUARANTORS . . . . . . . . . . . . . . . . 37
SECTION 5.9. INSURANCE COVERAGE. . . . . . . . . . . . . . . . . . . 37
ARTICLE VI
NEGATIVE COVENANTS . . . . . . . . . . . 37
SECTION 6.1. USE OF FUNDS. . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.2. MERGER, CONSOLIDATION, TRANSFER OF ASSETS . . . . . . . 38
SECTION 6.3. GUARANTIES. . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.4. OTHER INDEBTEDNESS. . . . . . . . . . . . . . . . . . . 40
SECTION 6.5. LOANS, ADVANCES, INVESTMENTS. . . . . . . . . . . . . . 42
SECTION 6.6. DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . 42
SECTION 6.7. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.8. NO NEGATIVE PLEDGES . . . . . . . . . . . . . . . . . . 44
SECTION 6.9. TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . 44
SECTION 6.10. CHANGE IN NATURE OF BUSINESS. . . . . . . . . . . . . . 44
ARTICLE VII
EVENTS OF DEFAULT. . . . . . . . . . . . 44
SECTION 7.1. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . 44
SECTION 7.2. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII
THE AGENT AND RELATIONS AMONG LENDERS. . . . . . . 47
SECTION 8.1. APPOINTMENT, POWERS AND IMMUNITIES. . . . . . . . . . . 47
SECTION 8.2. RELIANCE BY AGENT . . . . . . . . . . . . . . . . . . . 48
SECTION 8.3. DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.5. NON-RELIANCE. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.6. RESIGNATION OR REMOVAL OF AGENT . . . . . . . . . . . . 50
SECTION 8.7. AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.8. AGENT IN ITS INDIVIDUAL CAPACITY. . . . . . . . . . . . 50
ARTICLE IX
MISCELLANEOUS. . . . . . . . . . . . . 51
SECTION 9.1. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.2. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.3. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.4. WAIVERS, AMENDMENTS . . . . . . . . . . . . . . . . . . 53
SECTION 9.5. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . 54
SECTION 9.6. SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . 57
ii
TABLE OF CONTENTS
(continued)
Page
----
SECTION 9.7. ENTIRE AGREEMENT, AMENDMENT . . . . . . . . . . . . . . 57
SECTION 9.8. NO THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . 57
SECTION 9.9. TIME. . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.10. SEVERABILITY OF PROVISIONS. . . . . . . . . . . . . . . 58
SECTION 9.11. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.12. SUBMISSION TO JURISDICTION. . . . . . . . . . . . . . . 58
SECTION 9.13. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . 58
SECTION 9.14. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.15. AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT. . . . . . 59
SCHEDULE
I: Lenders
EXHIBITS
A: Note
B: Notice of Authorized Representatives
C: Notice of Borrowing
D: Notice of Conversion or Continuation
E: Assignment Agreement
F: Subsidiary Guaranty
iii
TABLE OF CONTENTS
(continued)
Page
----
iv
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of March __,
1997, by and among COPART, INC., a California corporation ("Borrower"), XXXXX
FARGO BANK, NATIONAL ASSOCIATION ("Xxxxx Fargo"), U.S. BANK OF CALIFORNIA, a
California state chartered bank, and FLEET NATIONAL BANK, and each of the other
financial institutions, if any, listed on Schedule I hereto, as amended from
time to time (collectively, including Xxxxx Fargo in its capacity as a lender
hereunder, "Lenders"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION, as agent for
the Lenders (in such capacity, "Agent").
RECITALS
Pursuant to that certain Credit Agreement among Borrower, Xxxxx Fargo and
U.S. Bank of California, and Xxxxx Fargo Bank, National Association, as Agent,
dated as of May 1, 1995 (the "Original Credit Agreement"), Xxxxx Fargo and U.S.
Bank of California agreed to make available to Borrower the Credits described
therein. Borrower has now requested that the Lenders amend and restate the
Original Credit Agreement so as to provide to Borrower the credit facilities
described in this Agreement, and the Lenders and Agent have agreed to provide
said credit facilities to Borrower on the terms and conditions contained in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises of
the parties contained herein, Agent, the Lenders and Borrower hereby amend and
restate the Original Credit Agreement to read in its entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINED TERMS. As used in this Agreement, all terms
defined above shall have the meanings set forth above, and the following terms
shall have the meanings set forth after each (with all such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"ADVANCE" shall mean each advance made by the Lenders to Borrower pursuant
to Section 2.1 or 2.2.
"AFFILIATE", as applied to any Person, shall mean any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person, PROVIDED that Consolidated Subsidiaries shall not constitute
"Affiliates" of Borrower or of other Consolidated Subsidiaries, and Borrower
shall not constitute an "Affiliate" of any Consolidated Subsidiary. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
applied to any Person, shall mean (i) the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of the securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise,
or (ii) the ownership of a general partnership interest, limited partnership
interest or membership interest representing ten percent (10%) or more of the
outstanding equity interest of such Person.
"AGENT'S OFFICE" shall mean (i) initially, Agent's office designated as
such in Schedule I hereto, and (ii) subsequently, such other office designated
as such in writing by Agent to the Lenders and Borrower.
"AGREEMENT" shall mean this Credit Agreement as amended, modified or
supplemented from time to time.
"APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender, (i)
initially, its office designated as such in Schedule I hereto, and (ii)
subsequently, such other office or offices designated as such in writing by such
Lender to Agent, PROVIDED that in all cases such office or offices shall be
located within the United States of America or a territory thereof.
"ASSIGNEE" shall have the meaning set forth in Section 9.5(c).
"ASSIGNMENT" shall have the meaning set forth in Section 9.5(c).
"ASSIGNMENT AGREEMENT" shall have the meaning set forth in Section 9.5(c).
"AUTHORIZED REPRESENTATIVES" shall mean those officers and employees
designated by Borrower on the most current Notice of Authorized Representatives
delivered by Borrower to Agent as being authorized to request any borrowing or
make any interest rate selection on behalf of Borrower hereunder, or to give
Agent any other notice hereunder which is designated by the terms hereof, as
being made through one of Borrower's Authorized Representatives.
"BANKRUPTCY CODE" shall mean the Bankruptcy Reform Act, Title 11 of the
United States Code, as amended or recodified from time to time.
"BORROWER DISCLOSURE LETTER" shall mean that certain letter dated as of the
date hereof signed on behalf of Borrower and delivered to Agent on or prior to
the Closing Date.
"BUSINESS DAY" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day other than a Saturday, Sunday or other day on which
commercial banks are authorized or required to close in San Francisco,
California, and (ii) with
2
respect to all notices, determinations, fundings and payments in connection with
any LIBOR interest selection, any day that is a Business Day described in clause
(i) above and that also is a day for trading by and between banks in U.S. dollar
deposits in the London interbank eurocurrency market.
"CAPITAL LEASES", as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"CHANGE OF LAW" shall mean the adoption of any Governmental Rule, any
change in any Governmental Rule or the application or requirements thereof
(whether such change occurs in accordance with the terms of such Governmental
Rule as enacted, as a result of amendment or otherwise), any change in the
interpretation or administration of any Governmental Rule by any Governmental
Authority, or compliance by any Lender (or any entity controlling such Lender)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority.
"CLOSING DATE" shall mean the date of this Agreement.
"CONSOLIDATED SUBSIDIARY" shall mean any Subsidiary the financial results
of which, under GAAP, are required to be reported on a consolidated basis with
the financial results of Borrower.
"CREDITS" shall mean the Revolving Reducing Term Line of Credit and the
Letter of Credit Facility.
"DALLAS OPERATION RESERVE" means all amounts held from time to time in the
restricted reserve account (in the amount of $3,100,000 as of the date hereof)
established in connection with environmental corrective actions in respect of
the Dallas Operation, as described in the SEC Documents.
"DEFAULT" shall mean an event or condition, which, with the passage of time
or giving of notice, or both, would constitute an Event of Default.
"EBITDA" shall mean net profit before tax plus interest expense (net of
capitalized interest expense but including the interest component of rental
payments under Capital Leases), depreciation expense and amortization expense.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 7.1.
3
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted average of the
per annum rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers as published by the
Federal Reserve Bank of New York for such day (or, if such rate is not so
published for any day, the average rate quoted to Agent on such day by three (3)
Federal funds brokers of recognized standing selected by Agent).
"FINANCIAL INSTITUTION" shall mean any bank, savings bank, savings and loan
association or insurance company, and any affiliate of any of U.S. Bancorp,
Fleet National Bank or Xxxxx Fargo & Co. that is controlled, either directly or
indirectly, by such Person.
"FIXED RATE TERM" shall mean a period of one (1), two (2), three (3), or
six (6) months, as designated by Borrower, during which all or a portion of the
Revolving Reducing Term Line of Credit bears interest determined in relation to
LIBOR; PROVIDED, HOWEVER, that no Fixed Rate Term may extend beyond the Maturity
Date.
"FUNDED DEBT" shall mean all Indebtedness of Borrower (including only
Indebtedness that is reflected or required to be reflected as a liability on the
consolidated balance sheet of Borrower in accordance with GAAP) that matures
more than one year from the date of creation or matures one year from the date
of creation but is renewable or extendible, at the option of the obligor, to a
date more than one year from the date of creation or arises under a revolving
credit or similar agreement which obligates the lender to extend credit during a
period more than one year from the date as of which Funded Debt is being
determined; PROVIDED, HOWEVER, that, regardless of whether they would otherwise
constitute "Funded Debt", neither deferred rents nor the Dallas Operation
Reserve nor Subordinated Debt shall constitute "Funded Debt" for purposes of the
Loan Documents.
"GAAP" shall mean generally accepted accounting principles as in effect in
the United States from time to time, consistently applied.
"GOVERNMENTAL AUTHORITY" shall mean any domestic or foreign national, state
or local government, any political subdivision thereof, any department, agency,
authority or bureau of any of the foregoing, or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the Federal Deposit Insurance Corporation,
the Federal Reserve Board, the Comptroller of the Currency, any central bank or
any comparable authority.
"GOVERNMENTAL RULE" shall mean any law, rule, regulation, ordinance, order,
code interpretation, judgment, decree, directive, guidelines, policy or similar
form of decision of any Governmental Authority.
4
"GUARANTORS" shall mean each Subsidiary that either (i) has assets with a
fair market value in excess of $100,000, or (ii) is significant to the
operations of Borrower and the Subsidiaries, considered as a single enterprise.
"INDEBTEDNESS" shall mean (i) indebtedness or liability for borrowed money;
(ii) obligations evidenced by bonds, debentures, notes or other similar
instruments; (iii) obligations for the deferred purchase price of property or
services (but excluding trade payables incurred in the ordinary course of
business); (iv) obligations as lessee under Capital Leases or other leases in
respect of which the lessee is treated as the owner of the leased property for
tax purposes; (v) reimbursement obligations under letters of credit; and (vi)
obligations, of the types described in the foregoing clauses (i) through (v),
secured by Liens, whether or not such obligations have been assumed.
"INDEMNITEES" shall have the meaning set forth in Section 9.3.
"LETTER OF CREDIT DOCUMENTS" has the meaning given to it in SECTION 2.2.
"LETTER OF CREDIT EXPOSURE" means, at any time, the aggregate amount
remaining to be drawn under all outstanding Letters of Credit; PROVIDED THAT the
"Letter of Credit Exposure" shall not include amounts remaining to be drawn
under Letters of Credit in respect of which credit support has been provided and
currently exists as set forth in Section 2.2(a)(v).
"LETTER OF CREDIT FACILITY" means the facility for the issuance of Letters
of Credit provided for under Section 2.2.
"LETTER OF CREDIT OBLIGATIONS" mean, collectively, all reimbursement and
other obligations of Borrower in respect of Letters of Credit.
"LETTERS OF CREDIT" mean the standby and commercial letters of credit
issued from time to time by Agent, for the account of Borrower, pursuant to
SECTION 2.2, as the same may be drawn on, advanced, replaced or modified from
time to time.
"LEVERAGE RATIO" shall mean the aggregate of (i) current liabilities and
non-current liabilities, less (A) Subordinated Debt and (B) (1) the Dallas
Operation Reserve and deferred rents; and (2) amounts held in such other
restricted reserve accounts that Majority Lenders agree in writing shall be
deducted from liabilities in determining the Leverage Ratio, DIVIDED BY (ii)
Tangible Net Worth.
"LIBOR" shall mean, for each Fixed Rate Term, the rate per annum (rounded
upward if necessary to the nearest whole 1/16 of 1%) and determined pursuant to
the following formula:
5
LIBOR = BASE LIBOR
-------------------------------
100% - LIBOR Reserve Percentage
As used herein, (i) "BASE LIBOR" shall mean the average of the rate per annum at
which U.S. dollar deposits are offered to Agent in the London interbank
eurocurrency market on the second Business Day prior to the commencement of a
Fixed Rate Term at or about 11:00 A.M. (London time), for delivery on the first
day of such Fixed Rate Term, for a term comparable to the number of days in such
Fixed Rate Term and in an amount approximately equal to the principal amount to
which such Fixed Rate Term shall apply, and (ii) "LIBOR RESERVE PERCENTAGE"
shall mean the reserve percentage prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for "Eurocurrency Liabilities" (as
defined in Regulation D of the Federal Reserve Board, as amended), adjusted by
Agent for expected changes in such reserve percentage during the applicable
Fixed Rate Term.
"LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance (intended as
security), preference, priority or other security agreement or preferential
arrangement (intended as security) of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing; PROVIDED,
HOWEVER, that none of the following shall be deemed a "Lien" for purposes of the
Loan Documents: (i) a right of set-off (other than a banker's lien or similar
Lien), provided that no consensual Lien has been granted as security therefor;
nor (ii) the interest of a consignor of inventory, under a consignment that is
not a security interest, in (A) the goods consigned or (B) the proceeds thereof,
PROVIDED that no consensual Lien has been granted in such goods or proceeds; nor
(iii) a financing statement filed pursuant to Section 2326 or 9114 of the
Uniform Commercial Code to reflect a consignment that is not a security
interest, PROVIDED that no consensual Lien has been granted in the consigned
goods or the proceeds thereof.
"LOAN AVAILABILITY" shall have the meaning set forth in Section 2.1(a).
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Letter of Credit
Documents and Subsidiary Guaranties and each other notice, document, contract or
instrument at any time delivered to Agent pursuant to this Agreement, any Note,
any Letter of Credit Document or any Subsidiary Guaranty.
"MAJORITY LENDERS" shall mean Lenders whose Proportionate Shares at any
time equal one hundred percent (100%) of the Total Commitments.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse
6
effect upon the financial condition, business or properties of Borrower and its
Subsidiaries, considered as a single enterprise. The phrase "has a Material
Adverse Effect", or "could have a Material Adverse Effect" or "will result in a
Material Adverse Effect" or words substantially similar thereto shall in all
cases be intended to mean "has resulted, or is reasonably likely to result, in a
Material Adverse Effect", and the phrase "has no (or does not have a) Material
Adverse Effect" or "will not result in a Material Adverse Effect" or words
substantially similar thereto shall in all cases be intended to mean "does not
or will not or is not reasonably likely to result in a Material Adverse Effect".
"MATURITY DATE" shall mean February 28, 2002.
"MAXIMUM PRINCIPAL AMOUNT" shall have the meaning set forth in Section
2.1(a).
"NET WORTH" shall mean total shareholders' equity.
"NOTES" shall mean the promissory notes executed by Borrower in favor of
the Lenders to evidence Advances under the Revolving Reducing Term Line of
Credit, substantially in the form of Exhibit A attached hereto.
"NOTICE OF AUTHORIZED REPRESENTATIVES" shall mean a notice delivered by
Borrower to Agent which designates by name each of Borrower's Authorized
Representatives and includes each of their respective specimen signatures, in
the form of Exhibit B attached hereto.
"NOTICE OF BORROWING" shall have the meaning set forth in Section 2.3.
"NOTICE OF CONVERSION OR CONTINUATION" shall have the meaning set forth in
Section 2.5(b).
"OBLIGATIONS" shall mean, from time to time, all indebtedness or other
obligations of Borrower owing to Agent, any Lender or any Person entitled to
indemnification pursuant to Section 9.3, or any of their respective successors,
transferees or assigns, of every type and description, whether or not evidenced
by any note, guaranty or other instrument, arising under or in connection with
this Agreement, any Letter of Credit Document or any other Loan Document,
whether or not for the payment of money, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired.
"PARTICIPANT" shall have the meaning set forth in Section 9.5(b).
"PERMITTED INVESTMENTS" shall mean:
(a) (i) Marketable direct obligations, maturing within one (1) year after
the date of acquisition thereof, issued or
7
unconditionally guarantied by the United States of America or any agency
thereof; (ii) provided in each case that such obligation, as of the date of
acquisition thereof, is rated "investment grade" by Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc. (or the equivalent thereof by
another nationally recognized rating agency): (A) marketable direct
obligations, maturing within one (1) year after the date of acquisition thereof,
issued or unconditionally guarantied by any State of the United States or any
political subdivision of such a State, or (B) commercial paper maturing within
one year after the date of acquisition thereof; (iii) provided in each case that
such obligation, as of the date of acquisition thereof, is an obligation of a
Lender, or of a commercial or investment bank whose unsecured long-term debt
obligations are rated at least A-1 by Standard & Poor's Corporation or A3 by
Xxxxx'x Investors Service, Inc. (or the equivalent thereof by another nationally
recognized rating agency): (A) certificates of deposit maturing no more than
one (1) year from the date of investment therein, (B) deposit accounts, (C)
banker's acceptances eligible for rediscount under the requirements of the Board
of Governors of the Federal Reserve System, and (D) Investments in repurchase
agreements involving securities or debt obligations of the types described in
this paragraph (a); (iv) Investments in money market programs having total
invested assets in excess of $1,000,000,000, PROVIDED that such Investment would
be classified on the balance sheet of Borrower as a current asset in accordance
with GAAP; and (v) Investments in money market preferred stocks or other
equivalent Dutch-auction preferred stock of any corporation with a credit
rating, at the time of acquisition thereof, of AA+ or aa1 or better by Standard
& Poor's Corporation or Xxxxx'x Investors Service, Inc. (or the equivalent
thereof by another nationally recognized rating agency);
(b) other Investments that, at the time of acquisition thereof, are
permitted by Borrower's investment policy, as amended from time to time,
PROVIDED that such investment policy (and any such amendment thereto) has been
approved by Majority Lenders (such approval not to be unreasonably withheld):
(c) Investments in any fund that invests solely in Investments of the type
permitted under the foregoing paragraphs (a) and (b) of this definition;
(d) Investments of Persons who become Subsidiaries in a transaction not
prohibited by Section 6.2 which exist at the time such transaction is
consummated (or are made pursuant to binding commitments which exist at such
time) and which Investments (or commitments) were not made or entered into in
anticipation of such transaction;
(e) Subject to the restrictions of Section 6.6, Investments in Borrower by
any Subsidiary;
(f) (i) travel advances, employee relocation loans and other employee
loans and advances in the ordinary course of
8
business, provided that the aggregate principal amount of all such loans
outstanding at any time shall not exceed $1,000,000, (ii) loans to employees,
officers or directors to finance the purchase of equity securities from Borrower
under either (A) a plan approved by the board of directors of Borrower or (B)
another arrangement approved by the board of directors of Borrower, or (iii)
other loans to officers and employees, in each case, specifically approved by
the board of directors of Borrower.
(g) (i) Investments received in connection with the bankruptcy or
reorganization of customers or suppliers, and (ii) Investments consisting of
debt obligations received in settlement of delinquent obligations of, or other
disputes with, customers or suppliers arising in the ordinary course of
business;
(h) deposit accounts (other than deposit accounts described in paragraph
(a) of this definition) maintained in the ordinary course of business in amounts
reasonably necessary for Borrower's or any Subsidiary's operating purposes; and
(i) Investments not otherwise permitted by Section 6.5, in an aggregate
outstanding amount not in excess of $10,000,000 at any time.
"PERMITTED LIENS" shall mean: (i) Liens (other than any Lien imposed under
ERISA or under any Governmental Rule relating to protection of the environment)
for taxes, assessments or charges of any Governmental Authority that are either
(A) not more than thirty (30) days delinquent, unless they are being contested
in good faith by appropriate proceedings and for which appropriate reserves have
been established, to the extent required by GAAP or (B) in respect of amounts
not in excess of $100,000 in any single instance; (ii) Liens (other than any
Lien imposed under ERISA) incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness) or statutory
obligations, and excluding in any event consensual Liens securing either (A) any
right of set-off (except as permitted under clause (v) below), or (B) any right
to payment under a consignment of goods; (iii) Liens imposed by law, such as
mechanics' liens and other similar liens arising in the ordinary course of
business, which secure payment of obligations not more than thirty (30) days
past due, unless such obligations are being contested in good faith by
appropriate proceedings and appropriate reserves have been established, to the
extent required by GAAP; (iv) Liens arising from judgments, decrees, attachments
or levies not constituting an Event of Default under Section 7.1(f); (v)
bankers' liens or other Liens that constitute rights of set-off of a customary
nature with respect to amounts on deposit with Financial Institutions, whether
arising by operation of law or by contract, in connection with non-lending
arrangements entered into with
9
such institutions in the ordinary course of business; and (vi) other Liens
permitted under Section 6.7.
"PERSON" shall mean any natural person, employee, corporation, limited
partnership, general partnership, joint stock company, limited liability
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, or
any other non-governmental entity, or any Governmental Authority.
"PLAN" shall mean any defined employee pension benefit plan as defined in
ERISA.
"PRIME RATE" shall mean at any time the rate of interest most recently
announced within Agent at its principal office in San Francisco as its Prime
Rate, with the understanding that the Prime Rate is one of Agent's base rates
and serves as the basis upon which effective rates of interest are calculated
for those loans making reference thereto (and not necessarily the rate of
interest Agent charges to any borrower or class of borrowers), and is evidenced
by the recording thereof in such internal publication or publications as Agent
may designate.
"PROPORTIONATE SHARE" shall mean, for each Lender, the dollar amount
determined at any time by multiplying the percentage set forth opposite such
Lender's name in Schedule I hereto by the amount of the Total Commitments at
such time, and shall include, where the context so requires, the amount of all
outstanding credit from such Lender to Borrower pursuant to this Agreement and
the obligation of such Lender to make Advances or otherwise extend credit up to
such amount on the terms and conditions set forth herein.
"REGISTER" shall have the meaning set forth in Section 9.5(d).
"RESPONSIBLE OFFICERS" shall mean each of the Chief Executive Officer, the
Chief Financial Officer and the President of Borrower.
"REVOLVING REDUCING TERM LINE OF CREDIT" shall mean a credit facility
available to Borrower in the initial maximum principal amount of $50,000,000, as
defined more fully in Section 2.1.
"SEC DOCUMENTS" shall mean the Annual Report of Borrower on Form 10-K for
the fiscal year ended July 31, 1996, the Quarterly Reports of Borrower on Form
10-Q for the quarters ended October 31, 1996, the Proxy Statement of Borrower
dated November 8, 1996, in connection with the Annual Meeting of Shareholders
held on December 5, 1996, and all other reports and documents filed with the
Securities and Exchange Commission and deemed incorporated by reference therein.
"SIGNIFICANT GUARANTOR" shall mean any Subsidiary that would
10
be a "significant subsidiary" under either clause (2) or clause (3) of the
definition of "significant subsidiary" in Rule 1-02 of Regulation S-X under the
Securities Act of 1933 (as amended) and the Securities Exchange Act of 1934 (as
amended), as such Regulation is in effect on the date hereof, assuming that
Borrower is the "registrant" referred to in such definition; PROVIDED that such
definition shall be applied for purposes hereof as if all references therein to
"10 percent" were references to "5 percent".
"SUBORDINATED DEBT" shall mean Indebtedness of Borrower or any Subsidiary
that has been subordinated to the Obligations, in writing, on terms and
conditions reasonably satisfactory to the Majority Lenders.
"SUBSIDIARY" shall mean any corporation, association, limited liability
company or other business entity of which Borrower owns directly or indirectly
more than fifty percent (50%) of the voting securities thereof or in which
Borrower otherwise owns a controlling interest.
"SUBSIDIARY GUARANTY" shall mean each of the guaranties, in substantially
the form of Exhibit F attached hereto, required to be entered into by each
Guarantor in accordance with this Agreement.
"TANGIBLE NET WORTH" shall mean the aggregate of Net Worth plus
Subordinated Debt less any intangible assets.
"TAXES" shall have the meaning set forth in Section 2.13(a).
"TOTAL COMMITMENTS" shall mean, at any time, the then aggregate amount of
the Proportionate Shares of the Lenders under this Agreement.
SECTION 1.2. ACCOUNTING TERMS. Any accounting terms used in this
Agreement which are not specifically defined shall have the meanings customarily
given them in accordance with GAAP. Unless otherwise expressly provided, all
calculations of financial ratios or other amounts with respect to Borrower shall
be determined on a consolidated basis in accordance with GAAP. Unless otherwise
expressly provided, all references to the "principal amount" or the "amount" of
any Indebtedness (expressly or by implication) shall mean the principal amount
of such Indebtedness, determined in accordance with GAAP.
SECTION 1.3. LENDER DISCRETION. In each case where the consent or
approval of Agent, all Lenders and/or Majority Lenders is required, or their
non-obligatory action is requested by Borrower, then, unless otherwise
specifically indicated, such consent, approval or action shall be in the sole
and absolute discretion of Agent and, as applicable, each Lender, exercised in
good faith.
SECTION 1.4. CERTAIN INTERPRETATIONS. Unless the context
11
otherwise clearly requires: any time the word "or" is used herein, it has the
inclusive meaning represented by the phrase "and/or"; "includes" and "including"
shall not be limiting; and "all" shall include "any" and "any" shall include
"all." The words "hereof", "herein", "hereby", "hereunder", and similar terms
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Article, section, subsection, paragraph, subparagraph, clause,
exhibit and schedule references are to this Agreement unless otherwise
specified. Any reference in this Agreement to this Agreement or to any other
Loan Document includes any and all amendments, modifications, supplements,
renewals or restatements thereto or thereof, as applicable.
SECTION 1.5. HEADINGS. Headings in this Agreement and each of the other
Loan Documents are for convenience of reference only and are not part of the
substance hereof or thereof.
ARTICLE II
THE CREDITS
SECTION 2.1. REVOLVING REDUCING TERM LINE OF CREDIT.
(a) REVOLVING REDUCING TERM LINE OF CREDIT. Subject to the terms and
conditions of this Agreement, each Lender hereby severally agrees, on a pro rata
basis, to make Advances to Borrower under the Revolving Reducing Term Line of
Credit from time to time up to and including the Maturity Date, not to exceed at
any time (x) during any period set forth below the applicable maximum amount
("MAXIMUM PRINCIPAL AMOUNT") set forth for such period (all dates inclusive),
LESS (y) the Letter of Credit Exposure at such time (such difference at any
time, the "LOAN AVAILABILITY"):
Through February 29, 2000: $50,000,000
March 1, 2000 through February 28, 2001: $40,000,000
March 1, 2001 through February 27, 2002: $30,000,000
February 28, 2002: $0
The proceeds of Advances under the Revolving Reducing Term Line of Credit shall
be used (i) to finance all or a portion of the costs of Borrower's acquisition,
either directly or through one or more Subsidiaries, of (A) another Person or
Persons engaged in businesses that, in the reasonable business judgment of the
Borrower's Board of Directors, lead to efficiencies or synergies with the
business of Borrower or any of its Subsidiaries, (B) all or substantially all of
the assets of any such Person, or (C) fixed assets; or (ii) for the working
capital and other general corporate purposes of Borrower and the Subsidiaries.
Borrower's obligation to repay Advances under the Revolving Reducing Term Line
of Credit shall be evidenced by the Notes, all terms of which are incorporated
herein by this reference.
12
(b) BORROWING AND REPAYMENT. Borrower may from time to time during the
term of the Revolving Reducing Term Line of Credit borrow, partially or wholly
repay its outstanding borrowings, and reborrow, subject to all the limitations,
terms and conditions contained herein; PROVIDED, HOWEVER, that the sum of the
total outstanding borrowings under the Revolving Reducing Term Line of Credit
plus the Letter of Credit Exposure shall not at any time exceed the applicable
Maximum Principal Amount. If at any time the principal amount of such total
outstanding borrowings, for any reason whatsoever, shall exceed the difference
between the applicable Maximum Principal Amount and the Letter of Credit
Exposure, the amount of such excess shall be immediately due and payable.
SECTION 2.2. LETTERS OF CREDIT.
(a) LETTERS OF CREDIT.
(i) Subject to the terms and conditions set forth in this Agreement,
at any time and from time to time prior to the Maturity Date,
Agent shall issue such Letters of Credit for the account of
Borrower as Borrower may request, PROVIDED THAT (A) upon issuance
of any such Letter of Credit: (1) the sum of the aggregate
outstanding principal amount of all Advances plus the Letter of
Credit Exposure shall not exceed the applicable Maximum Principal
Amount; (2) the Letter of Credit Exposure shall not exceed
$2,500,000; and (3) unless the Lenders otherwise unanimously
consent in writing and subject to paragraph (v) of this Section
2.2(a), the term of any Letter of Credit shall not extend beyond
the earlier of (q) the first anniversary of the issuance thereof
and (r) the Maturity Date. Unless the context otherwise
requires: (x) all references herein to "the outstanding
principal balance of the Advances" or similar references shall be
deemed to include, for all purposes, the Letter of Credit
Exposure; and (y) each reference herein to an "Advance" or a
"borrowing" shall include both the issuance of a Letter of Credit
and (except with respect to conditions precedent to the making of
Advances) the payment of any draw thereunder by Agent, as
appropriate.
(ii) Borrower, through one of its Authorized Representatives, shall
deliver to Agent a duly executed request for Letter of Credit not
later than 9:00 A.M. (San Francisco time), at least one (1)
Business Day prior to the date upon which the requested Letter of
Credit is to be issued. Borrower shall further execute and
deliver to Agent such additional instruments and documents as
Agent may reasonably require, in conformity with
13
the then standard practices of Agent's letter of credit
department relating to letters of credit comparable to the
requested Letter of Credit, in connection with the issuance of
such Letter of Credit (collectively, the "LETTER OF CREDIT
DOCUMENTS"); provided that if any of the terms of the Letter of
Credit Documents are inconsistent with the terms of this
Agreement then the terms of this Agreement shall control unless
Borrower and the Lenders expressly agree otherwise.
(iii) Agent shall, if the requested form of such Letter of Credit and
the identity and location of the proposed beneficiary thereof are
acceptable to Agent consistent with Agent's established policies
generally applicable to the issuance of letters of credit and
applicable law, and subject to the conditions set forth in
SECTION 4.2 (and, if applicable, SECTION 4.1), issue the Letter
of Credit on or before 2:00 P.M. (San Francisco time), on or
before the day one (1) Business Day following receipt of the
documents last due pursuant to SUBSECTION (ii) above.
(iv) If and to the extent that any amounts are drawn under any Letter
of Credit, then, unless prior to the date such draw is to be
funded (A) Borrower notifies Agent that Borrower intends to
reimburse Agent for such draw and on or before the date such draw
is to be funded AND, on or before the date such draw is funded,
Borrower does reimburse Agent in full therefor, in immediately
available funds; or (B) Borrower authorizes Agent to reimburse
itself on the date of such draw by debiting one or more accounts
of Borrower maintained with Agent AND, on the date of such draw,
sufficient funds are available in such designated account(s) to
reimburse Agent in full the amount so drawn: the amounts so
drawn under such Letter of Credit shall be considered an Advance
for all purposes hereunder as of the date of such draw, accruing
interest, initially, at a rate determined in accordance with
Section 2.4(a)(i), the proceeds of which were applied to
reimburse Agent for the payment made by it under the Letter of
Credit.
(v) (A) Upon the occurrence of the Maturity Date (or earlier
acceleration of the Advances or termination of the Lenders'
commitments hereunder) prior to the expiration of all Letters of
Credit, Borrower shall promptly provide to Agent a standby letter
of credit in favor of Agent, issued by a bank reasonably
satisfactory to Majority Lenders and in form and substance
reasonably satisfactory to Agent, in a face amount equal to the
Letter of
14
Credit Exposure on that date, or shall immediately make other
provisions satisfactory to Majority Lenders for the full
collateralization, by cash or cash equivalent, of all such
outstanding Letters of Credit.
(B) If, as of the date of any reduction in the Revolving
Reducing Term Line of Credit, the Letter of Credit Exposure
exceeds the difference between the Maximum Principal Amount and
the aggregate outstanding principal balance of the Advances as of
such date, Borrower shall promptly provide to Agent a standby
letter of credit in favor of Agent, issued by a bank reasonably
satisfactory to Majority Lenders and in form and substance
reasonably satisfactory to Majority Lenders, in a face amount
equal to the amount of such excess, or shall immediately make
other provisions reasonably satisfactory to Majority Lenders for
the full collateralization, by cash or cash equivalent, of the
amount of such excess.
(C) Upon the failure of Borrower to comply with the requirements
of either of the foregoing paragraphs, such portion of the Letter
of Credit Exposure as to which Borrower has failed to comply
shall be deemed to be immediately due and payable.
(vi) The issuance of any supplement, modification, amendment, renewal
or extension to or of any Letter of Credit shall be treated in
all respects the same as the issuance of a new Letter of Credit,
provided that the fees provided for in the first sentence of
Section 2.4(d) shall not be affected by any amendment that does
not change the amount available to be drawn under, or the
expiration date of, the affected Letter of Credit.
(vii) Borrower assumes all risks as to the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to
its use of such Letter of Credit. Neither Agent nor any Lender,
nor any of its or their respective officers or directors, shall
be liable or responsible for, nor shall Borrower's obligations
hereunder in respect of any Letter of Credit be impaired as a
result of:
(A) any lack of validity or enforceability of any Letter of
Credit or any Letter of Credit Document;
(B) the use that may be made of any Letter of Credit or any acts
or omissions of any
beneficiary or transferee in connection therewith;
(C) any statement or any other document presented
15
under a Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(D) the existence of any claim, set-off, defense or other right
that Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), any Lender or
any other Person, whether in connection with the transactions
contemplated by the Letter of Credit Documents or any unrelated
transaction;
(E) payment by Agent against presentation of documents that do
not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or
(F) any other circumstance whatsoever in making or failing to
make payment under any Letter of Credit.
In furtherance and not in limitation of the foregoing, Agent may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
Notwithstanding the foregoing, Borrower may have a claim against Agent, and
Agent may be liable to Borrower, to the extent of any direct (as opposed to
consequential or exemplary) damages suffered by Borrower caused by Agent's
wilful misconduct or gross negligence.
SECTION 2.3. NOTICE OF BORROWING. Borrower, through one of its
Authorized Representatives, shall request each Advance under the Revolving
Reducing Term Line of Credit by giving Agent irrevocable written notice or
telephonic notice (confirmed promptly in writing), in the form of Exhibit C
attached hereto (each, a "Notice of Borrowing"), which specifies, among other
things:
(i) the principal amount of the requested Advance, and a short
description of the proposed use of the proceeds thereof, and, if
the proceeds of such Advance are to be used to finance all or any
part of an acquisition: (A) a description of the acquisition to
be financed with the proceeds thereof, (B) copies of the related
documentation (to the extent available, but including at least
the relevant purchase or acquisition agreement), and (C) if the
aggregate Advances being used to finance all or any portion of
such acquisition exceed (i) $20,000,000, if such acquisition
involves a business substantially similar to Borrower's business
as of the date of this Agreement, or (ii) $10,000,000, if such
acquisition does not involve a business substantially similar to
16
Borrower's business as of the date of this Agreement (unless
Majority Lenders have waived delivery thereof, based on such
other information as may have been provided to the Lenders with
respect to such acquisition): calculations, based on pro forma
financial statements of Borrower as of the end of the most
recently completed fiscal quarter of Borrower giving pro forma
effect to such acquisition as of such date confirming on a pro
forma basis Borrower's compliance with the financial covenants of
Section 5.6 as of the end of such most recently completed fiscal
quarter notwithstanding such acquisition (provided that the
financial covenants otherwise required to be tested as of the end
of each fiscal year shall be calculated on the basis of the
twelve-month period ended as of the last day of such most
recently completed fiscal quarter);
(ii) the proposed date of borrowing, which shall be a Business Day;
and
(iii) the interest rate option applicable to such borrowing (which, for
a LIBOR interest selection, shall be subject to the minimum
dollar requirements set forth in Section 2.4(a)); and
(iv) if the amounts disbursed or advanced will bear interest
determined in relation to LIBOR, the Fixed Rate Term applicable
thereto.
Each such Notice of Borrowing must be received by Agent not later than 10:00
a.m. (San Francisco time) on the date of borrowing if interest will be
determined in relation to the Prime Rate, and (ii) at least three (3) Business
Days prior to the date of borrowing if interest will be determined in relation
to LIBOR. Agent shall promptly notify each Lender of the contents of each
Notice of Borrowing and of the amount of the Advance to be made by such Lender.
Each Advance (other than an Advance made in respect of a draw under a Letter of
Credit) shall be in the minimum amount of $500,000 and in an integral multiple
of $10,000.
17
SECTION 2.4. INTEREST/FEES
(a) INTEREST. Each LIBOR interest selection must be for a minimum amount
of $500,000 and in an integral multiple of $10,000. The outstanding principal
balances of the Revolving Reducing Term Line of Credit shall bear interest in
accordance with the following interest rate options, as designated by Borrower:
(i) at a fluctuating rate per annum equal to the Prime Rate in effect
from time to time; or
(ii) at a fixed rate per annum determined by Agent to be that number
of basis points above LIBOR in effect on the first day of a Fixed
Rate Term applicable in accordance with the following:
(A) If, as of the last day of Borrower's most recent fiscal
quarter, Borrower's ratio of Funded Debt to EBITDA for the period
of four fiscal quarters ending thereon was less than 0.75 to
1.00: 50 basis points.
(B) If, as of the last day of Borrower's most recent fiscal
quarter, Borrower's ratio of Funded Debt to EBITDA for the period
of four fiscal quarters ending thereon was less than or equal to
1.50 to 1.00 but not less than .75 to 1.00: 75 basis points.
(C) If, as of the last day of Borrower's most recent fiscal
quarter, Borrower's ratio of Funded Debt to EBITDA for the period
of four fiscal quarters ending thereon was less than or equal to
2.00 to 1.00 but not less than 1.51 to 1.00: 100 basis points.
(D) If, as of the last day Borrower's most recent fiscal
quarter, Borrower's ratio of Funded Debt to EBITDA for the period
of four fiscal quarters ending thereon was greater than 2.00 to
1.00: 125 basis points.
When interest is determined in relation to the Prime Rate, each change in the
rate of interest shall become effective on the date each Prime Rate change is
announced within Agent. Each change in the applicable spread over LIBOR shall
take effect as of the date on which Borrower delivers to Agent pursuant to
Section 5.3(c) its calculations evidencing satisfaction, as of the last day of
the immediately preceding fiscal quarter, of the ratios required to be met in
order for such spread to apply. If Borrower fails to deliver such calculations
within ten (10) days after the date that they are required to be delivered under
Section 5.3(c),
18
then, commencing on the day after such ten-day period and continuing until
Borrower has delivered to Agent such calculations evidencing that a different
spread should apply (but without prejudice to any other rights or remedies of
Agent or the Lenders in respect of Borrower's failure to deliver such
calculations when due under Section 5.3(c)), interest shall accrue on that
portion of the outstanding principal balance of the Revolving Reducing Term Line
of Credit subject to Fixed Rate Terms at a per annum rate equal to 125 basis
points over the LIBOR applicable to each Fixed Rate Term.
(b) COMMITMENT FEE. On the Closing Date, Borrower shall pay to Agent, for
the ratable benefit of the Lenders, a non-refundable commitment fee for the
Revolving Reducing Term Line of Credit of $25,000.
(c) UNUSED REVOLVING LOAN COMMITMENT FEE. From and after the first
anniversary of the date of this Agreement and until the Maturity Date (or
earlier acceleration of the Loans or termination of the Lenders' commitments
hereunder), Borrower shall pay to Agent, for the ratable benefit of the Lenders,
a fee accruing at the rate of 0.125% per year upon an amount equal to (i) the
average daily amount of the Maximum Principal Amount MINUS (ii) the average
daily principal balance of all Advances, including the Letter of Credit Exposure
(said difference being the "UNUSED AMOUNT"), as determined for each Fiscal
Quarter (the aforesaid fee, the "UNUSED REVOLVING LOAN COMMITMENT FEE"). The
Unused Revolving Loan Commitment Fee shall be payable, in the manner provided in
Section 2.6, in arrears on the first Business Day in each Fiscal Quarter,
beginning with the first such date to occur after the first anniversary of the
date hereof, and on the Maturity Date (or earlier acceleration of the Loans or
termination of the Lenders' commitments hereunder), with the Unused Revolving
Loan Commitment Fee to be prorated to the date of such payment in each case.
(d) LETTER OF CREDIT FEES. As additional consideration for the issuance,
extension or renewal of Letters of Credit pursuant to SECTION 2.2, Borrower
agrees to pay to Agent, for the ratable benefit of the Lenders, a fee,
calculated at the rate of one and one-quarter percent (1.25%) per annum for the
term thereof, on the face amount of each standby Letter of Credit and one-eighth
percent (.125%) on the face amount of each Commercial Letter of Credit (but in
no event less than $500 in respect of a standby Letter of Credit and $200 in
respect of a commercial Letter of Credit), payable upon issuance (and, in the
event of any extension or renewal of a Letter of Credit, upon such extension or
renewal, for the term thereof). In addition, Borrower shall pay Agent all
transfer, amendment and similar fees normally charged by Agent in connection
with standby or commercial letters of credit, as applicable.
(e) COMPUTATION AND PAYMENT. All interest and fees shall be computed on
the basis of a 360-day year, actual days elapsed, with the exception of Prime
Rate interest calculations which
19
shall be computed on the basis of a 365/366-day year, actual days elapsed.
Interest shall be payable on the last day of each month.
SECTION 2.5. CONVERSION OF INTEREST OPTIONS.
(a) ELECTION. Subject to (i) the minimum dollar requirements set forth in
Section 2.4(a), and (ii) the requirements that (A) as of the first day of any
Fixed Rate Term requested by Borrower, there shall not have occurred and be
continuing any Event of Default, and (B) as of the first day of any Fixed Rate
Term in excess of one (1) month, there shall not have occurred and be continuing
any Default: (1) at any time any portion of the Revolving Reducing Term Line of
Credit bears interest determined in relation to the Prime Rate, Borrower may
convert all or any portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower, and (2) at any
time any portion of the Revolving Reducing Term Line of Credit bears interest
determined in relation to LIBOR, Borrower may convert all or a portion thereof
at the end of the Fixed Rate Term applicable thereto so that it bears interest
determined in relation to the Prime Rate or in relation to LIBOR for a new Fixed
Rate Term designated by Borrower. If Borrower has not delivered the required
interest rate conversion or continuation election at least three (3) Business
Days prior to the last day of any Fixed Rate Term AND, as of the last day of
such Fixed Rate Term, no Event of Default has occurred and is continuing,
Borrower shall be deemed to have made an election to have the amounts subject
thereto earn interest at a rate determined in relation to LIBOR for a new Fixed
Rate Term (x) of one (1) month if, as of the last day of such Fixed Rate Term,
there shall have occurred and be continuing a Default, or (y) in any other case,
of the same duration as such expiring Fixed Rate Term. As of the last day of
any Fixed Rate Term with respect to which Borrower has not delivered a notice
making a Prime Rate selection for the amounts subject thereto, Borrower shall be
deemed to have represented and warranted to Agent and the Lenders that no Event
of Default has occurred and is continuing. As of the last day of any Fixed Rate
Term of more than one (1) month with respect to which Borrower has not delivered
a notice either making a Prime Rate selection for the amounts subject thereto or
selecting a new Fixed Rate Term of one (1) month therefor, Borrower shall be
deemed to have represented and warranted to Agent and the Lenders that no
Default has occurred and is continuing.
(b) NOTICE TO AGENT. Borrower, through one of its Authorized
Representatives, shall request each interest rate conversion or continuation by
giving Agent irrevocable written notice or telephonic notice (confirmed promptly
in writing), in the form of Exhibit D attached hereto (a "Notice of Conversion
or Continuation"), which specifies, among other things:
(i) the principal amount which is the subject of such conversion or
continuation;
20
(ii) the proposed date of such conversion or continuation, which shall
be a Business Day; and
(iii) if such Notice pertains to a LIBOR interest selection, the length
of the applicable Fixed Rate Term.
Any such Notice of Conversion or Continuation must be received by Agent not
later than 10:00 a.m. (San Francisco time), at least three (3) Business Days
prior to (x) the last day of any then-existing Fixed Rate Term to be affected
thereby, or (y) the effective date of any LIBOR interest selection made therein,
as applicable. Agent shall promptly notify each Lender of the contents of each
such Notice of Conversion or Continuation, or if timely notice is not received
from Borrower prior to the last day of any Fixed Rate Term of the automatic
conversion of the amounts subject thereto to the Prime Rate interest option.
SECTION 2.6. OTHER PAYMENT TERMS.
(a) AUTOMATIC DEBIT. Agent shall, and Borrower hereby authorizes Agent
to, debit a deposit account of Borrower with Agent, specifically identified by
Borrower to Agent for such purposes (but subject to change by mutual agreement
of Borrower and Agent, PROVIDED that at all times there shall be at least one
such deposit account so identified), for all payments of interest and fees as
they become due on any of the Credits. Should, for any reason whatsoever, the
funds in any such deposit account be insufficient to pay all interest and/or
fees when due, Borrower shall, immediately upon demand, remit to Agent the full
amount of any such deficiency.
(b) PLACE AND MANNER. Borrower shall make all payments due to each Lender
under the Loan Documents by payment to Agent at Agent's Office, for the account
of such Lender, in lawful money of the United States and in same day or
immediately available funds not later than 12:00 noon (San Francisco time) on
the date due. Agent shall promptly disburse to each Lender at such Lender's
Applicable Lending Office each such payment received by Agent for such Lender.
(c) DATE. Whenever any payment due hereunder shall fall due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be.
(d) DEFAULT INTEREST. From and after the Maturity Date, or such earlier
date as all principal owing under the Revolving Reducing Term Line of Credit
becomes due and payable, by acceleration or otherwise, the outstanding principal
balance thereof shall bear interest until paid in full at an increased rate per
annum (computed in accordance with Section 2.4(e)) equal to two percent (2%)
above the rate of interest from time to time
21
applicable thereto.
(e) APPLICATION OF PAYMENTS. All payments under the Loan Documents
(including prepayments) shall be applied first to unpaid fees, costs and
expenses then due and payable under this Agreement and the other Loan Documents,
second to accrued interest then due and payable under the Loan Documents, and
finally to reduce the principal amount of outstanding Advances. If no Event of
Default has occurred and is continuing, Agent shall, subject to the preceding
sentence, apply all payments to be applied to Borrower's obligations as directed
by Borrower. If an Event of Default has occurred and is continuing or if
Borrower fails to direct application, Agent shall apply such payments as
determined by it in its discretion.
(f) FAILURE TO PAY AGENT. Unless Agent shall have received notice from
Borrower at least one (1) Business Day prior to the date on which any payment is
due to the Lenders hereunder that Borrower will not make such payment in full,
Agent may assume that Borrower has made such payment in full to Agent on such
date and Agent may, in reliance upon such assumption, cause to be distributed to
each Lender on such due date an amount equal to the amount then due such Lender.
If and to the extent Borrower shall not have made such payment in full to Agent,
such Lender shall repay to Agent forthwith on demand such amount distributed to
such Lender, together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to Agent, at the Federal Funds Rate. A notice of Agent submitted to any
Lender with respect to any amounts owing by such Lender under this
Section 2.6(f) shall be presumptive evidence of such amounts.
SECTION 2.7. PREPAYMENT. Borrower may, through one of its Authorized
Representatives and upon (a) delivery of written notice to Agent received no
later than 10:00 a.m. on any Business Day, if interest is determined in relation
to the Prime Rate, and (b) at least three (3) Business Days' prior written
notice to Agent if interest is determined in relation to LIBOR, prepay the
outstanding amount of the Advances in whole or in part, without premium or
penalty, except as required by Section 2.14. Partial prepayments of any portion
of the Revolving Reducing Term Line of Credit which bears interest determined in
relation to the Prime Rate shall be in the minimum amount of $100,000 and in
integral multiples of $10,000, and partial prepayments of any portion of the
Reducing Term Line of Credit which bears interest determined in relation to
LIBOR shall be in the minimum amount of $500,000 and in integral multiples of
$10,000.
SECTION 2.8. FUNDING.
(a) LENDER FUNDING AND DISBURSEMENT. Each Lender shall, before 11:00 a.m.
(San Francisco time) on the date of each borrowing (including the date of any
draw under a Letter of Credit) make available to Agent at Agent's Office, in
same day or immediately available funds, such Lender's Proportionate Share
22
thereof. After Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article IV, Agent will promptly disburse such
funds in same day or immediately available funds to Borrower. Unless otherwise
directed by Borrower in writing, Agent shall disburse the proceeds of each
borrowing to Borrower by deposit to any demand deposit account maintained by
Borrower with Agent.
(b) LENDER FAILURE TO FUND. Unless Agent shall have received notice from
a Lender on or prior to the date of any borrowing (including any draw under a
Letter of Credit) that such Lender will not make available to Agent such
Lender's Proportionate Share thereof, Agent may assume that such Lender has made
such portion available to Agent on the date of such borrowing in accordance with
Section 2.8(a), and Agent may, in reliance upon such assumption, make available
to Borrower (or otherwise disburse) on such date a corresponding amount. If any
Lender does not make the amount of its Proportionate Share of any borrowing
available to Agent on the date of such borrowing, such Lender shall pay to
Agent, on demand, interest which shall accrue on such amount until made
available to Agent at rates equal to (i) the daily Federal Funds Rate during the
period from the date of such borrowing through the third Business Day
thereafter, and (ii) thereafter, the Prime Rate in effect from time to time. A
notice of Agent submitted to any Lender with respect to any amounts owing under
this Section 2.8(b) shall be presumptive evidence of such amounts. If any
Lender's Proportionate Share of any borrowing is not in fact made available to
Agent by such Lender within three (3) Business Days after the date of such
borrowing, Borrower shall pay to Agent, on demand, an amount equal to such
Proportionate Share together with interest thereon, for each day from the date
such amount was made available to Borrower until the date such amount is repaid
to Agent, at the rate of interest then applicable thereto.
(c) LENDERS' OBLIGATIONS SEVERAL. The obligation of each Lender hereunder
is several. The failure of any Lender to make available its Proportionate Share
of any borrowing shall not relieve any other Lender of its obligation hereunder
to do so on the date requested, but no Lender shall be responsible for the
failure of any other Lender to make available the Proportionate Share to be
funded by such other Lender.
SECTION 2.9. PRO RATA TREATMENT.
(a) BORROWINGS. Except as otherwise provided herein, (i) each extension
of credit under the Revolving Reducing Term Line of Credit, including in respect
of any draw under a Letter of Credit, shall be made or shared among the Lenders
pro rata according to their respective Proportionate Shares, and (ii) each
payment of principal of and interest or fees on a Credit (other than
administrative fees in respect of Letters of Credit) shall be made or shared
among the Lenders pro rata according to the respective unpaid principal amounts
of the Advances held by such Lenders.
23
(b) SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of setoff or
otherwise) on account of a Credit in excess of its ratable share of payments on
account of such Credit obtained by all Lenders entitled to such payments, such
Lender shall forthwith purchase from the other Lenders sufficient participations
in such Credit as shall be necessary to increase the purchasing Lender's
interest in the Credit to such amount as may be necessary to render the excess
payment received an amount equal to such Lender's ratable share of payments, as
so increased; PROVIDED, HOWEVER, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase shall
be rescinded and each other Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such other Lender's ratable share (according to the proportion of (i) the amount
of such other Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.9(b) may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of setoff) with respect
to such participation as fully as if such Lender were the direct creditor of
Borrower in the amount of such participation.
SECTION 2.10. GUARANTIES.
(a) GUARANTIES. The Obligations shall be jointly and severally guaranteed
by Guarantors, as evidenced by and subject to the terms of the Subsidiary
Guaranties.
(b) CERTAIN ACKNOWLEDGMENTS BY BORROWER. Borrower recognizes and
acknowledges the Credits made available hereunder are being established and will
be maintained in the manner provided herein and in the other Loan Documents at
the express request of, and to accommodate the administrative and operational
requirements of, Borrower and Guarantors. Specifically, the Credits might have
been established to provide for direct borrowings by Borrower and by each
Guarantor, subject to individual borrowing limits consistent with the Lenders'
prudent lending practices, based on each such Person's borrowing capacity, with
additional credit needs of such Person in excess of such borrowing limit being
accommodated by loans made to such Person by Borrower or other Guarantors having
excess borrowing capacity. For administrative and operational reasons imposed
by Borrower as aforesaid, however, the Credits are being established and will be
maintained as described above, but with the intention, as confirmed in Section
5.8 (but without limiting in any manner the obligations of Borrower to repay any
and all Advances in accordance with the terms hereof and of the Notes), that
Borrower and Guarantors ultimately share, among themselves, repayment
obligations under the Credits to the same extent as if
24
such borrowings had been made under the alternative, individualized arrangement
described above. In addition, it is further recognized and acknowledged that
Borrower, and each Guarantor, will directly and indirectly benefit from the
expansion of Borrower's and Guarantors' collective business activities, as
facilitated by the Credits.
SECTION 2.11. CHANGE OF CIRCUMSTANCES.
(a) INABILITY TO DETERMINE RATE. If Agent at any time shall reasonably
determine that adequate and reasonable means do not exist for ascertaining
LIBOR, or the Majority Lenders shall reasonably determine at any time that LIBOR
does not accurately reflect the cost to the Lenders of making or maintaining
LIBOR interest rates hereunder, then Agent shall give telephonic notice
(promptly confirmed in writing) to Borrower and each Lender of such
determination. If such notice is given and until such notice has been withdrawn
in writing by Agent, then no LIBOR interest option may be selected by Borrower
and any portion of any Credit which bears interest determined in relation to
LIBOR, subsequent to the end of the Fixed Rate Term applicable thereto, shall
bear interest determined in relation to the Prime Rate pursuant to the terms and
conditions of this Agreement. Agent shall review the circumstances affecting
the London interbank market from time to time and withdraw such notice at such
time as it shall reasonably determine that the circumstances giving rise to said
notice no longer exist.
(b) ILLEGALITY: TERMINATION OF COMMITMENT. Notwithstanding any other
provisions herein, if any Change of Law shall make it unlawful for any Lender
(i) to make a LIBOR interest rate available, or (ii) to maintain LIBOR interest
rates hereunder, then, in the former event, any obligation of the Lenders
hereunder to make available such unlawful LIBOR interest rate shall forthwith be
canceled, and in the latter event, any such unlawful LIBOR interest rate then
outstanding shall at the option of Agent be converted so that interest is
determined in relation to the Prime Rate pursuant to the terms of this
Agreement; PROVIDED, HOWEVER, if any such Change in Law shall permit a LIBOR
interest rate until the expiration of the Fixed Rate Term relating thereto, then
such permitted LIBOR interest rate shall continue as such until the end of such
Fixed Rate Term. In the event any outstanding principal amount to which such
LIBOR interest rate is converted to a lower rate in accordance with the
foregoing terms and provisions, Borrower shall pay to each Lender, within thirty
(30) days following demand accompanied by a certificate of such Lender
describing the basis therefor and the calculation thereof, such amount or
amounts as may be necessary to compensate such Lender for any loss in connection
therewith.
25
(c) CHARGES: ILLEGALITY. Upon the occurrence of any event described in
Section 2.11(b), Borrower shall pay to each Lender, within thirty (30) days
following demand accompanied by a certificate of such Lender describing the
basis therefor and the calculation thereof, such amount or amounts as may be
necessary to compensate such Lender for any fines, fees, charges, penalties or
other amounts payable by such Lender as a result thereof and which are
attributable to LIBOR interest rates made available to Borrower hereunder. In
determining which amounts payable by any Lender and/or losses incurred by any
Lender are attributable to LIBOR interest rates made available to Borrower
hereunder, any reasonable allocation made by any Lender among its operations,
absent manifest error, shall be conclusive and binding upon Borrower.
(d) CHARGES: CHANGE OF LAW. If, after the date of this Agreement, any
Change of Law:
(i) shall subject any Lender to any tax, duty or other charge with
respect to any LIBOR interest rate, or shall change the basis of
taxation of payments by Borrower to any Lender of principal,
interest, fees or any other amount payable hereunder (except for
changes in the rate of taxation on the overall net income of any
Lender imposed by the jurisdiction of such Lender's incorporation
or by any jurisdiction in which its Applicable Lending Office is
located); or
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances or loans by, or any other acquisition of funds by any
Lender; or
(iii) shall impose on any Lender any other condition;
and the effect of any of the foregoing is to increase materially the cost to
such Lender of making, renewing or maintaining any LIBOR interest rate hereunder
or to reduce any amount receivable by such Lender in connection therewith, then
Borrower shall, within thirty (30) days following demand accompanied by a
certificate of such Lender describing the basis therefor and the calculation
thereof, pay to such Lender such amount or amounts as may be necessary to
reimburse such Lender for such increased costs or to compensate such Lender for
such reduced amounts. Such certificate as to the amount of such increased costs
or reduced amounts, delivered by such Lender to Borrower, shall, in the absence
of manifest error, be conclusive and binding on Borrower for all purposes.
(e) CAPITAL REQUIREMENTS. If any Lender shall have determined that any
Change of Law regarding capital adequacy which occurs after the Closing Date has
or shall have the effect
26
of reducing the rate of return on the capital of such Lender (or any entity
controlling such Lender) as a consequence of such Lender's obligations hereunder
to a level below that which such Lender or such entity would have achieved but
for such Change of Law (taking into consideration such Lender's or such entity's
policies with respect to capital adequacy), by an amount deemed by such Lender
to be material, then from time to time, within thirty (30) days after demand by
such Lender (with a copy to Agent) accompanied by a certificate of such Lender
describing the basis therefor and the calculation thereof, Borrower shall pay to
such Lender or such entity such additional amounts as shall compensate such
Lender or such entity for such reduction. Any such request by a Lender under
this Section 2.11(e) shall, in the absence of manifest error, be conclusive and
binding on Borrower for all purposes.
SECTION 2.12. TAXES ON PAYMENTS.
(a) PAYMENTS FREE OF TAXES. All payments made by Borrower under the Loan
Documents shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority (except net income taxes imposed on Agent or any Lender) (with all
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter referred to herein as "Taxes"). If any Taxes are
required to be withheld from any amounts payable to Agent or any Lender under
the Loan Documents, the amounts so payable to Agent or such Lender shall be
increased to the extent necessary to yield to Agent or such Lender (after
payment of all Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in the Loan Documents. Whenever any Taxes
are payable by Borrower, as promptly as possible thereafter, Borrower shall send
to Agent for its own account or for the account of such Lender, as the case may
be, a certified copy of an original official receipt received by Borrower
showing payment thereof. If Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to Agent the required receipts or
other required documentary evidence, Borrower shall indemnify Agent and Lenders
for any incremental taxes, interest or penalties that may become payable by
Agent or any Lender as a result of any such failure. The agreements in this
Section 2.12(a) shall survive the termination of this Agreement.
(b) WITHHOLDING EXEMPTION CERTIFICATES. Each Lender agrees that it will
deliver to Borrower and Agent, upon the reasonable request of Borrower or Agent,
either (i) a statement that it is incorporated under the laws of the United
States of America or a state thereof, or (ii) if it is not so incorporated, two
duly completed copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying in each case
that such Lender is entitled to receive
27
payments under this Agreement without deduction or withholding of any United
States federal income taxes.
SECTION 2.13. FUNDING LOSS INDEMNIFICATION. If Borrower shall (a) repay
or prepay any portion of a Credit which bears interest determined in relation to
LIBOR on any day other than the last day of the Fixed Rate Term therefor
(whether an optional prepayment, a mandatory prepayment, a payment upon
acceleration or otherwise), (b) fail to borrow any such portion of a Credit for
which a Notice of Borrowing has been delivered to Agent (whether as a result of
the failure to satisfy any applicable conditions or otherwise), or (c) fail to
convert or continue at the LIBOR interest option any portion of a Credit in
accordance with a Notice of Conversion or Continuation delivered to Agent
(whether as a result of the failure to satisfy any applicable conditions or
otherwise), Borrower shall, within thirty (30) days after demand by such Lender
(with a copy to Agent) accompanied by a certificate of such Lender describing
the basis therefor and the calculation thereof, reimburse such Lender and hold
such Lender harmless for all reasonable costs and losses incurred by such Lender
as a result of such repayment, prepayment or failure, to the extent that such
costs and losses (x) arise from funding and other contracts entered into, or
similar arrangements made, by such Lender to fund any LIBOR portion of any
Credit or (y) are incidental to such contracts or other arrangements. Each
Lender demanding payment under this Section 2.13 shall deliver to Agent for
delivery to Borrower a certificate setting forth the amount of costs and losses
for which demand is made. Such a certificate so delivered to Borrower shall, in
the absence of manifest error, be conclusive and binding on Borrower as to the
amount of such loss for all purposes. The agreements in this Section 2.13 shall
survive the termination of this Agreement.
SECTION 2.14. LIMITATION ON REIMBURSEMENT AND INDEMNITY OBLIGATIONS.
Notwithstanding any other provision of this Agreement or the other Loan
Documents, no Lender shall be entitled to claim, under any of the foregoing
Sections 2.11(b), 2.11(c), 2.11(d), 2.11(e), 2.12 and 2.13, any amount in
respect the period preceding the date of the relevant demand by more than 360
days.
SECTION 2.15. AUTHORIZED REPRESENTATIVES. Agent shall be entitled to rely
conclusively on the authority of each officer or employee designated as an
Authorized Representative in the most current Notice of Authorized
Representatives delivered by Borrower to Agent to request borrowings and select
interest rate options hereunder, and to give to Agent such other notices as are
specified herein as being made through one of Borrower's Authorized
Representatives, until such time as Borrower has delivered to Agent, and Agent
has actual receipt of, a new written Notice of Authorized Representatives.
Agent shall have no duty or obligation to Borrower to verify the authenticity of
any signature appearing on any Notice of Borrowing, or any other written notice
from an Authorized Representative or to verify the authenticity of any person
purporting to be an Authorized
28
Representative giving any telephonic notice permitted hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and the Lenders as follows, which
representations and warranties shall survive the execution of this Agreement:
Except as set forth in the Borrower Disclosure Letter (which indicates which
sections of this Agreement are qualified by the disclosures set forth therein):
SECTION 3.1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the State of California, and is
qualified or licensed to do business and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which the failure to so
qualify or to be so licensed could have a Material Adverse Effect. Each
Subsidiary is a corporation, duly organized and existing and in good standing
under the laws of the State indicated for such Subsidiary in Section 3.1 of the
Borrower Disclosure Letter (or, with respect to Subsidiaries acquired after the
date hereof, as indicated on the relevant notice required to be delivered
pursuant hereto), and is qualified or licensed to do business and is in good
standing as a foreign corporation, if applicable) in all jurisdictions in which
the failure to so qualify or to be so licensed could have a Material Adverse
Effect. A true and correct list of (i) all names (including any former names)
used within the five (5) years preceding the date of this Agreement by Borrower
or any Subsidiary listed in Section 3.1 of the Borrower Disclosure Letter, and
(ii) to the best knowledge of Borrower, all names (including any former names)
used within the five (5) years preceding the date of this Agreement by any
Person acquired by Borrower or any Subsidiary listed in Section 3.1 of the
Borrower Disclosure Letter, or any Person all or any substantial portion of the
assets of which has been acquired by Borrower or any such Subsidiary, during
such period, is set forth in Section 3.1 of the Borrower Disclosure Letter.
Except as indicated in the Borrower Disclosure Letter, neither Borrower nor any
Subsidiary currently operates under any name other than its true corporate (or
other entity) name (indicated, in the case of Borrower, on the signature pages
hereto, and in the case of any Subsidiary listed in Section 3.1 of the Borrower
Disclosure Letter, in that Section 3.1).
SECTION 3.2. AUTHORIZATION AND VALIDITY. The Loan Documents to which
Borrower or any Subsidiary is or is to become a party have been duly authorized
by Borrower or such Subsidiary, and, upon their execution and delivery in
accordance with the provisions hereof, will constitute legal, valid and binding
agreements and obligations of Borrower or such Subsidiary, as the case may be,
enforceable in accordance with their respective terms.
SECTION 3.3. NO VIOLATION. The execution, delivery and
29
performance by Borrower or any Subsidiary of each of the Loan Documents to which
such Person is or is to become a party do not violate any provision of any
Governmental Rule, or contravene any provision of the Articles or Certificate of
Incorporation or By-Laws of Borrower or any Subsidiary, or result in a breach of
or constitute a default under any one or more contracts, obligations, indentures
or other instruments to which Borrower or any Subsidiary is a party or by which
Borrower or any Subsidiary may be bound and pursuant to which Borrower or any
Subsidiary is obligated to pay in excess of (a) in any one instance, $200,000,
or (b) in the aggregate, $2,000,000.
SECTION 3.4. LITIGATION. There are no pending or threatened actions,
claims, investigations, suits or proceedings before any governmental authority,
court or administrative agency which could have a Material Adverse Effect.
SECTION 3.5. CORRECTNESS OF FINANCIAL STATEMENTS. The consolidated
financial statements of Borrower dated as of and for the fiscal quarter ended
October 31, 1996 heretofore delivered by Borrower to Agent (a) are complete and
correct in all material respects and present fairly the consolidated financial
condition of Borrower as of such date; (b) disclose all material consolidated
liabilities of Borrower that are required to be reflected or reserved against
therein under GAAP, whether liquidated or unliquidated, fixed or contingent; and
have been prepared in accordance with GAAP (except for the absence of full
footnotes). Since the date of (x) such financial statements, or (y) if
applicable, the most recent financial statements delivered to the Lenders
pursuant to Section 5.3: (i) there has been no occurrence that has had a
Material Adverse Effect, and (ii) neither Borrower or any Subsidiary has
created, or suffered to exist, any Lien with respect to all or any portion of
its assets or properties except as permitted by this Agreement.
SECTION 3.6. OTHER OBLIGATIONS; LIENS. Neither Borrower nor any
Subsidiary is in default on any Indebtedness or any other material lease,
commitment, contract, instrument or obligation, which default could have a
Material Adverse Effect. Neither Borrower nor any Subsidiary is obligated in
respect of any Indebtedness, whether secured or unsecured, matured or unmatured,
liquidated or unliquidated, joint or several, other than (a) the Obligations and
the obligations of Guarantors under the Loan Documents, and (b) Indebtedness not
prohibited by any provision of Article VI. Borrower, and each Subsidiary owns
good title to each of the assets reflected on the most recent financial
statements previously delivered to the Lenders (other than any such assets
disposed of in a transaction not prohibited by any of the provisions of Article
VI or any other Loan Document after the date of such financial statements),
subject to no Liens other than Permitted Liens.
30
SECTION 3.7. PERMITS, FRANCHISES. Borrower, and each Subsidiary,
possesses, and will hereafter possess, (a) all permits, memberships, franchises,
contracts and licenses required, and (b) and all trademark rights, trade names,
trade name rights, patents, patent rights and fictitious name rights necessary,
to enable it to conduct the business in which it is now engaged without
violation of any Governmental Rule or conflict with the rights of others, except
where the failure so to possess such items would not have a Material Adverse
Effect.
SECTION 3.8. ERISA. Borrower, and each Subsidiary, is in compliance in
all material respects with all applicable provisions of ERISA; neither Borrower
nor any Subsidiary has violated any provision of any Plan maintained or
contributed to by Borrower or such Subsidiary; no Reportable Event as defined in
ERISA has occurred and is continuing with respect to any Plan initiated or
contributed to by Borrower or any Subsidiary; Borrower, and each Subsidiary, has
met its minimum funding requirements under ERISA with respect to each Plan; and
each Plan will be able to fulfill its benefit obligations as they come due in
accordance with the Plan documents and under GAAP.
SECTION 3.9. ENVIRONMENTAL MATTERS.
(a) Borrower, and each Subsidiary, is in compliance in all respects with
all applicable environmental, hazardous waste, health and safety statutes and
regulations governing its operations and/or properties (whether owned, leased or
operated), including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, the Federal Toxic Substances Control Act and the California Health and
Safety Code, as the same may be amended, modified or supplemented from time to
time, except to the extent that non-compliance would not have a Material Adverse
Effect.
(b) Other than as disclosed to Agent in writing, none of the operations of
Borrower or any Subsidiary, or any real property owned, leased or operated by
Borrower or any Subsidiary, is the subject of any federal or state investigation
evaluating whether any remedial action involving a material expenditure is
needed to respond to a release of any toxic or hazardous waste or substance into
the environment.
(c) Neither Borrower nor any Subsidiary has, in connection with any
release of any toxic or hazardous waste or substance into the environment, any
contingent liability which would have a Material Adverse Effect.
SECTION 3.10. INCOME TAX RETURNS. As of the date hereof, neither Borrower
nor any Subsidiary has any knowledge of any pending assessments in excess of
$100,000 or adjustments of its income tax payable with respect to any year.
31
SECTION 3.11. NO SUBORDINATION. There is no agreement, indenture,
contract or instrument to which Borrower or any Subsidiary is a party or by
which Borrower or any Subsidiary may be bound that requires the subordination in
right of payment of any of Borrower's or any such Subsidiary's obligations
subject to this Agreement to any other obligation of Borrower or such
Subsidiary.
SECTION 3.12. SUBSIDIARIES AND OTHER INVESTMENTS. Borrower owns no stock
or equity interest in any Person (directly or indirectly), and holds no debt
obligation of any Person, other than (a) accounts receivable arising in the
ordinary course of business; (b) stock and equity interests in Persons listed in
Section 3.1 of the Borrower Disclosure Letter or (if acquired after the date
hereof) otherwise advised to Agent in writing to the extent required under the
provisions hereof, in each case, identifying whether such Subsidiary is wholly
owned or, if not, the percentage of the outstanding equity of such Subsidiary
owned by Borrower (directly or indirectly); (c) Permitted Investments; or (d)
other Investments not prohibited by Section 6.5. As of the date hereof, Section
3.1 of the Borrower Disclosure Letter correctly identifies the address of the
chief executive office of Borrower and of each Subsidiary.
SECTION 3.13. GOVERNMENTAL REGULATION. Neither Borrower nor any
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940 or any other federal or state statute or regulation such
that Borrower's ability to incur indebtedness is limited or its ability to
consummate the transactions contemplated by the Loan Documents is materially
impaired.
SECTION 3.14. TRUTH, ACCURACY OF INFORMATION. All financial and other
information furnished to Agent or any Lender in connection with this Agreement,
taken together (and including the SEC Documents), is true and correct in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the information
furnished, in light of the circumstances under which furnished, not misleading
(it being recognized by Agent and the Lenders that projections and forecasts
provided by Borrower are not to be viewed as facts and that actual results
during the period or periods covered by any such projections and forecasts may
differ from the projected or forecasted results).
ARTICLE IV
CONDITIONS
SECTION 4.1. CONDITIONS TO INITIAL EXTENSION OF CREDIT. The obligation
of the Lenders to extend the initial credit contemplated by this Agreement
(whether the making of an Advance or the issuance of a Letter of Credit) is
subject to the fulfillment to Agent's satisfaction of all of the following
32
conditions on or before the earlier of (i) the date such initial credit is
extended hereunder, and (ii) the date that is thirty (30) days after the Closing
Date:
(a) APPROVAL OF AGENT'S COUNSEL. All legal matters incidental to the
extension of credit hereunder shall be satisfactory to counsel for Agent.
(b) DOCUMENTATION. Agent shall have received, in form and substance
satisfactory to Agent, each of the following duly executed:
(i) This Agreement and the Notes.
(ii) Corporate Borrowing Resolution from Borrower.
(iii) Corporate Resolution from each Guarantor authorizing the
execution and delivery of its respective Continuing Guaranty.
(iv) Certified copies of the filed Articles or Certificate of
Incorporation for Borrower and for each Guarantor.
(v) Certificate of Incumbency from Borrower and from each Guarantor.
(vi) Subsidiary Guaranty from each Guarantor.
(vii) Notice of Authorized Representatives.
(c) FINANCIAL CONDITION. Since the date of the most recent financial
statements delivered to the Lenders as of the date hereof: (i) there shall have
been no material adverse change, as determined by Agent, in the financial
condition or business of Borrower and the Subsidiaries, considered as a single
enterprise.
(d) FEES AND EXPENSES. Borrower shall have paid all fees and reasonable
invoiced costs and expenses then due pursuant to the terms of this Agreement.
(e) PAYMENT OF AMOUNTS DUE UNDER ORIGINAL CREDIT AGREEMENT. All amounts,
if any, remaining due and unpaid under the Original Credit Agreement shall have
been paid in full.
Without prejudice to any of the rights or remedies of Agent and the Lenders in
respect of any Default or Event of Default (and subject to the terms of any
waiver executed in connection with the initial Advance), the initial extension
of credit by the Lenders pursuant to this Agreement shall be deemed to be an
acknowledgment by the Lenders and Agent that the conditions set forth in this
Section 4.1 have been fulfilled to Agent's satisfaction.
SECTION 4.2. CONDITIONS TO EACH EXTENSION OF CREDIT. The
33
obligation of the Lenders to make each Advance (other than an Advance in respect
of a draw under a Letter of Credit) or issuance of a Letter of Credit requested
by Borrower hereunder shall be subject to the fulfillment, to Agent's reasonable
satisfaction, of all of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained herein shall be true and correct in all material respects on and as of
the date of the signing of this Agreement and on the date of each such extension
of credit by the Lenders pursuant hereto (except to the extent such
representations or warranties are conditioned by reference to a specific date,
in which case they shall be true and correct in all material respects as of such
date), with the same effect as though such representations and warranties had
been made on and as of each such date; and
(b) ABSENCE OF DEFAULTS. On each such date, no Default or Event of
Default shall have occurred and be continuing immediately prior to giving effect
to such Advance or shall exist immediately after giving effect to such Advance.
Borrower's delivery of any Borrowing Notice requesting an Advance or of a
request for the issuance of a Letter of Credit shall be deemed Borrower's
representation and warranty that, as of the date of such Borrowing Notice or
request and as of the date of the requested Advance or of the issuance of the
requested Letter of Credit, each of the foregoing conditions shall be satisfied.
ARTICLE V
AFFIRMATIVE COVENANTS
Borrower covenants that so long as the Lenders remain committed to extend
credit to Borrower pursuant to the terms of this Agreement or any payment
Obligations remain outstanding, and until payment in full of all such
outstanding payment Obligations (including, without limitation, the
cancellation, termination or cash collateralization as provided herein of all
outstanding Letters of Credit), Borrower shall, and shall cause each Subsidiary
to, unless Majority Lenders shall otherwise consent in writing:
SECTION 5.1. PUNCTUAL PAYMENTS. Punctually pay all interest, principal,
fees and other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein, and immediately upon demand by Agent,
the amount by which the outstanding principal balance of the Revolving Reducing
Term Line of Credit at any time exceeds Loan Availability.
SECTION 5.2. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with GAAP, and permit any representative of any Lender, at any
reasonable time and upon reasonable notice, to inspect, audit and examine such
books and
34
records, to make copies of the same, and to inspect the properties of
Borrower or any Subsidiary.
SECTION 5.3. FINANCIAL STATEMENTS. Provide to Agent and each Lender all
of the following, in form and detail reasonably satisfactory to Agent:
(a) not later than ninety (90) days after and as of the end of each fiscal
year, audited consolidated financial statements of Borrower prepared in
accordance with GAAP (to include balance sheet, statement of income, statement
of cash flows and statement of shareholders' equity), together with an
unqualified opinion of an independent certified public accountant of national or
regional reputation;
(b) not later than forty-five (45) days after and as of the end of each
fiscal quarter other than the last fiscal quarter of each year, consolidated
financial statements of Borrower prepared in accordance with GAAP (to include
balance sheet, statement of income and statement of cash flows), certified as
complete and correct in all material respects by a senior financial officer of
Borrower, together with a comparison of Borrower's actual financial condition
for said fiscal quarter to that of the same fiscal quarter in the immediately
preceding fiscal year;
(c) within ten Business Days after delivery of the financial statements
required to be delivered pursuant to Section 5.3(a) and 5.3(b) (but in no event
later than ten Business Days after the date on which such financial statements
are required to be so delivered pursuant to the relevant section), (i) copies of
calculations confirming Borrower's compliance with all financial covenants
contained in Section 5.6 as of the date of the most recent balance sheet
included in such financial statements, certified by a senior financial officer
of Borrower and (ii) a certificate of a senior financial officer of Borrower to
the effect that, as of the end of such fiscal quarter, no Default or Event of
Default had occurred and was continuing (or, if any Default or Event of Default
was then continuing, a description of such Default or Event of Default and of
the action that Borrower proposes to take, or cause to be taken, in connection
therewith); and
(d) from time to time such other information as Agent or any Lender may
reasonably request (provided that Borrower shall not be required to deliver
information the delivery of which would violate any confidentiality requirements
imposed by law or contract (provided that such contractual requirements were not
entered into principally to prevent disclosure to the Agent or the Lenders),
except where such delivery would be permitted subject to an agreement by Agent
and the Lenders to treat such information confidentially and Agent and the
Lenders agree to comply with such requirements of confidentiality).
Delivery by Borrower of its Annual Report on Form 10-K with respect to any
fiscal year shall be deemed to satisfy the
35
requirements of Section 5.3(a) for such year (provided that the included opinion
of independent certified public accountants is unqualified and that such Annual
Report otherwise complies with the requirements of applicable regulations); and
delivery by Borrower of its Quarterly Report on Form 10-Q for any fiscal quarter
shall be deemed (i) unless otherwise noted at the time by Borrower, to
constitute a certification by Borrower that the financial statements included
therein with respect to the most recently completed fiscal quarter are complete
and correct in all material respects and (ii) to satisfy the requirements of
Section 5.3(b) for such quarter (provided that the certification described in
the foregoing clause (i) is deemed made as provided therein and that such
Quarterly Report otherwise complies with the requirements of applicable
regulations).
SECTION 5.4. COMPLIANCE. Maintain all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business in substantially the manner in which it is conducted as of the date
hereof; conduct its business in an orderly and regular manner; and comply with
the provisions of all documents pursuant to which Borrower or any Subsidiary is
organized and/or which govern Borrower's or any Subsidiary's continued existence
and with the requirements of all Governmental Rules, of any Governmental
Authority, applicable to Borrower or any Subsidiary, its business, or any real
property owned, leased or operated by it (and including, without limitation, pay
all taxes, assessments and governmental charges imposed upon it or its property
before they become delinquent); except, in the case of any of the foregoing,
where the failure to do so would not have a Material Adverse Effect.
SECTION 5.5. FACILITIES. In a manner consistent with prudent business
practices and subject to Section 6.2(c), keep all properties of Borrower and
each Subsidiary useful or necessary to its business in good repair and
condition, and from time to time make necessary repairs, renewals and
replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.
SECTION 5.6. FINANCIAL COVENANTS. Maintain the financial condition (or
results, as the case may be) of Borrower on a consolidated basis as follows
(using GAAP consistently with prior practices, except to the extent modified by
the definitions herein):
(a) As of the last day of each fiscal quarter, a ratio of Funded Debt to
EBITDA for the period of four fiscal quarters ending thereon not greater than
3.00 to 1.00.
(b) Profitable operations (after tax, but without deduction of
non-recurring non-cash expenses) for every period of two consecutive fiscal
quarters, determined as of the end of each fiscal quarter on the basis of the
period consisting of the fiscal quarter just completed and the immediately
preceding fiscal quarter.
36
(c) Leverage Ratio not greater than 2.50 to 1.00 as of the end of each
fiscal quarter.
SECTION 5.7. NOTICE TO AGENT. Promptly (but in no event more than ten
(10) days after a Responsible Officer has knowledge of the occurrence of each
such event or matter) give written notice to Agent in reasonable detail of:
(a) the occurrence of any Default other than one arising from the failure to pay
money due to Agent or any Lender hereunder (provided that no such notice shall
be required to be given if, prior to the expiration of such 10-day period (i)
such Default is cured or (ii) Agent or any Lender has notified Borrower in
writing of the existence of such Default); (b) any change in the name of
Borrower or any Guarantor; and (c) any uninsured or partially uninsured loss
through liability or property damage, or through fire, theft or any other cause
affecting the property of Borrower or any Subsidiary, if such loss (i) is in
excess of $1,000,000 in any one case or (ii) together with all other such losses
during any one fiscal year, would cause the aggregate amount of such losses to
exceed $5,000,000.
SECTION 5.8. INDEMNITY OF GUARANTORS. Indemnify and hold harmless each
Guarantor from and against any liability (in the form of indebtedness repaid to
the Lenders in respect of the Obligations, including (if applicable) by way of
foreclosure under any security agreement at any time hereafter executed by such
Guarantor for the benefit of the Lenders) in excess of the benefit realized by
such Guarantor from the proceeds of Advances under the Revolving Reducing Term
Line of Credit, the issuance of Letters of Credit or under the Credits described
in the Original Credit Agreement. As between and among Borrower and Guarantors,
Borrower and the other Guarantors shall be responsible to reimburse each
Guarantor in respect of amounts paid by such Guarantor under its guaranty of the
Obligations to the end that Borrower, and each Guarantor, ultimately bears the
burden of payment of its respective share of the Obligations.
SECTION 5.9. INSURANCE COVERAGE. Maintain, or cause to be maintained,
for itself and its Subsidiaries, insurance against loss, damage and other risks
of the kinds customarily insured against by Persons similarly situated, with
reputable insurers, in such amounts, and with such deductibles and by such
methods as shall be adequate, and in any event in amounts not less than the
amounts generally maintained by other Persons engaged in businesses comparable
to those engaged in by Borrower and its Subsidiaries. From time to time, upon
the written request of Agent, Borrower shall deliver to Agent insurance
certificates evidencing the coverages maintained by Borrower.
ARTICLE VI
NEGATIVE COVENANTS
Borrower further covenants that so long as the Lenders remain committed to
extend credit to Borrower pursuant to the
37
terms of this Agreement or any payment Obligations remain outstanding, and until
payment in full of all such outstanding payment Obligations (including, without
limitation, the cancellation, termination or cash collateralization as provided
herein of all outstanding Letters of Credit), Borrower will not, and will not
permit any Subsidiary to, without the prior written consent of Majority Lenders:
SECTION 6.1. USE OF FUNDS. Use any of the proceeds of any of the Credits
except for the purposes stated in Article II with respect to the relevant
Credit.
SECTION 6.2. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Subject to the
last sentence of this Section 6.2:
(a) Merge with or into, or consolidate with, any other Person, except (i)
in a transaction complying with Section 6.2(b) in which Borrower or the relevant
Subsidiary is the surviving Person (or, in the case of a transaction complying
with Section 6.2(b) involving the merger or consolidation of a Subsidiary, in
which the surviving Person becomes a Guarantor and, no later than five (5)
Business Days following the effective date of such merger or consolidation,
executes and delivers to Agent a Subsidiary Guaranty, PROVIDED, HOWEVER, that
Borrower shall not become a subsidiary of any other Person; or (ii) in a
transaction (A) between Borrower and one or more Subsidiaries (provided that
Borrower is the surviving Person) or (B) among Subsidiaries (provided that the
Subsidiary that is the surviving Person is a Guarantor or, if such Subsidiary
will meet the definition of "Guarantor" as a result of such merger, on or before
the date of such Transfer has executed and delivered to Agent a Subsidiary
Guaranty); or
(b) acquire all or substantially all of the capital stock, or all or any
substantial portion of the assets (if such assets represent an ongoing
business), of any other Person (other than from Borrower or a Subsidiary),
unless:
(i) Borrower's Board of Directors has determined in its reasonable
business judgement that such acquisition would lead to
efficiencies or synergies with the business of Borrower or any of
its Subsidiaries;
(ii) as of the closing of such acquisition, Borrower would be in
compliance with each of the financial covenants contained in
Section 5.6, in each case, determined as of the end of the most
recently concluded fiscal quarter and as if such acquisition had
occurred on the last day of such fiscal quarter (provided that
compliance with the financial covenants otherwise required to be
tested as of the end of each fiscal year shall be determined on
the basis of the twelve-month period ended as of the last day of
such most recently
38
completed fiscal quarter); and
(iii) if such acquisition involves the payment by Borrower or the
acquiring Subsidiary of aggregate consideration (whether in cash,
stock or other property or by means of assumption of liabilities)
of (y) $20,000,000 or more if such Person is engaged in
substantially the same line of business as are Borrower and the
Subsidiaries as of the Closing Date or (z) $10,000,000 if such
Person is not engaged in substantially the same line of business
as are Borrower and the Subsidiaries as of the Closing Date:
Borrower shall have delivered to Agent, no later than five (5)
Business Days prior to the closing thereof, notice and a
description of such acquisition and (unless Majority Lenders have
waived delivery thereof, based on such other information as may
have been provided to the Lenders with respect to such
acquisition) calculations, based on pro forma financial
statements of Borrower as of the end of the most recently
completed fiscal quarter of Borrower giving pro forma effect to
such acquisition as of such date, establishing that the
requirements of the foregoing clause (ii) will be met; or
(c) Sell, lease, transfer or otherwise dispose of (any such action, a
"Transfer") (i) all or substantially all of the assets of Borrower or any
Significant Guarantor, or (ii) except in the ordinary course of business and for
fair and reasonable consideration, any substantial or material part of the
assets of Borrower and the Subsidiaries, considered as a whole; PROVIDED,
HOWEVER, that this Section 6.2(c) shall not prohibit (1) Transfers in connection
with the creation of operating leases or Capital Leases not prohibited by
Section 6.4 or 6.7; (2) Transfers by any Subsidiary (other than a Transfer of
all or substantially all of the assets of a Significant Guarantor) to Borrower
or to another Subsidiary that (A) is a Guarantor or (B) if such Subsidiary will
meet the definition of "Guarantor" as a result of such Transfer, on or before
the date of such Transfer has executed and delivered to Agent a Subsidiary
Guaranty; or (3) Transfers constituting a dividend or other distribution
permitted under Section 6.6 hereof. In the event that any Transfer permitted
under this Section 6.2(c) shall cause a Subsidiary to no longer fall within the
definition of a "Guarantor", Agent and the Lenders shall take such steps as may
be necessary to release such Guarantor from its obligations to Agent and the
Lenders hereunder and under any Subsidiary Guaranty.
If any of the transactions otherwise permitted under this Section 6.2 would
involve, at a time when a Default or Event of Default has occurred and is
continuing, (i) the merger into Borrower or another Subsidiary of a Significant
Guarantor, (ii) the Transfer of all or substantially all of the assets of a
39
Significant Guarantor to Borrower or another Subsidiary, or (iii) the
liquidation or dissolution of a Significant Guarantor, Borrower shall first
obtain the prior written consent of the Majority Lenders, which consent shall be
withheld only if the Majority Lenders determine, in the reasonable exercise of
their discretion, that such transaction would materially adversely affect the
prospect of the Credits being repaid in full.
SECTION 6.3. GUARANTIES. Guarantee or become liable in any way as
surety, endorser (other than as endorser of negotiable instruments for deposit
or collection in the ordinary course of business), accommodation endorser or
otherwise for (collectively, "Guarantee"), any liabilities or obligations of any
other Person (including Guarantees by Borrower of any obligations of
Subsidiaries) except (a) such Guarantees as are required by this Agreement; (b)
Guarantees of obligations of Borrower or any Subsidiary, if the obligation so
guarantied is not prohibited by the other provisions of this Article VI, and (c)
other Guarantees not exceeding $1,000,000 in the aggregate at any time.
SECTION 6.4. OTHER INDEBTEDNESS. Create, incur, assume or permit to
exist any Indebtedness, whether secured or unsecured, matured or unmatured,
liquidated or unliquidated, joint or several, except:
(a) the Obligations and the obligations of Guarantors under the Loan
Documents;
(b) Indebtedness incurred to any Person from whom the capital stock or all
or any substantial portion of the assets (if such assets represent an ongoing
business) of a Person are acquired in a transaction complying with Section
6.2(b), in an amount not in excess of the purchase price thereof, PROVIDED that
(i) such Indebtedness is either unsecured or, if secured, is secured only by the
capital stock or assets so acquired or if such Person is acquired pursuant to a
stock acquisition, any assets of such Person (and the proceeds thereof), and
(ii) both immediately before and immediately following the incurrence of such
obligation, there shall not exist and be continuing any Default or Event of
Default;
(c) Subordinated Debt;
(d) Indebtedness to Borrower or any Guarantor;
(e) Indebtedness of a Subsidiary created prior to the time such Person was
acquired directly or indirectly by Borrower, PROVIDED that such Indebtedness was
not created in anticipation of such acquisition;
(f) non-recourse Indebtedness incurred to finance the acquisition or
improvement of real property or the acquisition of equipment, in a principal
amount not in excess of the purchase price thereof, PROVIDED that such
Indebtedness is incurred within one year of the initial acquisition of such real
property or
40
equipment (or, in the case of improvements, within one year of the construction
thereof) by Borrower or any Subsidiary and is secured by Liens limited to (i)
such real property (including improvements and fixtures) and the rents, issues
and profits thereof or (ii) such equipment (and nonmaterial accessions), as the
case may be, and the proceeds thereof;
(g) other liabilities of Borrower or any Subsidiary (i) shown on
Borrower's financial statements as of October 31, 1996;
(h) Indebtedness listed in the Borrower Disclosure Letter;
(i) to the extent that the aggregate amount of all Indebtedness incurred
pursuant to this Section 6.4(i) does not exceed at any time ten percent (10%) of
Borrower's Net Worth:
(i) Indebtedness (not otherwise permitted under the preceding
paragraphs of this Section 6.4 or under paragraph (j) below as an
extension, refunding, refinancing, amendment or modification of
Indebtedness so otherwise permitted) incurred to finance the
acquisition of real property or equipment or other fixed assets
(other than in connection with the acquisition of all or any
substantial portion of the assets (if such assets represent an
ongoing business) of any Person), including Capital Leases and
other leases constituting Indebtedness; PROVIDED that the
principal amount of such Indebtedness (A) does not exceed in any
case the purchase price of such asset, (B) is either unsecured or
is secured by Liens that are limited to such asset and the
proceeds thereof, and (C) is incurred within one year of the
initial acquisition of such asset by Borrower or any Subsidiary;
or
(ii) Indebtedness, not otherwise permitted under the foregoing
provisions of this Section 6.4 of this Section 6.4 or under
paragraph (j) below as an extension, refunding, refinancing,
amendment or modification of Indebtedness so otherwise permitted,
the amount of which does not exceed $4,166,667 in the aggregate
at any one time; or
(j) extensions, refundings, refinancings, amendments or modifications of
any of the foregoing, PROVIDED that (i) the principal amount thereof is not
increased; and (ii) no Lien securing such Indebtedness is extended to property
not theretofore securing such Indebtedness.
For purposes of this Section 6.4, the "principal amount" or "amount" of a lease
under which the lessee is treated as the owner of the leased property for tax
purposes shall be determined as if such lease were a Capital Lease.
41
SECTION 6.5. LOANS, ADVANCES, INVESTMENTS.
(a) Make any loans or advances to, or otherwise acquire any Indebtedness
of, or acquire any equity interest or any option or warrant to acquire any
equity interest in, any Person (collectively, "Investments"; PROVIDED, HOWEVER,
that the term "Investments" shall not include obligations owed to Borrower or
any Subsidiary by customers or suppliers arising from Borrower's or such
Subsidiary's payment, in the ordinary course of business, of towing, storage and
other expenses associated with services rendered by Borrower or such Subsidiary,
that are subject to "netting" arrangements that provide for settlement of the
net outstanding obligations between Borrower or such Subsidiary and such
customer or supplier when the net obligation owed by one to the other reaches a
specified level), other than:
(i) Permitted Investments;
(ii) Investments in Subsidiaries (provided that if such Subsidiary
will meet the definition of "Guarantor" as a result of such
Investment, on or before the date of such Investment such
Subsidiary has executed and delivered to Agent a Subsidiary
Guaranty; or
(iii) the acquisition of the capital stock of a Person in a transaction
complying with Section 6.2(b) (and, if applicable, Section
6.2(a)); or
(b) without limiting the foregoing paragraph (a), organize any Subsidiary
unless, within five (5) Business Days after the incorporation or other formation
thereof: (i) Borrower gives Agent written notice thereof, and (ii) if such
Subsidiary meets the definition of "Guarantor", Borrower causes such Subsidiary
to execute and deliver to Agent a Subsidiary Guaranty.
SECTION 6.6. DIVIDENDS AND DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on the stock of
Borrower or (except to Borrower or another Subsidiary) any Subsidiary now or
hereafter outstanding; nor redeem, retire, repurchase or otherwise acquire any
shares of any class of the stock of Borrower or any Subsidiary (other than such
as may be owned by Borrower or another Subsidiary), or any options, warrants or
other rights to acquire any such security, now or hereafter outstanding;
PROVIDED, HOWEVER, that (a) Borrower may pay dividends on its capital stock in
its own capital stock and (b) Borrower may pay dividends to its shareholders in
cash or repurchase shares of its outstanding capital stock (collectively, "Cash
Distributions"), PROVIDED that the aggregate amount of all Cash Distributions
paid on or after January 31, 1995, shall not exceed the lesser of (x) that
amount equal to fifty percent (50%) of Borrower's cumulative retained earnings
(such retained earnings to be determined as of the end of the most recently
completed fiscal quarter preceding each Cash
42
Distribution and as if no Cash Distributions had been paid since January 30,
1995), and (y) $20,000,000; and PROVIDED FURTHER that (i) Borrower shall not
declare any Cash Distribution if, as of the date of declaration thereof, (A) any
Default or Event of Default has occurred and is continuing or (B) (determined as
of the end of the most recent fiscal quarter, as if such Cash Distribution had
been effected on the last day of such period) would exist after giving effect
thereto, and (ii) Borrower shall not effect any Cash Distribution at any time
that there has occurred and is continuing any Default or Event of Default.
SECTION 6.7. LIENS. Create, incur, assume, suffer or permit to exist any
Lien on all or any portion of the assets of Borrower or any Subsidiary, real or
personal, now owned or hereafter acquired, except for (a) Liens required by this
Agreement or the other Loan Documents; (b) Liens (i) existing as of the date
hereof and (ii) disclosed in the Borrower Disclosure Letter; (c) Permitted Liens
described in clauses (i) through (v) of the definition of Permitted Liens; (d)
the Liens of lessors under Capital Leases or other leases constituting
Indebtedness entered into in compliance with Section 6.4; (e) Liens, granted by
the primary obligor, securing Indebtedness incurred by such Person in compliance
with Section 6.4(b) and complying with the requirements of Section 6.4(b); (f)
Liens on tangible assets (including nonmaterial accessions thereto) other than
inventory, and the proceeds thereof, that existed at the time such assets were
acquired by Borrower or any Subsidiary (including Liens on tangible assets of
any corporation that existed at the time it becomes a Subsidiary, PROVIDED that
such transaction is effected in compliance with Section 6.2); (g) Liens (other
than those described in any of the foregoing clauses of this Section 6.7) (i)
upon or in any tangible assets acquired or held by Borrower or any Subsidiary in
a transaction not prohibited by any provision of this Article VI, and (ii)
securing the purchase price of such assets or Indebtedness, incurred solely for
the purpose of financing the acquisition of such asset, PROVIDED that the
Indebtedness so secured is permitted, and is permitted to be secured, under
Section 6.4 and PROVIDED FURTHER that the Lien is confined solely to the asset
so acquired (and (x) in the case of real property, related improvements and
fixtures and the rents, issues and profits thereof, or (y) in the case of
equipment, nonmaterial accessions thereto) and proceeds thereof; (g) Liens not
otherwise permitted by the foregoing clauses of this Section 6.7 or under the
following clause (h) with respect to a Lien so otherwise permitted, PROVIDED
that the aggregate amount of the Indebtedness or other obligations secured
thereby does not exceed at any time $1,666,667; or (h) Liens securing the
extension, renewal or refinancing of the Indebtedness secured by Liens (other
than Liens identified in the Borrower Disclosure Letter as to be satisfied)
previously existing in compliance with this Section 6.7, PROVIDED that such Lien
is limited to the property theretofore encumbered by such Lien and the principal
amount of the Indebtedness so extended, renewed or refinanced is not increased.
For purposes of this Section 6.7, the "principal amount" or "amount" of a lease
under which the lessee is treated
43
as the owner of the leased property for tax purposes shall be determined as if
such lease were a Capital Lease.
SECTION 6.8. NO NEGATIVE PLEDGES. Enter into or suffer to exist, in
favor of any Person other than Agent and the Lenders, any agreement that
prohibits or conditions the creation or assumption of any Lien upon any of its
property or assets except those in favor of such Person if such agreement would
prohibit the granting of a security interest to the Agent on behalf of the
Lenders as security for the Obligations of Borrower and any of the Guarantors,
EXCEPT FOR limitations prohibiting or conditioning the creation or imposition of
Liens on property or assets subject to a consensual Permitted Lien in favor of
such Person.
SECTION 6.9. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the lease, purchase, sale, or exchange of real or
personal property or the rendering of any service, with any Affiliate, except
any such transaction which, considered together with any series of transactions
of which such transaction is a part, is upon fair and reasonable terms no less
favorable to Borrower or such Subsidiary than those which would obtain in a
comparable arm's-length transaction with a Person not an Affiliate, PROVIDED
that the foregoing shall not apply to compensation of employees, officers and
directors so long as a disinterested majority of the board of directors (or the
compensation committee of the board of directors) of the Borrower (or the
Subsidiary, as the case may be) approves such compensation. The transactions
with Affiliates described in the SEC Documents under the heading "Certain
Transactions" or disclosed in the footnotes to the financial statements included
therein shall be deemed to satisfy the requirements of this Section 6.9.
SECTION 6.10. CHANGE IN NATURE OF BUSINESS. Other than pursuant to an
acquisition permitted pursuant to Section 6.2(b) engage in, or permit any of the
Subsidiaries to engage in, any business other than the businesses engaged in on
the Closing Date and any businesses substantially similar, substantially related
or incidental thereto; PROVIDED, HOWEVER, that the primary business of Borrower
and the Subsidiaries, considered as a single enterprise, shall remain at all
times the processing and sale of vehicles, principally through auctions.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. The occurrence of any of the following
(for whatever reason, and whether voluntarily or involuntarily, by operation of
law or otherwise) shall constitute an "Event of Default" under this Agreement:
(a) Borrower, or any Guarantor, shall fail to pay:
(i) the outstanding principal of the Revolving
44
Reducing Term Line of Credit on the Maturity Date;
(ii) the principal amount of any Advance due on any date other than
the foregoing dates when due (provided that such amount has
continued unpaid for at least five days after notice by the
Agent, if, as of the relevant due date, adequate funds to pay
such amount were on deposit in the deposit accounts subject to
the automatic debit arrangement provided for under Section
2.6(a));
(iii) interest on any Advance, within five days after such interest
shall have become due (provided such amount has continued unpaid
for at least five days after notice by the Agent, if, as of the
relevant due date, adequate funds to pay such amount were on
deposit in the deposit accounts subject to the automatic debit
arrangement provided for under Section 2.6(a));
(iv) any amount payable under any of Sections 2.11(b), 2.11(c),
2.11(d), 2.11(e), 2.12 and 2.13 when due; or
(v) any other amount payable by Borrower or any Guarantor under this
Agreement or any other Loan Document within thirty (30) days
after Borrower or Guarantor, as the case may be, shall have
received notice from Agent or the relevant Lender demanding
payment thereof and setting forth in reasonable detail the basis
for demanding payment and the calculation of the amount so
payable.
(b) Any representation or warranty made by Borrower or any Guarantor
hereunder or under any other Loan Document shall fail to be true and correct in
all material respects when made or deemed made.
(c) Any default by Borrower or any Guarantor in the performance of or
compliance with any obligation, agreement or other provision contained herein
(other than those referred to in Section 7.1(a) or 7.1(b)) which by its nature
cannot be cured or remedied, or which, if it can by its nature be cured or
remedied, shall continue uncured or unremedied, as the case may be, for a period
of thirty (30) days after a Responsible Officer first becomes aware (or should
have become aware) of such default (whether by notice from Agent or otherwise).
(d) (i) (A) Any default in the payment by Borrower or any Guarantor when
due of any amount due under any Indebtedness (whether by acceleration or
otherwise) to any Person if such default continues uncured beyond the expiration
of any applicable grace or cure period(s), or (B) any default other than a
payment default by Borrower or any Guarantor under any Indebtedness if the
effect of such default is to accelerate such Indebtedness, or
45
to give the holders of such Indebtedness, or any trustee or other representative
thereof, the right to accelerate the Indebtedness, and (ii) the amount of such
Indebtedness exceeds (A) in any instance, $3,000,000, or (B) in the aggregate,
$5,000,000.
(e) Any default, whether or not involving the payment of money, under any
operating lease or other obligation of Borrower or any Guarantor not
constituting Indebtedness, if as a result thereof such operating lease or
obligation is accelerated or terminated, and the aggregate payments due in
respect of such acceleration or termination exceed (i) in any instance,
$3,000,000, or (ii) in the aggregate, $5,000,000.
(f) Any default in the performance by Borrower or any Guarantor of any
obligation, or any defined event of default, under any of the Loan Documents
other than this Agreement, which by its nature cannot be cured or remedied, or
which, if it can by its nature be cured or remedied, shall continue uncured or
unremedied, as the case may be, for a period of thirty (30) days after a
Responsible Officer first becomes aware (or reasonably should have become aware)
of such default (whether by notice from Agent or otherwise).
(g) The filing of a notice of judgment lien against Borrower or any
Guarantor; or the recording of any abstract of judgment against Borrower or any
Guarantor in any county in which Borrower or such Guarantor has an interest in
real property; or the service of a notice of levy and/or of a writ of attachment
or execution, or other like process, against the assets of Borrower or any
Guarantor; or the entry of a judgment against Borrower or any Guarantor; in each
case, with respect to an obligation to pay money of in excess of $250,000, and
which shall have remained unsatisfied and in effect for sixty (60) consecutive
days without having being vacated, discharged or satisfied, or stayed or bonded
pending appeal.
(h) Borrower or any Guarantor shall become insolvent, or shall suffer or
consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for the benefit of
creditors; or Borrower or any Guarantor shall file a voluntary petition in
bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Code, or
under any state or federal law granting relief to debtors, whether now or
hereafter in effect; or any involuntary petition or proceeding pursuant to the
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower or any Guarantor and remains undismissed for a period of sixty
(60) consecutive days; or Borrower or any Guarantor shall file an answer
admitting the jurisdiction of the court and the material allegations of any
involuntary petition; or Borrower or any Guarantor shall be adjudicated a
bankrupt, or an order for relief shall be entered
46
by any court of competent jurisdiction under the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors.
(i) The dissolution or liquidation of Borrower; or Borrower or its
directors or stockholders shall take action seeking to effect the dissolution or
liquidation of Borrower.
(j) (i) Any material provision of any Loan Document shall cease to be in
full force and effect, or Borrower or any Guarantor shall disclaim any liability
thereunder or purport to revoke such Loan Document; or (ii) any Obligation (or
any obligation of any Guarantor under any Loan Document) shall be subordinated
to any other obligation of Borrower or any Guarantor, for any reason.
SECTION 7.2. REMEDIES. Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in Section 7.1(h)) and at
any time thereafter during the continuance of such Event of Default, Agent may,
with the consent of the Majority Lenders, or shall, upon instructions from the
Majority Lenders, by written notice to Borrower, (a) terminate the obligations
of the Lenders to make Advances under the Revolving Reducing Term Line of Credit
and to issue Letters of Credit under the Letter of Credit Facility, and/or
(b) declare all indebtedness of Borrower under the Loan Documents to be
immediately due and payable without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything in the
Loan Documents to the contrary notwithstanding. Upon the occurrence or
existence of any Event of Default described in Section 7.1(h), immediately and
without notice, (i) the obligations, if any, of the Lenders to extend any
further credit hereunder shall automatically cease and terminate, and (ii) all
indebtedness of Borrower under the Loan Documents shall automatically become
immediately due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything contained
herein or in the Notes to the contrary notwithstanding. In addition to the
foregoing remedies, upon the occurrence or existence of any Event of Default,
Agent may exercise any other right, power or remedy granted to it or the Lenders
under any Loan Document or permitted to it or the Lenders by law, either by suit
in equity or by action at law, or both, or as otherwise permitted under
applicable law. Immediately after taking any action under this Section 7.2,
Agent shall notify each Lender of such action.
ARTICLE VIII
THE AGENT AND RELATIONS AMONG LENDERS
SECTION 8.1. APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes Agent to act as its agent under the Loan
Documents with such powers as are expressly delegated to Agent by the terms of
the Loan Documents, together with such other powers as are reasonably incidental
thereto. Agent shall not have any duties or responsibilities
47
except those expressly set forth in any Loan Document, and Agent shall neither
be a trustee for any Lender nor have any fiduciary duty to any Lender. No
implied covenants, functions, responsibilities, duties or obligations shall be
read into any Loan Document or otherwise exist against Agent. Notwithstanding
anything to the contrary contained herein, Agent shall not be required to take
any action which is contrary to any Loan Document or applicable law. Neither
Agent nor any Lender shall be responsible to any other Lender for any recitals,
statements, representations or warranties made by Borrower contained in any Loan
Document, for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of any Loan Document or (if applicable) any collateral at any time
hereafter securing the Obligations or the obligations of any Guarantor or for
any failure by Borrower or any Guarantor to perform its respective obligations
hereunder or thereunder. Agent may employ agents and attorneys-in-fact and
shall not be responsible to any Lender for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. Neither
Agent nor any of its directors, officers, employees or agents shall be
responsible to any Lender for any action taken or omitted to be taken by it or
them under any Loan Document or in connection therewith, except for its or their
own gross negligence or wilful misconduct. Except as otherwise provided under
this Agreement, Agent shall take such action with respect to the Loan Documents
as shall be directed by the Majority Lenders.
SECTION 8.2. RELIANCE BY AGENT. Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telecopy,
or telex) or conversation believed by it in good faith to be genuine and correct
and to have been signed, sent or made by or on behalf of the proper person or
persons, and upon advice and statements of legal counsel (including counsel to
Borrower), independent accountants and other experts selected by Agent with
reasonable care. As to any matters not expressly provided for by this
Agreement, Agent shall not be required to take any action or exercise any
discretion, but shall be required to act or to refrain from acting upon
instructions of the Majority Lenders and shall in all cases be fully protected
by the Lenders in acting, or in refraining from acting, hereunder or under any
other Loan Document in accordance with the instructions of the Majority Lenders,
and such instructions of the Majority Lenders and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders.
SECTION 8.3. DEFAULTS. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default unless Agent has received a notice from a
Lender or Borrower, referring to this Agreement, describing such Default, and
stating that such notice is a "Notice of Default"; PROVIDED, HOWEVER, that Agent
shall be deemed to have knowledge and notice of a Default if Agent, in its
capacity as a Lender, has knowledge or notice of such Default. If Agent
receives such a notice of the occurrence
48
of a Default, Agent shall give prompt notice thereof to the Lenders. Subject to
Section 9.4 and to the fourth sentence of Section 8.1, Agent shall take such
action with respect to such Default as shall be directed by the Majority
Lenders; PROVIDED, HOWEVER, that until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as may be
reasonably necessary to prevent the material impairment of the Lenders'
collateral (if any) or the Lenders' rights; PROVIDED, FURTHER, that Agent shall
not, without the direction of Majority Lenders, institute any legal proceedings
against Borrower or any other Person to enforce any of the Lenders' rights or
remedies under the Loan Documents.
SECTION 8.4. INDEMNIFICATION. Without limiting the obligations of
Borrower or any Guarantor hereunder or under any other Loan Document, each
Lender agrees to indemnify Agent, ratably in accordance with its Proportionate
Share, for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time (including at any time following payment
of such obligations) be imposed on, incurred by or asserted against Agent in any
way relating to or arising out of this Agreement or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or the enforcement of any of the terms hereof or thereof or of any such
other documents or any action taken or omitted by Agent under or in connection
herewith or therewith; PROVIDED, HOWEVER, that no Lender shall be liable for any
of the foregoing to the extent they arise from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly on demand for its ratable share of any amounts payable
but not paid by Borrower under Section 9.2. Agent shall be fully justified in
refusing to take or to continue to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by Agent by reason of taking or
continuing to take any such action. The agreements in this Section 8.4 shall
survive the payment of the Obligations.
SECTION 8.5. NON-RELIANCE. Each Lender represents that it has,
independently and without reliance on Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the financial condition and affairs of
Borrower and decision to enter into this Agreement. Each Lender agrees that it
will, independently and without reliance upon Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own appraisals and decisions in taking or not taking
action under this Agreement. Each Lender acknowledges that Agent has not made
any representation or warranty to it with respect to the financial condition or
affairs of Borrower, this Agreement, any other Loan Document or any collateral
for the Obligations or
49
for the obligations of any Guarantor, and that no act by Agent hereafter,
including any review of any of such matters, shall be deemed to constitute any
such representation or warranty by Agent to any Lender. Neither Agent nor any
Lender shall be required to keep informed as to the performance or observance by
Borrower or any Guarantor of the respective obligations of Borrower and the
Guarantors under this Agreement or any other document referred to or provided
for herein or to make inquiry of, or to inspect the properties or books of
Borrower or any Guarantor. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by Agent
hereunder, neither Agent nor any Lender shall have any duty or responsibility to
provide any Lender with any credit or other information concerning Borrower or
any Guarantor which may come into the possession of Agent or of such Lender, or
of any of its or their respective affiliates.
SECTION 8.6. RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment
and acceptance of a successor Agent as provided below, Agent may resign at any
time by giving thirty (30) days' notice thereof to the Lenders, and Agent may be
removed at any time with or without cause by the Majority Lenders. Upon any
such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been appointed by
the Majority Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a bank having a
combined capital, surplus and retained earnings of not less than U.S.
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article VIII shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
SECTION 8.7. AUTHORIZATION. Agent is hereby authorized by the Lenders to
execute, deliver and perform each of the Loan Documents to which Agent is or is
intended to be a party and each Lender agrees to be bound by all of the
agreements of Agent contained in the Loan Documents.
SECTION 8.8. AGENT IN ITS INDIVIDUAL CAPACITY. Agent and its affiliates
may make loans to, accept deposits from, own securities of and generally engage
in any kind of business with Borrower, as though Agent were not Agent hereunder,
without any duty to give notice thereof or account therefor to any Lender.
Xxxxx Fargo as a Lender shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Lender and may exercise the
same as though it were not Agent, and
50
the terms "Lender" or "Lenders" shall include Xxxxx Fargo in each such capacity.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES. Except as specified otherwise herein, any
communications between the parties hereto or notices or requests required herein
to be given must be in writing and shall be deemed given or made when personally
delivered, or when received if sent by telecopy or cable, or upon the earlier of
the date of receipt or three (3) days after deposit in the U.S. mail, first
class and postage prepaid, addressed to Borrower at the following address or
telecopy number:
BORROWER: Copart, Inc.
0000 Xxxx 0xx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Senior Vice President
and Chief Financial Officer
Telecopier: (000) 000-0000,
WITH A COPY TO:
Xxxx X. Xxxxx, Esq., Senior Vice President
and General Counsel,
at the same address;
and to Agent and each Lender at its address or telecopy number set forth as the
"Address for Notices" for Agent or such Lender in Schedule I hereto, or at such
other address or telecopy number as any party may in writing hereafter indicate
by written notice to all other parties.
SECTION 9.2. EXPENSES. Borrower shall pay immediately upon demand
(a) all reasonable costs, fees and expenses, including reasonable attorneys'
fees and expenses, incurred by Agent and the Lenders in connection with the
preparation, review, execution and delivery of, and the exercise of its duties
under, this Credit Agreement and the other Loan Documents, and the preparation
of amendments and waivers hereunder and thereunder; (b) all reasonable costs,
fees and expenses, including reasonable attorneys' fees and expenses, incurred
by the Lenders and/or Agent in connection with the enforcement, preservation or
protection (or attempted enforcement, preservation or protection) of any rights
or remedies of the Lenders or Agent under this Agreement or any other Loan
Document (including in connection with any "workout" or restructuring relating
to this Agreement, any Credit, or any bankruptcy or insolvency case involving
Borrower or any Guarantor; and (c) all reasonable costs, fees and expenses
incurred by Agent and the Lenders for appraisals, audits, environmental
inspections and reviews, searches and filings in connection with any of the
foregoing; PROVIDED,
51
HOWEVER, that (x) Borrower shall not be required to pay in excess of $20,000 in
respect of attorneys' fees and expenses related to the preparation, review,
execution and delivery of the Loan Documents to be delivered in connection with
the initial Advance; and (y) absent the existence of a Default or the making of
a specific request by Borrower regarding the interpretation, amendment or
modification of, or any waiver or consent under, any Loan Document, or the
permissibility thereunder of a particular act or occurrence, Borrower shall not
be required to pay Agent's or the Lenders' costs, fees and expenses incurred in
administering the Credits. As used herein, the term "reasonable attorneys' fees
and expenses" shall include, without limitation, reasonable allocable costs and
expenses of the Lenders' and Agent's in-house legal counsel and staff, and
"reasonable costs, fees and expenses" shall include, without limitation,
reasonable allocable costs, fees and expenses of the Lenders' and Agent's
internal appraisal, audit, environmental and other similar services, and
reasonable fees and disbursements of expert witnesses and other consultants.
SECTION 9.3. INDEMNIFICATION. To the fullest extent permitted by law,
Borrower hereby agrees to protect, indemnify, defend and hold harmless each of
the Lenders, Agent, and their respective affiliates and each of their and their
respective affiliates' respective past and present officers, directors,
shareholders, employees, agents, attorneys, affiliates, successors and assigns,
together with their respective heirs, beneficiaries, executors, administrators,
trustees, predecessors, successors and assigns (collectively, "Indemnitees")
from and against any liabilities, losses, damages or expenses of any kind or
nature and from any suits, claims or demands (including in respect of or for
reasonable attorneys' fees and other expenses, including the allocated costs and
expenses of internal counsel) arising on account of or in connection with any
matter or thing or action or failure to act by Indemnitees, or any of them,
arising out of or relating to this Agreement, any other Loan Document, including
without limitation any use by Borrower of any proceeds of any Credit, except to
the extent such liability arises from the willful misconduct or gross negligence
of the Indemnitees. Upon receiving knowledge of any suit, claim or demand
asserted by a third party that Agent or any Lender believes is covered by this
indemnity, Agent or such Lender shall give Borrower notice of the matter and an
opportunity to defend it, at Borrower's sole cost and expense, with legal
counsel satisfactory to Agent or such Lender, as the case may be. Agent or such
Lender may also require Borrower to defend the matter. Any failure or delay of
Agent or any Lender to notify Borrower of any such suit, claim or demand shall
not relieve Borrower of its obligations under this Section 9.3 but shall reduce
such obligations to the extent of any increase in those obligations caused
solely by an unreasonable failure or delay in providing such notice. The
obligations of Borrower under this Section 9.3 shall survive the payment in full
and performance of all of the Obligations.
52
SECTION 9.4. WAIVERS, AMENDMENTS. Any term, covenant, agreement or
condition of this Agreement or any other Loan Document may be amended if such
amendment is in writing and is signed by Borrower and Majority Lenders, and any
term, covenant, agreement or condition of this Agreement or any other Loan
Document may be waived if such waiver is in writing and is signed by Borrower
and (for so long as Xxxxx Fargo is the Agent) the Agent; PROVIDED, HOWEVER, that
(a) any waiver of a Default under (i) any of Sections 5.1, 5.6, 6.1 and 6.2, or
(ii) any of Sections 5.3(a), 5.3(b) and 5.3(c) that involves a failure to
deliver the financial information required to be delivered pursuant thereto more
than thirty (30) days after the date it initially becomes due thereunder, or
(iii) any of Sections 6.3, 6.5, 6.6, 6.7 and 6.8 that involves an amount in
excess of $1,000,000, or (iv) Section 6.10, if such Default is material, may be
effected only with the written consent of Majority Lenders; (b) any amendment,
waiver or consent which affects the rights or duties of Agent must be in writing
and be signed also by Agent; and (c) any amendment, waiver or consent which
effects any of the following changes must be in writing and be signed also by
all the Lenders:
(i) increases the Maximum Principal Amount or the maximum Letter of
Credit Exposure set forth in Section 2.2(a);
(ii) extends the Maturity Date or the permissible term of any Letter
of Credit;
(iii) reduces (A) the principal of, or interest (including default rate
interest) on, any Advance, or (B) any fees or other amounts
payable for the account of the Lenders;
(iv) postpones or conditions any date fixed for any payment of the
principal of, or interest on, any Advance or any fees or other
amounts payable for the account of any of the Lenders;
(v) waives or amends this Section 9.4;
(vi) amends the definition of Majority Lenders;
(vii) results in a release of any substantial part of any collateral at
the time securing all or any portion of the Obligations; or
(viii) increases or decreases the Proportionate Share of any Lender in
the Total Commitments (other than through an assignment under
Section 9.5).
No failure or delay by Agent or the Lenders in exercising any right hereunder
shall operate as a waiver thereof or of any other right, nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other
53
right. Unless otherwise specified in such waiver or consent, a waiver or
consent given hereunder shall be effective only in the specific instance and for
the specific purpose for which given.
SECTION 9.5. SUCCESSORS AND ASSIGNS.
(a) BINDING EFFECT. The Loan Documents shall be binding upon and inure to
the benefit of Borrower, Guarantors, the Lenders, Agent, all future holders of
the Notes and their respective successors and permitted assigns, except that
neither Borrower nor any Guarantor may assign or transfer any of its rights or
obligations under any Loan Document without the prior written consent of Agent
and each Lender. All references in this Agreement to any Person shall be deemed
to include all successors and assigns of such Person.
(b) PARTICIPATIONS. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
Financial Institutions ("Participants") participating interests in any Credit
owing to such Lender, any Note held by such Lender, or any other interest of
such Lender under this Agreement and the other Loan Documents. In the event of
any such sale by a Lender of a participating interest to a Participant, (i) such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible for the
performance thereof, (iii) such Lender shall remain the holder of any such Note
for all purposes under this Agreement, and (iv) Borrower and the Guarantors and
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement. Participants
shall have no rights under this Agreement or any other Loan Document except as
provided below. No Lender shall sell any participating interest under which the
Participant shall have any rights to vote on any amendment or waiver of this
Agreement or any other Loan Document; PROVIDED, HOWEVER, that any agreement
pursuant to which any Lender sells a participating interest to a Participant may
require the selling Lender to obtain the consent of such Participant in order
for such Lender to agree in writing to any amendment of a type specified in
Sections 9.4(c)(i) through 9.4(c)(viii). No agreement pursuant to which any
Lender sells a participating interest to a Participant other than a Lender may
permit the participant to transfer, pledge, assign, sell participations in or
otherwise encumber its participating interest. Borrower agrees that if amounts
outstanding under this Agreement and the other Loan Documents are due and
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the fullest
extent permitted by law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any other Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement or any other Loan
Documents; PROVIDED, HOWEVER, that such rights of setoff shall be subject to
54
the obligation of such Participant to share with the Lenders, and the Lenders
agree to share with such Participant, as provided in Section 2.9(b). Borrower
also agrees that any Lender which has transferred all or part of its interests
in the Credits to one or more Participants shall, notwithstanding any such
transfer, be entitled to the full benefits accorded such Lender under
Sections 2.12 and 2.14, as if such Lender had not made such transfer.
(c) ASSIGNMENTS. Any Lender may, in the ordinary course of its business
and in accordance with applicable law, at any time, sell and assign to any
Lender or any other Financial Institution (individually, an "Assignee") all or
any portion of its rights and obligations under this Agreement and the other
Loan Documents (such a sale and assignment to be referred to herein as an
"Assignment") pursuant to an Assignment and Assumption Agreement in the form of
Exhibit E attached hereto (an "Assignment Agreement"), executed by each Assignee
and such assignor Lender (an "Assignor") and delivered to Agent for its
acceptance and recording in the Register; PROVIDED, HOWEVER, that:
(i) each Assignment shall be in a minimum amount of $5,000,000; and
(ii) without the written consents of Borrower, Agent and each other
Lender, which consents shall not be unreasonably withheld, no
Lender may make any Assignment to any Assignee which is not,
immediately prior to such Assignment, a Lender hereunder or an
affiliate thereof.
Upon the execution, delivery, acceptance and recording of each Assignment
Agreement, from and after the effective date set forth therein, (A) each
Assignee thereunder shall be a Lender hereunder with a Proportionate Share as
set forth in Section 1 of such Assignment Agreement and shall have the rights,
duties and obligations of such a Lender under this Agreement and the other Loan
Documents, and (B) the Assignor thereunder shall be a Lender with a
Proportionate Share as set forth in Section 1 of such Assignment Agreement, or,
if the Proportionate Share of the Assignor has been reduced to 0%, the Assignor
shall cease to be a Lender; PROVIDED, HOWEVER, that each Assignor shall
nevertheless be entitled to the indemnification rights contained in Section 9.3
for any events, acts or omissions occurring before the effective date of its
Assignment. Each Assignment Agreement shall be deemed to amend Schedule I
hereto to the extent necessary to reflect the addition of each Assignee and the
resulting adjustment of Proportionate Shares arising from the purchase by each
Assignee of all or a portion of the rights and obligations of an Assignor under
this Agreement and the other Loan Documents. On or prior to the effective date
of any Assignment, Borrower, at its own expense, shall execute and deliver to
Agent, in exchange for the surrendered Note of the Assignor thereunder, a new
Note to the order of the Assignee thereunder (with each new Note to be in an
amount equal to the
55
commitment assumed by such Assignee) and, if the Assignor has retained a
commitment hereunder, a new Note to the order of the Assignor (with the new Note
to be in an amount equal to the commitment retained by the Assignor), and
otherwise in the form of the Note replaced thereby. Any Note surrendered by the
Assignor shall be returned by Agent to Borrower marked "Exchanged".
(d) REGISTER. Agent shall maintain at Agent's Office a copy of each
Assignment Agreement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Proportionate
Shares of each Lender from time to time. The entries in the Register shall be
conclusive in the absence of manifest error, and Borrower, Agent and the Lenders
may treat each entity whose name is recorded in the Register as the owner of the
Proportionate Shares recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) REGISTRATION. Upon its receipt of an Assignment Agreement executed by
an Assignor and an Assignee (and, in the case of an Assignee that is not then a
Lender or an affiliate of a Lender, by Borrower and Agent) together with payment
by such Assignee to Agent of a registration and processing fee of $3,000, Agent
shall (i) promptly accept such Assignment Agreement, and (ii) on the effective
date of such Assignment record the information contained therein in the Register
and give notice of such acceptance and recordation to the Lenders and Borrower.
Agent may, from time to time at its election, prepare and deliver to the Lenders
and Borrower a revised Schedule I reflecting the names, addresses and respective
Proportionate Shares of all Lenders then parties hereto.
(f) CONFIDENTIALITY. Agent, and each of the Lenders, understands that
some of the information and documents furnished to it pursuant to this Agreement
or the other Loan Documents may be confidential, and agrees that it will keep
all non-public information, documents and agreements so furnished to it
confidential and will make no disclosure to other Persons of such information or
agreements until it shall have become public, except (i) to the extent required
in connection with matters involving operations under or enforcement or
amendment of the Loan Documents; (ii) in accordance with Agent's or such
Lender's obligations under law or regulations or pursuant to subpoenas or other
legal process to make information available to governmental agencies and
examiners or to others; (iii) to any corporate parent or (if such affiliate is a
Financial Institution) other affiliate of Agent or such Lender so long as such
parent or other affiliate agrees to accept such information or agreement subject
to the restrictions provided in this
56
Section 9.5(f); (iv) to any participant bank or trust company of the Agent or
such Lender that agrees to keep such information, documents or agreement
confidential in accordance with the restrictions provided in this Section
9.5(f); (v) to Agent or to any other Lender and such Lender's, Agent's and such
other Lenders' respective counsel and other professional advisors so long as
such Persons are instructed to keep such information confidential in accordance
with the provisions of this Section 9.5(f); (vi) to proposed Assignees and
Participants that are Financial Institutions and that agree to keep such
information, documents or agreements confidential in accordance with the
restrictions provided in this Section 9.5(f); or (vii) with the prior written
consent of the Borrower.
SECTION 9.6. SETOFF. In addition to any rights and remedies of the
Lenders provided by law, each Lender shall have the right, with the prior
consent of Agent but without prior notice to Borrower, any such notice being
expressly waived by Borrower to the extent permitted by applicable law, upon the
occurrence and during the continuance of an Event of Default, to set off and
apply against any indebtedness, whether matured or unmatured, of Borrower to
such Lender, any amount owing from such Lender to Borrower, at or at any time
after the happening of any of the above mentioned events, and, as security for
such indebtedness, Borrower hereby grants to each Lender a continuing security
interest in any and all deposits, accounts or moneys of Borrower then or
thereafter maintained with such Lender, subject in each case to Section 2.9(b).
The aforesaid right of set-off may be exercised by such Lender against Borrower
or against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment creditor of
Borrower or against anyone else claiming through or against Borrower or such
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the occurrence of a Default or Event of
Default. Each Lender agrees promptly to notify Borrower after any such set-off
and application made by such Lender, PROVIDED that the failure to give such
notice shall not affect the validity of such set-off and application.
SECTION 9.7. ENTIRE AGREEMENT, AMENDMENT. This Agreement and the other
Loan Documents constitute the entire agreement among Borrower, Agent and the
Lenders with respect to the Credits and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof.
SECTION 9.8. NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other Person shall be a
third party beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any other of the Loan Documents to
which it is not a party.
SECTION 9.9. TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan
57
Documents.
SECTION 9.10. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or any remaining provisions
of this Agreement.
SECTION 9.11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 9.12. SUBMISSION TO JURISDICTION. EACH OF BORROWER, AGENT AND THE
LENDERS HEREBY (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF CALIFORNIA AND THE FEDERAL COURTS OF THE UNITED STATES SITTING IN THE
STATE OF CALIFORNIA (AND TO THE NONEXCLUSIVE JURISDICTION OF THE SUPERIOR
COURTS FOR THE COUNTY OF SACRAMENTO OF THE STATE OF CALIFORNIA AND THE FEDERAL
COURTS OF THE UNITED STATES SITTING IN THE EASTERN DISTRICT OF THE STATE OF
CALIFORNIA) FOR THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS, (B) AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURTS, (C)
IRREVOCABLY WAIVES (TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW) ANY
OBJECTION WHICH IT NOW OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
ACTION OR PROCEEDING BROUGHT IN ANY OF THE FOREGOING COURTS, AND ANY OBJECTION
ON THE GROUND THAT ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM, AND (D) AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 9.13. WAIVER OF JURY TRIAL. EACH OF BORROWER, AGENT AND THE
LENDERS, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRAIL BY JURY IN ANY ACTION, PROCEEDING, COUNTERCLAIM OR
OTHER LITIGATION IN ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
OTHER OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS OR EVENTS REFERENCED
HEREIN OR THEREIN OR CONTEMPLATED HEREBY OR THEREBY, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND/OR ANY OTHER OF THE LOAN DOCUMENTS. A COPY OF THIS SECTION 9.13 MAY BE
FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY
JURY AND THE CONSENT TO TRIAL BY COURT.
SECTION 9.14. COUNTERPARTS. This Agreement may be executed in any number
of identical counterparts, any set of which signed by all the parties hereto
shall be deemed to constitute a complete, executed original for all purposes.
SECTION 9.15. AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT. As of the
Closing Date, this Agreement shall amend and restate
58
the Original Credit Agreement, but without prejudice to the rights of Xxxxx
Fargo and U.S. Bank of California under Section 9.3 of the Original Credit
Agreement or to the rights of Xxxxx Fargo under Section 8.4 of the Original
Credit Agreement, each of which shall remain in full force and effect and is
hereby incorporated into this Agreement by reference. Effective upon
satisfaction of the condition precedent to the initial extension of credit set
forth in Section 4.1(e), Agent hereby releases the security interests granted to
Agent pursuant to the Original Credit Agreement or the Security Agreements (as
defined in the Original Credit Agreement) or any other Loan Document (as defined
in the Original Credit Agreement) heretofore executed by Borrower or any
Subsidiary of Borrower as security for the Obligations (as defined in the
Original Credit Agreement). Agent shall cooperate with Borrower, at Borrower's
expense, in executing and filing or recording of record appropriate releases of
such security interests.
59
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
COPART, INC., a California XXXXX FARGO BANK,
corporation NATIONAL ASSOCIATION,
in its capacity as
Agent
By: ___________________________ By: _________________________
Title: ________________________ Title: ______________________
LENDERS:
XXXXX FARGO BANK, U.S. BANK OF CALIFORNIA, a
NATIONAL ASSOCIATION California state chartered
Bank
By: ___________________________ By: _________________________
Title: ________________________ Title: ______________________
FLEET NATIONAL BANK
By: ___________________________
Title: ________________________
60
SCHEDULE I
1. LENDERS: PROPORTIONATE SHARES:(1)
--------------------
XXXXX FARGO BANK, NATIONAL ASSOCIATION 40%
--------------------------------------
Applicable Lending Office:
Xxxxx Fargo Bank, National Association
000 Xxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Address for Notices:
Xxxxx Fargo Bank, National Association
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Agency Department - Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Wiring Instructions:
Xxxxx Fargo Bank, National Association
San Francisco, California
ABA No. 000000000
Account: 4518073895
Attn: Agency Department, Destination SR #703
Ref: Copart, Inc.
U.S. BANK OF CALIFORNIA 40%
-----------------------
Applicable Lending Office:
U.S. Bank of California
000 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxx 00000
-----------------
(1) Applicable to both Credits.
I-1
Address for Notices:
U.S. Bank of California
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx 00000-0000
or
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxx/Xxxxxxx Xxxxxx
Telephone: (000) 000-0000/(000) 000-0000
Telecopier: (000) 000-0000
Wiring Instructions:
U.S. Bank California
Seattle, Washington
ABA No. 000000000
Account: 4771111079
Attn: Xxxxxxx Xxxxxx
Ref: Copart, Inc.
FLEET NATIONAL BANK 20%
-------------------
Applicable Lending Office:
Fleet National Bank
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Address for Notices:
Fleet National Bank
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Wiring Instructions:
Fleet National Bank
ABA No. 000000000
Account: 151035003121 (General Ledger)
Attn: Xxxxxx Xxxxxxx (ph. (000) 000-0000)
Ref: Copart, Inc.
I-2
2. AGENT'S OFFICE:
Xxxxx Fargo Bank, National Association
Sacramento RCBO # 2684
000 Xxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
I-3
