W&S DRAFT
1/05/99
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CREDIT AGREEMENT
Dated as of January 6, 1999
among
HOMETOWN AUTO RETAILERS, INC.,
as a Guarantor,
WESTWOOD LINCOLN MERCURY SALES, INC.,
SHAKER'S INC.,
FAMILY FORD, INC.,
HOMETOWN AUTO FRAMINGHAM, INC.
and
HOMETOWN BRATTLEBORO, INC.
as Borrowers,
XXXXXX AUTOMOTIVE GROUP, INC., and
XXXXXX CHEVROLET, OLDSMOBILE, ISUZU, INC.,
as Specified Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
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TABLE OF CONTENTS
1. AMOUNT AND TERMS OF CREDIT.............................................1
1.1. Revolving Credit Facilities......................................1
1.2. Acquisition Facility.............................................7
1.3. Prepayments......................................................8
1.4. Use of Proceeds.................................................10
1.5. Interest........................................................10
1.6. Eligible Financed Vehicles......................................12
1.7. Eligible Used Vehicles..........................................13
1.8. Cash Management Systems.........................................14
1.9. Fees............................................................14
1.10. Collection and Disbursement.....................................14
1.11. Application and Allocation of Payments..........................16
1.12. Loan Account and Accounting.....................................18
1.13. Indemnity.......................................................18
1.14. Access..........................................................19
1.15. Taxes...........................................................20
1.16. Capital Adequacy; Increased Costs; Illegality...................21
1.17. Drafting Agreements.......................................22
(a) Issuance of Drafting Agreements...........................22
(b) Conditions to Issuance....................................23
(c) Notice of Issuance of or entering into
Manufacturers Drafting Letters..........................24
(d) Drafts Under Manufacturers Drafting Letters...............24
(e) Obligations Absolute......................................24
(f) Title Documents...........................................25
1.18. Single Loan.....................................................25
2. CONDITIONS PRECEDENT..................................................26
2.1. Conditions to the Initial Loans.................................26
2.2. Further Conditions to Each Loan.................................27
3. REPRESENTATIONS AND WARRANTIES........................................27
3.1. Corporate Existence; Compliance with Law........................28
3.2. Executive Offices; FEIN.........................................28
3.3. Corporate Power, Authorization, Enforceable Obligations.........28
3.4. Financial Statements and Projections............................28
3.5. Material Adverse Effect.........................................29
3.6. Ownership of Property; Liens....................................30
3.7. Labor Matters...................................................30
3.8. Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness........................................31
3.9. Government Regulation...........................................31
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3.10. Margin Regulations..............................................31
3.11. Taxes...........................................................31
3.12. ERISA...........................................................32
3.13. No Litigation...................................................33
3.14. Brokers.........................................................33
3.15. Intellectual Property...........................................33
3.16. Full Disclosure.................................................33
3.17. Environmental Matters...........................................33
3.18. Insurance.......................................................34
3.19. Deposit and Disbursement Accounts...............................34
3.20. Government Contracts............................................34
3.21. Customer and Trade Relations....................................34
3.22. Permits, Franchises.............................................35
3.23. Engaged in Vehicle Sales........................................35
3.24. Dealer Franchise Agreements.....................................35
3.25. Agreements and Other Documents..................................36
3.26. Solvency........................................................36
3.27. Year 2000 Representations.......................................36
4. FINANCIAL STATEMENTS AND INFORMATION..................................36
4.1. Reports and Notices.............................................36
4.2. Communication with Accountants..................................36
5. AFFIRMATIVE COVENANTS.................................................37
5.1. Maintenance of Existence, Conduct of Business, Etc..............37
5.2. Payment of Obligations..........................................37
5.3. Books and Records...............................................38
5.4. Insurance; Damage to or Destruction of Collateral...............38
5.5. Compliance with Laws............................................39
5.6. Supplemental Disclosure.........................................39
5.7. Intellectual Property...........................................40
5.8. Environmental Matters...........................................40
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee Letters..41
5.10. Further Assurances..............................................41
5.11. Fleet Sales.....................................................41
5.12. Year 2000 Problems..............................................41
6. NEGATIVE COVENANTS....................................................42
6.1. Mergers, Subsidiaries, Etc......................................42
6.2. Investments; Loans and Advances.................................46
6.3. Indebtedness....................................................46
6.4. Employee Loans and Affiliate Transactions.......................48
6.5. Capital Structure and Business..................................48
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6.6. Guaranteed Indebtedness.........................................48
6.7. Liens...........................................................48
6.8. Sale of Stock and Assets........................................49
6.9. ERISA...........................................................50
6.10. Financial Covenants.............................................50
6.11. Hazardous Materials.............................................50
6.12. Sale Leasebacks.................................................50
6.13. Cancellation of Indebtedness....................................50
6.14. Restricted Payments.............................................50
6.15. Change of Corporate Name or Location; Change of Fiscal Year.....50
6.16. No Impairment of Intercompany Transfers.........................51
6.17. Leases..........................................................51
6.18. Changes Relating to Subordinated Debt...........................51
6.19. Other Credit Parties............................................51
7. TERM..................................................................51
7.1. Termination.....................................................51
7.2. Survival of Obligations Upon Termination of Financing
Arrangements..................................................51
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES................................52
8.1. Events of Default...............................................52
8.2. Remedies........................................................54
8.3. Waivers by Credit Parties.......................................55
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT...................55
9.1. Assignment and Participations...................................55
9.2. Appointment of Agent............................................57
9.3. Agent's Reliance, Etc...........................................58
9.4. GE Capital and Affiliates.......................................58
9.5. Lender Credit Decision..........................................59
9.6. Indemnification.................................................59
9.7. Successor Agent.................................................59
9.8. Setoff and Sharing of Payments..................................60
9.9. Advances; Payments; Non Funding Lenders;
Information; Actions in Concert...............................61
10. SUCCESSORS AND ASSIGNS................................................63
10.1. Successors and Assigns..........................................63
11. MISCELLANEOUS.........................................................63
11.1. Complete Agreement; Modification of Agreement...................63
11.2. Amendments and Waivers..........................................63
11.3. Fees and Expenses...............................................65
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11.4. No Waiver.......................................................67
11.5. Remedies........................................................67
11.6. Severability....................................................67
11.7. Conflict of Terms...............................................67
11.8. Confidentiality.................................................67
11.9. GOVERNING LAW...................................................68
11.10.Notices.........................................................69
11.11.Section Titles..................................................69
11.12.Counterparts....................................................70
11.13.WAIVER OF JURY TRIAL............................................70
00.00.Xxxxx Releases..................................................70
11.15.Reinstatement...................................................70
11.16.Advice of Counsel...............................................71
00.00.Xx Strict Construction..........................................71
11.18.Agent for Service of Process....................................71
12. CROSS GUARANTY........................................................71
12.1. Cross Guaranty..................................................71
12.2. Waivers by Borrowers and Specified Borrowers....................72
12.3. Benefit of Guaranty.............................................72
12.4. Subordination of Subrogation, Etc...............................72
12.5. Election of Remedies............................................73
12.6. Limitation......................................................73
12.7. Contribution with Respect to Guaranty Obligations...............74
12.8. Liability Cumulative............................................74
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INDEX OF APPENDICES
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Exhibit 1.1(a) - Form of Notice of Floor Plan Advance
Exhibit 1.1(a)(ii) - Form of Floor Plan Note
Exhibit 1.1(b) - Form of Swing Line Note
Exhibit 1.2(a) - Form of Notice of Acquisition Advance
Exhibit 1.2(b) - Form of Acquisition Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Pro Forma
Schedule 3.4(C) - Projections
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.23 - Vehicle Locations
Schedule 3.24 - Dealer Franchise Agreements
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Annex A (Recitals) - Definitions
Annex B (Section 1.8) - Cash Management System
Annex C (Section 2.1(a))- Schedule of Additional Closing Documents
Annex D (Section 4.1(a))- Financial Statements and Projections -- Reporting
Annex E (Section 4.1(b))- Collateral Reports
Annex F (Section 6.10) - Financial Covenants
Annex G (Section 9.9(a))- Lenders' Wire Transfer Information
Annex H (Section 11.10) - Notice Addresses
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Annex I - Commitments as of Closing Date
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CREDIT AGREEMENT, dated as of January 6, 1999 among HOMETOWN AUTO
RETAILERS, INC., a Delaware corporation ("Hometown"), WESTWOOD LINCOLN MERCURY
SALES, INC., a New Jersey corporation ("Westwood"), XXXXXX AUTOMOTIVE GROUP,
INC., a New Jersey corporation ("Xxxxxx Automotive"), XXXXXX CHEVROLET,
OLDSMOBILE, ISUZU, INC., a New Jersey corporation ("Xxxxxx Isuzu"), SHAKER'S
INC., a Connecticut corporation ("Shaker"), FAMILY FORD, INC., a Connecticut
corporation ("Family Ford"), HOMETOWN AUTO FRAMINGHAM, INC., a Massachusetts
corporation ("Bay State") and HOMETOWN BRATTLEBORO, INC., a Vermont corporation
("Brattleboro") (Westwood, Shaker, Family Ford, Bay State and Brattleboro are
sometimes collectively referred to herein as the "Borrowers" and individually as
a "Borrower", and Xxxxxx Automotive and Xxxxxx Isuzu are sometimes collectively
referred to herein as the "Specified Borrowers" and individually as a "Specified
Borrower"); the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity, "GE Capital"),
for itself, as Lender, and as Agent for Lenders, and the other Lenders signatory
hereto from time to time.
RECITALS
WHEREAS, Borrowers desire that Lenders extend revolving and
acquisition credit facilities to Borrowers of up to One Hundred Million Dollars
($100,000,000) in the aggregate for the purpose of refinancing certain
indebtedness of Borrowers and to provide (a) floor plan financing for Borrowers,
and (b) funds for the acquisition of automobile dealerships by the Borrowers;
and for these purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrowers of up to such amount upon the terms and
conditions set forth herein; and
WHEREAS, Borrowers desire to secure all of their obligations under
the Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon all of their existing and after-acquired
personal and real property; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A. All Annexes, Disclosure Schedules,
Exhibits and other attachments (collectively, "Appendices") hereto, or expressly
identified to this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These Recitals shall be
construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1. Revolving Credit Facilities
(a) Floor Plan Facility.
(i) Subject to the terms and conditions hereof, each Floor
Plan Lender agrees to make available from time to time until the Commitment
Termination Date its Pro Rata Share of advances (each, a "Floor Plan Advance").
The Pro Rata Share of the Floor Plan Loan of any Floor Plan Lender shall not at
any time exceed its separate Floor Plan Loan Commitment. The obligations of each
Floor Plan Lender hereunder shall be several and not joint. Until the Commitment
Termination Date, Borrowers and Specified Borrowers may from time to time
borrow, repay and reborrow under this Section 1.1(a).
(ii) The aggregate amount of Floor Plan Advances outstanding
shall not exceed at any time the lesser of (A) the Floor Plan Loan Commitment
and (B) the Aggregate Borrowing Base, in each case less the Swing Line Loan
outstanding at such time ("Borrowing Availability"); provided, that (x) the
aggregate amount of Floor Plan Advances outstanding to Specified Borrowers shall
not exceed at any time the Aggregate Specified Borrowing Base, less the Swing
Line Loans of Specified Borrowers outstanding at such time, and (y) the sum of
the Floor Plan Loan and Swing Line Loan outstanding with respect to Used
Vehicles shall not exceed at any time the Used Vehicle Maximum Amount.
(iii) Each Floor Plan Advance shall be made on notice by (A)
Borrower Representative on behalf of each Borrower or a Specified Borrower, as
the case may be, or (B) a Manufacturer pursuant to a Drafting Agreement,
distributor or franchised dealer that notifies Agent that a Borrower or
Specified Borrower, as the case may be, desires the Floor Plan Lenders to
finance such Borrower's or Specified Borrower's purchase of a Financed Vehicle
from such Person to the representative of Agent identified on Schedule 1.1 at
the address specified thereon. Any Advance made by the Floor Plan Lenders at the
request of such third party to pay for the purchase of a Financed Vehicle shall
be deemed to be an Advance requested by Borrower Representative for the
Borrowers or a Specified Borrower, as the case may be. The Floor Plan Lenders,
at the option of Agent, may disburse the Advance to Borrower Representative, the
Specified Borrower or to the seller of the Financed Vehicle, as the case may be.
For purposes of determining Borrowing Availability and a Specified Aggregate
Borrowing Base, (A) Vehicles shall be reported sold through the Instant Access
System within three (3) Business Days of the sale date and (B) any commitment by
the Floor Plan Lenders to make a Floor Plan Advance to such third party shall be
deemed to have been made for the purposes of the Instant Access System and this
Agreement. Any invoice, receipt, notice of shipment or schedule pertaining to a
Financed Vehicle received by or sold to a Borrower or a Specified Borrower, as
the case may be, which indicates that the Lenders have an interest in or have
financed a Financed Vehicle shall be prima facia evidence when so used by the
Lenders that the Floor Plan Lenders have financed the acquisition of such
Financed Vehicle. Notwithstanding the foregoing, in the case of any Draft by a
Manufacturer (x) if the Agent has, at the request of the Requisite
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Lenders or acting in its discretion according to the terms hereof, taken action
to suspend or terminate Drafts pursuant to one or more Drafting Agreements and
such Drafting Agreements have in fact been suspended or terminated in accordance
with their respective terms or (y) the payment of any Draft with the proceeds of
a Floor Plan Advance would not be permitted pursuant to Section 1.1(a)(ii), then
no Floor Plan Lenders shall be required to fund the amount of such Draft.
(iv) Notices delivered pursuant to this Section 1.1(a) must be
given no later than noon (New York time) on the date which is three (3) Business
Days prior to the proposed Floor Plan Advance. Each such notice from the
Borrower Representative (a "Notice of Floor Plan Advance") must be given in
writing (by facsimile transmission or overnight courier) substantially in the
form of Exhibit 1.1(a)(i), and shall include the information required in such
Exhibit and such other information as may be required by Agent. Except for the
initial Floor Plan Advance, all Floor Plan Advances shall be disbursed pursuant
to the terms of Section 1.10.
(v) The Borrowers and Specified Borrowers shall execute and
deliver to each Floor Plan Lender a promissory note to evidence the Floor Plan
Loan Commitment of that Floor Plan Lender. Each promissory note shall be in the
principal amount of the Floor Plan Loan Commitment of the applicable Floor Plan
Lender, dated the Closing Date and substantially in the form of Exhibit
1.1(a)(ii) (each a "Floor Plan Note" and, collectively, the "Floor Plan Notes").
Each Floor Plan Note shall represent the joint and several obligation of each
Borrower, as a co-obligor, and of each Specified Borrower, as a co-obligor, to
pay the amount of each Floor Plan Lender's Floor Plan Loan Commitment or, if
less, the applicable Floor Plan Lender's Pro Rata Share of the aggregate unpaid
principal amount of all Floor Plan Advances together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the aggregate Floor Plan
Loan and all other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date.
(b) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender upon Agent's
receipt of any Notice of Floor Plan Advance. Subject to the terms and conditions
hereof, the Swing Line Lender may, in its discretion, make available from time
to time until the Commitment Termination Date advances (each, a "Swing Line
Advance") in accordance with any such notice. The aggregate amount of Swing Line
Advances outstanding shall not exceed the lesser of (A) the Swing Line
Commitment and (B) the sum of (x) the Aggregate Borrowing Base, plus (y) the
Aggregate Specified Borrowing Base, in each case less the outstanding balance of
the Floor Plan Loan at such time ("Swing Line Availability"). Until the
Commitment Termination Date, Borrowers and Specified Borrowers may from time to
time borrow, repay and reborrow under this Section 1.1(b). Each Swing Line
Advance shall be made pursuant to a Notice of Floor Plan Advance delivered to
Agent in accordance with Section 1.1(a). Those notices must be given no later
than noon (New York time) on the Business Day of the proposed Swing Line
Advance. Notwithstanding any other provision of this Agreement or the other Loan
Documents, the Swing Line Loan shall constitute an Index Rate Loan. Borrowers
and Specified Borrowers shall repay the aggregate outstanding principal amount
of the Swing Line
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Loan upon demand therefor by Agent. Notwithstanding the foregoing, in the case
of any Draft by a Manufacturer (x) if the Agent has, at the request of the
Requisite Lenders or acting in its discretion according to the terms hereof,
taken action to suspend or terminate Drafts pursuant to one or more Drafting
Agreements and such Drafting Agreements have in fact been suspended or
terminated in accordance with their respective terms or (y) the payment of any
Draft with the proceeds of a Swing Line Loan would not be permitted pursuant to
the second sentence of this Section 1.1(b)(i) and the Swing Line Lender has not
elected to make an Overdraft Loan to the Borrower or Specified Borrowers
pursuant to Section 1.1(b)(vi), then the Swing Line Lender shall not be required
to fund the amount of such Draft.
(ii) The Borrowers and each Specified Borrower shall execute
and deliver to the Swing Line Lender a promissory note to evidence the Swing
Line Commitment. The promissory note shall be in the principal amount of the
Swing Line Commitment of the Swing Line Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(b) (the "Swing Line Note"). The Swing
Line Note shall represent the joint and several obligation of each Borrower, as
a co-obligor, and of each Specified Borrower, as a co-obligor, to pay the amount
of the Swing Line Commitment or, if less, the aggregate unpaid principal amount
of all Swing Line Advances together with interest thereon as prescribed in
Section 1.5. The entire unpaid balance of the Swing Line Loan and all other
non-contingent Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date if not sooner
paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Lender, at
any time and from time to time in its sole and absolute discretion, but not less
frequently than monthly, shall on behalf of the Borrowers and the Specified
Borrowers (and each Borrower and Specified Borrower hereby irrevocably
authorizes the Swing Line Lender to so act on its behalf) request each Floor
Plan Lender (including the Swing Line Lender) to make a Floor Plan Advance to
the Borrowers or a Specified Borrower, as the case may be, (which shall be an
Index Rate Loan) in an amount equal to such Floor Plan Lender's Pro Rata Share
of the principal amount of such Borrower's or Specified Borrower's, as the case
may be, Swing Line Loan (the "Refunded Swing Line Loan") outstanding on the date
such notice is given. Unless any of the events described in Sections 8.1(h) or
8.1(i) shall have occurred (in which event the procedures of Section 1.1(b)(iv)
shall apply) and regardless of whether the conditions precedent set forth in
this Agreement to the making of a Floor Plan Advance are then satisfied, each
Floor Plan Lender shall disburse directly to Agent, its Pro Rata Share of a
Floor Plan Advance on behalf of the Swing Line Lender, prior to 3:00 p.m. (New
York time), in immediately available funds on the Business Day next succeeding
the date such notice is given. The proceeds of such Floor Plan Advances shall be
immediately paid to the Swing Line Lender and applied to repay the Refunded
Swing Line Loan.
(iv) Participation in Swing Line Loans. If, prior to refunding
a Swing Line Loan with a Floor Plan Advance pursuant to Section 1.1(b)(iii), one
of the events described in Sections 8.1(h) or 8.1(i) shall have occurred, then,
subject to the provisions of Section 1.1(b)(v) below, each Floor Plan Lender
will, on the date such Floor Plan Advance was to have been made for the benefit
of the Borrowers, or a Specified Borrower, as the case may be, purchase from the
Swing
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Line Lender an undivided participation interest in the Swing Line Loan in an
amount equal to its Pro Rata Share of such Swing Line Loan. Upon request, each
Floor Plan Lender will promptly transfer to the Swing Line Lender, in
immediately available funds, the amount of its participation.
(v) Floor Plan Lenders' Obligations Unconditional. Each Floor
Plan Lender's obligation to make Floor Plan Advances in accordance with Section
1.1(b)(iii) and to purchase participating interests in accordance with Section
1.1(b)(iv) shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Floor Plan Lender may have against the Swing Line Lender,
any Borrower, any Specified Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of any Default or Event of
Default; (C) any inability of any Borrower or any Specified Borrower to satisfy
the conditions precedent to borrowing set forth in this Agreement on the date
upon which such participating interest is to be purchased or (D) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If any Floor Plan Lender does not make available to Agent or the
Swing Line Lender, as applicable, the amount required pursuant to Section
1.1(b)(iii) or 1.1(b)(iv), as the case may be, the Swing Line Lender shall be
entitled to recover such amount on demand from such Floor Plan Lender, together
with interest thereon for each day from the date of non-payment until such
amount is paid in full at the Federal Funds Rate for the first two Business Days
and at the Index Rate thereafter.
(vi)(1) If on any day the aggregate principal amount of a
requested Advance consists of a Draft which has been delivered to the Swing Line
Lender pursuant to a Drafting Agreement the payment of which would cause the
aggregate amount of Floor Plan Advances outstanding to exceed the lesser of (A)
the Floor Plan Loan Commitment and (B) the Aggregate Borrowing Base, in each
case less the Swing Line Loan outstanding at such time, and the Borrowers or
Specified Borrowers fail to either immediately reduce the amount required
pursuant to a pending Notice of Floor Plan Advance, if any, which does not
consist of a Draft or make a payment of the principal on Floor Plan Loans and/or
Swing Line Loans in an amount which would prevent the amount of the Advance
requested pursuant to such Notice of Floor Plan Advance plus the amount of such
Draft from exceeding the lesser of (A) or (B) above, then such Advance shall be
deemed a notice for a swing line overdraft advance (each a "Notice of Swing Line
Overdraft Advance") pursuant to this Section 1.1(b)(vi), and the Swing Line
Lender may, in its sole discretion, make available from time to time until the
thirtieth (30th) day prior to the Commitment Termination Date swing line
overdraft advances (each a "Swing Line Overdraft Advance") in accordance with
any such notice.
(2) On any day that a Notice of Floor Plan Advance constitutes a Notice of
Swing Line Overdraft Advance, the Borrowers or Specified Borrower, as the case
may be, shall be deemed to have delivered to the Swing Line Lender a Notice of
Swing Line Overdraft Advance, and, if such Notice of Swing Line Overdraft
Advance is accepted by the Swing Line Lender, in its sole discretion, such
Notice of Overdraft Advance shall not be revocable by the Borrowers or Specified
Borrowers, as the case may be, and shall constitute and include a certification
of the Borrower Representative of the conditions contained in Section 2.2 as of
such date. The Swing Line Lender shall promptly
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notify Agent, Borrower Representative and the Floor Plan Lenders of it's
acceptance of a Notice of Swing Line Overdraft Advance.
(3) Each Swing Line Overdraft Loan shall constitute an Index Rate Loan.
The amount and date of each Swing Line Overdraft Loan and the amounts and dates
of any repayment shall be noted on the Swing Line Lender's records, which
records will be prima facia evidence thereof, absent manifest error; provided,
however, that any failure by the Swing Line Lender to record any such
information shall not affect the Borrowers' or Specified Borrowers' obligations
to repay any such Swing Line Overdraft Loan under the terms of this Agreement
and the other Loan Documents.
(4) Swing Line Overdraft Loans shall be made only by the Swing Line Lender
solely for its own account and shall not be subject to the provisions of Section
1.1(b)(iii); provided however, that at any time a Swing Line Overdraft Loan is
outstanding, the Lenders hereby acknowledge and agree that the payment of
principal and interest with respect to all Loans (other than Swing Line
Overdraft Loans) shall be subordinated in right of payment and priority to the
prior payment in full of the Swing Line Overdraft Loans and the Agent and the
Lenders, as the case may be, shall remit to the Swing Line Lender, and the Swing
Line Lender shall have the right to receive, all payments of principal and
interest made by any Borrower or Specified Borrowers in respect of any Loan and
all other proceeds of Collateral securing the Loans for application and
reduction of the aggregate principal amount of outstanding Swing Line Overdraft
Loans.
(5) In the event that the aggregate amount of Floor Plan Advances
outstanding exceed at any time the lesser of (A) the Floor Plan Loan Commitment
and (B) the Aggregate Borrowing Base, in each case less the Swing Line Loan
outstanding at such time, and at such time any Swing Line Overdraft Loans remain
outstanding, then in such event the Agent acting in its sole discretion may, and
upon the election of the Requisite Floor Plan Lenders shall, take any and all
actions reasonably necessary to suspend and/or terminate Drafts pursuant to the
Drafting Agreements.
(6) The Borrowers and Specified Borrowers shall, on receipt of demand from
the Swing Line Lender, immediately repay the Swing Line Overdraft Loan, and the
entire unpaid balance of the Swing Line Overdraft Loan shall be immediately due
and payable in full in immediately available funds on the Commitment Termination
Date if not sooner paid in full.
(c) Reliance on Notices; Appointment of Borrower Representative.
Agent shall be entitled to rely upon, and shall be fully protected in relying
upon, any Notice of Floor Plan Advance, Notice of Acquisition Advance or similar
notice believed by Agent to be genuine. Borrower Representative shall from time
to time inform Agent in writing of the Persons authorized to execute and deliver
such a notice and Agent may assume that each such Person executing and
delivering such a notice was duly authorized, unless the responsible individual
acting thereon for Agent has actual knowledge to the contrary. Each Borrower and
each Specified Borrower hereby designates Hometown as its representative and
agent on its behalf for the purposes of issuing Notices of Floor Plan Advances
and Notices of Acquisition Advance, giving instructions with respect to the
disbursement of the proceeds of the Loans, selecting interest rate options,
giving and receiving all notices and consents hereunder or under any of the
other Loan Documents and taking all other
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actions (including in respect of compliance with covenants) on behalf of any
Borrower or any Specified Borrower under the Loan Documents. Borrower
Representative hereby accepts such appointment. Agent and each Lender may regard
any notice or other communication pursuant to any Loan Document from Borrower
Representative as a notice or communication from all Borrowers, and may give any
notice or communication required or permitted to be given to any Borrower or any
Specified Borrower hereunder to Borrower Representative on behalf of such
Borrower or Specified Borrower. Each Borrower and Specified Borrower agrees that
each notice, election, representation and warranty, covenant, agreement and
undertaking made on its behalf by Borrower Representative shall be deemed for
all purposes to have been made by such Borrower or Specified Borrower and shall
be binding upon and enforceable against such Borrower or Specified Borrower to
the same extent as if the same had been made directly by such Borrower or
Specified Borrower.
1.2. Acquisition Facility.
(a) Subject to the terms and conditions hereof, each Lender
having an Acquisition Loan Commitment agrees to make available from time to time
until the Acquisition Loan Commitment Termination Date its Pro Rata Share of
advances (each, an "Acquisition Advance" and collectively, the "Acquisition
Advances"). The Pro Rata Share of the Acquisition Loan of any Lender shall not
at any time exceed its separate Acquisition Loan Commitment. The obligations of
each Lender hereunder shall be several and not joint. The aggregate amount of
Acquisition Advances outstanding at any one time shall not exceed the lesser of
(x) the Acquisition Loan Maximum Amount and (y) the Acquisition Loan
Availability. Each Acquisition Advance shall be made on notice by Borrower
Representative on behalf of each Borrower to the representative of Agent
identified on Schedule 1.1 at the address specified thereon. Those notices must
be given no later than noon (New York time) on the date which is three (3)
Business Days prior to the proposed Acquisition Advance. Each such notice (a
"Notice of Acquisition Advance") must be given in writing (by facsimile
transmission or overnight courier) substantially in the form of Exhibit 1.2(a),
and shall include the information required in such Exhibit and such other
information as may be required by Agent.
(b) The Borrowers shall execute and deliver to each Lender
having an Acquisition Loan Commitment a promissory note to evidence the
Acquisition Loan Commitment of that Lender. Each promissory note shall be in the
principal amount of the Acquisition Loan Commitment of the applicable Lender,
dated the Closing Date and substantially in the form of Exhibit 1.(2)(b) (each
an "Acquisition Note" and, collectively, the "Acquisition Notes"). Each
Acquisition Note shall represent the joint and several obligation of each
Borrower, as a co-obligor, to pay the amount of each Lender's Acquisition Loan
Commitment or, if less, the applicable Lender's Pro Rata Share of the aggregate
unpaid principal amount of all Acquisition Advances together with interest
thereon as prescribed in Section 1.5.
(c) With respect to each Acquisition Advance, the Borrowers
shall pay the principal amount of such Acquisition Advance in consecutive
installments on the respective payment dates and in the corresponding
installment amounts, set forth below:
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Payment Date Installment Amount
------------ ------------------
the first anniversary of the date 10% of the original principal amount
of such Acquisition Advance of such Acquisition Advance
the second anniversary of the date 10% of the original principal amount
of such Acquisition Advance of such Acquisition Advance
the third anniversary of the date 15% of the original principal amount
of such Acquisition Advance of such Acquisition Advance
the fourth anniversary of the date 15% of the original principal amount
of such Acquisition Advance of such Acquisition Advance
the fifth anniversary of the date 50% of the original principal amount
of such Acquisition Advance of such Acquisition Advance
Notwithstanding the foregoing, the entire unpaid balance of the aggregate
Acquisition Loan shall be immediately due and payable in full in immediately
available funds on the Acquisition Loan Maturity Date.
1.3. Prepayments
(a) Voluntary Prepayments. Borrowers may at any time on at least
five (5) days' prior written notice by Borrower Representative to Agent
voluntarily prepay all of the outstanding principal amount of the Acquisition
Loan and terminate the Acquisition Loan Commitment. Borrowers and/or Specified
Borrowers may at any time on at least five (5) days prior written notice by
Borrower Representative to Agent voluntarily prepay Floor Plan Loans, in whole
or in part, in amounts of $5,000,000 or any multiple of $1,000,000 in excess
thereof. In addition, Borrowers may at any time on at least ten (10) days' prior
written notice by Borrower Representative to Agent terminate the Floor Plan Loan
Commitment; provided that upon such termination, all Loans and other Obligations
shall be immediately due and payable in full. Any such voluntary prepayment of
Loans and termination must be accompanied by the payment of the fee required by
Section 1.9(c), if any, plus the payment of any LIBOR funding breakage costs in
accordance with Section 1.13(b). Upon any such prepayment and termination of the
Acquisition Loan Commitment or the termination of the Floor Plan Loan
Commitment, as the case may be, each Borrower's and Specified Borrower's right
to request Advances under such Loan, or, in the case of the Floor Plan Loan
Commitment, request Swing Line Advances, shall simultaneously be terminated.
(b) Mandatory Prepayments. (i) If at any time the outstanding
balance of the Floor Plan Loan exceeds the lesser of (A) the Floor Plan Loan
Commitment and (B) the Aggregate Borrowing Base, less, in each case, the
aggregate outstanding Swing Line Loan at such time, Borrowers and Specified
Borrowers shall immediately repay the relevant outstanding Advances to
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the extent required to eliminate such excess. If any time the outstanding
balance of the Floor Plan Loan attributable to Specified Borrowers exceeds the
Aggregate Specified Borrowing Base less the outstanding balance of the Swing
Line Loan attributable to Specified Borrowers at such time, the Specified
Borrowers shall immediately repay the relevant outstanding Advance to the extent
required to eliminate such excess. If at any time the sum of the Floor Plan and
Swing Line Loan outstanding with respect to Used Vehicles exceeds the Used
Vehicle Maximum Amount, the Borrowers and Specified Borrowers shall immediately
repay the relevant outstanding Advances to the extent required to eliminate such
excess.
(ii) Immediately upon receipt by any Credit Party of proceeds
of any asset disposition excluding proceeds of asset dispositions permitted by
Section 6.8 (a)) or any sale of Stock of any Subsidiary of any Credit Party,
Borrowers shall prepay the Acquisition Loan in an amount equal to all such
proceeds, net of (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable
by Borrowers in connection therewith (in each case, paid to non-Affiliates), (B)
transfer taxes related to such disposition, (C) amounts payable to holders of
senior Liens (to the extent such Liens constitute Permitted Encumbrances
hereunder) on such assets, if any, and (D) an appropriate reserve for income
taxes in accordance with GAAP in connection therewith. Any such prepayment shall
be applied in accordance with clause (c) below.
(iii) If any Credit Party issues Stock (other than Stock
issued to employees of Hometown or a Borrower pursuant to employee restrictive
stock or an employee stock option plan), no later than the Business Day
following the date of receipt of the proceeds thereof, Hometown shall cause the
Acquisition Loan to be prepaid in an amount equal to fifty percent (50%) of such
proceeds, net of underwriting discounts and commissions and other reasonable
costs paid to non-Affiliates in connection therewith. Any such prepayment shall
be applied in accordance with clause (c) below.
(iv) Until the Termination Date, Borrowers shall prepay the
Acquisition Loan on the earlier of the date which is ten (10) days after (A) the
date on which Hometown's consolidated annual audited Financial Statements for
the immediately preceding Fiscal Year are delivered pursuant to Annex D or (B)
the date on which such annual audited Financial Statements were required to be
delivered pursuant to Annex D, in an amount equal to sixty percent (60%) of
Excess Cash Flow for the immediately preceding Fiscal Year. Any such prepayment
shall be applied in accordance with clause (c) below. Each such prepayment shall
be accompanied by a certificate signed by Hometown's chief financial officer
certifying the manner in which Excess Cash Flow and the resulting prepayment,
which certificate shall be in form and substance satisfactory to Agent.
(v) Immediately upon receipt by any Credit Party of insurance
proceeds received in the event of loss or the condemnation, seizure or
requisition of property or assets of any Credit Party. Borrowers shall prepay
the Acquisition Loan to the extent required in accordance with Section 5.4.
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(c) Application of Certain Mandatory Prepayments. Any prepayments
made by any Borrower or Specified Borrower pursuant to clauses (b)(ii),
(b)(iii), (b)(iv) or (b)(v) above shall be applied as follows: first, to Fees
and reimbursable expenses of Agent then due and payable pursuant to any of the
Loan Documents; second, to interest then due and payable on the Swing Line
Overdraft Loan; third, to prepay the outstanding principal amount of the Swing
Line Overdraft Loan; fourth, to interest then due and payable on the Acquisition
Loan; and fifth, to prepay the remaining scheduled installments of the
Acquisition Loan on a pro rata basis, until such Loan shall have been prepaid in
full.
(d) Nothing in this Section 1.3 shall be construed to constitute
Agent's or any Lender's consent to any transaction referred to in clauses
(b)(ii) and (b)(iii) above which is not permitted by other provisions of this
Agreement or the other Loan Documents.
1.4. Use of Proceeds. Borrowers shall utilize the proceeds of (a)
the Floor Plan Advances and the Swing Line Advances for the Refinancing, the
financing of the acquisition of Vehicles (including in connection with the
refinancing of any floor plan financing of a Target in connection with any
Permitted Acquisition), the financing of Permitted Acquisitions, working capital
and general corporate purposes and (b) the Acquisition Loan solely for the
financing of Permitted Acquisitions. Specified Borrowers shall utilize the
proceeds of the Floor Plan Advances and the Swing Line Advances for the
financing of the acquisition of Vehicles (including in connection with the
refinancing of any floor plan financing of a Target in connection with any
Permitted Acquisition), working capital and for general corporate purposes.
Disclosure Schedule (1.4) contains a description of Borrowers' sources and uses
of funds as of the Closing Date, including Loans to be made on that date or
prior to December 31, 1998 with respect to the Refinancing, and a funds flow
memorandum detailing how funds from each source are to be transferred to
particular uses.
1.5. Interest. (a) Borrowers and Specified Borrowers, as the case
may be, shall pay interest to Agent, for the ratable benefit of Lenders in
accordance with the various Loans being made by each Lender, in arrears on each
applicable Interest Payment Date, at the following rates: (i) with respect to
Floor Plan Advances, the Index Rate per annum or, at the election of Borrower
Representative, the applicable LIBOR Rate plus one and one-half percent (1.5%)
per annum, based on the aggregate Floor Plan Advances outstanding from time to
time; (ii) with respect to the Acquisition Loan, (x) from the date on which an
Acquisition Loan is made through but excluding the next occurring Interest Reset
Date, the applicable Quoted Rate plus four percent (4.0%) per annum, and (y)
thereafter at the applicable LIBOR Rate plus four percent (4.0%) per annum; and
(iii) with respect to the Swing Line Loan and Swing Line Overdraft Loan, the
Index Rate per annum. Interest on all Advances shall begin to accrue on the
earlier of (i) the date of the invoice from a seller of a Vehicle to a Borrower
or Specified Borrower, as the case may be, or (ii) the date on which the Lenders
make an Advance.
(b) For purposes of computing interest and Fees and determining
Borrowing Availability, Net Borrowing Availability or a Specified Aggregate
Borrowing Base as of any date, all payments shall be deemed received on the day
of receipt of immediately available funds therefor in
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the Collection Account prior to 2:00 p.m. (New York time). Payments received
after 2:00 p.m. New York time on any Business Day shall be deemed to have been
received on the following Business Day. If any payment on any Loan becomes due
and payable on a day other than a Business Day, the maturity thereof will be
extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a three hundred and sixty (360)
day year, in each case for the actual number of days occurring in the period for
which such interest and Fees are payable. The Index Rate shall be determined
each day based upon the Index Rate as in effect each day. Each determination by
Agent of an interest rate and Fees hereunder shall be conclusive, absent
manifest error.
(d) So long as an Event of Default shall have occurred and be
continuing under Section 8.1(a), (h) or (i) or so long as any other Default or
Event of Default shall have occurred and be continuing and at the election of
Agent (or upon the written request of Requisite Lenders) confirmed by written
notice from Agent to Borrower Representative, the interest rates applicable to
the Loans shall be increased by two percent (2%) per annum above the rates of
interest otherwise applicable hereunder ("Default Rate"), and all outstanding
Obligations shall bear interest at the Default Rate applicable to such
Obligations. Interest at the Default Rate shall accrue from the initial date of
such Default or Event of Default until that Default or Event of Default is cured
or waived and shall be payable upon demand.
(e) So long as no Default or Event of Default shall have occurred
and be continuing, Borrower Representative shall have the option on any Interest
Reset Date to (i) convert all or any part of outstanding Floor Plan Loans from
Index Rate Loans to LIBOR Loans, (ii) convert any Floor Plan Loan maintained as
a LIBOR Loan to an Index Rate Loan or (iii) continue all or any portion of any
Floor Plan Loan as a LIBOR Loan. Any Floor Plan Loan to be continued as, or
converted into, a LIBOR Loan must be in a minimum amount of $1,000,000 and
integral multiples of $1,000,000 in excess of such amount. Any such election
must be made by noon (New York time) on the third (3rd) Business Day prior to
the applicable Interest Reset Date. If no election is received with respect to a
LIBOR Loan by noon (New York time) on the third (3rd) Business Day prior to the
applicable Interest Reset Date (or if a Default or an Event of Default shall
have occurred and be continuing or if the additional conditions precedent set
forth in Section 2.2 shall not have been satisfied), such LIBOR Loan shall be
converted to an Index Rate Loan at the end of its LIBOR Period. Borrower
Representative must make such election by notice to Agent in writing, by
facsimile transmission or overnight courier. In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a "Notice
of Conversion/Continuation") in the form of Exhibit 1.5(e). No Floor Plan Loan
may be made as or converted into a LIBOR Loan until the first Interest Reset
Date to occur after the Closing Date.
(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder
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exceeds the highest rate of interest permissible under law (the "Maximum Lawful
Rate"), then in such event and so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable hereunder shall be equal to the Maximum
Lawful Rate; provided, however, that if at any time thereafter the rate of
interest payable hereunder is less than the Maximum Lawful Rate, Borrowers and
Specified Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest which would have been received had
the interest rate payable hereunder been (but for the operation of this Section
15(f) the interest rate payable since the Closing Date as otherwise provided in
this Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e) above, unless
and until the rate of interest again exceeds the Maximum Lawful Rate, and at
that time this Section 1.5(f) shall again apply. In no event shall the total
interest contracted for, charged, owed or received by any Lender pursuant to the
terms hereof exceed the amount which such Lender could lawfully have received
had the interest due hereunder been calculated for the full term hereof at the
Maximum Lawful Rate. If the Maximum Lawful Rate is calculated pursuant to this
paragraph, such interest shall be calculated at a daily rate equal to the
Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made. If, notwithstanding the provisions of this Section 1.5(f),
a court of competent jurisdiction shall finally determine that a Lender has
received interest hereunder in excess of the Maximum Lawful Rate, Agent shall,
to the extent permitted by applicable law, promptly apply such excess in the
order specified in Section 1.11 and thereafter shall refund any excess to
Borrowers, a Specified Borrower or as a court of competent jurisdiction may
otherwise order. In determining whether the interest exceeds the Maximum Lawful
Rate or the maximum amount which a Lender could lawfully have received, the
total amount of interest shall, to the extent allowed by law, be spread over the
term of the total Indebtedness. Any provisions of this Agreement regarding the
time during which interest accrues on Advances are only elements of the formula
for calculating interest on the total indebtedness and are not intended to cause
interest to be applied to specific Advances for usury determination purposes.
1.6. Eligible Financed Vehicles. Based on the most recent Borrowing
Base Certificate and on other information available to Agent, Agent shall in its
reasonable credit judgment determine which Financed Vehicles of each Borrower
and each Specified Borrower shall be "Eligible Financed Vehicles" (as determined
pursuant to this Section 1.6) for purposes of this Agreement. Agent reserves the
right, at any time and from time to time after the Closing Date, to adjust any
such criteria, to establish new criteria and to adjust advance rates with
respect to Eligible Financed Vehicles, in its reasonable credit judgment,
subject to the approval of Supermajority Floor Plan Lenders in the case of
adjustments or new criteria or changes in advance rates which have the effect of
making more credit available. Eligible Financed Vehicles shall be any Financed
Vehicle of any Borrower or Specified Borrower which:
(a) is a Vehicle which (1) is not a Sold Unit and (2) has been in
such Borrower's or Specified Borrower's inventory for no more than 360
days;
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(b) is a Program Vehicle which has less than 20,000 miles on the
odometer and which has been in such Borrower's or Specified Borrower's
inventory for no more than 91 days; provided that the aggregate value of
Program Vehicles to be included in the Aggregate Borrowing Base together
with the Aggregate Specified Borrowing Base at any one time shall not
exceed an aggregate amount equal to the lesser of (x) 10% of the sum of
the Aggregate Borrowing Base plus each Specified Aggregate Borrowing Base
and (y) $2,500,000;
(c) is a Demonstrator which has been in such Borrower's or Specified
Borrower's inventory for no more than 360 days; provided that the
aggregate value of Demonstrators to be included in the Aggregate Borrowing
Base together with the Aggregate Specified Borrowing Base at any one time
shall not exceed ten percent (10%) of the aggregate Invoice Amounts of all
Eligible Financed Vehicles; or
(d) is a Fleet Vehicle which has been sold by such Borrower or such
Specified Borrower within the prior 30 days;
provided that with respect to any such Financed Vehicle (i) such Vehicle is
owned by such Borrower or Specified Borrower free and clear of all Liens and
rights of any other Person, except the Liens in favor of Agent, on behalf of
itself and the Lenders; (ii) such Vehicle is located on premises owned or leased
by such Borrower or Specified Borrower; (iii) no representations or warranties
pertaining to such Vehicle set forth in this Agreement or the Security Agreement
is untrue; and (iv) such Vehicle is covered by casualty insurance acceptable to
Agent.
1.7. Eligible Used Vehicles. Based on the most recent Borrowing Base
Certificate and on other information available to Agent, Agent shall in its
reasonable credit judgment determine which Used Vehicles of each Borrower and
each Specified Borrower shall be "Eligible Used Vehicles" (as determined
pursuant to this Section 1.7) for purposes of this Agreement. Agent reserves the
right, at any time and from time to time after the Closing Date, to adjust any
such criteria, to establish new criteria and to adjust advance rates with
respect to Eligible Used Vehicles, in its reasonable credit judgment, subject to
the approval of Supermajority Floor Plan Lenders in the case of adjustments or
new criteria or changes in advance rates which have the effect of making more
credit available. Eligible Used Vehicles shall be any Vehicle of any Borrower or
Specified Borrower which:
(a) is a Used Vehicle which is not a Sold Unit;
(b) is a Used Vehicle that has a NADA average trade-in value
(excluding adds) of at least $4,000;
(c) has been in such Borrower's or Specified Borrower's inventory
for no more than 90 days; and
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(d) such Borrower or Specified Borrower has in its physical
possession all title and purchase documentation; provided that if all
other criteria for Eligible Used Vehicle have been met, Eligible Used
Vehicles may be held in such Borrower's or Specified Borrower's inventory
for 30 days without title documentation;
provided that with respect to any such Used Vehicle (i) such Vehicle is owned by
such Borrower or Specified Borrower free and clear of all Liens and rights of
any other Person, except the Liens in favor of Agent, on behalf of itself and
the Lenders; (ii) such Vehicle is located on premises owned or leased by such
Borrower; (iii) no representations or warranties pertaining to such Vehicle set
forth in this Agreement or the Security Agreement is untrue; and (iv) such
Vehicle is covered by casualty insurance acceptable to Agent.
1.8. Cash Management Systems. On or prior to the Closing Date,
Borrowers and Specified Borrowers, separately, will establish and will maintain
until the Termination Date separate cash management systems described on Annex B
(each a "Cash Management System"). On or prior to the date upon which a
Permitted Acquisition is consummated, any new Borrower shall become a party to
the Cash Management System maintained by the Borrowers and any new Specified
Borrower shall become a party to the Cash Management System maintained by the
Specified Borrowers, pursuant to such documentation in form and substance and on
terms and conditions acceptable to Agent.
1.9. Fees. (a) Borrowers and Specified Borrowers, jointly and
severally as co-obligors, shall pay to GE Capital, individually, the Fees
specified in that certain fee letter of even date herewith among the Borrowers
and GE Capital (the "GE Capital Fee Letter"), at the times specified for payment
therein.
(b) As additional compensation for the Lenders with an Acquisition
Loan Commitment, Borrowers, jointly and severally as co-obligors, agree to pay
to Agent, for the ratable benefit of such Lenders, in arrears, on the first
Business Day of each month prior to the Acquisition Loan Commitment Termination
Date and on the Acquisition Loan Commitment Termination Date, a fee for
Borrowers' non-use of available funds (the "Acquisition Loan Availability Fee")
in an amount equal to one-quarter of one percent (.25%) per annum (calculated on
the basis of a 360 day year for actual days elapsed) of the unused Acquisition
Loan Commitment.
(c) If Borrowers prepay the Acquisition Loan or terminate the
Acquisition Loan Commitment, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations, Borrowers, jointly and
severally as co-obligors, shall pay to Agent, for the benefit of Lenders as
liquidated damages and compensation for the costs of being prepared to make
funds available hereunder an amount determined by multiplying the Applicable
Percentage (as defined below) by (i) the amount of the Acquisition Loan
Commitment, in the case of the termination of the Acquisition Loan Commitment,
and (ii) the principal amount of the Acquisition Loan outstanding immediately
prior to giving effect to such prepayment, in the case of the prepayment of
Acquisition Loans. As used herein, the term "Applicable Percentage" shall mean
(x) two percent (2%), in the
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case of a prepayment and/or termination on or prior to the first anniversary of
the Closing Date and (y) one percent (1%), in the case of a prepayment and/or
termination after the first anniversary of the Closing Date but on or prior to
the second anniversary. Notwithstanding the foregoing, no prepayment fee shall
be payable by Borrowers upon a mandatory prepayment made pursuant to Sections
1.3(b), 1.16(c) or 1.16(d); provided that in the case of prepayments made
pursuant to Section 1.3(b)(ii) or (b)(iii), the transaction giving rise to the
applicable prepayment is expressly permitted under Section 6.
1.10. Collection and Disbursement. (a) In addition to transfers of
available funds from the relevant Concentration Accounts in accordance with the
applicable Blocked Account Agreements, the following deposits shall be made to
the relevant Collection Account on each Business Day:
(i) Agent shall deposit the proceeds of each Advance made on such
Business Day, except the proceeds advanced to a Vehicle manufacturer or
other authorized seller of the Vehicles against which an Advance is made;
(ii) at all times during which an Activation Notice is not in
effect, Borrowers and Specified Borrowers shall deposit all principal and
interest payments and other Obligations due on such Business Day;
(iii) if Agent has notified Borrower Representative that a mandatory
prepayment is due on such Business Day under Section 1.3(b)(i), Borrowers
and Specified Borrowers shall deposit cash in an amount equal to such
mandatory prepayment amount;
(iv) if Borrower Representative has given notice of a voluntary
prepayment under Section 1.3(a) to be made on such Business Day, Borrowers
and Specified Borrowers shall deposit cash in an amount equal to such
optional prepayment amount; and
(v) if on such Business Day Borrowers or Specified Borrowers are
required to make other payments under this Agreement not previously
retained out of collections, Borrowers or Specified Borrowers, as the case
may be, shall deposit cash in an amount equal to such payment amounts.
To the extent that Borrowers or Specified Borrowers fail to make any of the
deposits required under this Section 1.10(a), then the Floor Plan Lenders are
authorized to, and at their sole election may, fund such deficiencies in
accordance with the terms of Section 1.11(b).
(b) On each Business Day, Agent shall disburse all amounts in the
relevant Collection Account in the following order:
(i) to the Swing Line Lender in payment of interest and principal on
any outstanding Swing Line Overdraft Loan;
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(ii) to the Lenders in payment of any interest on the Advances that
are due and payable on that Business Day and any Fees and other amounts
(excluding principal) that are due and payable from Borrowers or Specified
Borrowers to Agent and the Lenders on such Business Day;
(iii) if any mandatory prepayment is due under Section 1.3(b)(i) on
that Business Day or Borrowers have notified Agent of a voluntary
prepayment to be made under Section 1.3(a) on that Business Day, the
amount of any such repayment(s) to the Lenders as a repayment of principal
on outstanding Advances;
(iv) so long as no Default or Event of Default has occurred and is
continuing, to the applicable Disbursement Account in the amount of any
Advance made to a Borrower or a Specified Borrower on that Business Day,
plus any portion of the remaining amount in the relevant Collection
Account requested by Borrower Representative to cover work capital needs
of Borrowers or a Specified Borrower on such Business Day; and
(v) any balance remaining to the relevant Concentration Account.
1.11. Application and Allocation of Payments. (a) So long as no
Default or Event of Default shall have occurred and be continuing, (i) payments
matching specific scheduled payments then due shall be applied to those
scheduled payments; (ii) voluntary prepayments shall be applied as determined by
Borrower Representative, subject to the provisions of Section 1.3(a); and (iii)
mandatory prepayments shall be applied as set forth in Sections 1.3(c) and
1.3(d). All payments and prepayments applied to a particular Loan shall be
applied ratably to the portion thereof held by each Lender as determined by its
Pro Rata Share. As to each other payment, and as to all payments made when a
Default or Event of Default shall have occurred and be continuing or following
the Commitment Termination Date, each Borrower hereby irrevocably waives the
right to direct the application of any and all payments received from or on
behalf of such Borrower or Specified Borrower, and each Borrower and Specified
Borrower hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply any and all such payments against the Obligations of
Borrowers and Specified Borrowers as Agent may deem advisable notwithstanding
any previous entry by Agent in the Loan Account or any other books and records.
In the absence of a specific determination by Agent with respect thereto and,
except as otherwise provided in Section 1.11(b), payments shall be applied to
amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the Swing Line Loan; (3) to
principal payments on the Swing Line Loan; (4) to interest on the other Loans,
ratably in proportion to the interest accrued as to each Loan; (5) to principal
payments on the other Loans; and (6) to all other Obligations including expenses
of Lenders to the extent reimbursable under Section 11.3.
(b) All monies collected by the Agent upon the sale or other
disposition of Collateral through enforcement, realization under a Collateral
Document or otherwise, together with all other monies received by the Agent
under the Collateral Documents in respect of any Collateral, shall be applied as
follows:
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(i) first, to the payment of all costs and expenses incurred by the
Agent in connection with such sale, or disposition, the delivery of the
Collateral or the collection of any such monies (including, without
limitation, reasonable attorney's fees and expenses); and
(ii) second, the balance of such monies (the "Remaining Proceeds"),
shall be applied by the Agent:
(1) to the extent Remaining Proceeds are attributable to Floor Plan
Collateral, such Remaining Proceeds shall be applied first, to Swing Line
Overdraft Obligations, second, to Floor Plan Obligations, with each Floor
Plan Lender and the Swing Line Lender to receive an amount equal to its
outstanding Floor Plan Obligations, or if insufficient proceeds are
available for the payment in full of all outstanding Floor Plan
Obligations, to satisfy all Floor Plan Obligations with the Floor Plan
Lenders and the Swing Line Lender to receive its Pro Rata Share of the
amount required to be distributed to the Floor Plan Lenders and the Swing
Line Lender, and third, any Remaining Proceeds attributable to Floor Plan
Collateral and not theretofore distributed to the Floor Plan Lenders and
the Swing Line Lender shall be applied to satisfy the Acquisition Loan
Obligations, with each Acquisition Loan Lender to receive an amount equal
to its outstanding Acquisition Loan Obligations, or if insufficient
proceeds are available for the payment in full of all outstanding
Acquisition Loan Obligations, its Pro Rata Share of the amount required to
be distributed to the Acquisition Loan Lenders;
(2) to the extent Remaining Proceeds are attributable to
Acquisition Loan Collateral, such Remaining Proceeds shall be
applied first, to Acquisition Loan Obligations, with each
Acquisition Loan Lender to receive an amount equal to its
outstanding Acquisition Loan Obligations, or if insufficient
proceeds are available for the payment in full of all outstanding
Acquisition Loan Obligations, to satisfy all Acquisition Loan
Obligations with the Acquisition Loan Lenders to receive its Pro
Rata Share of the amount required to be distributed to the
Acquisition Loan Lenders, and second, any Remaining Proceeds
attributable to Acquisition Loan Collateral and not theretofore
distributed to the Acquisition Loan Lenders shall be applied to
satisfy first, the Swing Line Overdraft Obligations, and second, the
Floor Plan Obligations, with each Floor Plan Lender and the Swing
Line Lender to receive an amount equal to its outstanding Floor Plan
Obligations, or if insufficient proceeds are available for the
payment in full of all outstanding Floor Plan Obligations, its Pro
Rata Share of the amount required to be distributed to the Floor
Plan Lenders and the Swing Line Lender; and
(3) any Remaining Proceeds not theretofore distributed to the
Agent and the Lenders shall be distributed to the Borrowers, the
Specified Borrowers or to whomever may be lawfully entitled to
receive such payment.
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(c) Agent is authorized to, and at its sole election may, charge to
the Floor Plan Loan balance on behalf of each Borrower and Specified Borrower
and cause to be paid all Fees, expenses, Charges, costs (including insurance
premiums in accordance with Section 5.4(a)) and interest and principal, other
than principal of the Floor Plan Loans, owing by Borrowers and Specified
Borrowers under this Agreement or any of the other Loan Documents if and to the
extent Borrowers or Specified Borrowers fail to promptly pay any such amounts as
and when due, even if such charges would cause the balance of the aggregate
Floor Plan Loan and the Swing Line Loan to exceed Borrowing Availability or
would cause the balance of the Floor Plan Loan and the Swing Loan of any
Specified Borrower to exceed such Specified Borrower's separate Specified
Aggregate Borrowing Base. At Agent's option and to the extent permitted by law,
any charges so made shall constitute part of the Floor Plan Loan hereunder.
1.12. Loan Account and Accounting. Agent shall maintain a loan
account (the "Loan Account") on its books to record: all Advances, all payments
made by Borrowers and each Specified Borrower, and all other debits and credits
as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall, absent manifest error, be presumptive evidence
of the amounts due and owing to Agent and Lenders by Borrower and each Specified
Borrower; provided that any failure to so record or any error in so recording
shall not limit or otherwise affect any Borrower's or Specified Borrower's duty
to pay the Obligations. Agent shall render to Borrower Representative a monthly
accounting of transactions with respect to the Loans setting forth the balance
of the Loan Account as to each Borrower and Specified Borrower. Unless Borrower
Representative notifies Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within thirty (30) days
after the date thereof, each and every such accounting shall (absent manifest
error) be deemed final, binding and conclusive upon Borrowers and Specified
Borrower in all respects as to all matters reflected therein. At Agent's option,
Agent may provide statements on a computerized storage and retrieval medium or
by electronically transmitting the information or allowing Borrower
Representative computer access. Electronically transmitted or accessed
information shall be deemed received by Borrower Representative when it is
available to be accessed by Borrower Representative. Only those items expressly
objected to in such notice shall be deemed to be disputed by Borrowers or
Specified Borrowers. Notwithstanding any provision herein contained to the
contrary, any Lender may elect (which election may be revoked) to dispense with
the issuance of Notes to that Lender and may rely on the Loan Account as
evidence of the amount of Obligations from time to time owing to it.
1.13. Indemnity. (a) Each Credit Party that is a signatory hereto
shall jointly and severally indemnify and hold harmless each of Agent, Lenders
and their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or
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asserted against or incurred by any such Indemnified Person as the result of
credit having been extended, suspended or terminated under this Agreement and
the other Loan Documents and the administration of such credit, and in
connection with or arising out of the transactions contemplated hereunder and
thereunder and any actions or failures to act in connection therewith, including
any and all Environmental Liabilities and legal costs and expenses arising out
of or incurred in connection with disputes between or among any parties to any
of the Loan Documents (collectively, "Indemnified Liabilities"); provided, that
no such Credit Party shall be liable for any indemnification to an Indemnified
Person to the extent that any such suit, action, proceeding, claim, damage,
loss, liability or expense results from that Indemnified Person's gross
negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or is the
result of acceleration, by operation of law or otherwise); (ii) any Borrower or
Specified Borrower shall default in payment when due of the principal amount of
or interest on any LIBOR Loan; (iii) any Borrower or Specified Borrower shall
default in making any borrowing of, conversion into or continuation of LIBOR
Loans after Borrower Representative has given notice requesting the same in
accordance herewith; or (iv) any Borrower or Specified Borrower shall fail to
make any prepayment of a LIBOR Loan after Borrower Representative has given a
notice thereof in accordance herewith, Borrowers and Specified Borrowers shall
jointly and severally indemnify and hold harmless each Lender from and against
all losses, costs and expenses resulting from or arising from any of the
foregoing. Such indemnification shall include any loss (including loss of
margin) or expense arising from the reemployment of funds obtained by it or from
fees payable to terminate deposits from which such funds were obtained. For the
purpose of calculating amounts payable to a Lender under this subsection, each
Lender shall be deemed to have actually funded its relevant LIBOR Loan through
the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal
to the amount of that LIBOR Loan and having a maturity comparable to the
relevant LIBOR Period; provided, however, that each Lender may fund each of its
LIBOR Loans in any manner it sees fit, and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this subsection. This
covenant shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder. As promptly as practicable under
the circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.13(b), and
such calculation shall be binding on the parties hereto unless Borrower
Representative shall object in writing within ten (10) Business Days of receipt
thereof, specifying the basis for such objection in detail.
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1.14. Access. (a)Each Credit Party which is a party hereto shall,
during normal business hours, from time to time upon one (1) Business Day's
prior notice as frequently as Agent determines to be appropriate: (i) provide
Agent and any of its officers, employees and agents access to its properties,
facilities, advisors and employees (including officers) of each Credit Party and
to the Collateral, (ii) permit Agent, and any of its officers, employees and
agents, to inspect, audit and make extracts from any Credit Party's books and
records, and (iii) permit Agent, and its officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the
Accounts, Inventory and other Collateral of any Credit Party. If a Default or
Event of Default shall have occurred and be continuing or if access is necessary
to preserve or protect the Collateral as determined by Agent, each such Credit
Party shall provide such access to Agent and to each Lender at all times and
without advance notice. Furthermore, so long as any Event of Default shall have
occurred and be continuing, Borrowers shall provide Agent and each Lender with
access to their suppliers and customers. Each Credit Party shall make available
to Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records which Agent may request (including
an itemization and description of the cost, price, kind, type, quality and
quantity of the Vehicles). Each Credit Party shall deliver any document or
instrument necessary for Agent, as it may from time to time request, to obtain
records from any service bureau or other Person which maintains records for such
Credit Party, and shall maintain duplicate records or supporting documentation
on media, including computer tapes and discs owned by such Credit Party.
Representatives of other Lenders may accompany Agent's representatives on
regularly scheduled audits at no charge to Borrowers.
(b) Notwithstanding Section 1.14(a), each Credit Party shall permit
a duly authorized representative of Agent to enter upon each Credit Party's
premises at any time without advance notice during regular business hours to
perform audits of Vehicles in a manner satisfactory to Agent (Agent hereby
agreeing to use its commercially reasonable efforts to perform not less than
nine (9) Vehicle counts during any Fiscal Year); provided that Agent shall not
be required by the Lenders to make more than two (2) such audits in any fiscal
year of any Credit Party; and each Credit Party shall assist Agent and its
representatives in whatever way reasonably necessary to make the inspections and
audits provided for herein. Agent shall promptly deliver to each of the Lenders
a written summary of the results of each vehicle audit performed pursuant to
this Section 1.14(b).
1.15. Taxes. (a) Any and all payments by each Borrower and Specified
Borrower hereunder (including any payments made pursuant to Section 12) or under
the Notes shall be made, in accordance with this Section 1.15, free and clear of
and without deduction for any and all present or future Taxes. If any Borrower
or Specified Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder (including any sum payable pursuant to
Section 12) or under the Notes, (i) the sum payable shall be increased as much
as shall be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 1.15) Agent
or Lenders, as applicable, receive an amount equal to the sum they would have
received had no such deductions been made, (ii) such Borrower or Specified
Borrower shall make such deductions, and (iii) such Borrower or Specified
Borrower shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law. Within thirty (30) days
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after the date of any payment of Taxes, Borrower Representative shall furnish to
Agent the original or a certified copy of a receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and, within ten (10) days of demand therefor, pay Agent and
each Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction outside
the United States (a "Foreign Lender") as to which payments to be made under
this Agreement or under the Notes are exempt from United States withholding tax
under an applicable statute or tax treaty shall provide to Borrower
Representative and Agent a properly completed and executed IRS Form 4224 or Form
1001 or other applicable form, certificate or document prescribed by the IRS or
the United States certifying as to such Foreign Lender's entitlement to such
exemption (a "Certificate of Exemption"). Any foreign Person that seeks to
become a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower Representative and Agent prior to becoming a Lender hereunder. No
foreign Person may become a Lender hereunder if such Person is unable to deliver
a Certificate of Exemption.
1.16. Capital Adequacy; Increased Costs; IllegalIf any Lender shall
have determined that any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted
after the Closing Date, from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by such Lender and thereby reducing the
rate of return on such Lender's capital as a consequence of its obligations
hereunder, then Borrowers shall from time to time upon demand by such Lender
(with a copy of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrower
Representative and to Agent shall, absent manifest error, be final, conclusive
and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers and Specified Borrowers, jointly and severally as co-obligors, shall
from time to time, upon demand by such Lender (with a copy of such demand to
Agent), pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such
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increased cost, submitted to Borrower Representative and to Agent by such
Lender, shall be conclusive and binding on Borrowers and Specified Borrowers for
all purposes, absent manifest error. Each Lender agrees that, as promptly as
practicable after it becomes aware of any circumstances referred to above which
would result in any such increased cost, the affected Lender shall, to the
extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers and Specified Borrowers pursuant
to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if
the introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower Representative
through Agent, (i) the obligation of such Lender to agree to make or to make or
to continue to fund or maintain LIBOR Loans shall terminate and (ii) each
Borrower and Specified Borrower, jointly and severally as co-obligors, shall
forthwith prepay in full all outstanding LIBOR Loans owing by such Borrower or
Specified Borrower, as the case may be, to such Lender, together with interest
accrued thereon, unless Borrower Representative on behalf of such Borrower or
Specified Borrower, as the case may be, within five (5) Business Days after the
delivery of such notice and demand, converts all such Loans into a Loan bearing
interest based on the Index Rate.
(d) Replacement of Lender in Respect of Increased Costs. Within
fifteen (15) days after receipt by Borrower Representative of written notice and
demand from any Lender (an "Affected Lender") for payment of additional amounts
or increased costs as provided in Section 1.15(a), 1.16(a) or 1.16(b), Borrower
Representative may, at its option, notify Agent and such Affected Lender of its
intention to replace the Affected Lender. So long as no Default or Event of
Default shall have occurred and be continuing, Borrower Representative, with the
consent of Agent (which consent shall not be unreasonably withheld), may obtain,
at Borrowers' and Specified Borrowers' expense, a replacement Lender
("Replacement Lender") for the Affected Lender, which Replacement Lender must be
satisfactory to Agent. If Borrowers and Specified Borrowers obtain a Replacement
Lender within ninety (90) days following notice of their intention to do so, the
Affected Lender must sell and assign its Loans and Commitments to such
Replacement Lender for an amount equal to the principal balance of all Loans
held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale, provided that Borrowers and Specified
Borrowers, and jointly and severally as co-obligors, shall have reimbursed such
Affected Lender for the additional amounts or increased costs that it is
entitled to receive under this Agreement through the date of such sale and
assignment.
Notwithstanding the foregoing, Borrowers and Specified Borrowers
shall not have the right to obtain a Replacement Lender if the Affected Lender
rescinds its demand for increased costs or additional amounts within fifteen
(15) days following its receipt of Borrower
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Representative's notice of intention to replace such Affected Lender.
Furthermore, if Borrower Representative gives a notice of intention to replace
and Borrowers and Specified Borrowers do not so replace such Affected Lender
within ninety (90) days thereafter, Borrowers' and Specified Borrower's rights
under this Section 1.16(d) shall terminate and Borrowers and Specified Borrowers
shall promptly pay all increased costs or additional amounts demanded by such
Affected Lender pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).
1.17. Drafting Agreements.
(a) Issuance of Drafting Agreements. Subject to the terms and conditions
of this Agreement, Swing Line Lender shall, at any time and from time to time
until a date which is thirty (30) Business Days prior to the Commitment
Termination Date upon written request of the Borrower Representative,
accompanied by applications, letter of credit agreements and/or such other
documentation related thereto as the Swing Line Lender may require, issue
Drafting Agreements for the account of a Borrower or Specified Borrower. The
Swing Line Lender shall take such action as necessary to terminate and suspend
all Drafting Agreements effective ten (10) Business Days prior to the Commitment
Termination Date then in effect.
(b) Conditions to Issuance. The Swing Line Lender shall not be obligated
to enter into or issue a Drafting Agreement unless, as of the date of issuance
of such Drafting Agreement:
(i) the Borrower Representative shall have delivered to the Swing
Line Lender not less than ten (10) Business Days prior to the requested
date for issuance (or such shorter time as the Swing Line Lender in its
sole discretion may permit), a written application and such other
documentation (including, without limitation, a letter of credit agreement
if the Drafting Agreement is to be issued in the form of a letter of
credit) and the terms of such documents and of the proposed Drafting
Agreement shall satisfy the terms hereof and otherwise be satisfactory to
Swing Line Lender;
(ii) the representations and warranties contained in this Agreement
or any other Loan Documents are true in all material respects as if made
on such date (unless limited to an earlier date), and both immediately
before and immediately after issuance of the Drafting Agreement so
requested, no Default or Event of Default has occurred and is continuing;
(iii) No order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Swing Line
Lender from entering into or issuing such Drafting Agreement; no law
applicable to the Swing Line Lender and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over the Swing Line Lender shall prohibit the Swing Line
Lender, or request that the Swing Line Lender refrain, from issuing or
entering into Drafting Agreements generally or such Drafting Agreement in
particular or shall impose upon the Swing Line Lender with respect to such
Drafting Agreement any restriction, reserve or capital requirement (for
which
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the Swing Line Lender is not otherwise compensated hereunder) or shall
impose upon the Swing Line Lender any unreimbursed loss, cost or expense
which the Swing Line Lender deems material to its participation in Drafts
or Drafting Agreements; and
(iv) The Swing Line Lender does not receive written notice from the
Agent, any Lender, any Borrower or any Specified Borrower on or prior to
the Business Day prior to the requested date of issuance or entry into
such Drafting Agreement that one or more of the applicable conditions
contained in Section 2 (or in this Section 1.17(b)) have not been
satisfied or that a Default or Event of Default has occurred and is
continuing.
Each application for a Drafting Agreement issued by a Borrower or a
Specified Borrower hereunder shall constitute a certification by each
Borrower and Specified Borrower of the matters set forth in clauses (i)
through (iv) of this Section 1.17(b), and Swing Line Lender shall be
entitled to rely on such certification without any duty of inquiry.
(c) Notice of Issuance of or entering into Manufacturers Drafting Letters.
The Swing Line Lender shall give notice to the Agent which shall give notice to
each Lender of the issuance of or entering into each Drafting Agreement
attaching a copy of such Drafting Agreement, as issued or entered into.
(d) Drafts Under Manufacturers Drafting Letters.
(i) In accordance with Section 1.1(b)(i) hereof, each Draft
submitted by a Manufacturer pursuant to a Drafting Agreement shall
constitute a request for Borrowing of a Swing Line Loan and upon the
funding of each Draft presented by a Manufacturer under a Drafting
Agreement, the Swing Line Lender shall be deemed to have disbursed or on
behalf of the Borrowers or the Specified Borrowers, as the case may be,
and the Borrowers or the Specified Borrowers, as the case may be, shall be
deemed to have elected to substitute for its respective reimbursement
obligations in respect of such Draft, a Swing Line Loan. Each of the
Borrowers and Specified Borrowers shall be irrevocably obligated to
reimburse Swing Line Lender on demand for the amount of any Draft
presented by a Manufacturer under the terms of any Drafting Agreement;
provided however that such reimbursement obligation shall be deemed
satisfied by the funding of a Swing Line Loan in respect thereto.
Notwithstanding anything to the contrary contained herein, each of the
Borrowers and Specified Borrowers shall bear all risk of loss resulting
from the payment of any Draft, or any resulting disbursements of the Swing
Line Loans as Floor Plan Loans, as the case may be, whether or not due to
the gross negligence, willful misconduct or fraud of any Manufacturer.
(ii) On each Interest Reset Date or upon the occurrence and
continuance of an Event of Default each Lender shall be obligated to fund
Floor Plan Loans to refund Swing Line Loans resulting from the
presentation of Drafts by Manufacturers under the Drafting Agreements, by
making available their respective Pro Rata Shares of the amounts so
advanced, all in accordance with Section 1.1(b)(iii) hereof; provided,
however, that if for any
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reason the Lenders are prohibited from making a Floor Plan Loan to refund
Swing Line Loans in respect of any such Draft, each such Lender shall be
deemed to and unconditionally agrees to purchase from the Swing Line
Lender a participation interest in the amount of such Draft (in the amount
of its Pro Rata Share).
(e) Obligations Absolute. The Obligations of the Borrowers and Specified
Borrowers under this Agreement and any of the other Loan Documents to reimburse
the Swing Line Lender for Drafts presented by a Manufacturer under a Drafting
Agreement, and to repay any Swing Line Loans or the Floor Plan Loans, as the
case may be, funded to pay a Draft shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement and each
such other Loan Document under all circumstances, including the following: (1)
any lack of validity or enforceability of this Agreement or any of the other
Loan Documents; (2) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of any Borrower or Specified
Borrower in respect of any Draft or any Drafting Agreement or any other
amendment or waiver of or any consent to departure from all or any of the Loan
Documents; (3) the existence of any claim, set-off, defense or other right that
any Borrower or Specified Borrower may have at any time against any Manufacturer
or any other beneficiary or transferee of any Drafting Agreement (or any Person
for whom any such beneficiary or such transferee may be acting), the Swing Line
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the related Loan Documents or any
unrelated transaction other than the defense of payment or claims arising out of
the gross negligence, or willful misconduct of the Swing Line Lender; (4) any
Draft, demand, certificate or other document presented under a Drafting
Agreement proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect; or
any loss or delay in the transmission or otherwise of any document required in
order to make a Draft under any Drafting Agreement; (5) any payment by the Swing
Line Lender under any Drafting Agreement against presentation of a draft or
certificate that does not strictly comply with the terms of any Drafting
Agreement; or any payment made by the Swing Line Lender under any Drafting
Agreement to any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of a
successor to any beneficiary or any transferee of any Drafting Agreement,
including any arising in connection with any insolvency proceeding; (6) any
exchange, release or non-perfection of any Collateral, or any release or
amendment or waiver of or consent to departure from all or any of the
Obligations of any Borrower or Specified Borrower in respect of any Drafting
Agreement; or (7) any other circumstance that might otherwise constitute a
defense available to, or discharge of, any Borrower or Specified Borrower other
than the defense of payment or claims arising out of the gross negligence or
willful misconduct of the Swing Line Lender.
(f) Title Documents. All original Manufacturer's invoices and title
documents evidencing the Borrowers' and Specified Borrowers' ownership of all of
their Vehicles, including, without limitation, the Manufacturer's Certificate,
shall be maintained in safekeeping by the Borrowers and Specified Borrowers in a
manner acceptable to the Swing Line Lender and Agent, unless and until an Event
of Default has occurred and is continuing, within three (3) Business Days of the
request by the Agent, the Borrowers and the Specified Borrowers shall deliver or
cause to be delivered all such
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original Manufacturer's invoices and title documents whether at the time of such
request or thereafter, to the Agent and the Agent shall retain or hold all such
original Manufacturer's invoices and title documents received by the Agent after
such request. Thereafter, for so long as such Event of Default shall be
continuing, all original Manufacturer's Certificates and title documents shall
remain in the Agent's possession until the Floor Plan Advance in connection
therewith or such ratable portion thereof in respect of a Vehicle sold by any
Borrower or Specified Borrower in the ordinary course of business has been paid
and performed in full; provided that, upon the happening of an Event of Default
and during the continuance thereof, the Agent may transfer, as applicable, title
documents delivered to it pursuant to this Section 1.17(f) in connection with
the sale of Vehicles in accordance with its rights provided for in this
Agreement or the other Loan Documents.
1.18. Single Loan. All Loans to each Borrower and each Specified
Borrower and all of the other Obligations of each Borrower and each Specified
Borrower arising under this Agreement and the other Loan Documents shall
constitute one general obligation of the Borrowers and the Specified Borrowers,
secured, until the Termination Date, by all of its Collateral.
2. CONDITIONS PRECEDENT
2.1. Conditions to the Initial Loans. No Lender shall be obligated
to make any Loan on the Closing Date, or to take, fulfill, or perform any other
action hereunder, until the following conditions have been satisfied or provided
for in a manner satisfactory to Agent, or waived in writing by Agent and
Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrowers, Agent and
Lenders; and Agent shall have received such documents, instruments, agreements
and legal opinions as Agent shall reasonably request in connection with the
transactions contemplated by this Agreement and the other Loan Documents,
including all those listed in the Closing Checklist attached hereto as Annex C,
each in form and substance satisfactory to Agent.
(b) Approvals. Agent shall have received (i) satisfactory evidence
that the Credit Parties have obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents and the
consummation of the Related Transactions or (ii) an officer's certificate in
form and substance satisfactory to Agent affirming that no such consents or
approvals are required.
(c) Opening Availability. The Eligible Financed Vehicles and
Eligible Used Vehicles of each Borrower supporting the initial Floor Plan
Advances incurred and the amount of the Reserves to be established on the
Closing Date shall be sufficient in value, as determined by Agent, to provide
Borrowers, collectively, with Net Borrowing Availability, after giving effect to
the initial Floor Plan Advances made to each Borrower and the consummation of
the Related Transactions (on
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a pro forma basis, with trade payables being paid currently, and expenses and
liabilities being paid in the ordinary course of business and without
acceleration of sales) of at least $1,000,000.
(d) Payment of Fees. Borrowers shall have paid the Fees required to
be paid on the Closing Date in the respective amounts specified in Section 1.9
(including the Fees specified in the GE Capital Fee Letter), and shall have
reimbursed Agent for all fees, costs and expenses of closing presented as of the
Closing Date.
(e) Capital Structure: Other Indebtedness. The capital structure of
each Credit Party and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to Agent in its sole discretion.
2.2. Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Loan, convert or
continue any Loan as a LIBOR Loan, if, as of the date thereof:
(a) Any representation or warranty by any Credit Party contained
herein or in any of the other Loan Documents shall be untrue or incorrect
as of such date, except to the extent that such representation or warranty
expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement; or
(b) Any event or circumstance which reasonably could have a Material
Adverse Effect shall have occurred since the date hereof as determined by
the Requisite Floor Plan Lenders; or
(c) (i) Any Event of Default shall have occurred and be continuing
or would result after giving effect to any Loan, or (ii) a Default shall
have occurred and be continuing or would result after giving effect to any
Loan, and Agent or Requisite Floor Plan Lenders shall have determined not
to make any Loan so long as that Default is continuing; or
(d) Agent shall not have received a fully executed original of a
pay-off letter satisfactory to Agent confirming that all of the relevant
Prior Lender Obligations will be repaid in full from the proceeds of the
relevant Floor Plan Advance and all Liens upon any of the property of the
relevant Borrowers or any of their Subsidiaries in favor of such Prior
Lender shall be terminated by such Prior Lender immediately upon such
payment; or
(e) After giving effect to any Advance the proceeds of which will be
utilized to effect a Permitted Acquisition, the conditions precedent set
forth in Section 6.1 shall not have been satisfied in accordance with the
terms thereof.
The request and acceptance by or on behalf of the Borrowers and Specified
Borrowers of the proceeds of any Loan or the conversion or continuation of any
Loan into, or as, a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request or acceptance, (i) a
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representation and warranty by Borrowers and Specified Borrowers that the
conditions in this Section 2.2 have been satisfied and (ii) a reaffirmation by
Borrowers and Specified Borrowers of the cross-guaranty provisions set forth in
Section 12 and of the granting and continuance of Agent's Liens, on behalf of
itself and Lenders, pursuant to the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans, the Credit Parties executing this
Agreement, jointly and severally, make the following representations and
warranties to Agent and each Lender with respect to all Credit Parties, each and
all of which shall survive the execution and delivery of this Agreement.
3.1. Corporate Existence; Compliance with Law. Each Credit Party (a)
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (b) is duly qualified to conduct
business and is in good standing in each other jurisdiction where its ownership
or lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified would not result in exposure to
losses, damages or liabilities in excess of $50,000; (c) has the requisite
corporate power and authority and the legal right to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease and to conduct its business as now, heretofore and proposed to be
conducted; (d) subject to specific representations regarding Environmental Laws,
has all licenses, permits, consents or approvals from or by, and has made all
filings with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(e) is in compliance with its charter and by-laws; (f) subject to specific
representations set forth herein regarding ERISA, Environmental Laws, tax and
other laws, is in compliance with all applicable provisions of law, except where
the failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect; and (g) is in compliance with all
Vehicle franchise agreements to which it is a party.
3.2. Executive Offices; FEIN. As of the Closing Date, the current
location of each Credit Party's chief executive office and principal place of
business is set forth in Disclosure Schedule (3.2), and none of such locations
have changed within the twelve (12) months preceding the Closing Date. In
addition, Disclosure Schedule (3.2) lists the federal employer identification
number of each Credit Party.
3.3. Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's corporate power; (b) have been duly authorized by all
necessary or proper corporate and shareholder action; (c) do not contravene any
provision of such Person's charter or bylaws; (d) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority; (e)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, franchise or
agreement or
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other instrument to which such Person is a party or by which such Person or any
of its property is bound; (f) do not result in the creation or imposition of any
Lien upon any of the property of such Person other than those in favor of Agent,
on behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not
require the consent or approval of any Governmental Authority or any other
Person, except those referred to in Section 2.1(b), all of which will have been
duly obtained, made or complied with prior to the Closing Date. On or prior to
the Closing Date, each of the Loan Documents shall have been duly executed and
delivered by each Credit Party thereto and each such Loan Document shall then
constitute a legal, valid and binding obligation of such Credit Party
enforceable against it in accordance with its terms.
3.4. Financial Statements and Projections. Except for the
Projections, all Financial Statements concerning Borrowers and their respective
Subsidiaries which are referenced below have been prepared in accordance with
GAAP consistently applied throughout the periods covered (except as disclosed
therein and except, with respect to unaudited Financial Statements, for the
absence of footnotes and normal year-end audit adjustments) and present fairly
in all material respects the financial position of the Persons covered thereby
as at the dates thereof and the results of their operations and cash flows for
the periods then ended.
(a) The following Financial Statements attached hereto as Disclosure
Schedule (3.4(A)) have been delivered on the date hereof:
(i) The unaudited combined balance sheets at December 31, 1997
and the related statements of income and cash flows of Hometown and its
Subsidiaries for the Fiscal Year then ended;
(ii) The audited balance sheets at December 31, 1997 and the
related statements of income and cash flows of each Borrower for the Fiscal Year
then ended; and
(iii) The unaudited balance sheet(s) at September 30, 1998 and
the related statement(s) of income and cash flows of the Borrowers and their
Subsidiaries for the three Fiscal Quarters then ended.
(b) Pro Forma. The Pro Forma delivered on the date hereof and
attached hereto as Disclosure Schedule (3.4(B)) was prepared by Borrowers giving
pro forma effect to the Related Transactions, was based on the unaudited
consolidated and consolidating balance sheets of Borrowers and their
Subsidiaries dated September 30, 1998, and was prepared in accordance with GAAP,
with only such adjustments thereto as would be required in accordance with GAAP.
(c) Projections. The Projections delivered on the date hereof and
attached hereto as Disclosure Schedule (3.4(C)) have been prepared by Borrowers
in light of the past operations of their businesses, and reflect projections for
the five year period beginning on January 1, 1999 on a quarterly basis for the
first year and on a year by year basis thereafter. The Projections attached
hereto as Disclosure Schedule (3.4(c)) are, and the Projections delivered to the
Lenders pursuant to
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clause (a) of Annex D are, based upon estimates and assumptions stated therein,
all of which Borrowers believe to be reasonable and fair in light of current
conditions and current facts known to Borrowers and, as of the Closing Date,
reflect Borrowers' good faith and reasonable estimates of the future financial
performance of Borrowers and of the other information projected therein for the
period set forth therein.
3.5. Material Adverse Effect. Except as described on Disclosure
Schedule (6.3), between December 31, 1997 and the Closing Date, (a) no Credit
Party has incurred any obligations, contingent or non-contingent liabilities,
liabilities for Charges, long-term leases or unusual forward or long-term
commitments which are not reflected in the Pro Forma and which, alone or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, (b)
no contract, lease or other agreement or instrument has been entered into by any
Credit Party or has become binding upon any Credit Party's assets and no law or
regulation applicable to any Credit Party has been adopted which has had or
could reasonably be expected to have a Material Adverse Effect, and (c) no
Credit Party is in default and to the best of Borrowers' knowledge no third
party is in default under any material contract, lease or other agreement or
instrument, which alone or in the aggregate could reasonably be expected to have
a Material Adverse Effect. Between December 31, 1997 and the Closing Date no
event has occurred, which alone or together with other events, could reasonably
be expected to have a Material Adverse Effect.
3.6. Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed on Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned real
estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6), and copies of all such
leases or a summary of terms thereof satisfactory to Agent have been delivered
to Agent. Disclosure Schedule (3.6) further describes any Real Estate with
respect to which any Credit Party is a lessor, sublessor or assignor as of the
Closing Date. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal properties and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements, bills of sale
and other documents, and has duly effected all recordings, filings and other
actions necessary to establish, protect and perfect such Credit Party's right,
title and interest in and to all such Real Estate and other properties and
assets. Disclosure Schedule (3.6) also describes any purchase options, rights of
first refusal or other similar contractual rights pertaining to any Real Estate.
As of the Closing Date, no portion of any Credit Party's Real Estate has
suffered any material damage by fire or other casualty loss which has not
heretofore been repaired and restored in all material respects to its original
condition or otherwise remedied. As of the Closing Date, all material permits
required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied and used for all of the purposes for which they are currently
occupied and used have been lawfully issued and are in full force and effect.
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3.7. Labor Matters. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matter; (c) all payments
due from any Credit Party for employee health and welfare insurance have been
paid or accrued as a liability on the books of such Credit Party; (d) except as
set forth in Disclosure Schedule (3.7), no Credit Party is a party to or bound
by any collective bargaining agreement, management agreement, consulting
agreement or any employment agreement (and true and complete copies of any
agreements described on Disclosure Schedule (3.7) have been delivered to Agent);
(e) there is no organizing activity involving any Credit Party pending or, to
any Credit Party's knowledge, threatened by any labor union or group of
employees; (f) there are no representation proceedings pending or, to any Credit
Party's knowledge, threatened with the National Labor Relations Board, and no
labor organization or group of employees of any Credit Party has made a pending
demand for recognition; and (g) except as set forth in Disclosure Schedule
(3.7), there are no complaints or charges against any Credit Party pending or,
to the knowledge of any Credit Party, threatened to be filed with any
Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment by
any Credit Party of any individual.
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), no Credit Party
has any Subsidiaries, is engaged in any joint venture or partnership with any
other Person, or is an Affiliate of any other Person. All of the issued and
outstanding Stock of each Credit Party is owned by each of the stockholders and
in the amounts set forth on Disclosure Schedule (3.8) (but in the case of
Hometown only, such Schedule is only required to list stockholders that are
required to file a Form 13-G). Except as set forth on Disclosure Schedule 3.8,
there are no outstanding rights to purchase, options, warrants or similar rights
or agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness of
each Credit Party as of the Closing Date is described in Section 6.3 (including
Disclosure Schedule (6.3)).
3.9. Government Regulation. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940 as amended. No Credit Party is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, or any
other federal or state statute that restricts or limits its ability to incur
Indebtedness or to perform its obligations hereunder. The making of the Loans by
Lenders to Borrowers, the application of the proceeds thereof and repayment
thereof and the consummation of the Related Transactions will not violate any
provision of any such statute or any rule, regulation or order issued by the
Securities and Exchange Commission.
3.10. Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U or G of
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the Federal Reserve Board as now and from time to time hereafter in effect (such
securities being referred to herein as "Margin Stock"). No Credit Party owns any
Margin Stock, and none of the proceeds of the Loans or other extensions of
credit under this Agreement will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing
or retiring any Indebtedness which was originally incurred to purchase or carry
any Margin Stock or for any other purpose which might cause any of the Loans or
other extensions of credit under this Agreement to be considered a "purpose
credit" within the meaning of Regulation T, U or X of the Federal Reserve Board.
No Credit Party will take or permit to be taken any action which might cause any
Loan Document to violate any regulation of the Federal Reserve Board.
3.11. Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and all
Charges have been paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof (or any such fine,
penalty, interest, late charge or loss has been paid), excluding Charges or
other amounts being contested in accordance with Section 5.2(b). Proper and
accurate amounts have been withheld by each Credit Party from its respective
employees for all periods in full and complete compliance with all applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective Governmental Authorities. Disclosure Schedule (3.11) sets
forth as of the Closing Date those taxable years for which any Credit Party's
tax returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except as
described on Disclosure Schedule (3.11), no Credit Party has executed or filed
with the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any material Charges. None of the Credit Parties and their
respective predecessors are liable for any material Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to each Credit Party's
knowledge, as a transferee. As of the Closing Date, no Credit Party has agreed
or been requested to make any adjustment under IRC Section 481(a), by reason of
a change in accounting method or otherwise, which would have a Material Adverse
Effect.
3.12. ERISA. (a) Disclosure Schedule (3.12) lists and separately
identifies all Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare
Plans. Copies of all such listed Plans, together with a copy of the latest form
5500 for each such Plan, have been delivered to Agent. Except with respect to
Multiemployer Plans, each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the IRC, and the trusts created thereunder have
been determined to be exempt from tax under the provisions of Section 501 of the
IRC, and nothing has occurred which would cause the loss of such qualification
or tax-exempt status. Each Plan is in compliance with the applicable provisions
of ERISA and the IRC, including the filing of reports required under the IRC or
ERISA. No Credit Party or ERISA Affiliate has failed to make any contribution or
pay any amount due as required by either Section 412 of the IRC or Section 302
of ERISA or the terms of any such Plan. No Credit Party or ERISA Affiliate has
engaged in a prohibited transaction, as defined in Section 4975 of the IRC, in
connection with any Plan, which would subject any Credit Party to a material tax
on prohibited transactions imposed by Section 4975 of the IRC.
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(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title
IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan with
Unfunded Pension Liabilities has been transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party
or ERISA Affiliate; and (vi) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor's Corporation or the equivalent by another
nationally recognized rating agency.
3.13. No Litigation. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened against any Credit Party, before any Governmental Authority or
before any arbitrator or panel of arbitrators (collectively, "Litigation"), (a)
which challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) which has a reasonable risk of being determined adversely to any Credit
Party and which, if so determined, could have a Material Adverse Effect. Except
as set forth on Disclosure Schedule (3.13), as of the Closing Date there is no
Litigation pending or threatened which seeks damages in excess of $100,000 or
injunctive relief or alleges criminal misconduct of any Credit Party.
3.14. Brokers. No broker or finder acting on behalf of any Credit
Party brought about the obtaining, making or closing of the Loans or the Related
Transactions, and no Credit Party has any obligation to any Person in respect of
any finder's or brokerage fees in connection therewith.
3.15. Intellectual Property. As of the Closing Date, each Credit
Party owns or has rights to use all Intellectual Property necessary to continue
to conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15) hereto. Each Credit Party conducts its business and affairs
without infringement of or interference with any Intellectual Property of any
other Person.
3.16. Full Disclosure. No information contained in this Agreement,
any of the other Loan Documents, any Projections, Financial Statements or
Collateral Reports or other reports from time to time delivered hereunder or any
written statement furnished by or on behalf of any Credit Party to Agent or any
Lender pursuant to the terms of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times, assuming the timely filing by Agent of appropriate documents
executed
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by the applicable Credit Party with the relevant Governmental Authority, be
fully perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances with respect to the
Collateral other than Accounts.
3.17. Environmental Matters. (a) Except as set forth in Disclosure
Schedule (3.17), as of the Closing Date: (i) the Real Estate is free of
contamination from any Hazardous Material except for such contamination that
would not adversely impact the value or marketability of such Real Estate and
which would not result in Environmental Liabilities which could reasonably be
expected to exceed $50,000; (ii) no Credit Party has caused or suffered to occur
any Release of Hazardous Materials on, at, in, under, above, to, from or about
any of its Real Estate which would result in Environmental Liabilities which
could reasonably be expected to exceed $50,000; (iii) the Credit Parties are and
have been in compliance with all Environmental Laws, except for such
noncompliance which would not result in Environmental Liabilities which could
reasonably be expected to exceed $50,000; (iv) the Credit Parties have obtained,
and are in compliance with, all Environmental Permits required by Environmental
Laws for the operations of their respective businesses as presently conducted or
as proposed to be conducted, except where the failure to so obtain or comply
with such Environmental Permits would not result in Environmental Liabilities
which could reasonably be expected to exceed $50,000, and all such Environmental
Permits are valid, uncontested and in good standing; (v) no Credit Party is
involved in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of such Credit Party which could reasonably be
expected to exceed $50,000, and no Credit Party has permitted any current or
former tenant or occupant of the Real Estate to engage in any such operations;
(vi) there is no Litigation arising under or related to any Environmental Laws,
Environmental Permits or Hazardous Material which seeks damages, penalties,
fines, costs or expenses in excess of $25,000 or injunctive relief, or which
alleges criminal misconduct by any Credit Party; (vii) no notice has been
received by any Credit Party identifying it as a "potentially responsible party"
or requesting information under CERCLA or analogous state statutes, and to the
knowledge of the Credit Parties, there are no facts, circumstances or conditions
that may result in any Credit Party being identified as a "potentially
responsible party" under CERCLA or analogous state statutes; and (viii) the
Credit Parties have provided to Agent copies of all existing environmental
reports, reviews and audits and all written information pertaining to actual or
potential Environmental Liabilities, in each case relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i)
is not now, and has not ever been, in control of any of the Real Estate or any
Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate or compliance with Environmental Laws or Environmental Permits.
3.18. Insurance. Disclosure Schedule (3.18) lists all insurance
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.
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3.19. Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
lists all banks and other financial institutions at which any Credit Party
maintains deposits and/or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.
3.20. Government Contracts. Except as set forth in Disclosure
Schedule (3.20), as of the Closing Date, no Credit Party is a party to any
contract or agreement with any Governmental Authority and no Credit Party's
Accounts are subject to the Federal Assignment of Claims Act, as amended (31
U.S.C. Section 3727) or any similar state or local law.
3.21. Customer and Trade Relations. As of the Closing Date, there
exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or change
in: the business relationship of any Credit Party with any customer or group of
customers whose purchases during the preceding twelve (12) months caused them to
be ranked among the ten largest customers of such Credit Party.
3.22. Permits, Franchises. Each Credit Party possesses all permits,
memberships, franchises, contracts and licenses required and all trademark
rights, trade name rights, patent rights and fictitious name rights necessary to
enable it to conduct the business in which it is now engaged.
3.23. Engaged in Vehicle Sales. Each Borrower and each Specified
Borrower is engaged in the business of selling, leasing and servicing Vehicles;
all such Vehicles consist solely of goods held by a Borrower or a Specified
Borrower for sale or lease; no sales, leases or other transactions involving
such Vehicles are and will not become subject to set-off, counterclaim, defense,
allowance, or adjustment (other than warranty claims, the aggregate amount of
which shall not be material); except as set forth in Schedule 6.7,; there is no
financing statement, or similar statement or instrument of registration under
the laws of any jurisdiction covering or purporting to cover any interest of any
kind in such Vehicles or their proceeds on file or registered in any public
office other than a financing statement in favor of Agent for the benefit of the
Lenders covering all such Vehicles; except as set forth in Disclosure Schedule
(6.3), there is no other floor plan or other financing arrangement with any
party other than Agent for the benefit of the Lenders with respect to all such
Vehicles; except as set forth in Part A of Disclosure Schedule (3.23), no
Borrower or Specified Borrower has made any other verbal or written contract or
arrangement of any kind, the performance of which by the other party thereto
would give rise to a Lien against any such Vehicle, or the proceeds thereof; all
such Vehicles are free from damage caused by fire or other casualty, unless
covered by insurance, subject to customary deductibles. The locations (and
addresses) set forth in Part B of Disclosure Schedule (3.23) are the locations
at which each Borrower and each Specified Borrower keeps the Vehicles held as
inventory, except when such Vehicles may be in transit between locations, in
transit for 'dealer swaps' or being test driven by potential customers or is a
Demonstrator.
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3.24. Dealer Franchise Agreements. As of the Closing Date, no
Borrower or stockholder of a Borrower is a party to any dealer franchise and/or
national agreements with any Manufacturer ("Dealer Franchise Agreements") other
than those specifically disclosed on Disclosure Schedule (3.24) which schedule
shows the Manufacturer and the Borrower and/or Stockholder which is a party to
each such agreement, the date such agreement was entered into and the expiration
date (if any) of each such agreement. Each of the Dealer Franchise Agreements is
currently in full force and effect, and no Borrower and/or such Stockholder has
received any notice of termination with respect to any such agreements; and,
except as disclosed on Disclosure Schedule (3.24) no Credit Party is aware of
any event which with notice, lapse of time, or both would allow any Manufacturer
which is a party to any of the Dealer Franchise Agreements to terminate any such
agreements. There exists no actual or, to the best of each Borrower's and
Specified Borrower's knowledge, threatened termination, cancellation, or
limitation of, or any modification or change in, the business relationship
between any Borrower or Specified Borrower and any material Manufacturer, and
there exists no present condition or state of facts or circumstances which could
reasonably be expected to have a Material Adverse Effect.
3.25. Agreements and Other Documents. As of the Closing Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which any it is subject and each of which are listed on
Disclosure Schedule (3.23) and (3.25); supply agreements and purchase agreements
not terminable by such Credit Party within sixty (60) days following written
notice issued by such Credit Party and involving transactions in excess of
$250,000 per annum; any lease of Equipment having a remaining term of one year
or longer and requiring aggregate rental and other payments in excess of
$100,000 per annum; franchise agreements, licenses and permits held by the
Credit Parties, the absence of which could be reasonably likely to have a
Material Adverse Effect; instruments or documents evidencing Indebtedness of
such Credit Party and any security interest granted by such Credit Party with
respect thereto; and instruments and agreements evidencing the issuance of any
equity securities, warrants, rights or options to purchase equity securities of
such Credit Party.
3.26. Solvency. Both before and after giving effect to (a) the Loans
to be made or extended on the Closing Date or such other date as Loans requested
hereunder are made or extended, (b) the disbursement of the proceeds of such
Loans pursuant to the terms and provisions of this Agreement, (c) the
Refinancing and (d) the payment and accrual of all transaction costs in
connection with the foregoing, Hometown and its Subsidiaries, taken as a whole,
are Solvent.
3.27. Year 2000 Representations.
Hometown has completed a Year 2000 Assessment with respect to all
Credit Parties, a copy of which has been delivered to Agent.
4. FINANCIAL STATEMENTS AND INFORMATION
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4.1. Reports and Notices. (a) Each Credit Party executing this
Agreement hereby agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agent and/or Lenders, as required, the
Financial Statements, notices, Projections and other information at the times,
to the Persons and in the manner set forth in Annex D.
(b) Each Credit Party executing this Agreement hereby agrees that
from and after the Closing Date and until the Termination Date, it shall deliver
to Agent and/or Lenders, as required, the various Collateral Reports (including
Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the times, to the
Persons and in the manner set forth in Annex E.
4.2. Communication with Accountants. Each Credit Party executing
this Agreement authorizes Agent and, so long as a Default or Event of Default
shall have occurred and be continuing, each Lender, to communicate directly with
its independent certified public accountants including Xxxxxx Xxxxxxxx LLP, and
authorizes and shall instruct those accountants and advisors to disclose and
make available to Agent and each Lender any and all Financial Statements and
other supporting financial documents, schedules and information relating to any
Credit Party (including copies of any issued management letters) with respect to
the business, financial condition and other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
and until the Termination Date:
5.1. Maintenance of Existence, Conduct of Business, Etc. (a) Each
Credit Party shall: do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its rights and
franchises; continue to conduct its business substantially as now conducted or
as otherwise permitted hereunder; at all times maintain, preserve and protect
all of its assets and properties used or useful in the conduct of its business,
and keep the same in good repair, working order and condition in all material
respects (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices;
transact business only in such corporate and trade names as are set forth in
Disclosure Schedule (5.1); and keep the Vehicles only at each such Borrower's or
Specified Borrower's regular dealer locations as approved from time to time by
Agent, except (a) Demonstrators may be moved to other locations and demonstrated
in accordance with the terms and conditions established by Agent; (b) Vehicles
subject to a Fleet Sale Purchase Contract approved by the Requisite Lenders may
be located as provided therein.
(b) The Credit Parties hereby represent and warrant that neither
Xxxxxxxx Xxxxx, Inc. nor Family Rental, Inc. has any assets or liabilities of
any kind or nature, and hereby agree to cause the dissolution of each of
Xxxxxxxx Xxxxx, Inc. and Family Rental, Inc. by no later than January 31, 1999.
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(c) Hometown shall, and shall cause each of Bay State and
Brattleboro to, take any and all actions necessary to transfer the assets and
liabilities of Hometown relating to (x) the Bay State Lincoln Mercury
dealership, the Wellesley Lincoln Mercury dealership and the Bay State Mazda
dealership to Bay State and (y) the Brattleboro Chrysler Plymouth Dodge
dealership to Brattleboro, in each case by January 31, 1999 (or such later date
as is acceptable to Agent in light of the status of any Manufactuer consent or
approval) such transfers to be effected pursuant to documentation reasonably
acceptable to Agent.
5.2. Payment of Obligations. (a) Subject to Section 5.2(b), each
Credit Party shall pay and discharge or cause to be paid and discharged promptly
all Charges payable by it, including (A) Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security and unemployment withholding with respect to its
employees, and (B) lawful claims for labor, materials, supplies and services or
otherwise, before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges described in Section 5.2(a);
provided, that (i) adequate reserves with respect to such contest are maintained
on the books of such Credit Party, in accordance with GAAP, (ii) no Lien shall
be imposed to secure payment of such Charges that is superior to any of the
Liens securing the Obligations and such contest is maintained and prosecuted
continuously and with diligence and operates to suspend collection or
enforcement of such Charges, (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, (iv) such Credit Party shall
promptly pay or discharge such contested Charges or claims and all additional
charges, interest, penalties and expenses, if any, and shall deliver to Agent
evidence acceptable to Agent of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to such Credit Party or the
conditions set forth in this Section 5.2(b) are no longer met, and (v) Agent has
not advised Borrowers in writing that Agent reasonably believes that nonpayment
or nondischarge thereof could have or result in a Material Adverse Effect.
5.3. Books and Records. Each Credit Party shall keep adequate books
and records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
(3.4(A)).
5.4. Insurance; Damage to or Destruction of Collateral. (a) The
Credit Parties shall, at their sole cost and expense, maintain liability and
property insurance with financially sound and reputable insurance companies
covering such risks ordinarily insured against by other owners or users of such
properties in similar business; provided that property insurance shall be in an
amount at least equal to the full insurable value of such assets. Schedule
(3.18) describes the policies of insurance in effect on the date hereof. If any
Credit Party at any time or times hereafter shall fail to obtain or maintain any
of the policies of insurance required above or to pay all premiums relating
thereto, Agent may at any time or times thereafter obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which Agent deems advisable.
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Agent shall have no obligation to obtain insurance for any Credit Party or pay
any premiums therefor. By doing so, Agent shall not be deemed to have waived any
Default or Event of Default arising from any Credit Party's failure to maintain
such insurance or pay any premiums therefor. All sums so disbursed, including
attorneys' fees, court costs and other charges related thereto, shall be payable
on demand by Borrowers to Agent and shall be additional Obligations hereunder
secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any
Credit Party's risk profile (including any change in the product mix maintained
by any Credit Party or any laws affecting the potential liability of such Credit
Party) to require additional forms and limits of insurance to, in Agent's
opinion, adequately protect both Agent's and Lender's interests in all or any
portion of the Collateral and to ensure that each Credit Party is protected by
insurance in amounts, terms, scope and with coverage customary for its industry.
If requested by Agent, each Credit Party shall deliver to Agent from time to
time a report of a reputable insurance broker, satisfactory to Agent, with
respect to its insurance policies.
(c) Each Borrower and Specified Borrower shall deliver to Agent, in
form and substance satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured. Each
irrevocably makes, constitutes and appoints Agent (and all officers, employees
or agents designated by Agent), so long as any Default or Event of Default shall
have occurred and be continuing or the anticipated insurance proceeds exceed
$100,000, as such Borrower's or Specified Borrower's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of such Borrower or
Specified Borrower on any check or other item of payment for the proceeds of
such "All Risk" policies of insurance and for making all determinations and
decisions with respect to such "All Risk" policies of insurance. Agent shall
have no duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney. Borrower Representative shall promptly notify Agent
of any loss, damage, or destruction to the Collateral in the amount of $50,000
or more, whether or not covered by insurance. After deducting from such proceeds
the expenses, if any, incurred by Agent in the collection or handling thereof,
Agent may, at its option, apply such proceeds to the reduction of the
Obligations in accordance with Section 1.3(d); or permit or require the
applicable Borrower or Specified Borrower to use such money, or any part
thereof, to replace, repair, restore or rebuild the Collateral in a diligent and
expeditious manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction. Notwithstanding the
foregoing, if the casualty giving rise to such insurance proceeds would not
reasonably be expected to have a Material Adverse Effect and such insurance
proceeds do not exceed $250,000 for any individual occurrence or $750,000 in the
aggregate, Agent shall permit the applicable Borrower or Specified Borrower to
replace, restore, repair or rebuild the property; provided that if such Borrower
or Specified Borrower shall not have completed or entered into binding
agreements to complete such replacement, restoration, repair or rebuilding
within 180 days of such casualty, Agent may apply such insurance proceeds to the
Obligations in accordance with Section 1.3(d). All insurance proceeds which are
to
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be made available to any Borrower or Specified Borrower, as the case may be, to
replace, repair, restore or rebuild the Collateral shall be applied by Agent to
reduce the outstanding principal balance of the Floor Plan Loans (which
application shall not result in a permanent reduction of the Floor Plan Loan
Commitment) and upon such application, Agent shall establish a Reserve against
the Aggregate Borrowing Base or Specified Aggregate Borrowing Base, as the case
may be, in an amount equal to the amount of such proceeds so applied.
Thereafter, such funds shall be made available to the Borrowers or Specified
Borrowers, as the case may be, to provide funds to replace, repair, restore or
rebuild the Collateral as follows: (i) Borrower Representative shall request a
Floor Plan Advance in the amount requested to be released; (ii) so long as the
conditions set forth in Section 2.2 have been met, Floor Plan Lenders shall make
such Floor Plan Advance, the Reserve established with respect to such insurance
proceeds shall be reduced by the amount of such Floor Plan Advance. To the
extent not used to replace, repair, restore or rebuild the Collateral, such
insurance proceeds shall be applied in accordance with Section 1.3(d).
5.5. Compliance with Laws. Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including those relating to ERISA and labor matters and Environmental Laws and
Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.6. Supplemental Disclosure. From time to time as may be requested
by Agent (which request will not be made more frequently than once each year
absent the occurrence and continuance of a Default or an Event of Default), the
Credit Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Disclosure
Schedule or as an exception to such representation or which is necessary to
correct any information in such Disclosure Schedule or representation which has
been rendered inaccurate thereby (and, in the case of any supplements to any
Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to
show the changes made therein); provided that (a) no such supplement to any such
Disclosure Schedule or representation shall be or be deemed a waiver of any
Default or Event of Default resulting from the matters disclosed therein, except
as consented to by Agent and Requisite Lenders in writing; and (b) no supplement
shall be required as to representations and warranties that relate solely to the
Closing Date.
5.7. Intellectual Property. Each Credit Party will conduct its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect.
5.8. Environmental Matters. Each Credit Party shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance which could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation,
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remediation, removal and response actions which are appropriate or necessary to
maintain the value and marketability of the Real Estate or to otherwise comply
with Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any Real Estate which is reasonably likely
to result in Environmental Liabilities in excess of $50,000; and (d) promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental Laws
or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $50,000, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter. If Agent at any time has a reasonable basis to believe that there may be
a violation of any Environmental Laws or Environmental Permits by any Credit
Party or any Environmental Liability arising thereunder, or a Release of
Hazardous Materials on, at, in, under, above, to, from or about any of its Real
Estate, which, in each case, could reasonably be expected to have a Material
Adverse Effect, then each Credit Party shall, upon Agent's written request (i)
cause the performance of such environmental audits including subsurface sampling
of soil and groundwater, and preparation of such environmental reports, at
Borrowers' expense, as Agent may from time to time reasonably request, which
shall be conducted by reputable environmental consulting firms reasonably
acceptable to Agent and shall be in form and substance reasonably acceptable to
Agent, and (ii) permit Agent or its representatives to have access to all Real
Estate for the purpose of conducting such environmental audits and testing as
Agent deems appropriate, including subsurface sampling of soil and groundwater.
Borrowers and Specified Borrowers, jointly and severally as co-obligors, shall
reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
Each Credit Party shall obtain a landlord's agreement, mortgagee agreement or
bailee letter, as applicable, from the lessor of each leased property or
mortgagee of owned property or with respect to any warehouse facility or other
location where Collateral is located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Inventory or Collateral at that location, and
shall otherwise be satisfactory in form and substance to Agent. With respect to
such locations or warehouse space leased or owned as of the Closing Date and
thereafter, if Agent has not received a landlord or mortgagee agreement or
bailee letter as of the Closing Date (or, if later, as of the date such location
is acquired or leased), any Borrower's or Specified Borrower's Eligible
Inventory at that location shall, in Agent's discretion, be excluded from the
Aggregate Borrowing Base or the relevant Specified Aggregate Borrowing Base, as
the case may be, or be subject to such Reserves as may be established by Agent
in its reasonable credit judgment. After the Closing Date, no real property or
warehouse space shall be leased or acquired by any Credit Party without the
prior written consent of Agent (which consent, in Agent's discretion, may be
conditioned upon the exclusion from the Aggregate Borrowing Base or the relevant
Specified Aggregate Borrowing Base, as the case may be, of Eligible Inventory at
that
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location or the establishment of Reserves acceptable to Agent) or, unless and
until a satisfactory landlord or mortgagee agreement or bailee letter, as
appropriate, shall first have been obtained with respect to such location. Each
Credit Party shall timely and fully pay and perform its obligations under all
leases and other agreements with respect to each leased location or public
warehouse where any Collateral is or may be located.
5.10. Further Assurances. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Agent, duly execute and deliver, or cause to
be duly executed and delivered, to Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement or any other Loan Document.
5.11. Fleet Sales. Each Credit Party shall cause each Fleet Sales
Purchase Contract with a sale price of $500,000 or more to provide that the
proceeds of such sale be payable jointly to the applicable Credit Party and
Agent and provide satisfactory evidence thereof to Agent prior to the execution
of such contract.
5.12. Year 2000 ProblemsOn or prior to March 31, 1999, Hometown
shall complete and deliver to Agent a Year 2000 Corrective Plan with respect to
all Credit Parties. On or prior to Xxxxx 00, 0000, Xxxxxxxx shall implement Year
2000 Corrective Actions with respect to all Credit Parties. On or before June
30, 1999, Hometown shall complete Year 2000 Corrective Actions and Year 2000
Implementation Testing with respect to all Credit Parties. On or before June 30,
1999, Hometown shall eliminate all Year 2000 Problems, except where the failure
to correct the same could not reasonably be expected to have a Material Adverse
Effect, individually or in the aggregate.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees as
to all Credit Parties that, without the prior written consent of Agent and the
Requisite Lenders, from and after the date hereof until the Termination Date:
6.1. Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, provided, that Hometown shall be permitted to form (x) Specified
Borrowers and Real Estate Subsidiaries for the purpose of effecting a Permitted
Acquisition utilizing Permitted Acquisition Financing and (y) Non-Recourse
Subsidiaries), or (b) merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with or acquire, any
Person, except that any Borrower may merge with another Borrower, provided that
Borrower Representative shall be the survivor of any such merger to which it is
a party. Notwithstanding the foregoing, Hometown may acquire all or
substantially all of the Stock of any Person and any Borrower may acquire all or
substantially all of the assets of any Person
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(in each case, a "Permitted Acquisition") subject to the satisfaction of each of
the following conditions:
(i) Agent and Lenders shall receive at least thirty (30)
Business Days' prior written notice of such proposed Permitted
Acquisition, which notice shall include a reasonably detailed description
of such proposed Permitted Acquisition;
(ii) such Permitted Acquisition shall only involve assets
located in the United States and comprising a business, or those assets of
a business, of the type engaged in by Borrowers as of the Closing Date
with valid vehicle franchise agreements, and which business would not
subject Agent or any Lender to regulatory or third party approvals in
connection with the exercise of its rights and remedies under this
Agreement or any other Loan Documents other than approvals applicable to
the exercise of such rights and remedies with respect to Borrowers prior
to such Permitted Acquisition;
(iii) such Permitted Acquisition shall be consensual, shall
have been approved by the Target's board of directors and is acceptable to
the Agent, in its sole discretion, as a creditworthy Credit Party;
(iv) no additional Indebtedness, Guaranteed Indebtedness,
contingent obligations or other liabilities shall be incurred, assumed or
otherwise be reflected on a consolidated balance sheet of Hometown and
Target after giving effect to such Permitted Acquisition, except (A)
Advances made hereunder, provided that (x) no Floor Plan Advance may be
requested to fund any such Permitted Acquisition until the Borrowers have
utilized the Acquisition Loan Commitment in full in the amount of the
Acquisition Loan Commitment as in effect on the date of this Agreement and
(y) the aggregate principal amount of Floor Plan Advances utilized to
effect Permitted Acquisitions shall not exceed an aggregate amount equal
to 10% of Net Borrowing Availability, (B) ordinary course trade payables
and accrued expenses, (C) unsecured Indebtedness of the Target to the
extent no Default or Event of Default shall have occurred and be
continuing or would result after giving effect to such Permitted
Acquisition, (D) Subordinated Debt issued to the sellers of such Target,
(E) Permitted Acquisition Financing, (F) Permitted Acquisition Financing
Guaranties and (G) liabilities of the Target acceptable to the Agent in
its reasonable discretion;
(v) the aggregate Advance made to fund the Permitted
Acquisition shall not exceed three and one-half (3.5) times the Target's
EBITDA for the trailing twelve (12) month period immediately prior to the
proposed acquisition date; provided, however, that after giving effect to
any Advance ratio of (1), the aggregate principal amount of Acquisition
Loans then outstanding to (2) an amount equal to (x) Hometown's EBITDA
(after giving pro forma effect to such Permitted Acquisition), minus (y)
the unfinanced portion of Capital Expenditures, minus (z) Interest
Expense, in each case for the twelve (12) month period prior to the
proposed date of such Advance, shall not exceed 2.0 to 1.0;
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(vi) the Target shall have generated a return on sales of 0.5%
or more for the immediately preceding twelve month period, as determined
based upon the Target's Financial Statements for such period and sales for
such period shall have not declined more than fifteen percent (15%) as
measured against the twelve month period immediately preceding such
initial twelve month period;
(vii) the business and assets acquired in such Permitted
Acquisition shall be free and clear of all Liens (other than Permitted
Encumbrances);
(viii) at or prior to the closing of any Permitted
Acquisition, Agent will be granted a first priority perfected Lien
(subject to Permitted Encumbrances) in all assets acquired pursuant
thereto or in the assets and capital stock of the Target, and Borrowers,
Specified Borrowers and the Target shall have executed such documents and
taken such actions as may be required by Agent in connection therewith
including such documents and actions as may be required by Agent to make
the Specified Borrower and/or Target a Credit Party hereunder (as a
Borrower, Specified Borrower or Guarantor, as applicable) and as otherwise
required to comply with Section 1.8;
(ix) Concurrently with delivery of the notice referred to in
clause (i) above, such Person shall have delivered to Agent, in form and
substance satisfactory to Agent:
(A) a pro forma consolidated balance sheet, income
statement and cash flow statement of Hometown and its Subsidiaries
(the "Acquisition Pro Forma"), based on recent financial statements,
which shall be complete and shall fairly present in all material
respects the assets, liabilities, financial condition and results of
operations of Hometown and its Subsidiaries in accordance with GAAP
consistently applied, but taking into account such Permitted
Acquisition and the funding of all Loans in connection therewith,
and such Acquisition Pro Forma shall reflect that on a pro forma
basis, no Event of Default shall have occurred and be continuing or
would result after giving effect to such Permitted Acquisition and
Hometown and its Subsidiaries would have been in compliance with the
financial covenants set forth in Annex F for the four quarter period
reflected in the Compliance Certificate most recently delivered to
Agent pursuant to Annex D prior to the consummation of such
Permitted Acquisition (giving effect to such Permitted Acquisition
and all Loans funded in connection therewith as if made on the first
day of such period);
(B) updated versions of the most recently delivered
Projections covering the period commencing on the date of such
Permitted Acquisition and ending on the date which is not sooner
than the fifth anniversary of the Closing Date and otherwise
prepared in
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accordance with the Projections (the "Acquisition Projections") and
based upon historical financial data of a recent date satisfactory
to Agent, taking into account such Permitted Acquisition; and
(C) a certificate of the chief financial officer of
Hometown to the effect that: (v) Hometown and its Subsidiaries taken
as a whole (after taking into consideration all rights of
contribution and indemnity any such Person has against each other
Credit Party) will be Solvent upon the consummation of the Permitted
Acquisition; (w) the Acquisition Pro Forma fairly presents the
financial condition of Hometown and its Subsidiaries (on a
consolidated basis) as of the date thereof after giving effect to
the Permitted Acquisition; (x) the Acquisition Projections are
reasonable estimates of the future financial performance of Hometown
and its Subsidiaries subsequent to the date thereof based upon the
historical performance of Hometown and its Subsidiaries and the
Target and show that Hometown and its Subsidiaries shall continue to
be in compliance with the financial covenants set forth in Annex F
for the three (3) year period thereafter; (y) in the event that a
Loan other than an Acquisition Loan is utilized by the Borrowers to
effect a Permitted Acquisition, Borrowers shall have Net Borrowing
Availability (inclusive of any Reserves established by Agent in
connection therewith) in excess of an amount equal to 10% (or such
lesser percentage as is acceptable to the Agent in its sole
discretion) of Net Borrowing Availability after giving effect to
such Permitted Acquisition (inclusive of any Reserves established by
Agent in connection therewith) for the 90 day period following such
Permitted Acquisition; and (z) Hometown and its Subsidiaries have
completed their due diligence investigation with respect to the
Target and such Permitted Acquisition, which investigation was
conducted in a manner similar to that which would have been
conducted by a prudent purchaser of a comparable business and the
results of which investigation were delivered to Agent and Lenders;
(x) in the event that such Permitted Acquisition involves a
Specified Borrower, on or prior to the date of such Permitted Acquisition
Hometown, Agent and the Requisite Floor Plan Lenders shall establish
financial covenants of the type contained in Annex F hereto to be
applicable to such Specified Borrower;
(xi) on or prior to the date of such Permitted Acquisition,
Agent shall have received, in form and substance satisfactory to Agent,
copies of the acquisition agreement and related agreements and
instruments, and all opinions, certificates, lien search results and other
documents reasonably requested by Agent;
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(xii) if requested by Agent, Agent shall have received such
environmental review and audit reports with respect to the real property
of the Target as Agent shall have requested and Agent shall be satisfied,
in its sole discretion, with the contents and scope of all such
environmental reports;
(xiii) Agent shall have received evidence satisfactory to
Agent that on or prior to the proposed acquisition date Hometown has
contributed one dollar of equity (which, for the purposes of determining
compliance with this clause (xiii) shall include any Subordinated Debt or
equity issued to the sellers of the Target as consideration for such
Permitted Acquisition) for every two dollars of Advances made against the
purchase price of the Target. For purposes of this clause (xiii),
"purchase price" shall mean the total amount paid for the Target less the
cost to acquire Vehicles, and parts inventory of the Target;
(xiv) Agent shall have received evidence satisfactory to Agent
that such Person has obtained all required consents, waivers,
acknowledgments, orders, authorizations and approvals of all Persons
including all requisite Governmental Authorities, third parties and
Manufacturers to the consummation of the proposed acquisition;
(xv) at the time of such Permitted Acquisition and after
giving effect thereto, no Default or Event of Default shall have occurred
and be continuing; and
(xvi) the Agent shall have completed all business and legal
due diligence with respect to the Target and the proposed acquisition with
results satisfactory to the Agent including the capital structure,
corporate structure, governing documents and material agreements of
Hometown and the Target and their respective Subsidiaries after giving
effect to the proposed acquisition, and the legal and tax effects
resulting from such proposed acquisition.
Notwithstanding the foregoing, the Inventory of the Target shall not be included
in Eligible Financed Vehicles and Eligible Used Vehicles without the prior
written consent of Agent and Requisite Floor Plan Lenders.
6.2. Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, no Credit Party shall make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that:
(a) Any Credit Party may hold investments comprised of notes
payable, or stock or other securities issued by Account Debtors to any such
Credit Party pursuant to negotiated agreements with respect to settlement of
such Account Debtor's Accounts in the ordinary course of business, so long as
the aggregate amount of such Accounts so settled by such Credit Party does not
exceed $25,000;
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(b) each Credit Party may maintain its existing investments in its
Subsidiaries as of the Closing Date;
(c) so long as Agent has not delivered an Activation Notice/no
Default or Event of Default shall have occurred and be continuing and there is
no outstanding Loan balance, a Credit Party may make investments subject to
Control Letters in favor of Agent for the benefit of Lenders or otherwise
subject to a perfected security interest in favor of Agent for the benefit of
Lenders, in (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof maturing within
one year from the date of acquisition thereof, (ii) commercial paper maturing no
more than one year from the date of creation thereof and currently having the
highest rating obtainable from either Standard & Poor's Ratings Group or Xxxxx'x
Investors Service, Inc., (iii) certificates of deposit, maturing no more than
one year from the date of creation thereof, issued by commercial banks
incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $300,000,000
and having a senior unsecured rating of "A" or better by a nationally recognized
rating agency (an "A Rated Bank"), (iv) time deposits, maturing no more than 30
days from the date of creation thereof with A Rated Banks and (v) mutual funds
that invest solely in one or more of the investments described in clauses (i)
through (iv) above;
(d) in addition to the equity requirement contained in Section
6.1(xiii), Hometown shall be permitted to provide initial capitalization to a
Real Estate Subsidiary, a new Borrower established after the date of this
Agreement, a Specified Borrower or a Non-Recourse Subsidiary, provided, however,
that the aggregate amount of investments made by Hometown pursuant to this
clause (d) after the Closing Date shall not exceed $1,500,000;
(e) Hometown shall be permitted to utilize up to $2,000,000 of the
cash proceeds received from its July 1998 initial public offering for the
purpose of effecting a Permitted Acquisition; and
(f) Borrowers and Specified Borrowers shall be permitted to make
loans to customers for the purpose of financing the purchase of Used Vehicles;
provided, however, that the aggregate principal amount of all such loans shall
not at any time exceed $6,000,000 at any time (without giving effect to any
write-offs or write-downs of any such loans).
6.3. Indebtedness. (a) No Credit Party shall create, incur, assume
or permit to exist any Indebtedness, except (without duplication):
(i) Indebtedness secured by purchase money security interests
and Capitalized Leases permitted in clause (c) of Section 6.7;
(ii) the Loans and the other Obligations,
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(iii) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain
unfunded under applicable law;
(iv) existing Indebtedness described in Disclosure Schedule
(6.3) and refinancings thereof or amendments or modifications thereto
which do not have the effect of increasing the principal amount thereof or
changing the amortization thereof (other than to extend the same) and
which are otherwise on terms and conditions no less favorable to any
Credit Party, Agent or any Lender, as determined by Agent, than the terms
of the Indebtedness being refinanced, amended or modified, provided,
however, that the Indebtedness listed on items
1,2,6,7,8,9,10,12,16,17,18,20,21,22,23,24,38,41,44,45 and 49 of Disclosure
Schedule (6.3) shall only be permitted to exist until the earlier (i) the
date upon which a Floor Plan Advance is incurred to repay any such
Indebtedness and (ii) January 31, 1998;
(v) Indebtedness specifically permitted under Section 6.1;
(vi) Indebtedness consisting of intercompany loans and
advances made by any Borrower or Specified Borrower to any other Borrower
or Specified Borrower, provided that (A) any such Person shall have
executed and delivered a demand note (collectively, the "Intercompany
Notes") to evidence any such intercompany Indebtedness owing at any time
by such Person to such Borrowers or Specified Borrowers which Intercompany
Notes shall be in form and substance satisfactory to Agent and shall be
pledged and delivered to Agent pursuant to the Pledge Agreement or
Security Agreement as additional collateral security for the Obligations;
(B) each such Person shall record all intercompany transactions on its
books and records in a manner satisfactory to Agent; (C) the obligations
of each such Person under any such Intercompany Notes shall be
subordinated to the Obligations of each Credit Party hereunder in a manner
satisfactory to Agent; (D) at the time any such intercompany loan or
advance is made by any Borrower or Specified Borrower to any other
Borrower or Specified Borrower and after giving effect thereto, Hometown
and its Subsidiaries, taken as a whole, shall be Solvent; (E) in addition
to the intercompany loans referred to in the following clause (vii), the
aggregate outstanding principal amount of intercompany loans of, and
advances made to, any Specified Borrower by the Borrowers or any Borrower
by the Specified Borrowers shall not at any time exceed $100,000
(including any write-downs or write-offs in connection therewith); and (F)
no Default or Event of Default would occur and be continuing after giving
effect to any such proposed intercompany loan;
(vii) existing Indebtedness of (x) Xxxxxx Isuzu owing to
Hometown and the Borrowers in an aggregate principal amount of $2,000,000
and (y) Bay State owing to Hometown and the Borrowers in an aggregate
principal amount of $300,000, in each case as such amount is reduced as a
result of any repayment of any such Indebtedness; and
(viii) Indebtedness incurred by a Borrower or a Specified
Borrower incurred from a sub-prime financier and secured solely by Accounts
created by such Borrower or Specified
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Borrower from a transaction permitted by Section 6.2(f) and the related Used
Vehicle; provided, however, that the aggregate principal amount of all such
loans (advances) shall not at any time exceed $3,000,000 (without giving effect
to any write-offs or write-downs of any such Indebtedness).
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations and (ii) Indebtedness secured by a Permitted Encumbrance if the
asset securing such Indebtedness has been sold or otherwise disposed of in
accordance with Sections 6.8(b) or (c).
6.4. Employee Loans and Affiliate Transactions. (a) Except as
otherwise expressly permitted in this Section 6 with respect to Affiliates, no
Credit Party shall enter into or be a party to any transaction with any other
Credit Party or any Affiliate thereof except, consistent with such Credit
Party's practice prior to the extension of the Loan Documents, in the ordinary
course of and pursuant to the reasonable requirements of such Credit Party's
business and upon fair and reasonable terms that are no less favorable to such
Credit Party than would be obtained in a comparable arm's length transaction
with a Person not an Affiliate of such Credit Party. In addition, if any such
transaction or series of related transactions involves payments in the aggregate
during any Fiscal Year of either (i) the greater of (x) an amount equal to 1% of
Net Borrowing Availability up to a maximum of $500,000 and (y) $100,000, the
terms of these transactions must be disclosed in advance to, and approved by,
Agent and Lenders; provided, however that compensation paid to an Affiliate that
is an employee of Hometown or any of its Subsidiaries may be increased by an
amount up to 10% of such Person's previous annual compensation without the
approval of the Agent or Lenders. All such transactions existing as of the date
hereof are described on Disclosure Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to their
respective employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes and stock option financing up to a maximum of $50,000 to any employee
and up to a maximum of $250,000 in the aggregate at any one time outstanding.
6.5. Capital Structure and Business. No Credit Party shall (a) make
any changes in any of its business objectives, purposes or operations which
could in any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as described on
Disclosure Schedule (3.8), including the issuance of any shares of Stock,
warrants or other securities convertible into Stock or any revision of the terms
of its outstanding Stock except as otherwise permitted in connection with a
Permitted Acquisition, in Section 6.14 or in connection with an exercise by an
employee pursuant to employee restricted stock or an employee stock option plan
in effect on the date of this Agreement, or (c) amend its charter or bylaws in a
manner which would adversely affect Agent or Lenders or such Credit Party's duty
or ability to repay the Obligations. No Credit Party shall engage in any
business other than the businesses currently engaged in by it.
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6.6. Guaranteed Indebtedness. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, (b) for Guaranteed Indebtedness incurred for the benefit of any
other Credit Party if the primary obligation is expressly permitted by this
Agreement other than Indebtedness, if any, of a Target existing at the time such
Target is acquired and permitted pursuant to Section 6.1(iv), (c) for any
Permitted Acquisition Financing Guaranty and (d) for any unsecured Guaranteed
Indebtedness of Hometown issued to the provider of Permitted Acquisition
Financing in support of any Permitted Acquisition Financing Guaranty, which such
Guaranteed Indebtedness shall be on terms and conditions and in form and
substance satisfactory to Agent.
6.7. Liens. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7), provided, however, that any Lien relating to items
1,2,3,6,7,8,9,10,12,16,17,18,20,21,22,23,24,36,39,45,46 and 48 on Disclosure
Schedule (6.7) shall only be permitted to exist until the earlier of (i) the
date upon which a Floor Plan Advance is incurred to repay the Indebtedness
relating to any such Lien and (ii) January 31, 1999; (c) Liens created after the
date hereof by conditional sale or other title retention agreements (including
Capital Leases) or in connection with purchase money Indebtedness with respect
to Equipment and Fixtures acquired by any Credit Party in the ordinary course of
business, involving the incurrence of an aggregate amount of purchase money
Indebtedness and Capital Lease Obligations of not more than $250,000 for any
Credit Party and $1,500,000 in the aggregate for all Credit Parties, in each
case outstanding at any one time for all such Liens (provided that such Liens
attach only to the assets subject to such purchase money debt and such
Indebtedness is incurred within twenty (20) days following such purchase and
does not exceed 100% of the purchase price of the subject assets); (d) Liens
securing any Permitted Acquisition Financing, provided, however, that any such
Lien shall be limited to the real property owned by the Real Estate Subsidiary
party to such Permitted Acquisition Financing; (e) Liens securing any Permitted
Acquisition Financing Guaranty, provided, however, that any such Lien shall be
limited to (i) a first priority security interest in the leasehold interest of
the Specified Borrower operating the dealership subject to the related Permitted
Acquisition Financing and (iii) a second priority security interest in all other
assets of the dealership operated by the Specified Borrower and subject to the
related Permitted Acquisition Financing; and (f) Liens on Accounts and related
Used Vehicles subject to Indebtedness permitted pursuant to Section 6.3(viii).
In addition, no Credit Party shall become a party to any agreement, note,
indenture or instrument, or take any other action, which would prohibit the
creation of a Lien on any of its properties or other assets in favor of Agent,
on behalf of itself and Lenders, as additional collateral for the Obligations,
except operating leases, Capital Leases or Licenses which prohibit Liens upon
the assets that are subject thereto.
6.8. Sale of Stock and Assets. No Credit Party shall sell, transfer,
convey, consign, assign or otherwise dispose of any of its properties or other
assets, including the capital Stock of any of its Subsidiaries (whether in a
public or a private offering or otherwise) or any of their Accounts,
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other than (a) the sale of Inventory in the ordinary course of business, (b) the
sale, transfer, conveyance or other disposition by a Credit Party after the
Closing Date of Equipment, Fixtures or Real Estate that are obsolete or no
longer used or useful in such Credit Party's business and having a value not
exceeding $250,000 for any Credit Party and $1,500,000 in the aggregate for all
Credit Parties, (c) other Equipment and Fixtures having a value not exceeding
$250,000 for any Credit Party and $1,500,000 in the aggregate for all Credit
Parties; (d) Hometown shall be permitted to transfer assets constituting the Bay
State Lincoln Mercury dealership, the Wellesley Lincoln Mercury dealership and
Bay State Mazda dealership to Bay State upon the approval of Agent and Requisite
Lenders, which approvals shall not be unreasonably withheld, and the receipt of
the consent of the relevant Manufacturer, and on the date of any such transfer,
Bay State shall from and after such date constitute a Specified Borrower for all
purposes of this Agreement; and (e) Hometown shall be permitted to transfer
assets constituting the Brattleboro Chrysler Plymouth Dodge dealership to
Brattleboro pursuant to Section 5.1(c). With respect to any disposition of
assets or other properties permitted pursuant to clause (b) and clause (c)
above, Agent agrees on reasonable prior written notice to release its Lien on
such assets or other properties in order to permit the applicable Credit Party
to effect such disposition and shall execute and deliver to Borrowers, at
Borrowers' expense, appropriate UCC-3 termination statements and other releases
as reasonably requested by Borrowers.
6.9. ERISA. No Credit Party shall, or shall cause or permit any
ERISA Affiliate to, cause or permit to occur an event which could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10. Financial Covenants. The Credit Parties shall not breach or
fail to comply with any of the Financial Covenants (the "Financial Covenants")
set forth in Annex F or established pursuant to Section 6.1(x).
6.11. Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities which could not reasonably be
expected to have a Material Adverse Effect.
6.12. Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13. Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.
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6.14. Restricted Payments. No Credit Party shall make any Restricted
Payment, except (a) intercompany loans and advances among Borrowers and
Specified Borrowers to the extent permitted by Section 6.3 above, (b) dividends
and distributions by (i) Subsidiaries of any Borrower or Specified Borrower paid
to such Borrower or Specified Borrower, and (ii) Subsidiaries of Hometown to
Hometown to enable Hometown to fund Permitted Acquisitions, to make tax payments
then due and owing and for other administrative expenses then due and payable,
(c) employee loans permitted under Section 6.4(b) above and (d) repurchase of
the Stock of Hometown and/or options to purchase the Stock of Hometown held by
executive officers, members of management or employees of a Credit Party (i)
upon the death, disability, retirement or termination of such Person or (ii) in
order to effect the transfer of the Stock of Hometown held by a shareholder to
an individual retirement account of such Person.
6.15. Change of Corporate Name or Location; Change of Fiscal Year.
No Credit Party shall (a) change its corporate name, or (b) change its chief
executive office, principal place of business, corporate offices or warehouses
or locations at which Collateral is held or stored, or the location of its
records concerning the Collateral, in any case without at least sixty (60) days
prior written notice to Agent and after Agent's written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to
continue the perfection of any Liens in favor of Agent, on behalf of Lenders, in
any Collateral, has been completed or taken, and provided that any such new
location shall be in the continental United States. Without limiting the
foregoing, no Credit Party shall change its name, identity or corporate
structure in any manner which might make any financing or continuation statement
filed in connection herewith seriously misleading within the meaning of Section
9-402(7) of the Code or any other then applicable provision of the Code except
upon prior written notice to Agent and Lenders and after Agent's written
acknowledgment that any reasonable action requested by Agent in connection
therewith, including to continue the perfection of any Liens in favor of Agent,
on behalf of Lenders, in any Collateral, has been completed or taken. No Credit
Party shall change its Fiscal Year.
6.16. No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) which could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of any Borrower
to any Borrower or Specified Borrower or among Borrowers and Specified
Borrowers.
6.17. Leases. No Credit Party shall enter into any operating lease
for Equipment or Real Estate if the payments payable in any year would exceed
10% of sales for any Credit Party or 10% of sales in the aggregate for all
Credit Parties, in each case for the immediately preceding twelve (12) month
period.
6.18. Changes Relating to Subordinated Debt. No Credit Party shall
change or amend the terms of any Subordinated Debt (or any indenture or
agreement in connection therewith) or make any prepayment of any Subordinated
Debt.
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6.19. Other Credit Parties. (a) None of the Credit Parties other
than Borrowers, Specified Borrowers and Real Estate Subsidiaries shall engage in
any trade or business, or own any assets (other than Stock of their
Subsidiaries) or incur any Indebtedness or Guaranteed Indebtedness (other than
the Obligations).
(b) Hometown shall not engage in any business other than in
connection with its ownership of its Subsidiaries and such actions as are
necessary in connection wit the consummation of a Permitted Acquisition or incur
any Indebtedness or Guaranteed Indebtedness except as permitted pursuant to
Section 6.6(d).
7. TERM
7.1. Termination. The financing arrangements contemplated hereby
shall be in effect until the Commitment Termination Date, and the Loans and all
other Obligations shall be automatically due and payable in full on such date.
7.2. Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided however,
that in all events the provisions of Section 11, the payment obligations under
Sections 1.15 and 1.16, and the indemnities contained in the Loan Documents
shall survive the Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1. Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Any Borrower or Specified Borrower (i) fails to make any payment
of principal of, or interest on, or Fees owing in respect of, the Loans or any
of the other Obligations when due and payable, or (ii) fails to pay or reimburse
Agent or Lenders for any expense reimbursable hereunder or under any other Loan
Document within ten (10) days following Agent's demand for such reimbursement or
payment of expenses.
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(b) Any Credit Party shall fail or neglect to perform, keep or
observe any of the provisions of Sections 1.4, 1.8, 5.4 or 6, or any of the
provisions set forth in Annexes B or F, respectively.
(c) Any Borrower or Specified Borrower shall fail or neglect to
perform, keep or observe any of the provisions of Section 4 or any provisions
set forth in Annexes D or E, respectively, and the same shall remain unremedied
for three (3) days or more.
(d) Any Credit Party shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for thirty (30) days
or more.
(e) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party in excess of $250,000 in the aggregate, or
(ii) causes, or permits any holder of such Indebtedness or a trustee to cause,
Indebtedness or a portion thereof in excess of $250,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, regardless of whether such default is waived, or such right is
exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any respect, or any representation or warranty herein or
in any Loan Document or in any written statement, report, financial statement or
certificate (other than a Borrowing Base Certificate) made or delivered to Agent
or any Lender by any Credit Party is untrue or incorrect in any material respect
as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of $250,000
or more shall be attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any judgment creditor,
receiver, trustee, custodian or assignee for the benefit of creditors of any
Credit Party and such condition continues for thirty (30) days or more.
(h) A case or proceeding shall have been commenced against any
Credit Party seeking a decree or order in respect of any Credit Party (i) under
Title 11 of the United States Code, as now constituted or hereafter amended or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for any Credit Party or of any substantial
part of any such Person's assets, or (iii) ordering the winding-up or
liquidation of the affairs of any Credit Party, and such case or proceeding
shall remain undismissed or unstayed for sixty (60) days or more or such court
shall enter a decree or order granting the relief sought in such case or
proceeding.
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(i) Any Credit Party (i) shall file a petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) shall fail to contest in a timely and appropriate manner or shall consent
to the institution of proceedings thereunder or to the filing of any such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of any
Credit Party or of any substantial part of any such Person's assets, (iii) shall
make an assignment for the benefit of creditors, (iv) shall take any corporate
action in furtherance of any of the foregoing; or (v) shall admit in writing its
inability to, or shall be generally unable to, pay its debts as such debts
become due.
(j) A final judgment or judgments for the payment of money (not
fully covered by independent third-party insurance as to which the insurer has
acknowledged liability coverage) in excess of $250,000 in the aggregate at any
time outstanding shall be rendered against any Credit Party and the same shall
not, within thirty (30) days after the entry thereof, have been discharged or
execution thereof stayed or bonded pending appeal, or shall not have been
discharged prior to the expiration of any such stay.
(k) Any material provision of any Loan Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any security interest created under any Loan Document shall cease to be a
valid and perfected first priority security interest or Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby.
(l) Any Change of Control shall occur.
(m) Any Governmental Authority revokes or fails to renew any
material license, permit or franchise of any Credit Party, or any Credit party
for any reason loses any material license, permit or franchise, or any Credit
Party suffers the imposition of any restraining order, escrow, suspension or
impound of funds in connection with any proceeding (judicial or administrative)
with respect to any material license, permit or franchise.
(n) (i) Any Credit Party receives a notice from any automobile
manufacturer that it has terminated any agreement between such manufacturer and
any Credit Party or any equity holder of Hometown and the result of all such
notices would reduce the gross revenues of Hometown and its Subsidiaries by an
amount equal to or greater than 10% of the gross revenues of Hometown and its
Subsidiaries for the four consecutive fiscal quarters then last ended; provided
that the foregoing events shall not constitute an Event of Default if within
[90] days of any such notice Hometown or one of its Affiliates commences
proceedings with the appropriate Governmental Authority challenging any such
termination and such proceeding suspend the effectiveness of such termination
(which suspension is not interrupted for a period of more than 30 days); which
has a Material Adverse Effect
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or (ii) there shall occur any other change to any Dealer Franchise Agreement
which has a Material Adverse Effect.
(o) Any Credit Party ceases to conduct business or voluntarily or
involuntarily dissolves or is dissolved, liquidates or is liquidated.
(p) Any Borrower or Specified Borrower fails to provide Agent
promptly with any title and purchase documentation with respect to any Used
Vehicle requested by Agent.
(q) For any month the aggregate gross sales proceeds of Recently
Sold Vehicles reported sold to Agent later than three (3) Calendar Days from the
date of execution or effectiveness of the Sales Contract exceeds an amount equal
to 5% of the Aggregate Borrowing Base or a Specified Aggregate Borrowing Base,
as the case may be.
8.2. Remedies. (a) If any Event of Default shall have occurred and
be continuing or if a Default shall have occurred and be continuing and Agent or
Requisite Floor Plan Lenders shall have determined not to make any Advances so
long as that specific Default is continuing, Agent may (and at the written
request of the Requisite Floor Plan Lenders shall), without notice, suspend the
Floor Plan Loan facility with respect to further Advances whereupon any further
Advances shall be made in Agent's sole discretion (or in the sole discretion of
the Requisite Floor Plan Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
Default or Event of Default shall have occurred and be continuing, Agent may
(and at the written request of Requisite Lenders shall), without notice except
as otherwise expressly provided herein, increase the rate of interest applicable
to the Loans to the Default Rate. Imposition of the Default Rate shall not
constitute a waiver of Agent's and the Lenders' rights and remedies under
Section 8.2.
(b) If any Event of Default shall have occurred and be continuing,
Agent may (and at the written request of the Requisite Lenders shall), without
notice, (i) terminate the Floor Plan Loan facility and the Acquisition Loan
facility with respect to further Advances; (ii) declare all or any portion of
the Obligations, including all or any portion of any Loan to be forthwith due
and payable, all without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrowers and each other Credit
Party; (iii) enforce Borrowers' and Specified Borrowers' rights under their
respective Vehicle dealer franchise agreements including rights to manufacturer
repurchase; (iv) terminate Borrowers' and Specified Borrowers' rights under
their respective Vehicle dealer franchise agreements to the extent required to
consummate manufacturer repurchases; exercise any rights and remedies provided
to Agent under the Loan Documents and/or at law or equity, including all
remedies provided under the Code; provided, however, that upon the occurrence of
an Event of Default specified in Sections 8.1(g), (h) or (i), the Floor Plan
Loan Facility and the Acquisition Loan Facility shall be immediately terminated
and all of the Obligations, including the aggregate and the Acquisition Loan
Facility Loan, shall become immediately due and payable without declaration,
notice or demand by any Person.
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8.3. Waivers by Credit Parties. Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives (including for
purposes of Section 12): (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which any Credit Party may in any way be liable, and hereby ratifies and
confirms whatever Agent may do in this regard, (b) all rights to notice and a
hearing prior to Agent's taking possession or control of, or to Agent's replevy,
attachment or levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing Agent to exercise any of its remedies,
and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1. Assignment and Participations. (a) The Credit Parties signatory
hereto consent to any Lender's assignment of, and/or sale of participations in,
at any time or times, the Loan Documents, Loans and any Commitment or of any
portion thereof or interest therein, including any Lender's rights, title,
interests, remedies, powers or duties thereunder, whether evidenced by a writing
or not. Any assignment by a Lender shall (i) require the consent of Agent and,
so long as no Default or Event of Default has occurred and is continuing,
Borrower Representative (which shall not be unreasonably withheld or delayed)
and the execution of an assignment agreement (an "Assignment Agreement")
substantially in the from attached hereto as Exhibit 9.1(a) and otherwise in
form and substance satisfactory to, and acknowledged by, Agent; (ii) be
conditioned on such assignee Lender representing to the assigning Lender and
Agent that it is purchasing the applicable Loans to be assigned to it for its
own account, for investment purposes and not with a view to the distribution
thereof; (iii) if a partial assignment, be in an amount at least equal to
$5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; and (iv) include a payment to Agent of an assignment fee of $3,500.
In the case of an assignment by a Lender under this Section 9.1, the assignee
shall have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were a Lender hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitments
or assigned portion thereof from and after the date of such assignment. Each
Borrower and Specified Borrower hereby acknowledges and agrees that any
assignment will give rise to a direct obligation of Borrowers and Specified
Borrowers to the assignee and that the assignee shall be considered to be a
"Lender". In all instances, each Lender's liability to make Loans hereunder
shall be several and not joint and shall be limited to such Lender's Pro Rata
Share of the applicable Commitment. In the event Agent or any Lender assigns or
otherwise transfers all or any part of the Obligations, Agent or any such Lender
shall so notify Borrowers and Specified Borrowers, and Borrowers and Specified
Borrowers shall, upon the request of Agent or such Lender, execute new Notes in
exchange for the Notes, if any, being assigned. Notwithstanding the foregoing
provisions of this Section 9.1(a), any Lender may at any time pledge the
Obligations held by it and such Lender's rights
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under this Agreement and the other Loan Documents to a Federal Reserve Bank, and
any Lender that is an investment fund may assign the Obligations held by it and
such Lender's rights under this Agreement and the other Loan Documents to
another investment fund managed by the same investment advisor; provided,
however, that no such pledge to a Federal Reserve Bank shall release such Lender
from such Lender's obligations hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers and Specified Borrowers hereunder shall be determined as if that
Lender had not sold such participation, and that the holder of any such
participation shall not be entitled to require such Lender to take or omit to
take any action hereunder except actions directly affecting (i) any reduction in
the principal amount of, or interest rate or Fees payable with respect to, any
Loan in which such holder participates, (ii) any extension of the scheduled
amortization of the principal amount of any Loan in which such holder
participates or the final maturity date thereof, and (iii) any release of all or
substantially all of the Collateral (other than in accordance with the terms of
this Agreement, the Collateral Documents or the other Loan Documents). Solely
for purposes of Sections 1.13, 1.15, 1.16 and 9.8, each Borrower and Specified
Borrower acknowledges and agrees that a participation shall give rise to a
direct obligation of Borrowers and Specified Borrowers to the participant and
the participant shall be considered to be a "Lender". Except as set forth in the
preceding sentence no Borrower, Specified Borrower or Credit Party shall have
any obligation or duty to any participant. Neither Agent nor any Lender (other
than the Lender selling a participation) shall have any duty to any participant
and may continue to deal solely with the Lender selling a participation as if no
such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender
shall, as between Borrowers, Specified Borrowers and that Lender, or Agent and
that Lender, be relieved of any of its obligations hereunder as a result of any
sale, assignment, transfer or negotiation of, or granting of participation in,
all or any part of the Loans, the Notes or other Obligations owed to such
Lender.
(d) Each Credit Party executing this Agreement shall assist any
Lender permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and,
if requested by Agent, the preparation of informational materials for, and the
participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their affairs contained in any selling materials provided by them and all
other information provided by them and included in such materials, except that
any Projections delivered by Borrowers shall only be certified by Borrowers as
having been prepared by Borrowers in compliance with the representations
contained in Section 3.4(c).
(e) A Lender may furnish any information concerning Credit Parties
in the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained in Section 11.8.
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(f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.16(a),
increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or withholding taxes in accordance with Section 1.15(a).
9.2. Appointment of Agent. GE Capital is hereby appointed to act on
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Neither Agent nor any of its Affiliates nor any of their
respective officers, directors, employees, agents or representatives shall be
liable to any Lender for any action taken or omitted to be taken by it hereunder
or under any other Loan Document, or in connection herewith or therewith, except
for damages caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders,
Requisite Floor Plan Lenders, Supermajority Floor Plan Lenders or all affected
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders, Requisite Floor Plan
Lenders, Supermajority Floor Plan Lenders or all affected Lenders, as the case
may be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Requisite Floor Plan Lenders, Supermajority Floor Plan
Lenders or all affected Lenders, as applicable.
9.3. Agent's Reliance, Etc. Neither Agent nor any of its Affiliates
nor any of their respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents,
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except for damages caused by its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, Agent: (a)
may treat the payee of any Note as the holder thereof until Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to Agent; (b) may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the books and records) of
any Credit Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
9.4. GE Capital and Affiliates. With respect to its Commitments
hereunder, GE Capital 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 the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans and GE Capital as Agent.
9.5. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges 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
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
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9.6. Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Credit Parties and without limiting the obligations of
Credit Parties hereunder), ratably according to their respective Pro Rata
Shares, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted by Agent in connection
therewith; provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross negligence
or willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that Agent is not reimbursed for
such expenses by Credit Parties.
9.7. Successor Agent. Agent may resign at any time by giving not
less than thirty (30) days' prior written notice thereof to Lenders and Borrower
Representative. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Agent's giving notice of resignation, then
the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, by the 30th day after the date such notice of resignation was given
by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Requisite Lenders hereunder
shall be subject to the approval of Borrower Representative, such approval not
to be unreasonably withheld or delayed; provided that such approval shall not be
required if a Default or an Event of Default shall have occurred and be
continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent's resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent's
resignation hereunder, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents. Agent may be removed at the
written direction of the holders of two-thirds or more of the Commitments,
provided
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that in so doing, such Lenders shall be deemed to have waived and released any
and all claims they may have against Agent.
9.8. Setoff and Sharing of Payments. In addition to any rights now
or hereafter granted under applicable law and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default, each Lender and each holder of any Note is hereby authorized at any
time or from time to time, without notice to any Credit Party or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all balances held by it at any of its offices
for the account of any Borrower, Specified Borrower or Guarantor (regardless of
whether such balances are then due to such Borrower, Specified Borrower or
Guarantor) and any other properties or assets any time held or owing by that
Lender or that holder to or for the credit or for the account of any Borrower,
Specified Borrower or Guarantor against and on account of any of the Obligations
which are not paid when due. Any Lender or holder of any Note exercising a right
to set off or otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share the amount so set off or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares. Each
Lender's obligation under this Section 9.8 shall be in addition to and not
limitation of its obligations to purchase a participation in an amount equal to
its Pro Rata Share of the Swing Line Loans under Section 1.1. Each Credit Party
that is a Borrower or Guarantor agrees, to the fullest extent permitted by law,
that (a) any Lender or holder may exercise its right to set off with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such amount so set off to other Lenders and holders and (b)
any Lender or holders so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of set-off,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of the Loans and the
other Obligations in the amount of such participation. Notwithstanding the
foregoing, if all or any portion of the set-off amount or payment otherwise
received is thereafter recovered from the Lender that has exercised the right of
set-off, the purchase of participations by that Lender shall be rescinded and
the purchase price restored without interest.
9.9. Advances; Payments; Non-Funding Lenders; Information; Actions
in Concert.
(a) Advances; Payments
(i) Floor Plan Lenders shall refund or participate in the
Swing Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(b). If
the Swing Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Floor Plan Lenders, promptly after
receipt of a Notice of Floor Plan Advance and in any event prior to 1:00 p.m.
(New York time) on the date such Notice of Floor Plan Advance is received, by
telecopy, telephone or other similar form of transmission. Each Floor Plan
Lender shall make the amount of such Lender's Pro Rata Share of such Floor Plan
Advance available to Agent in same day funds by wire transfer to
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Agent's account as set forth in Annex G not later than 3:00 p.m. (New York time)
on the requested funding date, in the case of an Index Rate Loan and not later
than 11:00 a.m. (New York time) on the requested funding date in the case of a
LIBOR Loan. After receipt of such wire transfers (or, in the Agent's sole
discretion, before receipt of such wire transfers), subject to the terms hereof,
Agent shall make the requested Floor Plan Advance to the Borrowers and Specified
Borrowers designated by Borrower Representative in the Notice of Floor Plan
Advance. All payments by each Floor Plan Lender shall be made without setoff,
counterclaim or deduction of any kind.
(ii) On the last LIBOR Business Day of each calendar month or
more frequently as aggregate cumulative net payments in excess of $5,000,000 are
received with respect to the Loans (other than the Swing Line Loan) (each, a
"Settlement Date"), Agent will advise each Lender by telephone, or telecopy of
the amount of such Lender's Pro Rata Share of principal, interest and Fees paid
for the benefit of Lenders with respect to each applicable Loan. Provided that
such Lender has funded all payments or Advances required to be made by it and
has purchased all participations required to be purchased by it under this
Agreement and the other Loan Documents as of such Settlement Date, Agent will
pay to each Lender such Lender's Pro Rata Share of principal, interest and Fees
paid by Borrowers or Specified Borrowers since the previous Settlement Date for
the benefit of that Lender on the Loans held by it. To the extent that any
Lender (a "Non-Funding Lender") has failed to fund payments and Advances or
failed to fund the purchase of participations, Agent shall be entitled to set
off the funding short-fall against that Non-Funding Lender's Pro Rata Share of
all payments received from Borrowers or Specified Borrowers. Such payments shall
be made by wire transfer to such Lender's account (as specified by such Lender
in Annex G or the applicable Assignment Agreement) not later than 2:00 p.m. (New
York time) on the next Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume that
each Lender will make its Pro Rata Share of each Advance available to Agent on
each funding date. If such Pro Rata Share is not, in fact, paid to Agent by such
Lender when due, Agent will be entitled to recover such amount on demand from
such Lender without set-off, counterclaim or deduction of any kind. If any
Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent's
demand, Agent shall promptly notify Borrower Representative and Borrowers or
Specified Borrowers, as the case may be, shall immediately repay such amount to
Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Agent to advance funds on behalf
of any Lender or to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Borrowers or Specified
Borrowers, as the case may be, may have against any Lender as a result of any
default by such Lender hereunder. To the extent that Agent advances funds to any
Borrower or Specified Borrower on behalf of any Lender and is not reimbursed
therefor on the same Business Day as such Advance is made, Agent shall be
entitled to retain for its account all interest accrued on such Advance until
reimbursed by the applicable Lender.
(c) Return of Payments(i) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by Agent from Borrowers or Specified Borrowers, as the case may
be, and such related payment is not received
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by Agent, then Agent will be entitled to recover such amount from such Lender on
demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to any Borrower or Specified
Borrower, as the case may be, or paid to any other Person pursuant to any
insolvency law or otherwise, then, notwithstanding any other term or condition
of this Agreement or any other Loan Document, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent is
required to pay to any Borrower or Specified Borrower, as the case may be, or
such other Person, without set-off, counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender to
make any Advance or any payment required by it hereunder or to purchase any
participation in any Swing Line Loan to be made or purchased by it on the date
specified therefor shall not relieve any other Lender (each such other Lender,
an "Other Lender") of its obligations to make such Advance or purchase such
participation on such date, but neither any Other Lender nor Agent shall be
responsible for the failure of any Non-Funding Lender to make an Advance or to
purchase a participation required hereunder. Notwithstanding anything set forth
herein to the contrary, a Non-Funding Lender shall not have any voting or
consent rights under or with respect to any Loan Document or constitute a
"Lender" or a "Floor Plan Lender" (or be included in the calculation of
"Requisite Lenders", "Requisite Floor Plan Lenders" or "Supermajority Floor Plan
Lenders" hereunder) for any voting or consent rights under or with respect to
any Loan Document.
(e) Dissemination of Information. Agent will use reasonable efforts
to provide Lenders with any notice of Default or Event of Default received by
Agent from, or delivered by Agent to, any Credit Party, with notice of any Event
of Default of which Agent has actually become aware and with notice of any
action taken by Agent following any Event of Default; provided, however, that
Agent shall not be liable to any Lender for any failure to do so, except to the
extent that such failure is attributable to Agent's gross negligence or willful
misconduct. Lenders acknowledge that Borrowers and Specified Borrowers are
required to provide Financial Statements and Collateral Reports to Lenders in
accordance with Annexes D and E hereto and agree that Agent shall have no duty
to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of set-off) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent.
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10. SUCCESSORS AND ASSIGNS
10.1. Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1. Complete Agreement; Modification of Agreement. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 11.2 below. Any letter of interest, commitment letter, fee
letter (other than the GE Capital Fee Letter) and/or confidentiality agreement
between any Credit Party and Agent or any Lender or any of their respective
affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.2. Amendments and Waivers. Except for actions expressly permitted
to be taken by Agent, no amendment, modification, termination or waiver of any
provision of this Agreement or any of the Notes, or any consent to any departure
by any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by Agent and Borrowers, and by Requisite Lenders,
Requisite Floor Plan Lenders, Supermajority Floor Plan Lenders or all affected
Lenders, as applicable. Except as set forth in clauses (b) and (c) below, all
such amendments, modifications, terminations or waivers requiring the consent of
any Lenders shall require the written consent of Requisite Lenders.
(a) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement which increases the percentage
advance rates set forth in the definition of New Vehicle Borrowing Base or Used
Vehicle Borrowing Base of any Borrower, or which makes less restrictive the
nondiscretionary criteria for exclusion from Eligible Financed Vehicles and
Eligible Used Vehicles set forth in Sections 1.6 and 1.7, shall be effective
unless the same shall be in writing and signed by Agent, Supermajority Floor
Plan Lenders and Borrowers. No amendment, modification, termination or waiver of
or consent with respect to any provision of this Agreement which waives
compliance with the conditions precedent set forth in Section 2.2 to the making
of any Loan shall be effective unless the same shall be in writing and signed by
Agent,
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Requisite Floor Plan Lenders, Borrowers and the Specified Borrowers.
Notwithstanding anything contained in this Agreement to the contrary, no waiver
or consent with respect to any Default (if in connection therewith Agent or
Requisite Floor Plan Lenders, as the case may be, have exercised its or their
right to suspend the making or incurrence of further Advances pursuant to
Section 8.2(a)) or any Event of Default shall be effective for purposes of the
conditions precedent to the making of Loans set forth in Section 2.2 unless the
same shall be in writing and signed by Agent, Requisite Floor Plan Lenders and
Borrowers.
(b) No amendment, modification, termination or waiver shall, unless
in writing and signed by Agent and each Lender directly affected thereby, do any
of the following: (i) increase the principal amount of any Lender's Commitment
(which action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan of
any affected Lender; (iii) extend any scheduled payment date or final maturity
date of the principal amount of any Loan of any affected Lender; (iv) waive,
forgive, defer, extend or postpone any payment of interest or Fees as to any
affected Lender; (v) release any Guaranty or, except as otherwise permitted
herein or in the other Loan Documents, release, or permit any Credit Party to
sell or otherwise dispose of, any Collateral with a value exceeding $250,000
with respect to any Credit Party and $1,500,000 in the aggregate for all Credit
Parties in the aggregate (which action shall be deemed to directly affect all
Lenders); (vi) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for Lenders or any
of them to take any action hereunder; or (vii) amend or waive this Section 11.2
or the definitions of the terms "Requisite Lenders", "Requisite Floor Plan
Lenders" or "Supermajority Floor Plan Lenders" insofar as such definitions
affect the substance of this Section 11.2. Furthermore, no amendment,
modification, termination or waiver affecting the rights or duties of Agent
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by Agent, in addition to Lenders required hereinabove to take
such action. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
No amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note.
No notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 11.2 shall be binding upon
each holder of the Notes at the time outstanding and each future holder of the
Notes.
(c) If, in connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent
of Requisite Lenders is obtained, but the consent of other Lenders whose
consent is required is not obtained (any such Lender whose consent is not
obtained as described this clause (i) and in clauses (ii), (iii) and (iv)
below being referred to as a "Non-Consenting Lender");
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(ii) requiring the consent of Supermajority Floor Plan
Lenders, the consent of Requisite Floor Plan Lenders is obtained, but the
consent of Supermajority Floor Plan Lenders is not obtained;
(iii) requiring the consent of Requisite Floor Plan Lenders,
the consent of Floor Plan Lenders holding 51% or more of the aggregate
Floor Plan Loan Commitments is obtained, but the consent of Requisite
Floor Plan Lenders is not obtained; or
(iv) requiring the consent of Requisite Lenders, the consent
of Lenders holding 51% or more of the aggregate Commitments is obtained,
but the consent of Requisite Lenders is not obtained, then, so long as
Agent is not a Non-Consenting Lender, at Borrower Representative's
request, Agent or a Person acceptable to Agent shall have the right with
Agent's consent and in Agent's sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell
and assign to Agent or such Person, all of the Commitments of such
Non-Consenting Lender for an amount equal to the principal balance of all
Loans held by the Non-Consenting Lender and all accrued interest and Fees
with respect thereto through the date of sale, such purchase and sale to
be consummated pursuant to an executed Assignment Agreement.
(d) Upon indefeasible payment in full in cash and performance of all
of the Obligations (other than indemnification Obligations under Section 1.13),
termination of the Commitments and a release of all claims against Agent and
Lenders, and so long as no suits, actions, proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or
liabilities that are Indemnified Liabilities, Agent shall deliver to Borrowers
termination statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.
11.3. Fees and Expenses. Borrowers and Specified Borrowers shall
reimburse Agent for all out-of-pocket expenses incurred in connection with the
preparation of the Loan Documents (including the reasonable fees and expenses of
all of its special loan counsel, advisors, consultants and auditors retained in
connection with the Loan Documents and the Related Transactions and advice in
connection therewith). Borrowers and Specified Borrowers shall reimburse Agent
(and, with respect to clauses (c), (d) and, at any time after the occurrence of
a Default or Event of Default, (f)(iii) below, all Lenders) for all fees, costs
and expenses, including the reasonable fees, costs and expenses of counsel or
other advisors (including environmental and management consultants and
appraisers) for advice, assistance, or other representation in connection with:
(a) the forwarding to Borrowers, Specified Borrowers or any other
Person on behalf of Borrowers or Specified Borrowers, as the case may be, by
Agent of the proceeds of the Loans;
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(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or advice in connection with the
administration of the Loans made pursuant hereto or its rights hereunder or
thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, any Borrower, any Specified Borrower
or any other Person) in any way relating to the Collateral, any of the Loan
Documents or any other agreement to be executed or delivered in connection
therewith or herewith, whether as party, witness, or otherwise, including any
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against any or all
of the Borrowers, Specified Borrowers or any other Person that may be obligated
to Agent by virtue of the Loan Documents; including any such litigation,
contest, dispute, suit, proceeding or action arising in connection with any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default; provided that in the case of reimbursement of counsel for Lenders
other than Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
(d) any attempt to enforce any remedies of Agent against any or all
of the Credit Parties or any other Person that may be obligated to Agent or any
Lender by virtue of any of the Loan Documents; including any such attempt to
enforce any such remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default; provided that in the
case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(e) any work-out or restructuring of the Loans during the pendency
of one or more Events of Default;
(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all attorneys' and other
professional and service providers' fees arising from such services, including
those in connection with any appellate proceedings; and all reasonable expenses,
costs, charges and other fees incurred by such counsel and others in any way or
respect arising in connection with or relating to any of the events or actions
described in this Section 11.3 shall be payable, on demand, by Borrowers or
Specified Borrowers to Agent. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
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11.4. No Waiver. Agent's or any Lender's failure, at any time or
times, to require strict performance by the Credit Parties of any provision of
this Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrowers or
Specified Borrowers, as the case may be, specifying such suspension or waiver.
11.5. Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the
other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
11.6. Severability. Wherever possible, each provision of this
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7. Conflict of Terms. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
11.8. Confidentiality. Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts Agent or such Lender
applies to maintaining the confidentiality of its own confidential information)
to maintain as confidential all confidential information provided to them by the
Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that Agent and any Lender may disclose such
information (a) to Persons employed or engaged by Agent or such Lender in
evaluating, approving, structuring or administering the Loans and the
Commitments; (b) to any bona fide assignee or participant or potential assignee
or participant that has agreed to comply with the covenant contained in this
Section 11.8 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (c) as required or requested
by any Governmental Authority or reasonably believed by Agent or such Lender to
be compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, on the advice of Agent's or such Lender's counsel, required by
law; (e) in connection with the exercise of any right or remedy under the Loan
Documents or in connection with any Litigation to which Agent
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or such Lender is a party; or (f) which ceases to be confidential through no
fault of Agent or such Lender.
11.9. GOVERNING LAW. (a) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXX XXXX
XXXXXX, XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK
COUNTY, CITY OF NEW YORK, NEW YORK AND, PROVIDED, FURTHER NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT PARTY
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE
ADDRESS SET FORTH IN ANNEX H OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF
OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
(b) HOMETOWN HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT
CORPORATION SYSTEM WITH ITS OFFICES ON THE DATE HEREOF AT 0000 XXXXXXXX, XXX
XXXX, XXX XXXX 00000, AS ITS DESIGNEE,
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APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AN ON ITS BEHALF, AND
IN RESPECT OF ITS PROPERTY, AND EACH CREDIT PARTY HEREBY IRREVOCABLY DESIGNATES,
APPOINTS AND EMPOWERS HOMETOWN (THROUGH CT CORPORATION SYSTEM) AS ITS DESIGNEE,
APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF,
AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF
FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO
ACT AS SUCH, EACH CREDIT PARTY AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND
AGENT IN NEW YORK ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
SATISFACTORY TO THE AGENT UNDER THIS AGREEMENT.
11.10. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10), (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated on Annex H or to such other address
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower Representative or Agent)
designated on Annex H to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
11.11. Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12. Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON
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AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH,
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED
THERETO.
11.14. Press Releases. Each Credit Party executing this Agreement
agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure using the name of GE Capital or its
affiliates or referring to this Agreement, the other Loan Documents or the
Related Transactions Documents without at least two (2) Business Days' prior
notice to GE Capital and without the prior written consent of GE Capital unless
(and only to the extent that) such Credit Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will consult
with GE Capital before issuing such press release or other public disclosure.
Each Credit Party consents to the publication by Agent or any Lender of a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement. Agent or such Lender shall provide a draft of
any such tombstone or similar advertising material to Borrower Representative
for review and comment prior to the publication thereof. Agent reserves the
right to provide to industry trade organizations information necessary and
customary for inclusion in league table measurements with Borrowers' consent
which shall not be unreasonably withheld or delayed.
11.15. Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Borrower or Specified Borrower for liquidation or reorganization, should any
Borrower or Specified Borrower become insolvent or make an assignment for the
benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of any Borrower's or Specified
Borrower's assets, and shall continue to be effective or to be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16. Advice of Counsel. Each of the parties represents to each
other party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
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11.17. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
11.18. Agent for Service of Process. Hometown hereby irrevocably
accepts its appointment as agent for service of process for the Credit Parties
set forth in Section 11.9(b) and agrees that it (i) shall inform the Agent
promptly in writing of any change of its address or its appointment of CT
Corporation Systems as its agent to receive service of process, (ii) shall
terminate any of the agency relationships created by Section 11.9(b) only upon
60 days prior written notice to the Agent, and (iii) shall perform its
obligations as such agent in accordance with the provisions of Section 11.9(b).
Hometown, as process agent, and its successor or successors agrees to discharge
the above-mentioned obligations (and similar duties and obligations to the
extent Hometown is appointed by any Subsidiary of a Credit Party under any Loan
Document from time to time) and will not refuse fulfillment of such obligations
under Section 11.9(b) or the Loan Documents, as the case may be.
12. CROSS-GUARANTY
12.1. Cross-Guaranty. Each Borrower and Specified Borrower hereby
agrees that such Borrower and Specified Borrower is jointly and severally liable
for, and hereby absolutely and unconditionally guarantees to Agent and Lenders
and their respective successors and assigns, the full and prompt payment
(whether at stated maturity, by acceleration or otherwise) and performance of,
all Obligations owed or hereafter owing to Agent and Lenders by each other
Borrower and Specified Borrower. Each Borrower and Specified Borrower agrees
that its guaranty obligation hereunder is a continuing guaranty of payment and
performance and not of collection, that its obligations under this Section 12
shall not be discharged until payment and performance, in full, of the
Obligations has occurred, and that its obligations under this Section 12 shall
be absolute and unconditional, irrespective of, and unaffected by,
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Loan Document or
any other agreement, document or instrument to which any Borrower or Specified
Borrower is or may become a party;
(b) the absence of any action to enforce this Agreement (including
this Section 12) or any other Loan Document or the waiver or consent by Agent
and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to perfect its
Lien against, any security for the Obligations or any action, or the absence of
any action, by Agent and Lenders in respect thereof (including the release of
any such security);
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(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position,
as principal debtor with respect to the Obligations guaranteed hereunder.
12.2. Waivers by Borrowers and Specified Borrowers. Each Borrower
and Specified Borrower expressly waives all rights it may have now or in the
future under any statute, or at common law, or at law or in equity, or
otherwise, to compel Agent or Lenders to xxxxxxxx assets or to proceed in
respect of the Obligations guaranteed hereunder against any other Credit Party,
any other party or against any security for the payment and performance of the
Obligations before proceeding against, or as a condition to proceeding against,
such Borrower and Specified Borrower. It is agreed among each Borrower and
Specified Borrower, Agent and Lenders that the foregoing waivers are of the
essence of the transaction contemplated by this Agreement and the other Loan
Documents and that, but for the provisions of this Section 12 and such waivers,
Agent and Lenders would decline to enter into this Agreement.
12.3. Benefit of Guaranty. Each Borrower and Specified Borrower
agrees that the provisions of this Section 12 are for the benefit of Agent and
Lenders and their respective successors, transferees, endorsees and assigns, and
nothing herein contained shall impair, as between any other Borrower and Agent
or Lenders, the obligations of such other Borrower or Specified Borrower under
the Loan Documents.
12.4. Subordination of Subrogation, Etc. Notwithstanding anything to
the contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower and Specified Borrower hereby expressly and
irrevocably subordinates to payment of the Obligations any and all rights at law
or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety,
guarantor or accommodation co-obligor until the Obligations are indefeasibly
paid in full in cash. Each Borrower and Specified Borrower acknowledges and
agrees that this subordination is intended to benefit Agent and Lenders and
shall not limit or otherwise affect such Borrower's or Specified Borrower's
liability hereunder or the enforceability of this Section 12, and that Agent,
Lenders and their respective successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 12.4.
12.5. Election of Remedies. If Agent or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving Agent or such Lender a Lien upon any Collateral, whether owned by any
Borrower, Specified Borrower or by any other Person, either by judicial
foreclosure or by non-judicial sale or enforcement, Agent or any Lender may, at
its sole option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Section 12. If, in the
exercise of any of its rights and remedies, Agent or any
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Lender shall forfeit any of its rights or remedies, including its right to enter
a deficiency judgment against any Borrower and Specified Borrower or any other
Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, each Borrower and Specified Borrower hereby consents to
such action by Agent or such Lender and waives any claim based upon such action,
even if such action by Agent or such Lender shall result in a full or partial
loss of any rights of subrogation which each Borrower and Specified Borrower
might otherwise have had but for such action by Agent or such Lender. Any
election of remedies which results in the denial or impairment of the right of
Agent or any Lender to seek a deficiency judgment against any Borrower or
Specified Borrower shall not impair any other Borrower's or Specified Borrower's
obligation to pay the full amount of the Obligations. In the event Agent or any
Lender shall bid at any foreclosure or trustee's sale or at any private sale
permitted by law or the Loan Documents, Agent or such Lender may bid all or less
than the amount of the Obligations and the amount of such bid need not be paid
by Agent or such Lender but shall be credited against the Obligations. The
amount of the successful bid at any such sale, whether Agent, Lender or any
other party is the successful bidder, shall be conclusively deemed to be the
fair market value of the Collateral and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be
the amount of the Obligations guaranteed under this Section 12, notwithstanding
that any present or future law or court decision or ruling may have the effect
of reducing the amount of any deficiency claim to which Agent or any Lender
might otherwise be entitled but for such bidding at any such sale.
12.6. Limitation. Notwithstanding any provision herein contained to
the contrary, each Borrower's and Specified Borrower's liability under this
Section 12 (which liability is in any event in addition to amounts for which
such Borrower or Specified Borrower is primarily liable under Section 1) shall
be limited to an amount not to exceed as of any date of determination the
greater of:
(a) the net amount of all Loans advanced to any other Borrower or
Specified Borrower under this Agreement and then re-loaned or otherwise
transferred to, or for the benefit of, such Borrower or Specified Borrower; and
(b) the amount which could be claimed by Agent and Lenders from such
Borrower or Specified Borrower under this Section 12 without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law after taking into
account, among other things, such Borrower's right of contribution and
indemnification from each other Borrower or Specified Borrower under Section
12.7.
12.7. Contribution with Respect to Guaranty Obligations. (a) To the
extent that any Borrower or Specified Borrower shall make a payment under this
Section 12 of all or any of the Obligations (other than Loans made to that
Borrower or Specified Borrower for which it is primarily liable) (a "Guarantor
Payment") which, taking into account all other Guarantor Payments then
previously or concurrently made by any other Borrower or Specified Borrower,
exceeds the amount which such Borrower or Specified Borrower would otherwise
have paid if each Borrower or Specified Borrower had paid the aggregate
Obligations satisfied by such Guarantor Payment in the
-75-
same proportion that such Borrower's or Specified Borrower's "Allocable Amount"
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Borrowers and Specified
Borrowers as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the Obligations
and termination of the Commitments, such Borrower or Specified Borrower shall be
entitled to receive contribution and indemnification payments from, and be
reimbursed by, each other Borrower and Specified Borrower for the amount of such
excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any
Borrower or Specified Borrower shall be equal to the maximum amount of the claim
which could then be recovered from such Borrower or Specified Borrower under
this Section 12 without rendering such claim voidable or avoidable under Section
548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law.
(c) This Section 12.7 is intended only to define the relative rights
of Borrowers and Specified Borrowers and nothing set forth in this Section 12.7
is intended to or shall impair the obligations of Borrowers and Specified
Borrowers, jointly and severally, to pay any amounts as and when the same shall
become due and payable in accordance with the terms of this Agreement, including
Section 12.1. Nothing contained in this Section 12.7 shall limit the liability
of any Borrower or Specified Borrower to pay the Loans made directly or
indirectly to that Borrower or Specified Borrower and accrued interest, Fees and
expenses with respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of contribution
and indemnification hereunder shall constitute assets of the Borrower or
Specified Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers or Specified Borrowers
against other Credit Parties under this Section 12.7 shall be exercisable upon
the full and indefeasible payment of the Obligations and the termination of the
Commitments.
12.8. Liability Cumulative. The liability of Borrowers and Specified
Borrowers under this Section 12 is in addition to and shall be cumulative with
all liabilities of each Borrower and Specified Borrower to Agent and Lenders
under this Agreement and the other Loan Documents to which such Borrower or
Specified Borrower is a party or in respect of any Obligations or obligation of
the other Borrower, without any limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides
to the contrary.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
WESTWOOD LINCOLN MERCURY
SALES, INC., as a Borrower
By:
---------------------------------
Title:
------------------------------
SHAKER'S INC., as a Borrower
By:
---------------------------------
Title:
------------------------------
FAMILY FORD, INC., as a Borrower
By:
---------------------------------
Title:
------------------------------
HOMETOWN AUTO FRAMINGHAM,
INC., as a Borrower
By:
---------------------------------
Title:
------------------------------
-00-
XXXXXXXX XXXXXXXXXXX, INC., as
a Borrower
By:
---------------------------------
Title:
------------------------------
XXXXXX AUTOMOTIVE GROUP, INC.,
as a Specified Borrower
By:
---------------------------------
Title:
------------------------------
XXXXXX CHEVROLET, OLDSMOBILE,
ISUZU, INC., as a Specified Borrower
By:
---------------------------------
Title:
------------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and a Lender
By:
---------------------------------
Title:
------------------------------
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The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as Borrowers or Specified Borrowers..
HOMETOWN AUTO RETAILERS, INC.
By:
---------------------------------
Title:
------------------------------
E R R ENTERPRISES, INC.
By:
---------------------------------
Title:
------------------------------
SHAKER'S LINCOLN MERCURY
AUTOCARE, INC.
By:
---------------------------------
Title:
------------------------------
COMERICA BANK, as a Lender
By:
---------------------------------
Title:
------------------------------
[LENDER SIGNATURE PAGE]
ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all section references in the following definitions shall refer to
Sections of the Agreement:
"Account Debtor" shall mean any Person who may become obligated to
any Credit Party under, with respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party and, in any event,
including (a) all accounts receivable, other receivables, book debts and other
forms of obligations (other than forms of obligations evidenced by Chattel
Paper, Documents or Instruments) now owned or hereafter received or acquired by
or belonging or owing to any Credit Party, whether arising out of goods sold or
services rendered by it or from any other transaction (including any such
obligations which may be characterized as an account or contract right under the
Code), (b) all of each Credit Party's rights in, to and under all purchase
orders or receipts now owned or hereafter acquired by it for goods or services,
(c) all of each Credit Party's rights to any goods represented by any of the
foregoing (including unpaid sellers' rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to any Credit Party, under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such Credit Party or in connection with any other transaction (whether
or not yet earned by performance on the part of such Credit Party) now or
hereafter in existence, including the right to receive the proceeds of said
purchase orders and contracts, and (e) all collateral security and guarantees of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Acquisition Advance" shall have the meaning assigned to it in
Section 1.2(a).
"Acquisition Loan" shall mean the aggregate amount of Acquisition
Advances outstanding at any time.
"Acquisition Loan Availability" shall mean, as of any date of
determination, the Acquisition Loan Commitment as of such date less the
aggregate amount of all Acquisition Advances made as of such date of
determination, calculated on a cumulative basis without giving effect to any
payments or prepayments of principal in respect of the Acquisition Loan which
may have been made at any time or from time to time on or prior to such date of
determination.
"Acquisition Loan Availability Certificate" shall have the meaning
assigned to it in Annex E.
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"Acquisition Loan Availability Fee" shall have the meaning assigned
to it in Section 1.9(b).
"Acquisition Loan Collateral" shall mean, collectively, all
Mortgaged Properties and all "Collateral" designated as "Acquisition Loan
Collateral" under the Security Agreement.
"Acquisition Loan Commitment" shall mean (a) as to any Lender with
an Acquisition Loan Commitment, the aggregate commitment of such Lender to make
the Acquisition Advances as set forth on Annex I or in the most recent Lender
Addition Agreement executed by such Lender and (b) as to all Lenders with an
Acquisition Loan Commitment, the aggregate commitment of all Lenders to make
Acquisition Advances, which aggregate commitment shall be Fifteen Million
Dollars ($15,000,000) on the Closing Date, as such amount may be adjusted, if at
all, from time to time upon the making of an Acquisition Advance in an amount
equal to such Acquisition Advance and otherwise in accordance with the
Agreement.
"Acquisition Loan Commitment Termination Date" shall mean the
earlier of (a) January 5, 2001 and (b) the Commitment Termination Date.
"Acquisition Loan Lender" shall mean each Lender with an Acquisition
Loan Commitment.
"Acquisition Loan Maturity Date" shall mean the date which is the
earlier of (x) the Commitment Termination Date and (y) the fifth anniversary of
the Closing Date.
"Acquisition Loan Maximum Amount" shall mean, at any date of
determination, an amount equal to the Acquisition Loan Commitment of all
Lenders.
"Acquisition Loan Obligation" shall mean any Obligation due and
owing to the Acquisition Loan Lenders.
"Acquisition Note" shall have the meaning assigned to it in Section
1.2(b) .
"Acquisition Projections" shall have the meaning assigned to in
Section 6.1(ix).
"Activation Event" shall have the meaning set forth in Annex B.
"Activation Notice" shall have the meaning set forth in Annex B.
"Advance" shall mean any Floor Plan Advance, Swing Line Advance,
Swing Line Overdraft Advance or Acquisition Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five
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percent (5%) or more of the Stock having ordinary voting power in the election
of directors of such Persons, (b) each Person that controls, is controlled by or
is under common control with such Person, (c) each of such Person's officers,
directors, joint venturers and partners and (d) in the case of Borrowers, the
immediate family members, spouses and lineal descendants of individuals who are
Affiliates of any Borrower. For the purposes of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that the term "Affiliate" shall specifically exclude Agent and each Lender.
"Agent" shall mean GE Capital or its successor appointed pursuant to
Section 9.7.
"Aggregate Borrowing Base" shall mean, as the context may require,
the Aggregate New Vehicle Borrowing Base and the Aggregate Used Vehicle
Borrowing Base or any such Aggregate Borrowing Base.
"Aggregate Specified Borrowing Base" shall mean, as of any date of
determination, an amount equal to the sum of the specified Aggregate Borrowing
Base for all Specified Borrowers.
"Aggregate New Vehicle Borrowing Base" shall mean, as of any date of
determination, an amount equal to the sum of the New Vehicle Borrowing Base for
all Borrowers.
"Aggregate Used Vehicle Borrowing Base" shall mean, as of any date
of determination, an amount equal to the sum of the Used Vehicle Borrowing Base
for all Borrowers.
"Agreement" shall mean the Credit Agreement by and among Borrowers,
the other Credit Parties named therein, GE Capital, as Agent and Lender and the
other Lenders signatory from time to time to the Agreement.
"Appendices" shall have the meaning assigned to it in the recitals
to the Agreement.
"Assignment Agreement" shall have the meaning assigned to it in
Section 9.1(a).
"Blocked Account Agreement" shall have the meaning assigned to it in
Annex B and shall also mean any tri-party agreement entered into by a Specified
Borrower pursuant to Section 1.8.
"Borrower Representative" shall mean Hometown in its capacity as
Borrower Representative pursuant to the provisions of Section 1.1(c).
"Borrowers" and "Borrower" shall have the respective meanings
assigned thereto in the recitals to the Agreement, any other Person that becomes
a party to this Agreement and the other Loan Documents as a Borrower and, until
the transfers required by Section 5.1(c) have been completed, Hometown.
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"Borrowing Availability" shall mean, as the context may require, the
New Vehicle Borrowing Availability and the Used Vehicle Borrowing Availability
or any such Borrowing Availability provided, however, that for purposes of
determining availability the assets of Hometown constituting the Bay State
Lincoln Mercury dealership, the Wellesley Lincoln Mercury dealership and the Bay
State Mazda dealership shall be solely included in the calculation of the
Specified Aggregate Borrowing Base.
"Borrowing Base Certificate" shall mean a certificate which computes
the Aggregate New Vehicle Borrowing Base, the Aggregate Used Vehicle Borrowing
Base, the Aggregate Borrowing Base, each Specified Aggregate Borrowing Base and
the Aggregate Specified Borrowing Base prepared by Agent from information
supplied by Borrower Representative.
"Business Day" shall mean any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
Illinois or New York and in reference to LIBOR Loans shall mean any such day
that is also a LIBOR Business Day.
"Calendar Day" shall mean any day of the year including Saturday,
Sunday or a national holiday.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Cash Management Systems" shall have the meaning assigned to it in
Section 1.8.
"Change of Control" means any of the following: (a) any person or
group of persons (within the meaning of the Securities Exchange Act of 1934, as
amended) (other than the Management Shareholders) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended) of
20% or more of the voting power of the capital Stock of Hometown relating to the
right to vote for the election of directors of Hometown under ordinary
circumstances; (b) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the board of
directors of Hometown (together with any new directors whose election by the
board of directors of Hometown or whose nomination for election by the
stockholders
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of Hometown was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of such period or
whose elections or nomination for election was previously so approved) cease for
any reason other than death or disability to constitute a majority of the
directors then in office, or (c) Hometown shall cease to own and control all of
the economic and voting rights associated with all of the outstanding capital
Stock of any of its Subsidiaries.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"Closing Date" shall mean January 6, 1999.
"Closing Checklist" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex C.
"Code" shall mean the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided,
however, in the event that, by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of Agent's or any Lender's security
interest in any Collateral is governed by the Uniform Commercial Code as enacted
and in effect in a jurisdiction other than the State of New York, the term
"Code" shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
"Collateral" shall mean the property covered by the Security
Agreement and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
"Collateral Documents" shall mean the Security Agreement, the Pledge
Agreements, the Guaranties, the Patent Security Agreement, the Trademark
Security Agreement, the Copyright Security Agreement and all similar agreements
entered into guaranteeing payment of, or granting a Lien upon property as
security for payment of, the Obligations.
A-5
"Collateral Reports" shall mean the reports with respect to the
Collateral referred to in Annex E.
"Collection Account" shall mean that certain account of Agent,
account No.: 50-232- 723 in the name of Agent at Bankers Trust Company in New
York, New York titled "General Electric Capital Corporation - Collection Account
- Hometown Auto Retailers" or such other account as Agent shall specify with
respect to a Borrower or a Specified Borrower.
"Commitment Termination Date" shall mean the earliest of (a) January
6, 2003 (or such later date as permitted pursuant to this Agreement), (b) the
date of termination of Lenders' obligations to make Advances or permit existing
Loans to remain outstanding pursuant to Section 8.2(b), and (c) the date of
indefeasible prepayment in full by Borrowers and Specified Borrowers of the
Loans and the permanent reduction of each Commitment to zero dollars ($0).
"Commitments" shall mean (a) as to any Lender, the aggregate of such
Lender's Floor Plan Loan Commitment (including without duplication the Swing
Line Lender's Swing Line Commitment and the Acquisition Loan Commitment as set
forth on Annex I to the Agreement or in the most recent Assignment Agreement
executed by such Lender and (b) as to all Lenders, the aggregate of all Lenders'
Floor Plan Loan Commitments (including without duplication the Swing Line
Lender's Swing Line Commitment) and the Acquisition Loan Commitment which
aggregate commitment shall be One Hundred Million Dollars ($100,000,000) on the
Closing Date, as to each of clauses (a) and (b), as such Commitments may be
reduced, amortized or adjusted from time to time in accordance with the
Agreement.
"Compliance Certificate" shall have the meaning assigned to it in
Annex D.
"Concentration Account" shall have the meaning assigned to it in
Annex B.
"Contracts" shall mean all "contracts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Control Letter" means a letter agreement between Agent and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house with respect to
commodity accounts and commodity contracts held by any Credit Party, whereby,
among other things, the issuer, securities intermediary or futures commission
merchant disclaims any security interest in the applicable financial assets,
acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and
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agrees to follow the instructions or entitlement orders of Agent without further
consent by the affected Credit Party.
"Copyright License" shall mean any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyright Security Agreements" shall mean the Copyright Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Credit Party: (a) all copyrights and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including all registrations, recordings
and applications in the United States Copyright Office or in any similar office
or agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all reissues, extensions
or renewals thereof.
"Credit Parties" shall mean Hometown, each Borrower, each Specified
Borrower and each of their respective Subsidiaries; provided, however, that
other than with respect to Section 3, Section 5 (excluding Sections 5.4, 5.9,
5.10 and 5.11), Section 6.10 and Section 8, the term "Credit Party" shall not
include a Non-Recourse Subsidiary.
"Current Assets" shall mean, with respect to any Person, the sum of
(a) all current assets of such Person as of any date of determination calculated
in accordance with GAAP, but excluding cash, cash equivalents and debts due from
Affiliates and (b) LIFO Reserves as of any date of determination.
"Current Liabilities" shall mean, with respect to any Person, all
liabilities which should, in accordance with GAAP, be classified as current
liabilities, and in any event shall include all Indebtedness payable on demand
or within one year from any date of determination without any option on the part
of the obligor to extend or renew beyond such year, all accruals for federal or
other taxes based on or measured by income and payable within such year, and the
current portion of long-term debt required to be paid within one year, but
excluding liabilities owing to any Credit Party.
"Current Ratio" shall mean, with respect to any Person as of any
date of determination, the ratio of (a) Current Assets, to (b) Current
Liabilities.
"Dealer Franchise Agreement" shall have the meaning assigned to it
in Section 3.24.
"Debt Service" shall mean, with respect to any Person for any fiscal
period, an amount equal to the sum of (a) Interest Expense for such period and
(b) the scheduled amortization of any outstanding Indebtedness during such
period.
A-7
"Debt Service Coverage Ratio" shall mean, with respect to any Person
for any period, the ratio of (a) EBITDA minus the unfinanced portion of Capital
Expenditures minus cash taxes to (b) Debt Service.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in Section
1.5(d).
"Demonstrator" shall mean a New Vehicle which has more than 2,500
miles on its odometer or which has been designated or used by a Borrower or a
Specified Borrower as a demonstrator.
"Disbursement Account" shall have the meaning assigned to it on
Annex B.
"Disclosure Schedules" shall mean the Schedules prepared by
Borrowers and denominated as Disclosure Schedules 1.4 through 6.7 in the Index
to the Agreement.
"Distribution Date" shall mean the fifth Business Day following the
end of any Fiscal Month.
"Documents" shall mean any "documents," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" shall mean lawful currency of the United States of
America.
"Draft" means a Draft on a Borrower's or Specified Borrower's
account at the Agent made by a Manufacturer in accordance with the terms of a
Drafting Agreement by and among the Agent, a Manufacturer and/or a Borrower or
Specified Borrower.
"Drafting Agreement" means an agreement (whether or not issued in
the form of a letter of credit) by and between the Agent in its individual
capacity and a Manufacturer, entered into for the account of, or acknowledged or
countersigned by, a Borrower or Specified Borrower pursuant to which such
Manufacturer is entitled to submit Drafts to the Agent for payment of invoices
identifying vehicles delivered or shipped to such Borrower or Specified
Borrower, such Drafting Agreements to be in form and substance and in terms and
conditions satisfactory to Agent.
"EBITDA" shall mean, with respect to any Person for any fiscal
period, an amount equal to (a) consolidated net income of such Person for such
period, minus (b) the sum of (i) income tax paid and tax credits, (ii) gain from
extraordinary items for such period, (iii) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or other
disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (iv) any other non-cash
gains which have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, plus
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii)
loss from extraordinary items for such period, (iv) the amount of non-cash
charges (including depreciation and amortization) for such period, (v) amortized
debt discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to
A-8
the extent included in the calculation of consolidated net income of such Person
for such period in accordance with GAAP, but without duplication. For purposes
of this definition, the following items shall be excluded in determining
consolidated net income of a Person: (1) the income (or deficit) of any other
Person accrued prior to the date it became a Subsidiary of, or was merged or
consolidated into, such Person or any of such Person's Subsidiaries; (2) the
income (or deficit) of any other Person (other than a Subsidiary) in which such
Person has an ownership interest, except to the extent any such income has
actually been received by such Person in the form of cash dividends or
distributions; (3) the undistributed earnings of any Subsidiary of such Person
to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary;
(4) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period; (5) any write-up of any asset; (6) any net gain from the collection of
the proceeds of life insurance policies; (7) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person, (8) in the case of a successor to such Person by
consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets, and (9) any
deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary.
"Eligible Financed Vehicles" shall have the meaning assigned to it
in Section 1.6.
"Eligible Inventory" shall mean, as the context may require,
Eligible Financed Vehicles and Eligible Used Vehicles or any such Vehicles.
"Eligible Used Vehicles" shall have the meaning assigned to it in
Section 1.7.
"Environmental Laws" shall mean all applicable federal, state, local
and foreign laws, statutes, ordinances, codes, rules, standards and regulations,
now or hereafter in effect, and in each case as amended or supplemented from
time to time, and any applicable judicial or administrative interpretation
thereof, including any applicable judicial or administrative order, consent
decree, order or judgment, imposing liability or standards of conduct for or
relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
xx.xx. 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. xx.xx. 5101 et seq.); the Federal
Insecticide,
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Fungicide, and Rodenticide Act (7 U.S.C. xx.xx. 136 et seq.); the Solid Waste
Disposal Act (42 U.S.C. xx.xx. 6901 et seq.); the Toxic Substance Control Act
(15 U.S.C. xx.xx. 2601 et seq.); the Clean Air Act (42 U.S.C. xx.xx. 7401 et
seq.); the Federal Water Pollution Control Act (33 U.S.C. xx.xx. 1251 et seq.);
the Occupational Safety and Health Act (29 U.S.C. xx.xx. 651 et seq.); and the
Safe Drinking Water Act (42 U.S.C. xx.xx. 300(f) et seq.), each as from time to
time amended, and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located
and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment with software and peripheral equipment (other than software
constituting part of the Accounts), and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures not forming a
part of real property, all whether now owned or hereafter acquired, and wherever
situated, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time, and
any regulations promulgated thereunder.
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"ERISA Affiliate" shall mean, with respect to any Credit Party, any
trade or business (whether or not incorporated) which, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or any
ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status;
or (j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" shall mean a Plan which is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section
8.1.
"Excess Cash Flow" shall mean, without duplication, with respect to
any Fiscal Year of Hometown and its Subsidiaries (other than Real Estate
Subsidiaries and Non-Recourse Subsidiaries), consolidated net income plus (a)
depreciation, amortization and Interest Expense to the extent deducted in
determining consolidated net income, plus decreases or minus increases (as the
case may be) (b) in Working Capital, minus (c) Capital Expenditures during such
Fiscal Year (excluding the financed portion thereof and excluding any Capital
Expenditures in such Fiscal Year to the extent in excess of the amount permitted
to be made in such Fiscal Year pursuant to clause (a) of Annex F), minus (d)
Interest Expense paid or accrued (excluding any original issue discount,
interest paid in kind or amortized debt discount, to the extent included in
determining Interest Expense) and scheduled principal payments paid or payable
in respect of Funded Debt, plus or minus (as the case may be), (e) extraordinary
gains or losses which are cash items not included in the calculation of net
income, minus (f) mandatory prepayments paid in cash pursuant to Section 1.3
other than mandatory prepayments made pursuant to Sections 1.3(b)(i), 1.3(b)(iv)
or 1.3(d), plus (g) taxes deducted in determining consolidated net income to the
extent not paid for in cash. For purposes of this definition, "Working Capital"
means Current Assets less Current Liabilities.
"Federal Funds Rate" shall mean, for any day, a floating rate equal
to the weighted
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average of the rates on overnight Federal funds transactions among members of
the Federal Reserve System, as determined by Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
"Fees" shall mean any and all fees payable to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
"Financed Vehicle" shall mean, as the context may require, a New
Vehicle, Program Vehicle, Fleet Vehicle and Demonstrator or any such Vehicle.
"Financial Statements" shall mean the consolidated and consolidating
income statements, statements of cash flows and balance sheets of Borrowers and
Specified Borrowers delivered in accordance with Section 3.4 and Annex D to the
Agreement.
"Fiscal Month" shall mean any of the monthly accounting periods of
Borrowers.
"Fiscal Quarter" shall mean any of the quarterly accounting periods
of Borrowers and Specified Borrowers, ending on March 31, June 30, September 30
and December 31 of each year.
"Fiscal Year" shall mean any of the annual accounting periods of
Borrowers and Specified Borrowers ending on December 31 of each year.
"Fixtures" shall mean any "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.
"Fleet Sale" shall mean a sale by any Borrower or Specified Borrower
of more than one Vehicle in a single transaction or in a series of related
transactions to a single buyer for business used by such buyer.
"Fleet Sale Purchase Contract" means the contract or contracts
between a Credit Party and the purchaser under a Fleet Sale, including any
delivery agreement, purchase order, or other document evidencing the Fleet Sale
and its terms.
"Fleet Vehicle" shall mean any Vehicle sold pursuant to a Fleet
Sale.
"Floor Plan Advance" shall have the meaning assigned to it in
Section 1.1(a).
"Floor Plan Collateral" means, collectively, all "Collateral" as
defined in the Pledge Agreement and all "Collateral" designated as "Floor Plan
Collateral" under the Security Agreement.
"Floor Plan Lender" shall mean each Lender with a Floor Plan Loan
Commitment.
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"Floor Plan Loan" shall mean, at any time, Floor Plan Advances
outstanding to any Borrower.
"Floor Plan Loan Commitment" shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make Floor Plan Advances (including
without duplication Swing Line Advances) as set forth on Annex I to the
Agreement or in the most recent Assignment Agreement executed by such Lender and
(b) as to all Lenders, the aggregate commitment of all Lenders to make Floor
Plan Advances, which aggregate commitment shall be Eighty-Five Million Dollars
($85,000,000) on the Closing Date, as such amount may be adjusted, if at all,
from time to time in accordance with the Agreement; provided, however, that the
aggregate principal amount of Floor Plan Loans attributable to Used Vehicles
shall not exceed the Used Vehicle Net Borrowing Availability.
"Floor Plan Obligations" shall mean any Obligations due and owing to
the Floor Plan Lenders and the Swing Line Lender.
"Floor Plan Note" shall have the meaning assigned to it in Section
1.1(b).
"Funded Debt" shall mean, with respect to any Person, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and which by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.
"GAAP" shall mean generally accepted accounting principles in the
United States of America consistently applied, as such term is further defined
in Annex F to the Agreement.
"GE Capital Fee Letter" shall mean that certain letter, dated as of
January 6, 1999, among GE Capital, Hometown, Borrowers and Specified Borrowers
with respect to certain Fees to be paid from time to time by Hometown, Borrowers
and Specified Borrowers to GE Capital.
"GECC Contracts" shall mean New Vehicle or Used Vehicle leases or
retail installment contracts purchased from General Electric Capital
Corporation, Auto Financial Services Division.
"General Intangibles" shall mean any "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, and, in any event, including all right, title and interest which such
Credit Party may now or hereafter have in or under any Contract, all customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues,
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extensions or renewals thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations, licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all
rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
chooses in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments, rights of indemnification, all books and
records, correspondence, credit files, invoices and other papers, including
without limitation all tapes, cards, computer runs and other papers and
documents in the possession or under the control of such Credit Party or any
computer bureau or service company from time to time acting for such Credit
Party.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including any obligation or arrangement of such Person
(a) to purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof. The amount of any Guaranteed Indebtedness at any time
shall be deemed to be an amount equal to the lesser at such time of (x) the
stated or determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is made and (y) the maximum amount for which such Person
may be liable pursuant to the terms of the instrument embodying such Guaranteed
Indebtedness; or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.
"Guaranties" shall mean, collectively, the Hometown Guaranty, the
Subsidiary Guaranty and any other guaranty executed by any Guarantor in favor of
Agent and Lenders in respect of the Obligations.
"Guarantors" shall mean Hometown, each Subsidiary (other than a Real
Estate Subsidiary or a Non-Recourse Subsidiary) of a Borrower, or Specified
Borrower and each other Person, if any, which executes a guarantee or other
similar agreement in favor of Agent in connection with the transactions
contemplated by the Agreement and the other Loan Documents.
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"Hazardous Material" shall mean any substance, material or waste
which is regulated by or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or substance which is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Hometown Guaranty"shall mean the guaranty of even date herewith
executed by Hometown in favor of Agent and Lenders.
"Indebtedness" of any Person shall mean without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present value (discounted
at the Index Rate as in effect on the Closing Date) of future rental payments
under all synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates, in each case whether contingent or matured, (h) all
Indebtedness referred to above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property or other assets (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning assigned to it in
Section 1.13.
"Index Rate" shall mean, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans at large U.S. money center
commercial banks" (or, if The Wall Street Journal ceases quoting a base rate of
the type described, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change
in any interest rate provided for in the Agreement based upon the Index Rate
shall take effect at the time of such change in the Index Rate.
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"Index Rate Loan" shall mean a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Instant Access System" shall mean the proprietary vehicle tracking
system of GE Capital.
"Instruments" shall mean any "instrument," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located, and, in any event, including all certificated securities, all
certificates of deposit, and all notes and other, without limitation, evidences
of indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents,
Copyrights, Trademarks, trade secrets and customer lists.
"Intercompany Notes" shall have the meaning assigned to it in
Section 6.3.
"Interest Coverage Ratio" shall mean, with respect to any Person for
any period, the ratio of (a) EBITDA minus Capital Expenditures and cash taxes
(b) Interest Expense.
"Interest Expense" shall mean, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any event, interest expense with respect to any Funded Debt (net
of any floor plan credits, or similar credit program, of a Manufacturer) of such
Person and interest expense for the relevant period that has been capitalized on
the balance sheet of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan, the
first Business Day of each month to occur while such Loan is outstanding, (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; provided that,
in addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest which is then accrued under the Agreement.
"Interest Reset Date" shall mean the last LIBOR Business Day of each
calendar month.
"Inventory" shall mean any "inventory," as such term is defined in
the Code, now or hereafter owned or acquired by any Credit Party, wherever
located, and in any event including inventory, merchandise, goods and other
personal property which are held by or on behalf of any Credit Party for sale or
lease or are furnished or are to be furnished under a contract of service, or
which constitute raw materials, work in process or materials used or consumed or
to be used or
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consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including other
supplies.
"Inventory Detail Report" means a report delivered pursuant to
clause (b) of Annex F by the Credit Parties (on an individual and consolidated
basis) which breaks out in detail the New Vehicles, Used Vehicles,
Demonstrators, and Program Vehicles held by such Credit Party as reflected in
its Manufacturer/Dealer Statements.
"Investment Property" shall have the meaning ascribed thereto in
Section 9-115 of the Code in those jurisdictions in which such definition has
been adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts held by any Credit
Party; (iv) all commodity contracts held by any Credit Party; and (v) all
commodity accounts held by any Credit Party.
"Invoice Amount" shall mean, with respect to a Vehicle, the
manufacturer's invoice amount (including freight costs) for such Vehicle.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Lenders" shall mean GE Capital, the other Lenders named on the
signature page of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include such assignee.
"Leverage Ratio" shall mean, with respect to any Person for any
fiscal period, the ratio of (a) the sum of (i) Acquisition Loans, (ii)
Subordinated Debt, (iii) Guaranteed Indebtedness of the Indebtedness of a Person
not a Credit Party (iv) that portion of any Permitted Acquisition Financing not
attributable to the fair market value of the real property securing such
Permitted Acquisition Financing outstanding at such time and (v) Indebtedness of
a Target assumed in connection with a Permitted Acquisition to (b) the sum of
consolidated EBITDA of such Person and its Subsidiaries for the relevant period
ended on such date, less cash Capital Expenditures of such Person and its
Subsidiaries during such period, less Interest Expense relating to Floor Plan
Loans and Swing Line Loans during such period.
"Liabilities" shall mean, with respect to a Person, all liabilities
(including Indebtedness) of such Person which are or should be reflected on a
balance sheet of such Person, as of any date of determination calculated in
accordance with GAAP.
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"LIBOR Business Day" shall mean a Business Day on which banks in the
city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" shall mean each period commencing on the applicable
Interest Reset Date and ending one month thereafter; provided that the foregoing
provision is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a
LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be
to carry such LIBOR Period into another calendar month in which event such
LIBOR Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days prior to
such date; and
(c) any LIBOR Period pertaining to a LIBOR Loan that begins on the
last LIBOR Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such LIBOR Period) shall end on the last LIBOR Business Day of a calendar
month.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on the second full LIBOR Business Day next preceding the first day
of each LIBOR Period (unless such date is not a Business Day, in which event the
next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days prior to
the beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve system or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in Regulation D of
such Board which are required to be maintained by a member bank of the Federal
Reserve System.
If such interest rates shall cease to be available from Telerate News Service,
the LIBOR Rate shall be determined from such financial reporting service or
other information as shall be mutually
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acceptable to Agent and Borrower Representative. The LIBOR Rate shall be
specified by the Agent on each Interest Reset Date and, once specified, shall be
in effect throughout the next calendar month.
"License" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" shall have the meaning assigned to it in Section 3.13.
"Loan Account" shall have the meaning assigned to it in Section
1.12.
"Loan Documents" shall mean the Agreement, the Notes, the Collateral
Documents and all other agreements, instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor of,
Agent and/or Lenders and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated hereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
such Agreement as the same may be in effect at any and all times such reference
becomes operative.
"Loans" shall mean the Floor Plan Loan, the Swing Line Loan, the
Swing Line Overdraft Loan and the Acquisition Loan.
"Management Shareholders" shall mean the holders of 5% or more of
the capital stock of Hometown listed on Disclosure Schedule (3.8).
"Manufacturer" means the manufacturer of a Vehicle.
"Manufacturer/Dealer Statement" means a financial statement prepared
by a Borrower or a Specified Borrower for a Manufacturer and delivered to the
Manufacturer on a monthly basis.
"Manufacturer's Certificate" means any Manufacturer's Statement of
Origin, Manufacturer's Certificate, MSO, Certificate of Origin or any other
document evidencing the ownership or transfer of ownership of a new Vehicle from
a Manufacturer to any Credit Party.
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"Material Adverse Effect" shall mean a material adverse effect on
(a) the business, assets, operations, prospects or financial or other condition
of Hometown and its Subsidiaries taken as a whole, (b) the Borrowers or
Specified Borrowers, ability to pay any of the Loans or any of the other
Obligations in accordance with the terms of the Agreement, (c) the Collateral or
Agent's Liens, on behalf of itself and Lenders, on the Collateral or the
priority of such Liens, or (d) Agent's or any Lender's rights and remedies under
the Agreement and the other Loan Documents. Without limiting the foregoing, any
event or occurrence adverse to one or more Credit Parties which results or could
reasonably be expected to result in costs and/or liabilities in excess of the
lesser of $2,000,000 and 10% of Borrowing Availability as of any date of
determination shall be deemed to have had Material Adverse Effect.
"Maximum Amount" shall mean, as the context may require, the New
Vehicle Maximum Amount, the Used Vehicle Maximum Amount and the Acquisition Loan
Maximum Amount or any such Maximum Amount.
"Mortgaged Properties" shall have the meaning specified in Annex C.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean, as the context may require,
the New Vehicle Net Borrowing Availability and the Used Vehicle Net Borrowing
Availability or any such Net Borrowing Availability.
"Net Worth" shall mean, with respect to any Person as of any date of
determination, the book value of the assets of such Person, minus (a) reserves
applicable thereto, and minus (b) all of such Person's liabilities on a
consolidated basis (including accrued and deferred income taxes), all as
determined in accordance with GAAP.
"New Vehicle" shall mean a vehicle which: (a) has not been titled,
or sold at retail, or used as a Demonstrator or regular means of transportation
prior to purchase by a Borrower or Specified Borrower; (b) is purchased by a
Borrower or Specified Borrower from the manufacturer or an authorized
distributor or a dealer with a New Vehicle franchise for such Vehicle; (c) was
manufactured by a manufacturer acceptable to Agent with which such Borrower or
Specified Borrower is in good standing under a New Vehicle franchise agreement;
and (d) has no more than 2,500 miles on its odometer.
"New Vehicle Borrowing Base" shall mean, as to each Borrower and
Specified Borrower, as of any date of determination by Agent, from time to time,
an amount equal to the sum at such time of:
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(a) one hundred percent (100%) of the Invoice Amount of such
Borrower's or Specified Borrower's New Vehicles and Fleet Vehicles which
are Eligible Financed Vehicles;
(b) one hundred percent (100%) of the Invoice Amount of such
Borrower's or Specified Borrower's Demonstrators which are Eligible
Financed Vehicles and have been held in such Borrower's or Specified
Borrower's inventory for 30 days or less; provided that such advance rate
shall be reduced by two percent (2%) for each 30-day period (or portion
thereof) that such Eligible Financed Vehicle has been held in such
Borrower's or Specified Borrower's inventory over 30 days.
(c) one hundred percent (100%) of the Invoice Amount of such
Borrower's or Specified Borrower's Program Vehicles which are Eligible
Financed Vehicles and have been held in such Borrower's or Specified
Borrower's inventory for 30 days or less;
(d) ninety percent (90%) of the Invoice Amount of such Borrower's or
Specified Borrower's Program Vehicles which are Eligible Financed Vehicles
and have been held in such Borrower's or Specified Borrower's inventory
for between 31 and 60 days; and
(e) eighty eight percent (88%) of the Invoice Amount of such
Borrower's or Specified Borrower's Program Vehicles which are Eligible
Financed Vehicles and have been held in such Borrower's or Specified
Borrower's inventory for between 61 and 90 days; provided that such
advance rate shall be reduced by two percent (2%) for each 30-day period
(or portion thereof) that such Eligible Financed Vehicle has been held in
such Borrower's or Specified Borrower's inventory over 90 days; less
(f) in each case less any Reserves established by the Agent at such
time.
"New Vehicle Maximum Amount" shall mean, at any date of
determination, an amount equal to the Floor Plan Loan Commitment of all Lenders.
"New Vehicle Net Borrowing Availability" shall mean as of any date
of determination, the lesser of (i) the New Vehicle Maximum Amount and (ii) the
Aggregate New Vehicle Borrowing Base, in each case less the sum of the aggregate
Floor Plan Loan and Swing Line Loan then outstanding.
"Non-Funding Lender" shall have the meaning assigned to it in
Section 9.9(a)(ii).
"Non-Recourse Subsidiary" means a wholly-owned Subsidiary of
Hometown which is engaged in the retail automobile business, and none of the
obligations or liabilities of which shall be supported by Guaranteed
Indebtedness of Hometown or any of its Subsidiaries (other than Non- Recourse
Subsidiaries).
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"Notes" shall mean the Floor Plan Notes, the Swing Line Note and the
Acquisition Notes, collectively.
"Notice of Acquisition Advance" shall have the meaning assigned to
it in Section 1.2(a).
"Notice of Floor Plan Advance" shall have the meaning assigned to it
in Section 1.1(a).
"Notice of Swing Line Overdraft Advance" has the meaning assigned to
it in Section 1.1(b)(vi).
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including
all interest which accrues after the commencement of any case or proceeding in
bankruptcy after the insolvency of, or for the reorganization of any Credit
Party, whether or not allowed in such proceeding), Fees, Charges, expenses,
attorneys' fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents.
"Patent Security Agreements" shall mean the Patent Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"Patent License" shall mean rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Credit Party
now holds or hereafter acquires any interest: (a) all letters patent of the
United States or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State or Territory thereof, or any other country, and (b) all
reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Acquisition Financing" shall mean Indebtedness of a Real
Estate Subsidiary incurred in connection with the acquisition by such Real
Estate Subsidiary of the real property of a
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Target pursuant to a Permitted Acquisition; provided, however, that (i) the
documentation evidencing any such Indebtedness shall not contain covenants more
restrictive than those contained in this Agreement and shall be on terms and
conditions otherwise acceptable to the Agent, provided that such documentation
may contain a restriction on distributions by such Real Estate Subsidiary, (ii)
such Indebtedness may be secured to the extent permitted pursuant to Section
6.7(d) and (iii) such Indebtedness shall be subject to an intercreditor
agreement in form and substance and on terms and conditions acceptable to the
Agent.
"Permitted Acquisition Financing Guaranty" shall mean Guaranteed
Indebtedness of a Specified Borrower existing on the Closing Date and listed in
item 40 on Disclosure Schedule (6.3) and any Guaranteed Indebtedness of a
Specified Borrower (other than Xxxxxx Automotive and Xxxxxx Izuzu) issued after
the Closing Date solely relating to Permitted Acquisition Financing; provided,
however, that (i) such Guaranteed Indebtedness may only be incurred by the
Specified Borrower designated to own and operate the dealership located on the
real property subject to such Permitted Acquisition Financing, (ii) such
Guaranteed Indebtedness may only be secured to the extent permitted pursuant to
Section 6.7(e), (iii) such Guaranteed Indebtedness shall be subject to an
intercreditor agreement in form and substance and on terms and conditions
acceptable to the Agent and (iv) the documentation evidencing any such
Guaranteed Indebtedness shall not contain financial covenants, restrictions on
distributions by such Specified Borrower or other covenants more restrictive
than those contained in this Agreement and shall be on terms and conditions
acceptable to the Agent.
"Permitted Encumbrances" shall mean the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable; (b) pledges or deposits of money securing statutory obligations under
workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA); (c) pledges
or deposits of money securing bids, tenders, contracts (other than contracts for
the payment of money) or leases to which any Credit Party is a party as lessee
made in the ordinary course of business; (d) inchoate and unperfected workers',
mechanics' or similar liens arising in the ordinary course of business, so long
as such Liens attach only to Equipment, Fixtures and/or Real Estate; (e)
carriers', warehousemen's, suppliers' or other similar possessory liens arising
in the ordinary course of business and securing liabilities in an outstanding
aggregate amount not in excess of $ 100,000 at any time, so long as such Liens
attach only to Inventory; (f) deposits securing, or in lieu of, surety, appeal
or customs bonds in proceedings to which any Credit Party is a party; (g) any
attachment or judgment lien not constituting an Event of Default under Section
8.1(j); (h) zoning restrictions, easements, licenses, or other restrictions on
the use of any Real Estate or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the use,
value, or marketability of such Real Estate; (i) presently existing or
hereinafter created Liens in favor of Agent, on behalf of Lenders; and (j) Liens
expressly permitted under clauses (b) and (c) of Section 6.7 of the Agreement.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
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local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" shall mean, at any time, an employee benefit plan, as defined
in Section 3(3) of ERISA, which any Credit Party maintains, contributes to or
has an obligation to contribute to on behalf of participants who are or were
employed by any Credit Party.
"Pledge Agreements" shall mean, collectively, the Pledge Agreement
of even date herewith entered into among Agent, on behalf of itself and the
Lenders, and each Credit Party that is a signatory thereto.
"Prior Lender" shall mean each of Chrysler Financing Corporation,
Ford Motor Credit Company, Toyota Motor Credit Company, Corestates Bank, N.A.,
The Phillipsburg National Bank and Trust Company, and First Union Bank of
Connecticut..
"Prior Lender Obligations" shall mean items 1,2,3,6,7,8,9,10,12,16,
17,18,19,20,21,22,23,24,36,44,45,49,50,51 and 53 listed on Disclosure Schedule
(6.3).
"Proceeds" shall mean "proceeds," as such term is defined in the
Code and, in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Copyright, Copyright License, Trademark
or Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the
Collateral, and (e) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, upon disposition or
otherwise.
"Pro Forma" shall mean the unaudited consolidated and consolidating
balance sheet of Hometown and its Subsidiaries as of September 30, 1998 after
giving pro forma effect to the Related Transactions.
"Program Vehicle" shall mean a Vehicle supplied by a manufacturer to
an authorized auction company, excluding Vehicles intended to be sold or
re-leased to a commercial purchaser as part of a block of Vehicles or otherwise
in bulk.
"Projections" means Borrowers' and Specified Borrower's forecasted
consolidated and consolidating: (a) balance sheets; (b) profit and loss
statements; (c) cash flow statements; and (d)
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capitalization statements, all prepared on a Subsidiary by Subsidiary or
division by division basis, if applicable, and otherwise consistent with the
historical Financial Statements of the Borrowers and Specified Borrowers,
together with appropriate supporting details and a statement of underlying
assumptions.
"Pro Rata Share" shall mean with respect to all matters relating to
any Lender (a) with respect to the Floor Plan Loan (including the Swing Line
Loan as a subset of the Swing Line Lender's Floor Plan Loan), the percentage
obtained by dividing (i) the Floor Plan Loan Commitment (including the Swing
Line Commitment as a subset of the Swing Line Lender's Vehicle Commitment) by
(ii) the aggregate Floor Plan Loan Commitments of all Lenders, (b) with respect
to the Acquisition Loan, the percentage obtained by dividing (i) the Acquisition
Loan Commitment of that Lender by (ii) the aggregate Acquisition Loan
Commitments of all Lenders, (c) with respect to all Loans, the percentage
obtained by dividing (i) the aggregate Commitments of that Lender by (ii) the
aggregate Commitments of all Lenders, and (d) with respect to all Loans on and
after the Commitment Termination Date, the percentage obtained by dividing (i)
the aggregate outstanding principal balance of the Loans held by that Lender, by
(ii) the outstanding principal balance of the Loans held by all Lenders.
"Qualified Plan" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.
"Quoted Rate" shall mean an interest rate per annum established by
Agent in its sole discretion, and accepted by Borrower Representative, which
interest rate shall be an approximation of the then offered rates for deposits
in United States Dollars for a one month period which appears on Telerate Page
3750 as of 11:00 a.m., London time, on the second full LIBOR Business Day
preceding the date of determination.
"Real Estate" shall have the meaning assigned to it in Section 3.6.
"Real Estate Subsidiary" shall mean a wholly owned Subsidiary of
Hometown created for the sole purpose of acquiring the real property of a Target
in connection with a Permitted Acquisition.
"Recently Sold Vehicle" shall mean, as of any date of determination,
a New Vehicle or Used Vehicle which has been sold within the prior three (3)
Calendar Days.
"Refinancing" shall mean the repayment in full by Borrowers of the
Prior Lender Obligations.
"Refunded Swing Line Loan" shall have the meaning assigned to it in
Section 1.1(b)(iii).
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"Related Transactions" means each Floor Plan Loan made on the
Closing Date, the Refinancing, the payment of all fees, costs and expenses
associated with all of the foregoing and the execution and delivery of all of
the Loan Documents.
"Release" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"Requisite Lenders" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the Commitments of all Lenders, or
(b) if the Commitments have been terminated, more than sixty-six and two-thirds
percent (66 2/3%) of the aggregate outstanding amount of all Loans.
"Requisite Floor Plan Lenders" shall mean (a) Lenders having more
than sixty-six and two-thirds percent (66 2/3%) of the Floor Plan Loan
Commitments of all Floor Plan Lenders, or (b) if the Floor Plan Loan Commitments
have been terminated, more than sixty-six and two-thirds percent (66 2/3%) of
the aggregate outstanding amount of the Floor Plan Loan.
"Reserves" shall mean, with respect to the New Vehicle Borrowing
Base, the Used Vehicle Borrowing Base and/or a Specified Aggregate Borrowing
Base (a) reserves established by Agent from time to time against Eligible
Financed Vehicles or Eligible Used Vehicles pursuant to Section 5.9, (b)
reserves established pursuant to Section 5.4(c), and (c) such other reserves
against Eligible Financed Vehicles, Eligible Used Vehicles, Borrowing
Availability or a Specified Aggregate Borrowing Base which Agent may, in its
reasonable credit judgment, establish from time to time. Without limiting the
generality of the foregoing, Reserves established to ensure the payment of
accrued Interest Expenses or Indebtedness shall be deemed to be a reasonable
exercise of Agent's credit judgment.
"Restricted Payment" shall mean (a) the declaration or payment of
any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Person other than payment of
A-26
compensation in the ordinary course to stockholders who are employees of such
Person; and (g) any payment of management fees (or other fees of a similar
nature) by such Person to any Stockholder of such Person or their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a
"welfare plan" as defined in Section 3(2) of ERISA, that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant
after such participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the IRC and at the sole expense
of the participant or the beneficiary of the participant.
"Sales Contract" shall mean a retail sale or lease contract executed
by a Borrower's or a Specified Borrower's customer for the purchase of a
Vehicle.
"Security Agreements" shall mean, collectively, the Security
Agreements of even date herewith entered into among Agent, on behalf of itself
and Lenders, and each Credit Party that is a signatory thereto.
"Sold Unit" shall mean any Vehicle with respect to which a Borrower
or Specified Borrower has executed a Sales Contract and/or an odometer
statement.
"Solvent" shall mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the probably liability
of such Person on its debts as they become absolute and matured; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities (such as litigation, guarantees and pension plan
liabilities) at any time shall be computed as the amount which, in light of all
the facts and circumstances existing at the time, represents the amount which
can be reasonably be expected to become an actual or matured liability.
"Specified Aggregate Borrowing Base" shall mean, with respect to a
Specified Borrower, the New Vehicle Borrowing Base and Used Vehicle Borrowing
Base of such Specified Borrower.
"Specified Borrowers" and "Specified Borrower" shall have the
respective meanings assigned thereto in the recitals to the Agreement and any
other wholly owned Subsidiary of Hometown (other than a Borrower, a Real Estate
Subsidiary or a Non-Recourse Subsidiary) that leases real property from a Real
Estate Subsidiary and has issued a Permitted Acquisition Financing Guaranty
solely relating to the Permitted Acquisition Financing of such Real Estate
Subsidiary.
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"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
"Subordinated Debt" shall mean any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such Stock
whether by proxy, agreement, operation of law or otherwise, and (b) any
partnership or limited liability company in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) or of which any such Person is a general partner or may exercise
the powers of a general partner.
"Subsidiary Guaranty" shall mean the guaranty of each date herewith
executed by each Subsidiary of a Borrower or a Specified Borrower in favor of
Agent and Lenders.
"Supermajority Floor Plan Lenders" shall mean (a) Lenders having
eighty percent (80%) or more of the Floor Plan Loan Commitments of all Floor
Plan Lenders, or (b) if the Floor Plan Loan Commitments have been terminated,
eighty percent (80%) or more of the aggregate outstanding amount of the Floor
Plan Loan (with the Swing Line Loan being attributed to the Lender making such
Loan).
"Swing Line Advance" has the meaning assigned to it in Section
1.1(b)(i).
"Swing Line Availability" has the meaning assigned to it in Section
1.1(b)(i).
"Swing Line Commitment" shall mean, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Loans in an aggregate
principal amount not to exceed the lesser of (x) $5,000,000 and (y) an amount
equal to 10% of the Aggregate Borrowing Base, which commitment constitutes a
subfacility of the Floor Plan Loan Commitment of the Swing Line Lender.
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"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean, as the context may require, at any
time of determination, the aggregate amount of Swing Line Advances outstanding
to any Borrower or to all Borrowers.
"Swing Line Note" has the meaning assigned to it in Section
1.1(b)(ii).
"Swing Line Overdraft Advance" has the meaning assigned to it in
Section 1.1(b)(vi).
"Swing Line Overdraft Loan" shall mean the aggregate amount of Swing
Line Overdraft Advances outstanding at any time.
"Tangible Net Worth" shall mean, with respect to any Person at any
date, the Net Worth of such Person at such date, excluding, however, from the
determination of the total assets at such date, (a) all goodwill, capitalized
organizational expenses, capitalized research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other intangible items, (b) all unamortized debt
discount and expense, (c) treasury Stock, and (d) any write-up in the book value
of any asset resulting from a revaluation thereof.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or any political subdivision
thereof.
"Termination Date" shall mean the date on which the Loans have been
indefeasibly repaid in full and all other Obligations under the Agreement and
the other Loan Documents have been completely discharged, and none of Borrowers
shall have any further right to borrow any monies under the Agreement.
"Third Party Interactives" shall mean all Persons with whom any
Credit Party exchanges data electronically in the ordinary course of business,
including, without limitation, customers, suppliers, third-party vendors,
subcontractors, processors-converters, shippers and warehousemen.
"Title IV Plan" shall mean an employee pension benefit plan, as
defined in Section 3 (2) of ERISA (other than a Multiemployer Plan), which is
covered by Title IV of ERISA, and which any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Trademark Security Agreements" shall mean the Trademark Security
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party.
A-29
"Trademark License" shall mean rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use
any Trademark.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Credit Party: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether registered or
unregistered), now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof; (b) all reissues, extensions or renewals thereof;
and (c) all goodwill associated with or symbolized by any of the foregoing.
"Unfunded Pension Liability" shall mean, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"Used Vehicle" shall mean a Vehicle which was titled or sold at
retail and subsequently acquired by a Borrower or a Specified Borrower by
purchase or in trade.
"Used Vehicle Borrowing Base" shall mean, as of any date of
determination by Agent, from time to time, as to any Borrower or Specified
Borrower, an amount equal to the sum at such time of the lesser of (a) such
Borrower's or Specified Borrower's cost or (b) ninety percent (90%) of the NADA
trade-in value (excluding adds) of Eligible Used Vehicles of such Borrower or
Specified Borrower, less any Reserves established by Agent at such time.
"Used Vehicle Maximum Amount" shall mean, at any date of
determination, an amount equal to Fifteen Million Dollars ($15,000,000).
"Used Vehicle Net Borrowing Availability" shall mean as of any date
of determination the lesser of (i) the Used Vehicle Maximum Amount and (ii) the
Aggregate Used Vehicle Borrowing Base, in each case less the sum of the
aggregate Floor Plan Loan attributable to Used Vehicles then outstanding;
provided, however, that the aggregate outstanding principal amount of Floor Plan
Loans attributable to Used Vehicles shall not at any time exceed fifty percent
(50%) of the then outstanding principal amount of Floor Plan Loans plus Swing
Line Loans.
A-30
"Vehicle" shall mean a motor vehicle which: (a) is a passenger motor
vehicle, van, or light duty truck, which is not manufactured for a particular
commercial purpose; (b) complies with all applicable safety, environmental and
construction requirements, and is in good and operable condition; and (c) is
capable of being titled and registered for use on public highways.
"Year 2000 Assessment" shall mean a comprehensive written assessment
of the nature and extent of each Credit Party's Year 2000 Problems and Year 2000
Date-Sensitive Systems/Components, including, without limitation, Year 2000
Problems regarding data exchanges with Third Party Interactives.
"Year 2000 Corrective Actions" shall mean, as to each Credit Party,
all actions necessary to eliminate such Person's Year 2000 Problems, including,
without limitation, computer code enhancements and revisions, upgrades and
replacements of Year 2000 Date-Sensitive Systems/Components, and coordination of
such enhancements, revisions, upgrades and replacements with Third Party
Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to each Credit
Party, a comprehensive plan to eliminate all of its Year 2000 Problems on or
before June 30, 1999, including without limitation (i) computer code
enhancements or revisions, (ii) upgrades or replacements of Year 2000
Date-Sensitive Systems/Components, (iii) test and validation procedures, (iv) an
implementation time line and budget and (v) designation of specific employees
who will be responsible for planning, coordinating and implementing each phase
or subpart of the Year 2000 Corrective Plan.
"Year 2000 Date-Sensitive System/Component" shall mean, as to any
Person, any system software, network software, applications software, data base,
computer file, embedded microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs calendar-related
data accurately; such systems and components shall include, without limitation,
mainframe computers, file server/client systems, computer workstations, routers,
hubs, other network-related hardware, and other computer-related software,
firmware or hardware and information processing and delivery systems of any kind
and telecommunications systems and other communications processors, security
systems, alarms, elevators and HVAC systems.
"Year 2000 Implementation Testing" shall mean, as to each Credit
Party, (i) the performance of test and validation procedures regarding Year 2000
Corrective Actions on a unit basis and on a system-wide basis; (ii) the
performance of test and validation procedures regarding data exchanges among the
Credit Parties' Year 2000 Date-Sensitive Systems/Components and data exchanges
with Third Party Interactives, and (iii) the design and implementation of
additional Corrective Actions, the need for which has been demonstrated by test
and validation procedures.
"Year 2000 Problems" shall mean, with respect to each Credit Party,
limitations on the capacity or readiness of any such Credit Party's Year 2000
Date-Sensitive Systems/Components to accurately accept, create, manipulate,
sort, sequence, calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year beginning on or
after
X-00
Xxxxxxx 0, 0000 (xxxxxxxxx leap year computations), including, without
limitation, exchanges of information among Year 2000 Date-Sensitive
Systems/Components of the Credit Parties and exchanges of information among the
Credit Parties and Year 2000 Date-Sensitive Systems/Components of Third Party
Interactives and functionality of peripheral interfaces, firmware and embedded
microchips.
All other undefined terms contained in any of the Loan Documents
shall, unless the context indicates otherwise, have the meanings provided for by
the Code as in effect in the State of New York to the extent the same are used
or defined therein. Unless otherwise specified, references in the Agreement or
any of the Appendices to a Section, subsection or clause refer to such Section,
subsection or clause as contained in the Agreement. The words "herein," "hereof"
and "hereunder" and other words of similar import refer to the Agreement as a
whole, including all Annexes, Exhibits and Schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in the Agreement or any such
Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated
in either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents) or, in the case
of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of the same and any successor statutes and regulations. Whenever
any provision in any Loan Document refers to the knowledge (or an analogous
phrase) of any Credit Party, such words are intended to signify that such Credit
Party has actual knowledge or awareness of a particular fact or circumstance or
that such Credit Party, if it had exercised reasonable diligence, would have
known or been aware of such fact or circumstance.
A-32
ANNEX B (Section 1.8)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Each of Hometown, Borrowers and Specified Borrowers shall, and shall
cause its Subsidiaries (other than Real Estate Subsidiaries and Non-Recourse
Subsidiaries) to, establish and maintain separate the Cash Management Systems
among the Borrowers and the Specified Borrowers as described below:
(a) On or before the Closing Date and until the Termination Date,
Hometown shall (i) establish an account (the "Concentration Account") in
Hometown's name at the bank set forth on Disclosure Schedule (3.19), (the
"Concentration Account Bank") and (ii) deposit and cause its Subsidiaries to
deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral into the Concentration Account.
(b) On or before the Closing Date, Hometown shall establish an
operating account (a "Disbursement Account") at the bank set forth on Disclosure
Schedule (3.19) into which amounts to be disbursed from the Collection Account
to the Borrowers shall be provided in accordance with Section 1.10. Unless an
Event of Default has occurred and is continuing, each Borrower and Specified
Borrower may make or cause to be made withdrawals from its Disbursement Account
as necessary for the conduct of its business.
(c) On or before the Closing Date (or such later date as Agent shall
consent to in writing), the Concentration Account Bank and the bank where the
relevant Disbursement Account is located shall have entered into tri-party
blocked account agreements (each a "Blocked Account Agreement" and collectively,
the "Blocked Account Agreements") with Agent, for the benefit of itself and
Lenders, and the Borrowers and Specified Borrower in form and substance
acceptable to Agent, which shall become operative on or prior to the Closing
Date. Each such blocked account agreement shall provide, among other things,
that (i) all items of payment deposited in such account and proceeds thereof
deposited in the Concentration Account are held by such bank as agent or
bailee-in-possession for Agent, on behalf of Lenders, (ii) the bank executing
such agreement has no rights of setoff or recoupment or any other claim against
such account, as the case may be, other than for payment of its service fees and
other charges directly related to the administration of such account and for
returned checks or other items of payment, and (iii) from and after the Closing
Date (A) with respect to banks at which a the Disbursement Account is located,
such bank agrees, from and after the receipt of a notice (an "Activation
Notice") from Agent (which Activation Notice may be given by Agent at any time
at which (1) a Default or Event of Default shall have occurred and be
continuing, (2) Agent reasonably believes based upon information available to it
that a Default or an Event of Default is likely to occur; (3) Agent reasonably
believes that an event or circumstance which
B-1
is likely to have a Material Adverse Effect has occurred, or (4) Agent
reasonably has grounds to question the integrity of Hometown's, any Borrower's,
or any Specified Borrower's Cash Management System or Hometown's, any Borrower's
or any Specified Borrower's compliance with the provisions of this Annex B or
any other provisions of the Loan Documents to the extent related to such Cash
Management Systems (any of the foregoing being referred to herein as an
"Activation Event")), to forward immediately all amounts in the relevant
Disbursement Account to the Concentration Account Bank and to commence the
process of daily sweeps from the relevant Disbursement Account into the
Concentration Account and (B) with respect to each Concentration Account Bank,
such bank agrees to immediately forward all amounts received in the applicable
Concentration Account to the Collection Account through daily sweeps from such
Concentration Account into the Collection Account. On each Business Day, funds
on deposit in the Collection Account shall be applied as provided in Section
1.11. From and after the date Agent has delivered an Activation Notice to any
bank with respect to the relevant Disbursement Account, no Borrower or Specified
Borrower, as the case may be, shall, or shall cause or permit any Subsidiary
thereof to, accumulate or maintain cash in disbursement or payroll accounts as
of any date of determination in excess of checks outstanding against such
accounts as of that date and amounts necessary to meet minimum balance
requirements.
(d) So long as no Default or Event of Default has occurred and is
continuing, Borrowers or Specified Borrowers may amend Disclosure Schedule
(3.19) to add or replace the Concentration Account Bank or Disbursement Account
or to replace the Concentration Account; provided, however, that (i) Agent shall
have consented in writing in advance to the opening of such account with the
relevant bank and (ii) prior to the time of the opening of such account, the
applicable Borrower, Specified Borrower and/or the Subsidiaries thereof, as
applicable, and such bank shall have (x) executed and delivered to Agent a
tri-party blocked account agreement, in form and substance satisfactory to Agent
and (y) taken all such action as Agent shall require to grant and perfect a
first priority security interest in such account in favor of Agent, for itself
and the Lenders. Borrowers and Specified Borrowers shall close any of their
accounts (and establish replacement accounts in accordance with the foregoing
sentence) promptly and in any event within thirty (30) days of notice from Agent
that the creditworthiness of any bank holding an account is no longer acceptable
in Agent's reasonable judgment, or as promptly as practicable and in any event
within sixty (60) days of notice from Agent that the operating performance,
funds transfer and/or availability procedures or performance with respect to
accounts or lockboxes of the bank holding such accounts or Agent's liability
under any tri-party blocked account agreement with such bank is no longer
acceptable in Agent's reasonable judgment. If any such account of a Borrower or
Specified Borrower terminates for any reason or any such bank fails to comply
with its obligations under its related account agreement with a Borrower or
Specified Borrower for any reason, then such Borrower or Specified Borrower
shall promptly notify such bank to make all future payments to a new
Concentration Account or Disbursement Account, as applicable.
(e) The Disbursement Accounts and the Concentration Account shall be
cash collateral accounts, with all cash, checks and other similar items of
payment in such accounts securing payment of the Loans and all other
Obligations, and in which Hometown, each Borrower, each
B-2
Specified Borrower and each Subsidiary thereof shall have granted a Lien to
Agent, on behalf of itself and Lenders, pursuant to a Security Agreement.
(f) All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 of the Agreement and shall be
applied (and allocated) by Agent in accordance with Section 1.11 of the
Agreement. In no event shall any amount be so applied unless and until such
amount shall have been credited in immediately available funds to the Collection
Account.
(g) Each of Hometown, Borrower and Specified Borrowers shall and
shall cause its Affiliates, officers, employees, agents, directors or other
Persons acting for or in concert with such Person (each a "Related Person") to
(i) hold in trust for Agent, for the benefit of itself and Lenders, all checks,
cash and other items of payment received by such Person or any such Related
Person, and (ii) within one (1) Business Day after receipt by such Person or any
such Related Person of any checks, cash or other items or payment, deposit the
same into an account of such Person. Each of Hometown, Borrowers and Specified
Borrowers and each Related Person thereof acknowledges and agrees that all cash,
checks or items of payment constituting proceeds of Collateral are the property
of Agent and Lenders. All proceeds of the sale or other disposition of any
Collateral, shall be deposited directly into the applicable accounts.
(h) Notwithstanding the above language, Hometown, each Borrower and
each Specified Borrower shall (i) as soon as practicable and in any event not
later than January 31, 1999, either (x) close each of the accounts
(collectively, the "Existing Accounts") at the banks (collectively, the
"Existing Banks") set forth on Disclosure Schedule (3.19) (other than those
located at Fleet National Bank) or (y) enter into a Blocked Account Agreement in
form and substance satisfactory to Agent with respect to each Existing Account
that is not closed on January 31, 1999, any such Blocked Account Agreement to be
in full force and effect on January 31, 1999; provided that in the event such
Existing Account is not subject to a Blocked Account Agreement, such Person
shall have established written instructions with each such Existing Bank with
respect to termination of such Existing Accounts in form and substance
satisfactory to Agent; and (ii) until such time (x) on a daily basis remit all
monies, checks, drafts or similar items of payment relating to or constituting
payments made in respect of any Collateral directly to the Collection Account
and (y) cause each Existing Bank on a daily basis to wire transfer all collected
funds in such Existing Accounts in excess of $50,000 to the Collection Account.
B-3
ANNEX C (Section 2.1(a))
to
CREDIT AGREEMENT
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Agent in form and substance satisfactory to Agent on or prior to the
Closing Date (each capitalized term used but not otherwise defined herein shall
have the meaning ascribed thereto in Annex A to the Agreement):
A. Appendices. All Appendices to the Agreement, in form and
substance satisfactory to Agent.
B. Notes. Duly executed originals of the New Floor Plan Notes, Swing
Line Note and Acquisition Notes for each applicable Lender, dated the Closing
Date.
C. Security Agreements. Duly executed originals of the Security
Agreements, dated the Closing Date, and all instruments, documents and
agreements executed pursuant thereto.
D. Insurance. Satisfactory evidence that the insurance policies
required by Section 5.4 are in full force and effect, together with appropriate
evidence showing loss payable and/or additional insured clauses or endorsements,
as requested by Agent, in favor of Agent, on behalf of Lenders.
E. Security Interests and Code Filings.
(a) Evidence satisfactory to Agent that Agent (for the benefit of
itself and Lenders) has a valid and perfected first priority security interest
in the Collateral, including (i) such documents duly executed by each Credit
Party (including financing statements under the Code and other applicable
documents under the laws of any jurisdiction with respect to the perfection of
Liens) as Agent may request in order to perfect its security interests in the
Collateral and (ii) copies of Code search reports listing all effective
financing statements that name any Credit Party as debtor, together with copies
of such financing statements, none of which shall cover the Collateral, except
for those relating to the Prior Lender Obligations (all of which shall be
terminated on the Closing Date).
(b) Evidence satisfactory to Agent, including copies, of all UCC-1
and other financing statements filed in favor of any Credit Party with respect
to each location, if any, at which Inventory may be consigned.
(c) Control Letters from (i) all issuers of uncertificated
securities and financial assets held by each Borrower, (ii) all securities
intermediaries with respect to all securities accounts
C-1
and securities entitlements of each Borrower, and (iii) all futures commission
agents and clearing houses with respect to all commodities contracts and
commodities accounts held by any Borrower.
F. Payoff Letter; Termination Statements. Copies of a duly executed
payoff letter, in form and substance satisfactory to Agent, by and between all
parties to the Prior Lender loan documents evidencing repayment in full of all
Prior Lender Obligations to be repaid on the Closing Date, together with (a)
UCC-3 or other appropriate termination statements, in form and substance
satisfactory to Agent, manually signed by the Prior Lender releasing all liens
of Prior Lender upon any of the personal property of each Credit Party, and (b)
termination of all blocked account agreements, bank agency agreements or other
similar agreements or arrangements or arrangements in favor of Prior Lender or
relating to the Prior Lender Obligations to be repaid on the Closing date.
G. Intellectual Property Security Agreements. Duly executed
originals of Trademark Security Agreements, Copyright Security Agreements and
Patent Security Agreements, each dated the Closing Date and signed by each
Credit Party which owns Trademarks, Copyrights and/or Patents, as applicable,
all in form and substance satisfactory to Agent, together with all instruments,
documents and agreements executed pursuant thereto.
X. Xxxxxx Documents. Duly executed originals of an Intercreditor
Agreement, dated the Closing Date, between the Agent and Falcon Financial, LLC
with respect to the Guaranteed Indebtedness of Xxxxxx Automotive and Xxxxxx
Isuzu to Falcon Financial, LLC, together with duly executed originals of the
amendments to the documentation evidencing such Guaranteed Indebtedness in form
and substance satisfactory to Agent, and all documents, instruments and
agreements executed pursuant thereto.
I. Initial Borrowing Base Certificate. Duly executed originals of an
initial Borrowing Base Certificate, dated the Closing Date, reflecting
information concerning Aggregate New Vehicle Borrowing Base, Aggregate Used
Vehicle Borrowing Base, Specified Aggregate Borrowing Base and Aggregate
Borrowing Base as of a date not more than two (2) days prior to the Closing
Date.
J. Initial Notice of Advance. Duly executed originals of a Notice of
Advance, dated the Closing Date, with respect to the initial Advance to be
requested by Borrower Representative on the Closing Date.
K. Letter of Direction. Duly executed originals of a letter of
direction from Borrower Representative addressed to Agent, on behalf of itself
and Lenders, with respect to the disbursement on the Closing Date of the
proceeds of the Floor Plan Advance.
L. Cash Management System; Blocked Account Agreement. Evidence
satisfactory to Agent that, as of the Closing Date, Cash Management Systems
complying with Annex B to the Agreement have been established and are currently
being maintained in the manner set forth
C-2
in such Annex B, together with copies of duly executed tri-party blocked account
and lock box agreements, satisfactory to Agent, with the banks as required by
Annex B.
M. Charter and Good Standing. For each Credit Party, such Person's
(a) charter and all amendments thereto, (b) good standing certificates
(including verification of tax status) in its state of incorporation and (c)
good standing certificates (including verification of tax status) and
certificates of qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Closing Date and certified
by the applicable Secretary of State or other authorized Governmental Authority.
N. Bylaws and Resolutions. For each Credit Party, (a) such Person's
bylaws, together with all amendments thereto and (b) resolutions of such
Person's Board of Directors, approving and authorizing the execution, delivery
and performance of the Loan Documents to which such Person is a party and the
transactions to be consummated in connection therewith, each certified as of the
Closing Date by such Person's corporate secretary or an assistant secretary as
being in full force and effect without any modification or amendment.
O. Incumbency Certificates. For each Credit Party, signature and
incumbency certificates of the officers of each such Person executing any of the
Loan Documents, certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.
P. Opinions of Counsel. Duly executed originals of opinions of
Xxxxx, Xxxxxxx & Xxxx, counsel for the Credit Parties, together with any local
counsel opinions requested by Agent, each in form and substance satisfactory to
Agent and its counsel, dated the Closing Date, and each accompanied by a letter
addressed to such counsel from the Credit Parties, authorizing and directing
such counsel to address its opinion to Agent, on behalf of Lenders, and to
include in such opinion an express statement to the effect that Agent and
Lenders are authorized to rely on such opinion.
Q. Pledge Agreements. Duly executed originals of the Pledge
Agreements accompanied by (as applicable) (a) share certificates representing
all of the outstanding Stock being pledged pursuant to such Pledge Agreement and
stock powers for such share certificates executed in blank and (b) the original
Intercompany Notes and other instruments evidencing Indebtedness being pledged
pursuant to such Pledge Agreement, duly endorsed in blank.
R. Accountants' Letters. A letter from the Credit Parties to their
independent auditors authorizing the independent certified public accountants of
the Credit Parties to communicate with Agent and Lenders in accordance with
Section 4.2, and a letter from such auditors acknowledging Lenders' reliance on
the auditor's certification of past and future Financial Statements.
S. Appointment of Agent for Service. An appointment of CT
Corporation as Hometown's agent for service of process.
C-3
T. Solvency Certificate. Hometown shall deliver to Agent for the
benefit of Lenders a solvency certificate in form and substance satisfactory to
Agent.
U. Fee Letter. Duly executed originals of the GE Capital Fee Letter.
V. Officer's Certificate. Agent shall have received duly executed
originals of a certificate of the Chief Financial Officer of each Borrower and
Specified Borrower, dated the Closing Date, stating that, since December 31,
1997 (a) no event or condition has occurred or is existing which could
reasonably be expected to have a Material Adverse Effect; (b) there has been no
material adverse change in the industry in which any Borrower or Specified
Borrower operates; (c) no Litigation has been commenced which, if successful,
would have a Material Adverse Effect or could challenge any of the transactions
contemplated by the Agreement and the other Loan Documents; (d) there have been
no Restricted Payments made by any Credit Party; and (e) there has been no
material increase in liabilities, liquidated or contingent, and no material
decrease in assets of any Credit Party or any of its Subsidiaries.
W. Waivers. Agent, on behalf of Lenders, shall have received
landlord waivers and consents, bailee letters and mortgagee agreements in form
and substance satisfactory to Agent, in each case as required pursuant to
Section 5.9.
X. Mortgages. Mortgages covering all of the leased Real Estate
located at 000 Xxxxxxx Xxxxxxxx, Xxxxxxxxx, XX 00000, 0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000, 0000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxx, XX 00000, 0000 Xxxxx
Xxxx Xxxxxx Xxxxxxxxx, XX 00000 and Xxxxx 0, Xxxxxx Xx. X. Xxxxxxxxxxx, XX,
00000 (the "Mortgaged Properties") together with evidence that counterparts of
the Mortgages have been recorded in all places to the extent necessary or
desirable, in the judgment of Agent, to create a valid and enforceable first
priority lien (subject to Permitted Encumbrances) on each Mortgaged Property in
favor of Agent for the benefit of itself and Lenders (or in favor of such other
trustee as may be required or desired under local law)
Y. Environmental Reports. To the extent requested, Agent shall have
received Phase I Environmental Site Assessment Reports, consistent with American
Society for Testing and Materials (ASTM) Standard E 1527-94 and applicable state
requirements, on all of the Real Estate, prepared by environmental engineers
satisfactory to Agent, all in form and substance satisfactory to Agent, in its
sole discretion; and Agent shall have further received such environmental review
and audit reports, including Phase II reports, with respect to the Real Estate
of any Credit Party as Agent shall have requested, and Agent shall be satisfied,
in its sole discretion, with the contents of all such environmental reports.
Z. Audited Financials; Financial Condition. Agent shall have
received Hometown's unaudited combined Financial Statements for its Fiscal Year
ended December 31, 1997, and each Borrower's audited Financial Statements for
their Fiscal Year ended December 31, 1997. Each Borrower shall have provided
Agent with its current operating statements, a consolidated and consolidating
balance sheet and statement of cash flows, the Pro Forma, Projections
C-4
with respect to such Borrower certified by its Chief Financial Officer, in each
case in form and substance satisfactory to Agent, and Agent shall be satisfied,
in its sole discretion, with all of the foregoing. Agent shall have further
received a certificate of the Chief Executive Officer and/or the Chief Financial
Officer of Hometown, based on such Pro Forma and Projections, to the effect that
(a) Hometown and its Subsidiaries taken as a whole will be Solvent upon the
consummation of the transactions contemplated herein; (b) the Pro Forma fairly
presents the financial condition of Hometown and its Subsidiaries as of the date
thereof after giving effect to the transactions contemplated by the Loan
Documents; (c) the Projections are based upon estimates and assumptions stated
therein, all of which Hometown believes to be reasonable and fair in light of
current conditions and current facts known to Hometown and, as of the Closing
Date, reflect Hometown's good faith and reasonable estimates of its future
financial performance and of the other information projected therein for the
period set forth therein; (d) the Fair Salable Balance Sheet was prepared on the
same basis as the Pro Forma, except that Hometown's and its Subsidiaries' assets
are set forth therein at their fair salable values on a going concern basis, and
the liabilities set forth therein include all contingent liabilities of Hometown
and its Subsidiaries stated at the reasonably estimated present values thereof;
and (e) containing such other statements with respect to the solvency of
Hometown and its Subsidiaries and matters related thereto as Agent shall
request.
AA. Approvals and Consents. All requisite or necessary Governmental
Authorities and third parties (other than pursuant to clause (AA) below) shall
have approved or consented to the consummation of the transactions contemplated
by this Agreement and the other Loan Documents to the extent required and/or all
applicable waiting periods shall have expired, all such approvals and consents
shall remain in effect and there shall be no governmental or judicial action,
actual or threatened, that has a reasonable likelihood of restraining,
preventing or imposing burdensome conditions on such transactions.
BB. Other Documents. Such other certificates, documents and
agreements respecting any Credit Party as Agent may, in its reasonable
discretion, request.
C-5
ANNEX D (Section 4.1(a))
to
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrowers and Specified Borrowers shall deliver or cause to be
delivered to Agent or to Agent and Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, (I) within twenty-five
days (or such earlier date as determined by the Agent after consultation with
Hometown, but in any event not earlier than fifteen (15) days) after the end of
each Fiscal Month, financial information regarding Borrowers, Specified
Borrowers and their respective Subsidiaries, certified by the Chief Financial
Officer of Borrower Representative, consisting of (i) commencing with the Fiscal
Month ending April 30, 1999, consolidated and consolidating unaudited balance
sheets as of the close of such Fiscal Month and the related statements of income
and cash flow for that portion of the Fiscal Year ending as of the close of such
Fiscal Month; (ii) consolidated and consolidating unaudited statements of income
and cash flows for such Fiscal Month, setting forth in comparative form the
figures for the corresponding period in the prior year and the figures contained
in the Projections for such Fiscal Year, all prepared in accordance with GAAP
(subject to normal year-end adjustments); (iii) copies of financial statements
for each dealership delivered to Vehicle manufacturers monthly; and (iv) a
summary of the outstanding balance of all Intercompany Notes as of the last day
of that Fiscal Month. Such financial information shall be accompanied by (A) a
statement in reasonable detail (each, a "Compliance Certificate") showing the
calculations used in determining compliance with each financial covenant set
forth on Annex F monthly on a trailing twelve month basis, and (B) the
certification of the Chief Financial Officer of Borrower Representative that (i)
such financial information presents fairly in accordance with GAAP (subject to
normal year-end adjustments) the financial position and results of operations of
Borrowers, Specified Borrowers and their respective Subsidiaries, on a
consolidated and consolidating basis, in each case as at the end of such month
and for the period then ended and (ii) any other information presented is true,
correct and complete in all material respects and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default shall have occurred and be continuing, describing the nature thereof and
all efforts undertaken to cure such Default or Event of Default; and
(II) together with the delivery of the first monthly financial
statements delivered pursuant to the preceding clause (I)(ii), Projections
on a month by month basis for the 1999 calender year;
(b) Quarterly Financials. To Agent and Lenders, within forty-five
(45) days after the end of each Fiscal Quarter, consolidated and consolidating
financial information regarding Borrowers, Specified Borrowers and their
respective Subsidiaries, certified by the Chief Financial Officer of Borrower
Representative, including (i) commencing with the Fiscal Quarter ending March
31, 1999, unaudited balance sheets as of the close of such Fiscal Quarter and
the related statements
D-1
of income and cash flow for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter and (ii) unaudited statements of income and cash
flows for such Fiscal Quarter, in each case setting forth in comparative form
the figures for the corresponding period in the prior year and the figures
contained in the Projections for such Fiscal Year, all prepared in accordance
with GAAP (subject to normal year-end adjustments). Such financial information
shall be accompanied by (A) a Compliance Certificate in respect of each of the
financial covenants set forth on Annex F which is tested quarterly on a trailing
four quarter basis and (B) the certification of the Chief Financial Officer of
Borrower Representative that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments) the financial
position, results of operations and statements of cash flows of Borrowers,
Specified Borrowers and their respective Subsidiaries, on both a consolidated
and consolidating basis, as at the end of such Fiscal Quarter and for the period
then ended, (ii) any other information presented is true, correct and complete
in all material respects and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default shall have
occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default. In addition, Borrowers and
Specified Borrowers shall deliver to Agent and Lenders, within forty-five (45)
days after the end of each Fiscal Quarter, a management discussion and analysis
which includes a comparison to the corresponding period for the prior year for
that Fiscal Quarter and a comparison of performance for that Fiscal Quarter to
the corresponding period in the prior year, and the Borrowers and Specified
Borrowers hereby acknowledge and agree that the Agent and Requisite Lenders may
readjust the financial covenants contained in Annex F as a result of their
review of such management discussion and analysis;
(c) Operating Plan. To Agent and Lenders, as soon as available, but
not later than thirty (30) days (sixty (60) days in the case of the 1998 Fiscal
Year) after the end of each Fiscal Year, an annual operating plan for each
Borrower and Specified Borrower, approved by the Board of Directors of such
Borrower and Specified Borrower, for the following year, which will include a
statement of all of the material assumptions on which such plan is based, will
include monthly balance sheets and a monthly budget for the following year and
will integrate sales, gross profits, operating expenses, operating profit, cash
flow projections and Borrowing Availability and Specified Aggregate Borrowing
Base, as the case may be, projections all prepared on the same basis and in
similar detail as that on which operating results are reported (and in the case
of cash flow projections, representing management's good faith estimates of
future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and facilities;
(d) Annual Audited Financials. To Agent and Lenders, within one
hundred twenty (120) days after the end of each Fiscal Year, audited Financial
Statements for Borrowers, Specified Borrowers and their respective Subsidiaries
on a consolidated and (unaudited) consolidating basis, consisting of balance
sheets and statements of income and retained earnings and cash flows, setting
forth in comparative form in each case the figures for the previous Fiscal Year,
which Financial Statements shall be prepared in accordance with GAAP, certified
without qualification, by an independent certified public accounting firm of
national standing or otherwise acceptable to Agent. Such Financial Statements
shall be accompanied by (i) a statement prepared in reasonable detail
D-2
showing the calculations used in determining compliance with each of the
financial covenants set forth on Annex F, (ii) a report from such accounting
firm to the effect that, in connection with their audit examination, nothing has
come to their attention to cause them to believe that a Default or Event of
Default has occurred (or specifying those Defaults and Events of Default that
they became aware of), it being understood that such audit examination extended
only to accounting matters and that no special investigation was made with
respect to the existence of Defaults or Events of Default, (iii) a letter
addressed to Agent, on behalf of itself and Lenders, in form and substance
reasonably satisfactory to Agent and subject to standard qualifications taken by
nationally recognized accounting firms, signed by such accounting firm
acknowledging that Agent and Lenders are entitled to rely upon such accounting
firm's certification of such audited Financial Statements, (iv) the annual
letters to such accountants in connection with their audit examination detailing
contingent liabilities and material litigation matters, and (v) the
certification of the Chief Executive Officer or Chief Financial Officer of
Borrower Representative that all such Financial Statements present fairly in
accordance with GAAP the financial position, results of operations and
statements of cash flows of Borrowers, Specified Borrowers and their respective
Subsidiaries on a consolidated and consolidating basis, as at the end of such
year and for the period then ended, and that there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default shall
have occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default;
(e) Management Letters. To Agent and Lenders, within five (5)
Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received by
such Credit Party from its independent certified public accountants;
(f) Default Notices. To Agent and Lenders, as soon as practicable,
and in any event within five (5) Business Days after an executive officer of any
Borrower or Specified Borrower has actual knowledge of the existence of any
Default, Event of Default or other event which has had a Material Adverse
Effect, telephonic or telecopied notice specifying the nature of such Default or
Event of Default or other event, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in writing on the
next Business Day;
(g) SEC Filings and Press Releases. To Agent and Lenders, promptly
upon their becoming available, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person;
(h) Subordinated Debt and Equity Notices. To Agent, as soon as
practicable, copies of all material written notices given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person, and,
within two (2) Business Days after any Credit Party
D-3
obtains knowledge of any matured or unmatured event of default with respect to
any Subordinated Debt, notice of such event of default;
(i) Supplemental Schedules. To Agent, supplemental disclosures, if
any, required by Section 5.6 of the Agreement;
(j) Litigation. To Agent in writing, promptly upon learning thereof,
notice of any Litigation commenced or threatened against any Credit Party that
(i) seeks damages in excess of $100,000, (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or
against any Credit Party or ERISA Affiliate in connection with any Plan, (iv)
alleges criminal misconduct by any Credit Party, (v) alleges the violation of
any law regarding, or seeks remedies in connection with, any Environmental
Liabilities or (vi) involves any product recall;
(k) Insurance Notices. To Agent, disclosure of losses or casualties
required by Section 5.4 of the Agreement;
(l) Lease Default Notices. To Agent, copies of (i) any and all
default notices received under or with respect to any leased location or public
warehouse where Collateral is located, and (ii) such other notices or documents
as Agent may request in its reasonable discretion;
(m) Lease Amendments. To Agent, copies of all material amendments to
real estate leases.
(n) Tax Returns. To Agent, within five (5) days of the filing of a
federal or state tax return, a copy of such tax return. Each Borrower and
Specified Borrower shall exercise its best efforts to file such tax returns
within 120 days after the end of its Fiscal Year. In the event a Borrower does
not file its tax return within such time period, such Borrower and Specified
Borrower shall provide Agent with a draft of the proposed tax return or a copy
of the filed extension notification within the 120-day period;
(o) Manufacturer Financial Statements. As soon as available, but in
any event within (i) fifteen (15) days after the end of each month, copies of
each monthly financial statement delivered to a manufacturer or distributor as
required by the dealership franchise agreement with such manufacturer or
distributor, and (ii) forty-five (45) days after the end of each month, any "13
month" year-end statements;
(p) Financial Agreements. Any material change in the relationship
between a Credit Party and any vehicle manufacturer or distributor, including,
without limitation, the loss or cancellation, or threatened loss or
cancellation, of a franchise; and
(q) Other Documents. To Agent and Lenders, such other financial and
other information respecting any Credit Party's business or financial condition
as Agent or any Lender shall, from time to time, request.
D-4
ANNEX E (Section 4.1(b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrowers and Specified Borrowers shall deliver or cause to be
delivered the following:
(a) To Agent, daily (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date), a Borrowing
Base Certificate accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion.
(b) To Agent (i) upon its request, and in no event less frequently
than five (5) Business Days after the end of each Fiscal Month (together with a
copy of all or any part of such delivery requested by any Lender in writing
after the Closing Date) and (ii) no later than two (2) days prior to the
consummation of a Permitted Acquisition, a statement in reasonable detail (each,
an "Acquisition Loan Availability Certificate") showing the calculation of
Acquisition Loan Availability as of the close of the most recently ended Fiscal
Month or as at such other date as Agent may request;
(c) Upon request of the Agent or any Lender, copies of the Inventory
Detail Report of each Borrower and Specified Borrower individually and on a
consolidated basis;
(d) To Agent, at the time of delivery of each of the Financial
Statements delivered pursuant to Annex D, (i) a listing of government contracts
of each Borrower and Specified Borrower subject to the Federal Assignment of
Claims Act of 1940; and (ii) a list of any applications for the registration of
any Patent, Trademark or Copyright with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency which
any Credit Party thereof has filed in the prior Fiscal Quarter;
(e) Each Borrower and Specified Borrower, at its own expense, shall
deliver to Agent such appraisals of its assets as Agent may request at any time
after the occurrence and during the continuance of a Default or an Event of
Default, such appraisals to be conducted by an appraiser, and in form and
substance, satisfactory to Agent; and
(f) Such other reports, statements and reconciliations with respect
to any New Vehicle Borrowing Base, any Used Vehicle Borrowing Base or any
Collateral of any or all Credit Parties as Agent shall from time to time request
in its reasonable discretion.
E-1
ANNEX F (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Hometown, Borrowers and Specified Borrowers shall not breach or fail
to comply with any of the following financial covenants, each of which shall be
calculated in accordance with GAAP consistently applied:
(a) Maximum Capital Expenditures. Hometown and its Subsidiaries on a
consolidated basis shall not make Capital Expenditures during any Fiscal Year in
an aggregate amount in excess of $1,000,000; provided, however, that Bay State
may make additional Capital Expenditures during the term of this Agreement in an
aggregate amount of up to $1,000,000.
(b) Minimum Debt Service Coverage Ratio. Borrower's on a
consolidated basis shall have at the end of each Fiscal Quarter, a Debt Service
Coverage Ratio for the 12-month period then ended (or with respect to the Fiscal
Quarters ending on or before June 30, 1999, the period commencing on July 1,
1998 and ending on the last day of such Fiscal Quarter) of not less than (x)
2.00 to 1.0, for any such period ending on or prior to December 31, 1999, and
(y) 1.50 to 1.0, for any such period thereafter.
(c) Minimum Tangible Net Worth. Borrowers on a consolidated basis
shall maintain at any time during the period set forth below minimum Tangible
Net Worth of not less than the amount established for such period:
Period Amount
------ ------
January 1, 1999 through
and including March 30, 2000 $ 1,170,000
March 31, 2000 through
and including June 29, 2000 $ 1,535,400
June 30, 2000 through
and including September 29, 2000 $ 3,049,200
September 30, 2000 through
and including December 30, 2000 $ 5,032,800
December 31, 2000 through
and including March 30, 2001 $ 6,390,000
F-1
March 31, 2001 through
and including June 29, 2001 $ 6,826,100
June 30, 2001 through
and including September 29, 2001 $ 8,632,800
September 30, 2001 through
and including December 30, 2001 $11,000,200
December 31, 2001 through
and including March 30, 2002 $12,620,000
March 31, 2002 through
and including June 29, 2002 $13,090,400
June 30, 2002 through
and including September 29, 2002 $15,039,200
September 30, 2002 through
and including December 30, 2002 $17,592,800
December 31, 2002 through
and including March 30, 2003 $19,340,000
March 31, 2003 through
and including June 29, 2003 $19,834,200
June 30, 2003 through
and including September 29, 2003 $21,881,600
September 30, 2003 through
and including December 30, 2003 $24,564,400
Thereafter $26,440,000
(d) Minimum Interest Coverage Ratio. Borrowers on a consolidated
basis shall have at the end of each Fiscal Quarter, an Interest Coverage Ratio
for the 12-month period then ended (or with respect to the Fiscal Quarters
ending on or before June 30, 1999, the period commencing on July 1, 1998 and
ending on the last day of such Fiscal Quarter) of not less than 2.50 to 1.0.
(e) Minimum Current Ratio. Borrowers on a consolidated basis shall
maintain at all times a Current Ratio of not less than 1.20 to 1.0 at any time.
F-2
(f) Leverage Ratio. Borrowers on a consolidated basis shall have at
the end of each Fiscal Quarter, a Leverage Ratio for the 12-month period then
ended (or with respect to the Fiscal Quarters ending on or before June 30, 1999,
the period commencing on July 1, 1998 an ending on the last day of such Fiscal
Quarter) of not more than 2.0 to 1.0.
(g) Minimum EBITDA. Borrowers on a consolidated basis shall have at
the end of each Fiscal Year EBTIDA for such Fiscal Year then ended of not less
than the amount established for such Fiscal Year below:
Fiscal Year Ended Amount
----------------- ------
December 31, 1998 $ 3,130,000
December 31, 1999 $ 8,810,000
December 31, 2000 $10,880,000
December 31, 2001 $12,520,000
December 31, 2002 $13,390,000
Each Fiscal Year End Thereafter $13,950,000
(h) Minimum Debt Service Coverage Ratio. Specified Borrower on a
consolidated basis shall have at the end of each Fiscal Quarter, a Debt Service
Coverage Ratio for the 12-month period then ended (or with respect to the Fiscal
Quarters ending on or before June 30, 1999, the period commencing on July 1,
1998 and ending on the last day of such Fiscal Quarter) of not less than 1.30 to
1.0 for any such period.
(i) Minimum Interest Coverage Ratio. Specified Borrowers on a
consolidated basis shall have at the end of each Fiscal Quarter, an Interest
Coverage Ratio for the 12-month period then ended (or with respect to the Fiscal
Quarters ending on or before June 30, 1999, the period commencing on July 1,
1998 and ending on the last day of such Fiscal Quarter) of not less than 1.60 to
1.0.
(j) Minimum Current Ratio. Specified Borrowers on a consolidated
basis shall maintain at all times a Current Ratio of not less than 1.10 to 1.0,
at any time on or prior to December 31, 1999, and (y) 1.20 to 1.0 at any time
thereafter.
(k) Leverage Ratio. Specified Borrowers on a consolidated basis
shall have at the end of each Fiscal Quarter, a Leverage Ratio for the 12-month
period then ended (or with respect to the Fiscal Quarters ending on or before
June 30, 1999, the period commencing on July 1, 1998 an ending on the last day
of such Fiscal Quarter) of not more than 2.5 to 1.0.
Unless otherwise specifically provided herein, any accounting term
used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP"
F-3
shall in no way be construed to limit the foregoing. If any "Accounting Changes"
(as defined below) occur and such changes result in a change in the calculation
of the financial covenants, standards or terms used in the Agreement or any
other Loan Document, then Borrowers, Specified Borrowers, Agent and Lenders
agree to enter into negotiations in order to amend such provisions of the
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating Borrowers', Specified Borrowers' and
their respective Subsidiaries' financial condition shall be the same after such
Accounting Changes as if such Accounting Changes had not been made; provided,
however, that the agreement of Requisite Lenders to any required amendments of
such provisions shall be sufficient to bind all Lenders. "Accounting Changes"
means (a) changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants (or successor
thereto or any agency with similar functions), (b) changes in accounting
principles concurred in by any Borrower's certified public accountants; (c)
purchase accounting adjustments under A.P.B. 16 and/or 17 and EITF 88-16, and
the application of the accounting principles set forth in FASB 109, including
the establishment of reserves pursuant thereto and any subsequent reversal (in
whole or in part) of such reserves; and (d) the reversal of any reserves
established as a result of purchase accounting adjustments. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including
capitalization of costs and expenses or payment of pre-Closing Date liabilities)
shall be treated as expenses in the period the expenditures are made and
deducted as part of the calculation of EBITDA in such period. If Agent,
Borrowers, Specified Borrowers and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Agent, Borrowers, Specified Borrowers and Requisite Lenders cannot agree upon
the required amendments within thirty (30) days following the date of
implementation of any Accounting Change, then all Financial Statements delivered
and all calculations of financial covenants and other standards and terms in
accordance with the Agreement and the other Loan Documents shall be prepared,
delivered and made without regard to the underlying Accounting Change.
F-4
ANNEX G (Section 9.9(a))
to
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
G-1
ANNEX H (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
GE Capital Auto
Financial Services
000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Director--Portfolio Control
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies to:
Attention:
Telecopier No.:
Telephone No.:
and
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel - Commercial Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(B) If to any Borrower, to Borrower Representative, at
Attention:
Telecopier No.:
Telephone No.:
H-1
with copies to:
Attention:
Telecopier No.:
Telephone No.:
H-2
ANNEX I
to
CREDIT AGREEMENT
Floor Plan Acquisition Loan
Lender Loan Commitment Commitment
------ --------------- ----------
GE Capital $63,750,000 $11,250,000
Comerica Bank $21,250,000 $ 3,750,000
----------- -----------
Total: $85,000,000 $15,000,000
I-1
