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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
or
For the transition period from _________ to ________
Commission file number: 001-38424
Lazydays Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
4042 Park Oaks Blvd, Suite 350 Tampa, Florida
(Address of principal executive offices)
82-4183498
(I.R.S. Employer Identification No.)
33610
(Zip Code)
Registrant’s telephone number, including area code: (813) 246-4999
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $0.0001 per share
Trading Symbol(s)
GORV
Name of Each Exchange on Which Registered
Nasdaq Capital Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Securities registered pursuant to Section 12(g) of the Act:
None
Yes o No x
Yes o No x
Yes x No o
Yes x No o
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions
of "large accelerated filer,” "accelerated filer,” "smaller reporting company,” and "emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
o
o
Smaller reporting company
Emerging growth company
x
x
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers
previously issued financial statements. o
during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The aggregate market value of the 2,868,538 voting and non-voting shares of common stock held by non-affiliates of the registrant as of June 30, 2023 (based on the last reported sales price of such
stock on the Nasdaq Capital Market on such date, the last business day of the registrant’s quarter ended June 30, 2023, of $11.56 per share) was approximately $33.2 million.
As of March 8, 2024, the registrant had 14,064,797 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant’s definitive proxy statement pursuant to Regulation 14A of the Securities Exchange Act of 1934 for its 2024 annual meeting of stockholders, which will be filed with
the Securities and Exchange Commission within 120 days after the end of the year covered by this report, are incorporated by reference into Part III of this report.
Table of Contents
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
TABLE OF CONTENTS
PART I
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
PART IV
Exhibits, Financial Statement Schedules
Form 10-K Summary
Signatures
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Forward Looking Statements
Certain statements in this Annual Report on Form 10-K (including but not limited to this Item 7 – "Management’s Discussion and Analysis of Financial Condition and Results of
Operations”) constitute "forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, reflecting our or our management team's expectations,
hopes, beliefs, intentions, strategies, estimates, and assumptions concerning events and financial trends that may affect our future financial condition or results of operations. All
statements other than statements of historical facts included in this Annual Report on Form 10-K, are "forward-looking” statements. Forward-looking statements generally can be identified
by the use of forward-looking terminology such as "may,” "will,” "expect,” "anticipate,” "intend,” "plan,” "believe,” "seek,” "estimate” or "continue” or the negative of such words or
variations of such words and similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to
predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements, and we can give no assurance that such
forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements,
or "cautionary statements,” include, but are not limited to:
Future market conditions and industry trends, including anticipated national new recreational vehicle ("RV”) wholesale shipments;
Changes in U.S. or global economic and political conditions or outbreaks of war;
Changes in expected operating results, such as store performance, selling, general and administrative expenses ("SG&A”) as a percentage of gross profit and all projections;
•
•
•
• Our ability to procure and manage inventory levels to reflect consumer demand;
• Our ability to find accretive acquisitions;
•
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•
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•
• Additional funds may not be available to us when we need or want them;
• Dilution related to our outstanding warrants, options and rights; and,
• Our business strategies for customer retention, growth, market position, financial results and risk management.
Changes in the planned integration, success and growth of acquired dealerships and greenfield locations;
Changes in our expected liquidity from our cash, availability under our credit facility and unfinanced real estate;
Compliance with financial and restrictive covenants under our credit facility and other debt agreements;
Changes in our anticipated levels of capital expenditures in the future;
The repurchase of shares under our share repurchase program;
Non-GAAP Financial Measures
This Annual Report on Form 10-K contains adjusted net cash provided by operating activities, a non-GAAP financial measure. Adjusted net cash provided by operating activities is
defined as GAAP net cash provided by operating activities adjusted for net (repayments) borrowings on floor plan notes payable. Non-GAAP measures do not have definitions under
GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. As a result, we review any non-GAAP financial measures in connection
with a review of the most directly comparable measures calculated in accordance with GAAP. We caution you not to place undue reliance on such non-GAAP measures, but also to
consider them with the most directly comparable GAAP measures. As required by Securities Exchange Commission ("SEC”) rules, we have reconciled this measure to the most directly
comparable GAAP measure reported in this annual report on Form 10-K. We believe the non-GAAP financial measure we present improves the transparency of our disclosures; provides a
meaningful presentation of our results from core business operations because items are excluded that are not related to core business operations and other non-cash items; and improves
the period-to-period comparability of our results from core business operations. This presentation should not be considered an alternative to a GAAP measure.
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Item 1. Business
Business Organization
PART I
Lazydays RV Center, Inc., the operating subsidiary of Lazydays Holdings, Inc., operates recreational vehicle ("RV”) dealerships in 24 locations as of December 31, 2023, with a 25th location
opened in Arizona in March 2024:
Location
Arizona
Colorado
Florida
Tennessee
Minnesota
Indiana
Iowa
Nevada
Ohio
Oklahoma
Oregon
Texas
Utah
Washington
Wisconsin
Number of Dealerships
3
3
3
3
2
1
1
1
1
1
1
1
1
1
1
Unless otherwise indicated or the context suggests otherwise, references to "the Company,” "our Company,” "Lazydays RV Center, Inc.,” "Lazydays RV,” "we,” "us,” or "our” refer to
Lazydays Holdings, Inc. and its wholly-owned subsidiaries.
Overview
We have operated recreational vehicle ("RV”) dealerships that offer new and pre-owned recreational vehicles and sell related parts and accessories since 1976. We became a publicly traded
company March 15, 2018 following a business combination with Andina Acquisition Corp. II.
We arrange financing and extended service contracts for vehicle sales through third-party financing sources and extended warranty providers.
We believe, based on industry research and management’s estimates, that we operate the world’s largest RV dealership, measured in terms of on-site inventory, located on approximately
126 acres outside Tampa, Florida.
Lazydays offers one of the largest selections of leading RV brands in the nation, featuring more than 6,000 new and pre-owned RVs. We have more than 400 service bays, and each location
has an RV parts and accessories store. We employ approximately 1,300 people at our 24 dealership locations. Our locations are staffed with knowledgeable local team members, providing
customers access to extensive RV expertise. We believe our locations are strategically located in key RV markets which account for a significant portion of new RV units sold on an annual
basis in the U.S. Our dealerships in these key markets attract customers from all states except Hawaii.
We attract new customers primarily through Lazydays dealership locations as well as digital and traditional marketing efforts. Once we acquire customers, those customers become part of
our customer database where we leverage customer relationship management tools and analytics to actively engage, market and sell our products and services.
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We strive to create diversification in our products, services, brands and geographic locations to reduce dependence on any one manufacturer, reduce susceptibility to changing consumer
preferences, manage seasonality and market risk and maintain profitability. As of December 31, 2023, we operated 24 locations, representing more than 30 original equipment manufacturers
("OEM’s”) across 15 states.
Business Strategy
We have been a prominent player in the RV industry since 1976, earning a stellar reputation for delivering exceptional RV sales, service and ownership experiences. Our commitment to
excellence has led to enduring relationships with RVers and their families who rely on Lazydays for all of their RV needs. Our wide selection of RV brands from top manufacturers, state-of-
the-art service facilities and extensive range of parts and accessories ensure that we are the go-to destination for RV enthusiasts.
Our long-term strategy to create value for our customers, employees and shareholders includes the following:
Driving Operational Excellence Across Our Existing Stores
We are focused on improving performance through increasing market share and profitability at each of our locations. By promoting an entrepreneurial model, we are building strong
businesses responsive to each of our local markets. Utilizing performance-based action plans, we strive to drive operational performance and develop high-performing teams. We believe
our strong brands, market position, ongoing investment in our service platform, broad product portfolio and full array of RV offerings will continue to provide us with a competitive
advantage in targeting and capturing a larger share of consumers, including the growing number of new RV enthusiasts that we believe are entering the market. We continuously work to
attract new customers to our dealerships through targeted integrated digital and traditional marketing efforts, attractive offerings, and access to our wide array of resources for RV
enthusiasts. We have focused specifically on marketing to the fast-growing RV demographics of Baby Boomers, Gen X and Millennials. We also market to these segments through RV
lifestyle-focused partnership and sponsorship efforts.
Our performance-based culture is geared toward an incentive-based compensation structure for a majority of our personnel. We develop pay plans that are measured upon various factors
such as customer satisfaction, profitability and individual performance metrics. These plans serve to reward team members for creating exceptional customer experiences, customer loyalty
and achieving store potential. This approach allows us to mitigate fluctuations in RV sales and general economic conditions.
Growth Through Acquisitions and Greenfields
The RV industry is highly fragmented with primarily independent dealers. We target increasing our physical network of stores through acquisitions to strategically grow our presence and
create density in our network to provide convenience for our customers across the country. Our value-based acquisition strategy targets underperforming stores with strong brands in
desirable markets. As we integrate these stores into our network, we focus on increasing profitability through gaining market share, elevating the customer experience and leveraging our
cost structure.
In addition to acquisitions, we will, from time to time, open greenfield sites in new or existing markets. During 2023, we opened three greenfield sites located in the following markets: Council
Bluffs, Iowa; Fort Pierce, Florida; Wilmington, Ohio. Additionally, we opened a new greenfield site located in Surprise, Arizona in March 2024.
Leveraging Our Scale and Cost Structure to Create Operational Efficiencies
As we grow, we are positioned to leverage our scale to improve operating margins. We have centralized many administrative functions to drive efficiencies and streamline store-level
operations. The reduction of administrative functions at our stores allows our local teams to focus on customer-facing opportunities to increase revenues and gross profit. Our stores also
receive supply chain management support, ensuring optimal levels of new and used RV inventory; and finance and insurance product and training support to provide a full array of
offerings to our customers.
Community Involvement
We are committed to making an impact in our communities through the Lazydays Employee Foundation (the "Foundation”), a 501(c)(3) non-profit organization focused on making a positive
impact in the lives of at-risk children. The
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Foundation is run exclusively by employees as volunteers and members of the Foundation’s board of directors,and their mission is to measurably change the lives of children by instilling
hope, inspiring dreams and empowering them with education. Since its inception, the Foundation has donated more than $2.5 million to help disadvantaged children in Florida, Arizona,
Colorado, Minnesota and Tennessee. The Foundation sponsors two facilities in Florida that carry its name; The Lazydays House at a Kids Place, which houses foster children in a facility
where siblings can remain together and the Lazydays House at Bridging Freedom, which houses and rehabilitates children rescued from human trafficking. The Foundation also provides
financial contributions to other smaller community programs that benefit at-risk youth by providing educational tutoring, expression through the arts, and education scholarships. Lazydays
employees also volunteer their time to many worthwhile charities and engage in life enriching activities with at-risk youth. The Foundation has received multiple awards for its philanthropic
work, including the national Arthur J. Decio Humanitarian Award for outstanding civic and community outreach in the RV industry, as well as the Olin Mott Golden Heart Award and
several WEDU Be More awards.
Customers and Markets
The RV industry is characterized by RV enthusiasts’ investment in, and steadfast commitment to, the RV lifestyle. Approximately 11.2 million U.S. households are estimated to own an RV.
Owners invest in insurance, extended service contracts, parts and accessories, roadside assistance and regular maintenance to protect and maintain their RVs. They typically invest in new
accessories and the necessary installation costs as they upgrade their RVs. They also spend on services and resources as they plan, engage in, and return from their road trips.
Furthermore, based on industry research and management’s estimates, we believe that RV owners typically trade-in to buy another RV every four to five years.
Per the RV Industry Association’s ("RVIA”) December 2023 survey of manufacturers, total RV wholesale shipments ended 2023 at 313,174, down 36.5% compared to 493,268 units in 2022.
Towable RVs were down 38.5% at 267,295 from 434,858 units and motorhome shipments were down 21.5% at 45,879 units from 58,410 units in 2022. Per the RVIA survey, RV shipments for
the last two months of 2023 showed an increase over the previous year, and our projections indicate we should continue to see increased shipments and retail sales in 2024, particularly in
the latter half of the year. Generally, pre-owned RVs are sold at a lower price point than comparable new RVs and the sale of pre-owned RVs has historically been more stable than the sale
of new vehicles through business cycles.
We believe RV trips remain one of the least expensive types of vacation, allowing RV owners to travel more while spending less. RV trips offer savings on a variety of vacation costs,
including, among others, airfare, lodging, pet boarding and dining. While fuel costs are a component of the overall vacation cost, we believe fluctuations in fuel prices are not a significant
factor affecting a family’s decision to take RV trips. Based on RVIA information, the average annual mileage use of an RV is between 5,000 and 9,000 miles. In addition, our customer
research indicates that customers are attracted to RV ownership based on the comfortable and convenient travel it provides.
Competition
We believe that the principal competitive factors in the RV industry are breadth and depth of product selection, pricing, convenient dealership locations, quality technical services,
customer service, and overall experience. We compete directly and/or indirectly with other RV dealers, RV service providers, and RV parts and accessories retailers. One of our direct
competitors, Camping World Holdings, Inc., is publicly listed on the New York Stock Exchange. Additional competitors may enter the businesses in which we currently operate.
Marketing and Advertising
We market our product offerings through integrated marketing campaigns across all digital and traditional marketing disciplines, with an emphasis on digital. Our marketing efforts include
our website, paid and organic search efforts, email, social media, online blog and video content, television, radio, billboards, direct mail, and RV shows and rallies. We also have exclusive
partnership and sponsorship relationships with various RV lifestyle properties. We currently have a segmented marketing database of over 1 million RV owners and prospects. Our principal
marketing strategy is to leverage our unique brand positioning, extensive product selection, exclusive benefits, and high-quality customer experience among RV owners.
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Our total website traffic for the year ended December 31, 2023 was approximately 16.7 million visits with approximately 10.8 million unique visitors. Our website features over 6,000 new and
pre-owned RVs, as well as information regarding our RV financing and insurance products, service capabilities, parts and accessories offerings, and other RV lifestyle content.
We measure our marketing productivity and effectiveness with front end analytics integrated with 1 party data to optimize marketing efforts.
st
Trademarks and Other Intellectual Property
®
We own a variety of registered trademarks and service marks related to our brands and our services, protection plans, products and resources, including Lazydays, Lazydays The RV
Authority , Lazydays RV Accessories & More, Crown Club, and Exit 10, among others. We also own numerous domain names, including Lazydays.com, LazydaysRVSale.com,
LazydaysEvents.com, and LazydaysService.com among many others. We believe that our trademarks and other intellectual property have significant value and are important to our
marketing efforts.
Government Regulation
Our operations are subject to varying degrees of federal, state and local regulation, including our RV sales, vehicle financing, outbound telemarketing, email, direct mail, roadside assistance
programs, extended vehicle service contracts and insurance activities. These laws and regulations include consumer protection laws, so-called "lemon laws,” privacy laws, escheatment
laws, anti-money laundering laws, environmental laws and other extensive laws and regulations applicable to new and pre-owned vehicle dealers, as well as a variety of other laws and
regulations. These laws also include federal and state wage and hour, anti-discrimination and other employment practices laws.
Motor Vehicle Laws and Regulations
Our operations are subject to the National Traffic and Motor Vehicle Safety Act, Federal Motor Vehicle Safety Standards promulgated by the United States Department of Transportation
and the rules and regulations of various state motor vehicle regulatory agencies. We are also subject to federal and state consumer protection and unfair trade practice laws and regulations
relating to the sale, transportation and marketing of motor vehicles. Federal, state and local laws and regulations also impose upon vehicle operators’ various restrictions on the weight,
length and width of motor vehicles that may be operated in certain jurisdictions or on certain roadways. Certain jurisdictions also prohibit the sale of vehicles exceeding length restrictions.
Federal and state authorities also have various environmental control standards relating to air, water, noise pollution and hazardous waste generation and disposal.
Our financing activities with customers are subject to federal truth-in-lending, consumer leasing and equal credit opportunity laws and regulations as well as state and local motor vehicle
finance laws, leasing laws, installment finance laws, usury laws and other installment sales and leasing laws and regulations, some of which regulate finance and other fees and charges that
may be imposed or received in connection with motor vehicle retail installment sales.
The Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act”), which was signed into law on July 21, 2010, established the Bureau of Consumer Financial
Protection ("BCFP”), an independent federal agency funded by the United States Federal Reserve with broad regulatory powers and limited oversight from the United States Congress.
Although automotive dealers are generally excluded, the Dodd-Frank Act could lead to additional, indirect regulation of automotive dealers, in particular, their sale and marketing of finance
and insurance products, through its regulation of automotive finance companies and other financial institutions.
Insurance Laws and Regulations
As a marketer of insurance programs, we are subject to state rules and regulations governing the business of insurance including, without limitation, laws governing the administration,
underwriting, marketing, solicitation and/or sale of insurance programs. The insurance carriers that underwrite the programs that we sell are required to file their rates for approval by state
regulators. Additionally, certain state laws and regulations govern the form and content of certain disclosures that must be made in connection with the sale, advertising or offering of any
insurance program to a consumer. We are required to maintain certain licenses to market insurance programs.
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Marketing Laws and Regulations
The Federal Trade Commission (the "FTC”) and each of the states have enacted consumer protection statutes designed to ensure that consumers are protected from unfair and deceptive
marketing practices. We review all of our marketing materials for compliance with applicable FTC regulations and state marketing laws.
Environmental, Health and Safety Laws and Regulations
Our operations involve the use, handling, storage and contracting for recycling and/or disposal of materials such as motor oil and filters, transmission fluids, antifreeze, refrigerants, paints,
thinners, batteries, cleaning products, lubricants, degreasing agents, tires and propane. Consequently, our business is subject to a variety of federal, state and local requirements that
regulate the environment and public health and safety.
Most of our dealership locations utilize above ground storage tanks, and to a lesser extent underground storage tanks, primarily for petroleum-based products. Storage tanks are subject to
periodic testing, containment, upgrading and removal requirements under the Resource Conservation and Recovery Act and its state law counterparts. Clean-up or other remedial action
may be necessary in the event of leaks or other discharges from storage tanks or other sources. In addition, water quality protection programs under the federal Water Pollution Control Act
(commonly known as the Clean Water Act), the Safe Drinking Water Act and comparable state and local programs govern certain discharges from some of our operations. Similarly, air
emissions from our operations, such as RV painting, are subject to the federal Clean Air Act and related state and local laws. Certain health and safety standards promulgated by the
Occupational Safety and Health Administration of the United States Department of Labor and related state agencies also apply to certain of our operations.
Although we incur costs to comply with applicable environmental, health and safety laws and regulations in the ordinary course of our business, we do not presently anticipate that these
costs will have a material adverse effect on our business, financial condition or results of operations. We do not have any material known environmental commitments or contingencies.
Insurance
We utilize insurance to provide for the potential liabilities for workers’ compensation, product liability, general liability, business interruption, property liability, director and officers’
liability, cyber, environmental issues, and vehicle liability. Beginning in 2020, we became self-insured for employee health-care benefits. Liabilities associated with the risks that are retained
by us are estimated, in part, by considering actuarial reports, historical claims experience, demographic factors, severity factors, stop loss coverage and other assumptions. To protect itself
against loss exposure associated with this policy, the Company has individual stop-loss insurance coverage that insures individual claims that exceed $500,000 for each member. Our results
could be adversely affected by claims and other expenses related to such plans and policies if future occurrences and claims differ from these assumptions and historical trends.
Employees
As of December 31, 2023, we had over 1,300 employees, almost all of which are full-time employees. None of our employees are represented by a labor union or are party to a collective
bargaining agreement, and we have not had any labor-related work stoppages. We believe that our employee relations are in good standing.
Seasonality and Effects of Weather
Our operations generally experience modestly higher volumes of vehicle sales in the first half of each year due in part to consumer buying trends and the hospitable warm climate during the
winter months at our Florida and Arizona locations. In addition, the northern locations in Colorado, Tennessee, Minnesota, Indiana, Oregon, Washington and Wisconsin generally
experience modestly higher vehicle sales during the spring months.
Our largest RV dealership is located near Tampa, Florida, which is in close proximity to the Gulf of Mexico. A severe weather event, such as a hurricane, could cause severe damage to
property and inventory and decrease the traffic to our dealerships. Although we believe that we have adequate insurance coverage, if we were to experience a catastrophic loss, we may
exceed our policy limits and/or may have difficulty obtaining similar insurance coverage in the future.
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Principal Executive Offices
Our principal executive offices are located at 4042 Park Oaks Boulevard, Suite 350, Tampa, Florida 33610 and our telephone number is (813) 246-4999.
Available Information
Our Internet website is www.lazydays.com. Our reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of
charge, under the Investor Relations – Finance Information tab of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities
and Exchange Commission ("SEC”). You may also read any materials we file with the SEC at the SEC’s Internet website located at www.sec.gov.
Item 1A. Risk Factors
The following are material risks to which our business operations are subject. Any of these risks could materially adversely affect our business, financial condition, or results of
operations. These risks could also cause our actual results to differ materially from those indicated in the forward-looking statements contained herein and elsewhere. The risks
described below are not the only risks we face. Additional risks not currently known to us or those we currently deem to be immaterial may also materially and adversely affect our
business operations.
Risks Related to Lazydays Business
Failure to identify deficiencies in our internal control over financial reporting in a timely matter or to remediate any deficiencies, or the identification of material weaknesses or
significant deficiencies in the future could prevent us from accurately and timely reporting our financial results. This could lead to a loss of investor confidence in our financial
statements and have an adverse effect on our stock price.
As of December 31, 2023, management identified material weaknesses in our internal control related to the ineffective design and implementation of information technology general controls
("ITGCs”) in the areas of user access, program change management and security administration that are relevant to the preparation of our financial statements, and the turnover of certain
accounting positions during the fourth quarter. Additionally, the Company was unable to attract, develop and retain sufficient resources to fulfill internal control responsibilities during the
fourth quarter which impacted the operating effectiveness of controls during that period. Management has developed and implemented a remediation plan to address both material
weaknesses. Effective internal controls are necessary for us to provide reliable and accurate financial statements and to effectively prevent fraud. We devote significant resources and time
to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002 as amended (the "Sarbanes-Oxley Act”). There is no assurance that material
weaknesses or significant deficiencies will not occur or that we will be successful in adequately remediating any such material weaknesses and significant deficiencies. We may in the future
discover areas of our internal controls that need improvement. We cannot be certain that we will be successful in maintaining adequate internal control over our financial reporting and
financial processes. Furthermore, as we grow our business, including through acquisition, our internal controls will become more complex, and we will require significantly more resources to
ensure our internal controls remain effective. Additionally, the existence of any material weakness or significant deficiency would require management to devote significant time and incur
significant expense to remediate any such material weaknesses or significant deficiencies, and management may not be able to remediate any such material weaknesses or significant
deficiencies in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require
us to restate our financial statements, cause us to fail to meet our reporting obligations, subject us to investigations from regulatory authorities or cause stockholders to lose confidence in
our reported financial information, all of which could materially and adversely affect us.
Natural disasters, whether or not caused by climate change, unusual weather conditions, epidemic and pandemic outbreaks, terrorist acts and political events could disrupt business
and result in lower sales and otherwise adversely affect our financial performance.
The occurrence of one or more natural disasters, such as tornadoes, hurricanes, fires, floods, hail storms and earthquakes, unusual weather conditions, epidemic and pandemic outbreaks, or
other global health emergencies, terrorist attacks or disruptive political events in certain regions where our stores are located could adversely affect our business and result in lower sales.
Severe weather, such as heavy snowfall or extreme temperatures, may discourage or restrict customers in a
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particular region from traveling to our dealerships or utilizing our products, thereby reducing our sales and profitability. Natural disasters including tornadoes, hurricanes, floods, hail
storms and earthquakes may damage our stores or other operations, which may materially adversely affect our financial results. Any of these events could have a material adverse effect on
our business, financial condition and results of operations.
Our business is affected by the availability of financing to us and our customers.
Our business is affected by the availability of financing to us and our customers. Generally, RV dealers finance their purchases of inventory with financing provided by lending institutions.
On February 21, 2023, we amended our Senior Secured Credit Facility with M&T Bank including increasing the committed floor plan financing to $525 million from $327 million and
increasing the capacity under the Revolving Credit Facility to up to $50 million from $25 million. We were in breach of our covenant with M&T Bank as of December 31, 2023, but received a
waiver through the second quarter of 2024, with modified covenant terms through the fourth quarter of 2024. Please see Item 9B for further information. As of December 31, 2023,
substantially all of the invoice cost of new RV inventory was financed under the floor plan facility. A decrease in the availability of this type of wholesale financing or an increase in the
cost of such wholesale financing could prevent us from carrying adequate levels of inventory, which may limit product offerings and could lead to reduced sales and revenues.
Furthermore, most of our customers finance their RV purchases. Consumer credit market conditions, including rising interest rates, sustained interest rates at current levels, continue to
influence demand, especially for RVs, and may continue to do so. There continues to be fewer lenders, more stringent underwriting and loan approval criteria, and greater down payment
requirements than in the past. If credit conditions or the credit worthiness of our customers worsen, and adversely affect the ability of consumers to finance potential purchases on
acceptable terms and interest rates, it could result in a decrease in the sales of our products and have a material adverse effect on our business, financial condition and results of operations.
Additionally, on December 29, 2023, we entered into a loan agreement, as described below in "Our credit facility and loan agreement contain restrictive covenants that may impair our ability
to access sufficient capital and operate our business."
Climate change legislation or regulations restricting emission of "greenhouse gases” could result in increased operating costs and reduced demand for the RVs we sell.
The United States Environmental Protection Agency has adopted rules under existing provisions of the federal Clean Air Act that require a reduction in emissions of greenhouse gases
from motor vehicles. The Biden Administration has focused significant attention on greenhouse gases and climate change. In addition, the SEC has proposed climate-related disclosure,
which may be adopted as soon as the first quarter of 2024. The adoption of any laws or regulations requiring significant increases in fuel economy requirements or new federal or state
restrictions on vehicles and automotive fuels in the United States or internationally could adversely affect demand for those vehicles and could have a material adverse effect on our
business, financial condition and results of operations.
Our success depends to a significant extent on the well-being, popularity, financial condition and reputation for quality, of our manufacturers, particularly Thor Industries, Inc.,
Winnebago Industries, Inc., and Forest River, Inc., as well as their respective supply chains.
Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc. supplied approximately 41%, 23%, and 32%, respectively, of our purchases of new RV inventory during the year
ended December 31, 2023. We depend on our manufacturers to provide us with products that compare favorably with competing products in terms of quality, performance, safety and
advanced features. Any adverse change in the production efficiency, product development efforts, technological advancement, marketplace acceptance, reputation, marketing capabilities
or financial condition of our manufacturers or their respective supply chains could have a substantial adverse impact on our business. Any difficulties encountered by any of our
manufacturers resulting from economic, financial, or other factors could adversely affect the quality and number of products that they are able to supply to us and the services and support
they provide to us. The interruption or discontinuance of the operations of our manufacturers or their respective supply chains could cause us to experience shortfalls, disruptions, or
delays with respect to needed inventory. Although we believe that adequate alternate sources would be available that could replace any manufacturer as a product source, those alternate
sources may not be available at the time of any interruption, alternative products may not be available at comparable quality and prices and alternative products may not be equally
appealing to our customers.
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Any change, non-renewal, unfavorable renegotiation or termination of our supply arrangements for any reason could have a material adverse effect on product availability and cost
and our financial performance.
Our supply arrangements with manufacturers are typically governed by dealer agreements, which are customary in the RV industry. Our dealer agreements with manufacturers are generally
made on a location-by-location basis, and each retail location typically enters into multiple dealer agreements with multiple manufacturers. The terms of our dealer agreements are typically
subject to us meeting program requirements and retail sales objectives, performing services and repairs for customers still under warranty (regardless from whom the RV was purchased),
carrying the relevant manufacturer’s parts and accessories needed to service and repair its RVs, actively advertising and promoting the manufacturer’s RVs, and in some instances
indemnifying the manufacturer.
Our dealer agreements designate a specific geographic territory, exclusive to us, provided that we are able to meet the material obligations of the applicable dealer agreement.
In addition, many of our dealer agreements contain contractual provisions concerning minimum advertised product pricing for current model year units. Wholesale pricing is generally
established on a model year basis and is subject to change in the manufacturer’s sole discretion. Any change, non-renewal, unfavorable renegotiation or termination of these dealer
agreements for any reason could have a material adverse effect on product availability and cost and our financial performance.
Our growth in existing markets or expansion into new, unfamiliar markets, whether through acquisitions or otherwise, presents risks that could materially affect profitability.
Our success will depend, in part, on our ability to make successful acquisitions and to integrate the operations of acquired retail locations, including centralizing certain functions to achieve
cost savings and pursuing programs and processes that promote cooperation and the sharing of opportunities and resources among our retail locations and consumer services and plans.
We may not be able to achieve the anticipated operating and cost synergies or long-term strategic benefits of our acquisitions within the anticipated timing or at all. For as long as the first
year after a substantial acquisition and possibly longer, the benefits from the acquisition may be offset by the costs incurred in integrating the business and operations.
We intend to continue to expand in part by acquiring or building new retail or service locations in new markets. As a result of this and any future expansion, we may have less familiarity
with local consumer preferences and could encounter difficulties in attracting customers due to a reduced level of consumer familiarity with us and our brands.
Other factors, many of which are beyond our control, may impact our ability to acquire or open retail locations successfully, whether in existing or new markets, and operate them profitably.
These factors include (a) the ability to (i) identify suitable acquisition opportunities at purchase prices likely to provide returns required by our acquisition criteria, (ii) control expenses
associated with sourcing, evaluating and negotiating acquisitions (including those that are not completed), (iii) accurately assess the profitability of potential acquisitions or new locations,
(iv) secure required third party or governmental permits and approvals, (v) negotiate favorable lease agreements, (vi) hire, train and retain skilled operating personnel, especially
management personnel, (vii) provide a satisfactory product mix responsive to local market preferences where new retail locations are built or acquired, (viii) secure product lines, (ix) supply
new retail locations with inventory in a timely manner; (b) the availability of construction materials and labor for new retail locations and the occurrence of significant construction delays or
cost overruns; (c) competitors in the same geographic area and regional economic variants; (d) the absence of disagreements with potential acquisition targets that could lead to litigation;
(e) successfully integrating the operations of acquired dealers with our own operations; (f) managing acquired dealers and stores profitably without substantial costs, delays, or other
operational or financial problems; and (g) the ability of our information management systems to process increased information accurately and in a timely fashion. A negative outcome
associated with any of these factors could have a material adverse effect on our business, financial condition and results of operations.
Once we decide on a new market and identify a suitable acquisition or location opportunity, any delays in acquiring or opening or developing new retail locations could impact our financial
results. For example, delays in the acquisition process or construction delays caused by permitting or licensing issues, material shortages, labor issues, weather delays or other acts of God,
discovery of contaminants, accidents, deaths or injuries, third parties attempting to impose unsatisfactory restrictions on us in connection with their approval of acquisitions, and other
factors could delay planned openings or force us to abandon planned openings altogether.
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As we grow, we will face the risk that our existing resources and systems, including management resources, accounting and finance personnel and operating systems, may be inadequate to
support our growth.
Finally, the size, timing, and integration of any future new retail location openings or acquisitions may cause substantial fluctuations in our results of operations from quarter to quarter.
Consequently, our results of operations for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year. These fluctuations
could have a material adverse effect on our business, financial condition and results of operations.
Failure to maintain the strength and value of our brands could have a material adverse effect on our business, financial condition and results of operations.
Our success depends on the value and strength of the Lazydays brands. The Lazydays name and Lazydays brands are integral to our business as well as to the implementation of our
strategies for expanding our business. Maintaining, enhancing, promoting and positioning our brands, particularly in new markets where we have limited brand recognition, will depend
largely on the success of our marketing efforts and our ability to provide high quality products, services, protection plans, and resources and a consistent, high quality customer
experience. Our brands could be adversely affected if: (a) we fail to achieve these objectives or to comply with local laws and regulations; (b) we are subject to publicized litigation; or (c)
our public image or reputation were to be tarnished by negative publicity. Some of these risks are not within our control, such as the effects of negative publicity regarding our
manufacturers, suppliers or third party providers of services or negative publicity related to members of management. Any of these events could result in decreases in revenues. Further,
maintaining, enhancing, promoting and positioning our brand image may require us to make substantial investments (as we incurred in 2023 as a result of our rebranding efforts) in areas
such as marketing, dealership operations, community relations, store graphics and employee training, which could adversely affect our cash flow and profitability. Furthermore, efforts to
maintain, enhance or promote our brand image may ultimately be unsuccessful. These factors could have a material adverse effect on our business, financial condition and results of
operations.
Our failure to successfully procure and manage our inventory to reflect consumer demand in a volatile market and anticipate changing consumer preferences and buying trends could
have a material adverse effect on our business, financial condition and results of operations.
Our success depends upon our ability to successfully manage our inventory and to anticipate and respond to product trends and consumer demands in a timely manner. The preferences of
our target consumers cannot be predicted with certainty and are subject to change. We may order products in advance of the following selling season. Extended lead times for our
purchases may make it difficult for us to respond rapidly to new or changing product trends, increases or decreases in consumer demand or changes in prices. Additionally, adoption of
new technological advances and changing governmental regulatory mandates could result in changes in consumer preferences for recreational vehicles or the types of recreational vehicles
consumers prefer. These changes could include shifts to smaller recreational vehicles, electric recreational vehicles, autonomous recreational vehicles or other currently unanticipated
changes. If we misjudge either the market for our products or our consumers’ purchasing habits in the future, our revenues may decline significantly, we may not have sufficient inventory
to satisfy consumer demand or sales orders, or we may be required to discount excess inventory; all of which could have a material adverse effect on our business, financial condition and
results of operations.
Our business is impacted by general economic conditions, ongoing economic and financial uncertainties, and changing consumer tastes, each of which may cause a decline in
consumer spending that may adversely affect our business, financial condition and results of operations.
We depend on consumer discretionary spending and, accordingly, we may be adversely affected if our customers reduce, delay or forego their purchases of our products, services, and
protection plans as a result of, including but not limited to, recessionary conditions, job loss, bankruptcy, higher consumer debt, rising interest rates, sustained interest rates at current
levels, inflation, reduced access to credit, higher energy and fuel costs, relative or perceived cost, availability and comfort of RV use versus other modes of travel, such as air travel and rail
(including as a result of consumer tastes in response to climate change), falling home prices, lower consumer confidence, uncertain or changes in tax policies, uncertainty due to national or
international security or health concerns, volatility in the stock market, or epidemics.
Decreases in the number of customers, average spend per customer, or retention and renewal rates for our consumer services and plans would negatively affect our financial performance. A
prolonged period of depressed consumer spending could have a material adverse effect on our business. In addition, adverse economic conditions may result in an increase in our
operating expenses due to, among other things, higher costs of labor, energy, equipment and facilities. Our business
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and financial performance may continue to be adversely affected by current and future economic conditions, including, without limitation, the level of consumer debt, high levels of
unemployment, higher interest rates or sustained interest rates at current levels, and the ability of our customers to obtain credit, which has caused, and may cause a continued or further
decline in consumer spending. Additionally, we are subject to economic fluctuations in local markets, most significantly Florida, that may not reflect the general economic conditions of the
broader U.S. economy. Any of the foregoing factors could have a material adverse effect on our business, financial condition and results of operations.
Additionally, economic uncertainty and business downturns in the U.S. markets have adversely affected, and may in the future adversely affect, our financial condition and results of
operations.
Competition in the market for products, services, and protection plans targeting the RV lifestyle or RV enthusiast could reduce our revenues and profitability.
Competition in the RV market is fragmented, driven by price, product and service features, technology, performance, reliability, quality, availability, variety, delivery and customer service. In
addition to competing with other dealers of new and pre-owned RVs we compete directly or indirectly with major national insurance and warranty companies, providers of roadside
assistance and providers of extended service contracts.
Additional competitors may enter the businesses in which we currently operate. Some of our competitors may build new stores in or near our existing locations and certain RV and
accessory manufacturers may choose to expand their direct to consumer offerings. In addition, an increase in the number of aggregator and price comparison sites for insurance products
may negatively impact our sales of these products. If any of our competitors successfully provides a broader, more efficient or attractive combination of products, services and protection
plans to our target customers, our business results could be materially adversely affected. Our inability to compete effectively with existing or potential competitors, some of which may
have greater resources or be better positioned to absorb economic downturns in local markets, could have a material adverse effect on our business, financial condition and results of
operations.
The cyclical nature of our business has caused our sales and results of operations to fluctuate. These fluctuations may continue in the future, which could result in operating losses
during downturns.
The RV industry is cyclical and is influenced by many national and regional economic and demographic factors, including: (a) the terms and availability of financing for retailers and
consumers; (b) overall consumer confidence and the level of discretionary consumer spending; (c) population and employment trends; and (d) income levels and general economic
conditions, such as inflation, including as a result of tariffs, deflation, increasing interest rates and recessions. As a result of these factors, our sales and results of operations have
fluctuated, and we expect that they will continue to fluctuate in the future.
Our business is seasonal, and this leads to fluctuations in sales and revenues.
We have experienced, and expect to continue to experience, some variability in revenue, net income and cash flows as a result of seasonality in our business. Because our largest dealership
is located in Florida, demand for services, protection plans, products and resources generally increases during the winter season when people move south for the winter or vacation in
warmer climates, while sales and profits are generally lower during the summer months. In addition, unusually severe weather conditions in some geographic areas may impact demand. This
includes the threat of hurricanes in Florida, which could substantially damage property and inventory in our Florida dealerships, and lead to a material disruption of operations at our
Tampa, Florida headquarters and dealership.
For the years ended December 31, 2023 and 2022, we generated 56% and 58% (excluding the impact of acquisitions) of our annual revenue in the first and second quarters, respectively,
which include the peak winter months. We incur additional expenses in the first and second quarters due to higher purchase volumes, increased staffing in our retail locations and program
costs. If, for any reason, we miscalculate the demand for our products or our product mix during the first and second fiscal quarters, our sales in these quarters could decline, resulting in
higher labor costs as a percentage of sales, lower margins and excess inventory, which could have a material adverse effect on our business, financial condition and results of operations.
Due to our seasonality, the possible adverse impact from other risks associated with our business, including extreme weather, consumer spending levels and general business conditions, is
potentially greater if any such risks occur during our peak sales seasons, which are the first and second fiscal quarters.
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We primarily lease our retail locations and if we are unable to maintain those leases or locate alternative sites for retail locations in our target markets and on terms that are
acceptable to it, our revenues and profitability could be materially adversely affected.
We lease 16 of the 24 real properties where we have operations. At inception of the leases, they generally provide for fixed monthly rentals with escalation clauses and range from three to
twenty years. There can be no assurance that we will be able to maintain our existing retail locations as leases expire, extend the leases or be able to locate alternative sites in our target
markets and on favorable terms. Any failure to maintain our existing retail locations, extend the leases or locate alternative sites on favorable or acceptable terms could have a material
adverse effect on our business, financial condition and results of operations.
We may be unable to enforce our intellectual property rights and/or we may be accused of infringing the intellectual property rights of third parties which could have a material
adverse effect on our business, financial condition and results of operations.
We own a variety of registered trademarks and service marks. We believe that our trademarks have significant value and are important to our marketing efforts. If we are unable to continue
to protect the trademarks and service marks for our proprietary brands, if such marks become generic or if third parties adopt marks similar to our marks, our ability to differentiate our
products and services may be diminished. In the event that our trademarks or service marks are successfully challenged by third parties, we could lose brand recognition and be forced to
devote additional resources to advertising and marketing new brands for our products.
From time to time, we may be compelled to protect our intellectual property, which may involve litigation. Such litigation may be time-consuming, expensive and distract our management
from running the day-to-day operations of our business, and could result in the impairment or loss of the involved intellectual property. There is no guarantee that the steps we take to
protect our intellectual property, including litigation when necessary, will be successful. The loss or reduction of any of our significant intellectual property rights could diminish our ability
to distinguish our products and services from competitors’ products and services and retain our market share for our products and services. Our inability to effectively protect our
proprietary intellectual property rights could have a material adverse effect on our business, results of operations and financial condition.
Other parties also may claim that we infringe on their proprietary rights. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial
resources, injunctions against us or the payment of damages. These claims could have a material adverse effect on our business, financial condition and results of operations.
Regulations applicable to the sale of extended service contracts could materially impact our business and results of operations.
We offer extended service contracts that may be purchased as a supplement to the original purchaser’s warranty as well as other optional products to protect the consumer’s investment.
These products are subject to complex federal and state laws and regulations. There can be no assurance that regulatory authorities in the jurisdictions in which these products are offered
will not seek to further regulate or restrict these products. Failure to comply with applicable laws and regulations could result in fines or other penalties including orders by state regulators
to discontinue sales of the warranty products in one or more jurisdictions. Such a result could materially and adversely affect our business, results of operations and financial condition.
Third parties bear the majority of the administration and liability obligations associated with these extended service contracts upon purchase by the customer. State laws and regulations,
however, may limit or condition our ability to transfer these administration and liability obligations to third parties, which could in turn impact the way revenue is recognized from these
products. Failure to comply with these laws could result in fines or other penalties, including orders by state regulators to discontinue sales of these product offerings as currently
structured. Such a result could materially and adversely affect our business, financial condition and results of operations.
If state dealer laws are repealed or weakened, our dealerships will be more susceptible to termination, non-renewal or renegotiation of dealer agreements.
State dealer laws generally provide that a manufacturer may not terminate or refuse to renew a dealer agreement unless it has first provided the dealer with written notice setting forth good
cause and stating the grounds for termination or non-
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renewal. Some state dealer laws allow dealers to file protests or petitions or attempt to comply with the manufacturer’s criteria within a specified notice period to avoid the termination or
non-renewal. Manufacturers have been lobbying and continue to lobby for the repeal or revision of state dealer laws. If dealer laws are repealed in the states in which we operate, or
manufacturers convince legislators to pass legislation in those states allowing termination or non-renewal of dealerships without cause, manufacturers may be able to terminate our dealer
agreements without providing advance notice, an opportunity to cure or a showing of good cause. Without the protection of state dealer laws, it may also be more difficult for us to renew
our dealer agreements upon expiration.
The ability of a manufacturer to grant additional dealer agreements is based on a number of factors which we cannot control. If manufacturers grant new dealer agreements in areas near our
existing markets, such new dealer agreements could have a material adverse effect on our business, financial condition and results of operations.
Risks Associated with Our Debt Obligations
We may not be able to satisfy our debt obligations upon the occurrence of a change in control under our credit facility or loan agreement.
A change in control is an event of default under the credit facility. Upon the occurrence of a change in control, M&T Bank will have the right to declare all outstanding obligations under
the credit facility immediately due and payable and to terminate the availability of future advances to us. There can be no assurance that our lenders will agree to an amendment of the credit
facility or a waiver of any such event of default. There can be no assurance that we will have sufficient resources available to satisfy all of our obligations under the credit facility if no
waiver or amendment is obtained. The effect of this provision may be to make a change in control less likely, potentially decreasing the value of our shares of common stock. In the event
we are unable to satisfy these obligations, it could have a material adverse impact on our business, financial condition and results of operations.
On December 29, 2023, we entered into a loan agreement, as described below in "Our credit facility and loan agreement
contain restrictive covenants that may impair our ability to access sufficient capital and operate our business.” A change
in control is an event of default under the loan agreement. Upon the occurrence of a change in control, the lender is
permitted to take certain remedies, including declaring the debt to be immediately due and payable, partially foreclosing the mortgage and taking possession of the related property, any of
which could have a material adverse impact on our business, financial condition and results of operations.
Our ability to operate and expand our business and to respond to changing business and economic conditions will depend on the availability of adequate capital.
The operation of our business, the rate of our expansion and our ability to respond to changing business and economic conditions depend on the availability of adequate capital, which in
turn depends on cash flow generated by our business and, if necessary, the availability of equity or debt capital. We also require sufficient cash flow to meet our obligations under our
existing debt agreements.
We are dependent to a significant extent on our ability to finance our new and certain of our pre-owned RV inventory under the credit facility. Floor plan financing arrangements allow us to
borrow money to purchase new RVs from the manufacturer or pre-owned RVs on trade-in or at auction and pay off the loan when we sell the financed RV. We may need to increase the
capacity of our existing credit facility in connection with our acquisition of dealerships and overall growth. In the event that we are unable to obtain such incremental financing, our ability
to complete acquisitions could be limited.
We cannot ensure that our cash flow from operations or cash available under our credit facility will be sufficient to meet our needs. If we are unable to generate sufficient cash flows from
operations in the future, and if availability under our credit facility is not sufficient, we may have to obtain additional financing. Towards that end, on December 29, 2023, we entered into a
loan agreement, as described below in "Our credit facility and loan agreement contain restrictive covenants that may impair our ability to access sufficient capital and operate our business.”
If we obtain additional capital through the issuance of equity, the interests of existing stockholders may be diluted. If we incur additional indebtedness, such indebtedness may contain
significant financial covenants and other negative covenants that may significantly restrict our ability to operate. We cannot ensure that we could obtain additional financing on favorable
terms or at all.
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Our credit facility and loan agreement contain restrictive covenants that may impair our ability to access sufficient capital and operate our business.
Our credit facility contains various provisions that limit our ability to, among other things: (a) incur additional indebtedness or liens; (b) consolidate or merge; (c) alter the business
conducted by the Company and our subsidiaries; (d) make investments, loans, advances, guarantees and acquisitions; (e) sell assets, including capital stock of our subsidiaries; (f) enter
into certain sale and leaseback transactions; (g) pay dividends on capital stock or redeem, repurchase or retire capital stock or certain other indebtedness; (h) engage in transactions with
affiliates; and (i) and enter into agreements restricting our subsidiaries’ ability to pay dividends.
In addition, the restrictive covenants contained in the documentation governing the credit facility require us to maintain specified financial ratios. See "Management’s Discussion and
Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” below. Our ability to comply with those financial ratios may be affected by events beyond
our control, and our failure to comply with these ratios could result in an event of default. The restrictive covenants may affect our ability to operate and finance our business as we deem
appropriate. Our inability to meet obligations as they become due or to comply with various financial covenants contained in the instruments governing our current or future indebtedness
could constitute an event of default under the instruments governing our indebtedness.
If there were an event of default under the instruments governing our indebtedness, the holders of the affected indebtedness could declare all of the affected indebtedness immediately due
and payable, which, in turn, could cause the acceleration of the maturity of all of our other indebtedness. We may not have sufficient funds available, or we may not have access to
sufficient capital from other sources, to repay any accelerated debt. Even if we could obtain additional financing, the terms of such financing may not be favorable to us. In addition,
substantially all of our assets are subject to liens securing the obligations under the credit facility. If amounts outstanding under the credit facility were accelerated, our lenders could
foreclose on these liens and we could lose substantially all of our assets. Any event of default under the instruments governing our indebtedness could have a material adverse effect on
our business, financial condition and results of operations.
On February 21, 2023, we amended our Senior Secured Credit Facility with M&T Bank including increasing the committed floor plan financing to $525 million from $327.0 million and
increasing the capacity under the Revolving Credit Facility to up to $50.0 million from $25.0 million. We were in breach of our covenant with M&T Bank as of December 31, 2023, but
received a waiver through the second quarter of 2024, with modified covenant terms through the fourth quarter of 2024. Please see Item 9B for further information.
Additionally, on December 29, 2023, we entered into a $35.0 million mortgage loan agreement (the "Loan Agreement”), with Coliseum Holdings I, LLC as lender (the "Lender”). The Lender is
an affiliate of Coliseum Capital Management, LLC ("Coliseum") and, Christopher Shackelton, the chairman of our Board. Certain funds and accounts managed by Coliseum currently hold
57% of LazyDays common stock (calculated as if the preferred stock has been converted into common stock). Covenants under the Loan Agreement restrict our ability to, among other
things, but subject to certain exceptions: (i) sell, mortgage, assign or transfer any interest in the mortgaged property, (ii) create, incur, assume or permit to exist any lien on any portion of the
mortgaged property, (iii) create, incur or assume any indebtedness, (iv) enter into, amend, modify, supplement or terminate material agreements and (v) enter into, terminate or amend any
lease.
If we breach certain of the covenants in the Loan Agreement or otherwise default on the loan, the Lender would have the right to accelerate the loan and foreclose on the collateral. If we do
not have sufficient cash to repay the Loan at that time, we would be forced to refinance the loan. We cannot assure you that such refinancing would be available to us on favorable terms or
at all.
We depend on our relationships with third party providers of services, protection plans, products and resources and a disruption of these relationships or of these providers’
operations could have an adverse effect on our business and results of operations.
Our business depends in part on developing and maintaining productive relationships with third party providers of products, services, protection plans, and resources that we market to our
customers. Additionally, we rely on certain third party providers to support our products, services, protection plans, and resources, including insurance carriers for our property and
casualty insurance and extended service contracts, banks and captive financing companies for vehicle financing and refinancing. We cannot accurately predict whether, or the extent to
which, we will experience any disruption in the supply of products from our vendors or services from our third party providers. Any such disruption could negatively
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impact our ability to market and sell our products, services, protection plans, and resources, which could have a material adverse effect on our business, financial condition and results of
operations.
With respect to the insurance programs that we offer, we are dependent on the insurance carriers that underwrite the insurance to obtain appropriate regulatory approvals and maintain
compliance with insurance regulations. If such carriers do not obtain appropriate state regulatory approvals or comply with such changing regulations, we may be required to use an
alternative carrier or change our insurance products or cease marketing certain insurance related products in certain states, which could have a material adverse effect on our business,
financial condition and results of operations. If we are required to use an alternative insurance carrier or change our insurance related products, we may materially increase the time required
to bring an insurance related product to market. Any disruption in our service offerings could harm our reputation and result in customer dissatisfaction.
Additionally, we provide financing to qualified customers through a number of third party financing providers. If one or more of these third party providers ceases to provide financing to
our customers, provides financing to fewer customers or no longer provides financing on competitive terms, or if we are unable to replace the current third party providers upon the
occurrence of one or more of the foregoing events, it could have a material adverse effect on our business, financial condition and results of operations.
A portion of our revenue is from financing, insurance and extended service contracts, which depend on third party lenders and insurance companies. We cannot ensure these third
parties will continue to provide RV financing and other products.
A portion of our revenue comes from the fees we receive from lending institutions and insurance companies for arranging financing and insurance coverage for our customers. The lending
institution pays us a fee for each loan that it arranges. If these lenders were to lend to our customers directly rather than through us, we would not receive a fee. In addition, if customers
prepay financing we arranged within a specified period (generally within six months of making the loan), we are required to rebate (or "chargeback”) all or a portion of the commissions paid
to us by the lending institution. The same process applies to vehicle services contract fees, which are also subject to chargebacks if a customer chooses to terminate the contract early. We
receive a chargeback for a portion of the initial fees received. Our revenues from financing fees and vehicle service contract fees are recorded net of a reserve for estimated future
chargebacks based on historical operating results. Lending institutions may change the criteria or terms they use to make loan decisions, which could reduce the number of customers for
whom we can arrange financing, or may elect to not continue to provide these products with respect to RVs. Our customers may also use the internet or other electronic methods to find
financing alternatives. If any of these events occur on a large scale, we could lose a significant portion of our income and profit.
Furthermore, new and pre-owned vehicles may be sold and financed through retail installment sales contracts entered into between us and third-party purchasers. Prior to entering into a
retail installment sales contract with a third-party purchaser, we typically have a commitment from a third-party lender for the assignment of such retail installment sales contract, subject to
final review, approval and verification of the retail installment sales contract, related documentation and the information contained therein. Retail installment sales contracts are typically
assigned by us to third-party lenders simultaneously with the execution of the retail installment sales contracts. Contracts in transit represent amounts due from third-party lenders from
whom prearranged assignment agreements have been determined, and to whom the retail installment sales contract have been assigned. We recognize revenue when the applicable new or
pre-owned vehicle is delivered and we have assigned the retail installment sales contract to a third-party lender and collectability is reasonably assured. Funding from the third-party lender
is provided upon receipt, final review, approval and verification of the retail installment sales contract, related documentation and the information contained therein. Retail installment sales
contracts are typically funded within ten days of the initial approval of the retail installment sales contract by the third-party lender. Contracts in transit are included in current assets and
totaled $14.8 million and $15.4 million as of December 31, 2023 and December 31, 2022, respectively. Any significant number of defaults on these retail installment sales contracts could have
a material adverse effect on our business, financial condition and results of operations.
Our business is subject to numerous federal, state and local regulations.
Our operations are subject to varying degrees of federal, state and local regulation, including regulations with respect to our RV sales, RV financing, marketing, direct mail, roadside
assistance programs and insurance activities. New regulatory efforts may be proposed from time to time that may affect the way we operate our businesses. For example, in the past a
principal source of leads for our direct response marketing efforts was new vehicle registrations provided by motor vehicle departments in various states. Currently, all states restrict access
to motor vehicle registration information.
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We are also subject to federal and state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles. Federal, state
and local laws and regulations also impose upon vehicle operators various restrictions on the weight, length and width of motor vehicles that may be operated in certain jurisdictions or on
certain roadways. Certain jurisdictions also prohibit the sale of vehicles exceeding length restrictions.
Further, certain federal and state laws and regulations affect our activities. Areas of our business affected by such laws and regulations include, but are not limited to, labor, advertising,
consumer protection, digital marketing, real estate, promotions, quality of services, intellectual property, tax, import and export, anti-corruption, anti-competition, environmental, health and
safety. Compliance with these laws and others may be onerous and costly, at times, and may be inconsistent from jurisdiction to jurisdiction which further complicates compliance efforts.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act”), which was signed into law on July 21, 2010, established the Bureau of Consumer Financial
Protection ("BCFP”), an independent federal agency with broad regulatory powers and limited oversight from the United States Congress. Although automotive dealers are generally
excluded, the Dodd-Frank Act could lead to additional, indirect regulation of automotive dealers, in particular, their sale and marketing of finance and insurance products, through its
regulation of automotive finance companies and other financial institutions.
In addition, the Patient Protection and Affordable Care Act (the "Affordable Care Act”), which was signed into law on March 23, 2010, may increase our annual employee health care costs
that we fund and has increased our cost of compliance and compliance risk related to offering health care benefits. Efforts to modify, repeal or otherwise invalidate all, or certain provisions
of, the Affordable Care Act and/or adopt a replacement healthcare reform law may impact our employee healthcare costs. If healthcare costs rise, we may experience increased operating
costs, which may adversely affect our business, financial condition and results of operations.
Furthermore, our property and casualty insurance programs that we offer through third party insurance carriers are subject to state laws and regulations governing the business of
insurance, including, without limitation, laws and regulations governing the administration, underwriting, marketing, solicitation or sale of insurance products. Our third party insurance
carriers are required to apply for, renew, and maintain licenses issued by state, federal or foreign regulatory authorities. Such regulatory authorities have relatively broad discretion to grant,
renew and revoke such licenses. Accordingly, any failure by such parties to comply with the then current licensing requirements, which may include any determination of financial
instability by such regulatory authorities, could result in such regulatory authorities denying third party insurance carriers’ initial or renewal applications for such licenses, modifying the
terms of licenses or revoking licenses that they currently possess, which could severely inhibit our ability to market these insurance products. Additionally, certain state laws and
regulations govern the form and content of certain disclosures that must be made in connection with the sale, advertising or offer of any insurance program to a consumer. We review all
marketing materials we disseminate to the public for compliance with applicable insurance regulations. We are required to maintain certain licenses and approvals in order to market
insurance products.
We have instituted various comprehensive policies and procedures to address compliance. However, there can be no assurance that employees, contractors, vendors or our agents will not
violate such laws and regulations or our policies and procedures.
Our failure to comply with certain environmental regulations could adversely affect our business, financial condition and results of operations.
Our operations involve the use, handling, storage and contracting for recycling and/or disposal of materials such as motor oil and filters, transmission fluids, antifreeze, refrigerants, paints,
thinners, batteries, cleaning products, lubricants, degreasing agents, tires and propane. Consequently, our business is subject to federal, state and local requirements that regulate the
environment and public health and safety. We may incur significant costs to comply with such requirements. Our failure to comply with these regulations and requirements could cause us
to become subject to fines and penalties or otherwise have an adverse impact on our business. In addition, we have indemnified certain of our landlords for any hazardous waste which may
be found on or about property we lease. If any such hazardous waste were to be found on property that we occupy, a significant claim giving rise to our indemnity obligation could have a
negative effect on our business, financial condition and results of operations.
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Risks Related to Our Capital Stock
Our outstanding Series A convertible preferred stock, warrants, options and restricted stock units may have an adverse effect on the market price of our common stock.
As of December 31, 2023, we had outstanding (i) stock options issued to the board of directors and employees to purchase 376,940 shares of common stock at exercise prices ranging from
$4.50 to $30.00 per share, (ii) 600,000 shares of Series A Preferred Stock which are convertible into up to 5,962,733 shares of common stock, taking into account any accrued dividends which
we may elect to pay in cash or shares of common stock, and (iii) 238,275 restricted stock units. We may also issue additional equity awards under our Amended and Restated 2018 Long-
Term Incentive Plan (the "Amended 2018 Plan”).
The sale, or even the possibility of sale, of the shares of common stock underlying the warrants, stock options, restricted stock units and Series A Preferred Stock and the shares issuable
under the Amended 2018 Plan could have an adverse effect on the market price of the common stock or on our ability to obtain future financing. If and to the extent these warrants, stock
options and restricted stock units are exercised or the Series A Preferred Stock is converted to common stock, you may experience substantial dilution to your holdings.
The conversion of the Series A Preferred Stock into our common stock may dilute the value for the other holders of our common stock.
The Series A Preferred Stock is convertible into 5,962,733 shares of our common stock (this excludes accrued dividends which we may elect to pay in cash or shares of common stock). As a
result of the conversion of any issued and outstanding Series A Preferred Stock, the existing holders of our common stock will own a smaller percentage of the outstanding common stock.
Further, additional shares of our common stock may be issuable pursuant to certain other features of the Series A Preferred Stock, with such issuances being further dilutive to existing
holders of our common stock.
If the Series A Preferred Stock is converted into our common stock, holders of such common stock will be entitled to the same dividend and distribution rights as other holders of our
common stock. As such, another dilutive effect which may result from the conversion of any shares of Series A Preferred Stock will be a dilution to dividends and distributions receivable
on account of our common stock.
The holders of Series A Preferred Stock own a large portion of the voting power and have the right to designate two members to our board of directors. This significantly influences
the composition of our board of directors and future actions taken by our board of directors.
Our board of directors currently has eight members. The holders of the Series A Preferred Stock are exclusively entitled to designate two members to our board of directors. In addition, the
holders of the Series A Preferred Stock are entitled to vote upon all matters upon which holders of our common stock have the right to vote and are entitled to the number of votes equal to
the number of full shares of our common stock into which such shares of Series A Preferred Stock could be converted at the then applicable conversion rate. These matters include the
election of all director nominees not designated by the holders of the Series A Preferred Stock. As a result, the holders of the Series A Preferred Stock have significant influence on the
composition of our board of directors.
As of December 31, 2023, the holders of the Series A Preferred Stock held approximately 63.1% of the voting power on an as-converted basis, taking into account the accrued dividends
which we may elect to pay in cash or shares of common stock. As a result, the holders of the Series A Preferred Stock will have the ability to influence future actions requiring stockholder
approval.
Pursuant to the Certificate of Designations governing the Series A Preferred Stock, the holders of the Series A Preferred Stock must consent to us taking certain actions, including among
others, increasing the number of directors constituting our board of directors above eight members, incurring certain indebtedness and the sale of certain assets. The holders of the Series
A Preferred Stock are not obligated to consent to any specific action and there can be no assurance that the holders will consent to any action our board of directors determines is in the
best interests of our stockholders as a whole.
Additionally, the holders of the Series A Preferred Stock have been granted a right of first refusal on certain debt financings. Pursuant to this right, the holders of the Series A Preferred
Stock have 15 business days to determine whether they want to undertake a covered debt financing. This may delay our ability to undertake a debt financing and may cause
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certain third parties to be less willing to engage in any debt financing with us. As a common shareholder, Series A Preferred shareholders could negatively impact your investment and may
not take actions that will be in your best interest.
Our board of directors approved a stock repurchase program, which could increase the volatility of the price of our common stock.
In September 2021, our board of directors approved a stock repurchase program authorizing us to repurchase up to a maximum of $25.0 million of our shares of common stock through
December 31, 2022. On December 15, 2022, our board of directors approved the extension of the program for the remaining balance of $13.7 million and approved additional repurchases of
$50.0 million, each through December 31, 2024 of which $63.4 million remains as of December 31, 2023. Repurchases may be made at management’s discretion from time to time in the open
market, through privately negotiated transactions or pursuant to a trading plan subject to market conditions, applicable legal requirements and other factors. There can be no assurance that
we would buy shares of our common stock or the timeframe for repurchases under our stock repurchase program or that any repurchases would have a positive impact on our stock price or
earnings per share.
Additionally, the Inflation Reduction Act of 2022 was recently signed into law, which, among other things, imposed a new 1% excise tax on the fair market value of stock redeemed or
repurchased by publicly traded corporations on or after January 1, 2023, subject to certain exceptions. If we redeem or repurchase shares of our stock in the future under our current stock
repurchase program or otherwise, we could be subject to this excise tax, unless the redemptions or repurchases qualify for any of the exceptions that are provided in the Inflation Reduction
Act or in future regulations or rules. Any such excise tax would be a liability and could increase the amount of tax that we are required to pay.
Our amended and restated certificate of incorporation provides to the fullest extent permitted by law that the Court of Chancery of the State of Delaware will be the exclusive forum
for certain legal actions between the us and our stockholders, which could increase the costs to bring a claim in a judicial forum viewed by the stockholders as more favorable for
disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides to the fullest extent permitted by law that unless the Company consents in writing to the selection of an alternative forum,
the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of a
fiduciary duty owed by any of our directors, officers or other employees to the Company or our stockholders, any action asserting a claim arising pursuant to any provision of the Delaware
General Corporation Law ("DGCL”), or any action asserting a claim governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim
in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us or our directors, officers and other
employees. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an
action, we may incur additional costs associated with resolving such action in other jurisdictions. The exclusive forum provision in our amended and restated certificate of incorporation
does not apply to actions arising under the federal securities laws and will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the
federal securities laws including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or the respective rules and regulations promulgated thereunder.
General Risk Factors
We depend on our ability to attract and retain customers.
Our future success depends upon our ability to attract and retain customers for our products, services, protection plans, and resources. The extent to which we achieve growth in our
customer base materially influences our profitability. Any number of factors could affect our ability to grow our customer base. These factors include consumer preferences and general
economic conditions, our ability to maintain our retail locations, weather conditions, the availability of alternative products, significant increases in gasoline prices, the disposable income of
consumers available for discretionary expenditures and the external perception of our brands. Any significant decline in our customer base, the rate of growth of our customer base or
customer demand could have a material adverse effect on our business, financial condition and results of operations.
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If we are unable to protect, maintain or upgrade our information technology systems or if we are unable to convert to alternate systems in an efficient and timely manner, our
operations may be disrupted or become less efficient.
We depend on a variety of information technology systems for the efficient operation of our business. We rely on hardware, telecommunications and software vendors to maintain and
periodically upgrade many of these information technology systems so that we can continue to operate our business. Various components of our information technology systems,
including hardware, networks, and software, are licensed to us by third party vendors. We rely extensively on our information technology systems to process transactions, summarize
results and efficiently manage our business. Additionally, because we accept debit and credit cards for payment, we are subject to the Payment Card Industry Data Security Standard (the
"PCI Standard”), issued by the Payment Card Industry Security Standards Council. The PCI Standard contains various compliance guidelines with respect to our security surrounding the
physical and electronic storage, processing and transmission of cardholder data. We are currently in compliance with the PCI Standard, however, complying with the PCI Standard and
implementing related procedures, technology and information security measures requires significant resources and ongoing attention to compliance. Costs and potential problems and
interruptions associated with the implementation of new or upgraded systems and technology such as those necessary to maintain compliance with the PCI Standard or with respect to
maintenance or support of existing systems could also disrupt or reduce the efficiency of our operations. Any material interruptions or failures in our payment-related systems could have a
material adverse effect on our business, financial condition and results of operations.
While we have completed significant steps in our remediation, management will continue to implement its remediation plan, including its determination if additional updates are appropriate
in the remediated actions noted above and through taking additional actions to remediate the material weaknesses in internal control over financial reporting, which include but are not
limited to performing and implementing a user role redesign for certain systems, using third-party assistance to assess training needs, and expanding available resources at the Company
with the appropriate experience. The material weaknesses will not be considered remediated until the remediation actions, including those noted above and any others determined
appropriate have been completed and have operated effectively for a sufficient period of time. The Company is committed to validating that changes made are operating as intended within
our remediation plan, and with the actions already taken and our planned remediation steps, when fully implemented and operated consistently, we believe we will remediate the material
weaknesses.
Any disruptions to our information technology systems or breaches of our network security could interrupt our operations, compromise our reputation, expose us to litigation,
government enforcement actions and costly response measures and could have a material adverse effect on our business, financial condition and results of operations.
We rely on the integrity, security and successful functioning of our information technology systems and network infrastructure across our operations. We use information technology
systems to, among other things, generate and manage sales leads, support our consumer services and plans, manage procurement, manage our supply chain, track inventory information at
our retail locations, communicate customer information and aggregate daily sales, margin and promotional information. We also use information systems to report and audit our operational
results.
In connection with sales, we transmit encrypted confidential credit and debit card information. Although we are currently in compliance with the PCI Standard, there can be no assurance
that in the future we will be able to remain compliant with the PCI Standard or other industry recommended or contractually required practices. Even if we continue to be compliant with such
standards, we still may not be able to prevent security breaches.
We also have access to, collect or maintain private or confidential information regarding our customers, associates and suppliers, as well as our business. The protection of our customer,
associate, supplier and company data is critical to us. The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of
new and constantly changing requirements across our business and operations. In addition, our customers have a high expectation that we will adequately protect their personal
information from cyber-attacks and other security breaches. We have procedures in place to safeguard our customer’s data and information. However, a significant breach of customer,
employee, supplier, or company data could attract a substantial amount of negative media attention, damage our relationships with our customers and suppliers, harm our reputation and
result in lost sales, fines and/or lawsuits.
An increasingly significant portion of our sales depends on the continuing operation of our information technology and communications systems, including but not limited to our point-of-
sale system and our credit card processing systems. Our information technology, communication systems and electronic data may be vulnerable to damage or interruption from
earthquakes, acts of war or terrorist attacks, floods, fires, tornadoes, hurricanes, power loss and outages, computer and telecommunications failures, computer viruses, loss of data,
unauthorized data breaches, usage errors by our associates or
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our contractors or other attempts to harm our systems, including cyber-security attacks, hacking by third parties, computer viruses or other breaches of cardholder data. Some of our
information technology and communication systems are not fully redundant and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster,
intentional sabotage or other unanticipated problems could result in lengthy interruptions in our information technology and communications systems. Any errors or vulnerabilities in our
information technology and communications systems, or damage to or failure of our information technology and communications systems, could result in interruptions services and non-
compliance with certain regulations or expose us to risk of litigation and liability, which could have a material adverse effect on our business, financial condition and results of operations.
We may be subject to product liability claims if people or property are harmed by the products we sell and may be adversely impacted by manufacturer safety recalls.
Some of the products we sell may expose us to product liability claims relating to personal injury, death, or environmental or property damage, and may require product recalls or other
actions. Although we maintain liability insurance, we cannot be certain that our insurance coverage will be adequate for losses actually incurred or that insurance will continue to be
available to us on economically reasonable terms, or at all. In addition, some of our agreements with our vendors and sellers do not indemnify us from losses attributable to product liability.
In addition, even if a product liability claim is not successful or is not fully pursued, the negative publicity surrounding a product recall or any assertion that the products sold by the
Company caused property damage or personal injury could damage brand image and our reputation with existing and potential consumers and have a material adverse effect on our
business, financial condition and results of operations.
Our risk management policies and procedures may not be fully effective in achieving their purposes.
Our policies, procedures, controls and oversight to monitor and manage our enterprise risks may not be fully effective in achieving their purpose and may leave us exposed to identified or
unidentified risks. Past or future misconduct by our employees or vendors could result in violations of law by us, regulatory sanctions and/or serious reputational or financial harm to us.
We monitor our policies, procedures and controls; however, there can be no assurance that these will be sufficient to prevent all forms of misconduct. We review our compensation policies
and practices as part of our overall enterprise risk management program, but it is possible that our compensation policies could incentivize inappropriate risk taking or misconduct. If such
inappropriate risks or misconduct occurs, it is possible that it could have a material adverse effect on our business, financial condition and results of operations.
We have incurred impairment charges for goodwill, and could incur impairment charges for intangible assets or other long-lived assets.
At least annually, we review goodwill, trademarks and trade names for impairment. Long-lived assets, identifiable intangible assets and goodwill are also reviewed for impairment whenever
events or changes in circumstances indicate the carrying amount of an asset may not be recoverable from future cash flows. These events or circumstances could include a significant
change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors. If the carrying value
of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. Our determination of
future cash flows, future recoverability and fair value of our long-lived assets includes significant estimates and assumptions. Changes in those estimates and/or assumptions or lower than
anticipated future financial performance may result in the identification of an impaired asset and a non-cash impairment charge, which could be material. Any such charge could adversely
affect our financial position or results of operations.
Refer to Note 2 - Significant Accounting Policies and Note 7 - Goodwill and Intangible Assets of Notes to Consolidated Financial Statements for additional information.
We may be unable to retain senior executives and attract, develop, and retain other qualified employees.
Our success depends in part on our ability to attract, hire, develop and retain qualified personnel. Competition for the personnel required is high. We may be unsuccessful in attracting and
retaining the personnel needed to conduct operations successfully. In this event, our business could be materially and adversely affected. In addition, the loss of members of our senior
management team could impair our ability to execute our business plan and could have a material and adverse effect on our business, results of operations and financial condition.
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Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Cybersecurity risk management is a major component of our overall risk management systems and processes. We have a cybersecurity program and governance structure designed to
identify and manage cybersecurity risks and threats. The program encompasses a comprehensive framework that begins with a clear governance structure comprised of our Chief Technical
Officer (CTO), Director of Internal Audits, and Senior Director of Compliance, ensuring a holistic approach to risk management. Regular reporting mechanisms to the board and senior
management keep all stakeholders informed about the evolving cyber risk landscape and the program's effectiveness.
The program includes a well-defined risk assessment and analysis process, identifying critical digital assets, conducting thorough threat and vulnerability assessments, and quantifying
risks based on potential impact and likelihood. This information prioritizes risks, allowing us to allocate resources effectively and focus on mitigating the most significant threats. Policies
and procedures form the foundation of the cyber risk management program, with comprehensive guidelines covering data protection, access controls, incident response, and employee
training. Security controls, such as robust identity governance and access controls, AI-based email security solutions, endpoint protection, and network security measures, are
implemented to fortify our defenses. An effective incident response plan ensures a swift and coordinated response to security incidents, minimizing potential damages. Continuous
monitoring through MDR (Managed Detect and Respond) solutions and staying informed about the latest threat intelligence feeds enhance our ability to detect and respond to evolving
cyber threats.
As part of our cybersecurity program, we assess the cybersecurity posture of our third-party vendors and partners to ensure they meet our security standards. This includes due diligence
during the vendor selection and periodic evaluations throughout our partnerships. Third-party risk management, compliance adherence, and the consideration of cyber insurance contribute
to a holistic and proactive approach to cyber risk management. Regular reviews and updates to the program ensure its relevance and effectiveness in the face of emerging threats, fostering
a culture of continuous improvement and resilience.
We have not identified any risks from cybersecurity threats including those ones resulted from previous cybersecurity incidents that have materially affected or are reasonably likely to
materially affect our business strategy, results of operations, or financial condition.
Item 2. Properties
We own the property at 8 of our locations and lease the remaining 16 properties. We also own the property for one additional location expected to open in March 2024. Our real property
leases generally provide for fixed monthly rents with annual escalation clauses and multiple renewal terms of 3 to 20 years each. The leases are typically "triple net” requiring us to pay real
estate taxes, insurance and maintenance costs. We believe that our properties are suitable and adequate for present purposes, and that the productive capacity in such properties is
substantially being utilized.
Our largest leased dealership property is located in Tampa, Florida. The dealership is 384,000 square feet and sits on 126 acres. The lease term is 20 years with an initial expiration date in
2035.
Item 3. Legal Proceedings
We are a party to multiple legal proceedings that arise in the ordinary course of our business. We do not believe that the ultimate resolution of these matters will have a material adverse
effect on our business, results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty and an unfavorable resolution of
one or more of these or other matters could have a material adverse effect on our business, results of operations, financial condition and/or cash flows.
Item 4. Mine Safety Disclosures
None.
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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Currently, our shares of common stock are listed on the Nasdaq Capital Market under the symbol "GORV”.
As of March 8, 2024, there were 47 holders of record of our shares of common stock and 4 holders of record of our shares of Series A Preferred Stock.
PART II
We have not paid any cash dividends on our common stock and do not plan to pay any cash dividends on our common stock in the foreseeable future. Our board of directors will determine
our future dividend policy on the basis of many factors, including results of operations, capital requirements, and general business conditions, subject to any restrictions under our credit
facility and the Certificate of Designations for the Series A Preferred Stock.
Recent Sales of Unregistered Securities
During the quarter ended December 31, 2023, there were no sales of unregistered securities.
Purchases of Equity Securities by the Issuer
As of December 31, 2023, we had $63.4 million of remaining availability to purchase our common stock pursuant to a plan that expires on December 31, 2024. No repurchases were made
during the year ended December 31, 2023.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Part I, including matters set forth in the "Risk Factors” section
of this Form 10-K and our Consolidated Financial Statements and notes thereto, included in Part II, Item 8 of this Form 10-K.
Business Overview
We operate recreational vehicle dealerships and offer a comprehensive portfolio of products and services for RV owners and outdoor enthusiasts. We generate revenue by providing RV
owners and outdoor enthusiasts a full spectrum of products: RV sales, RV repair and services, financing and insurance products, third-party protection plans, and after-market parts and
accessories. During the second quarter of 2023 we closed the campground facilities at our Tampa, Florida location. In the third quarter of 2023, we closed our dealerships at the Maryville
and Burns Harbor locations.
We operate 24 dealerships in 15 states and expect to open an additional dealership in March 2024. Based on industry research and management’s estimates, we believe we operate the
world’s largest RV dealership, measured in terms of on-site inventory, located on approximately 126 acres outside Tampa, Florida. See Item 1. Business for additional details.
Lazydays offers one of the largest selections of leading RV brands in the nation, featuring more than 6,000 new and pre-owned RVs. We have more than 400 service bays, and each location
has an RV parts and accessories store. We employ approximately 1,300 people at our 24 dealership locations. Our locations are staffed with knowledgeable local team members, providing
customers access to extensive RV expertise. We believe our locations are strategically located and, based on information collected by us from reports prepared by Statistical Surveys,
account for a significant portion of new RV units sold on an annual basis in the U.S. Our dealerships attract customers from all states, except Hawaii.
We attract new customers primarily through Lazydays dealership locations as well as digital and traditional marketing efforts. Once we acquire customers, those customers become part of
our customer database where we use customer relationship management tools and analytics to actively engage, market and sell our products and services.
In January 2024, we launched a complete rebranding effort with new websites, logos, fonts and colors, as well as a new stock symbol ("GORV"). We belive these rebranding efforts will
enhance our digital retail experience, particularly on mobile devices, which account for over 80% of our website traffic.
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Results of Operations
For the year ended December 31, 2023, we reported a net loss of $110.3 million, or $8.45 per diluted share. For the year ended December 31, 2022, we reported net income of $66.4 million, or
$2.42 per diluted share.
(In thousands, except vehicle and per vehicle data)
Revenue
New vehicle retail
Pre-owned vehicle retail
Vehicle wholesale
Finance and insurance
Service, body and parts and other
Total revenue
Gross profit
New vehicle retail
Pre-owned vehicle retail
Vehicle wholesale
Finance and insurance
Service, body and parts and other
LIFO
Total gross profit
Gross profit margins
New vehicle retail
Pre-owned vehicle retail
Vehicle wholesale
Finance and insurance
Service, body and parts and other
Total gross profit margin
Total gross profit margin (excluding LIFO)
Retail units sold
New vehicle retail
Pre-owned vehicle retail
Total retail units sold
Average selling price per retail unit
New vehicle retail
Pre-owned vehicle retail
Average gross profit per retail unit (excluding LIFO)
New vehicle retail
Pre-owned vehicle retail
Finance and insurance
NM - Not meaningful
Year Ended December 31,
2023
2022
Change
%
Change
$
$
$
$
$
$
$
$
$
$
$
$
631,748
323,258
8,006
62,139
57,596
1,082,747
79,437
63,764
(172)
59,592
29,873
(3,752)
228,742
12.6 %
19.7 %
(2.2)%
95.9 %
51.9 %
21.1 %
21.5 %
7,269
5,018
12,287
86,910
64,420
10,928
12,707
4,850
$
$
$
$
$
$
777,807
394,582
21,266
75,482
57,824
1,326,961
145,491
93,017
(354)
72,753
30,167
(12,383)
328,691
18.7 %
23.6 %
(1.7)%
96.4 %
52.2 %
24.8 %
25.7 %
8,603
5,409
14,012
90,411
72,949
16,912
17,197
5,192
(146,059)
(71,324)
(13,260)
(13,343)
(228)
(244,214)
(66,054)
(29,253)
182
(13,161)
(294)
8,631
(99,949)
(610) bps
(390) bps
(50) bps
(50) bps
(30) bps
(370) bps
(420) bps
(1,334)
(391)
(1,725)
(3,501)
(8,529)
(5,984)
(4,490)
(342)
(18.8)%
(18.1)%
(62.4)%
(17.7)%
(0.4)%
(18.4)%
(45.4)%
(31.4)%
(51.4)%
(18.1)%
(1.0)%
(69.7)%
(30.4)%
(15.5)%
(7.2)%
(12.3)%
(3.9)%
(11.7)%
(35.4)%
(26.1)%
(6.6)%
Same Store Results of Operations
We believe that same store comparisons are an important indicator of our financial performance. Same store measures demonstrate our ability to grow operations in our existing locations.
Same store measures reflect results for stores that were operating in each comparison period, and only include the months when operations occurred in both periods. For example, a store
acquired in November 2022 would be included in same store operating data beginning in December 2023, after its first complete comparable month of operations. The fourth quarter
operating results for the same store comparisons would include results for that store for both comparable periods. We believe that this measure provides meaningful information on our
performance and operating results. However, readers
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should know that this financial metric has no standardized meaning and may not be comparable to similar measures presented by other companies.
(In thousands, except vehicle and per vehicle data)
Revenues
Year Ended December 31,
2023
2022
Change
%
Change
New vehicle retail
Pre-owned vehicle retail
Vehicle wholesale
Finance and insurance
Service, body and parts and other
Total revenues
Gross profit
New vehicle retail
Pre-owned vehicle retail
Vehicle wholesale
Finance and insurance
Service, body and parts and other
LIFO
Total gross profit
Gross profit margins
New vehicle retail
Pre-owned vehicle retail
Vehicle wholesale
Finance and insurance
Service, body and parts and other
Total gross profit margin
Total gross profit margin (excluding LIFO)
Retail units sold
New vehicle retail
Pre-owned vehicle retail
Total retail units sold
Average selling price per retail unit
New vehicle retail
Pre-owned vehicle retail
Average gross profit per retail unit (excluding LIFO)
New vehicle retail
Pre-owned vehicle retail
Finance and insurance
NM - Not meaningful
$
$
$
$
$
$
731,572
378,117
21,167
71,899
55,603
1,258,358
137,016
88,854
(354)
69,285
29,109
(12,383)
311,527
18.7 %
23.5 %
(1.7)%
96.4 %
52.4 %
24.8 %
25.7 %
7,867
5,049
12,916
92,993
74,889
17,417
17,598
5,364
$
$
$
$
$
$
$
$
$
$
$
$
557,176
290,242
7,567
54,395
51,392
960,772
69,710
56,773
(171)
52,132
26,593
(3,752)
201,285
12.5 %
19.6 %
(2.3)%
95.8 %
51.7 %
21.0 %
21.3 %
6,142
4,362
10,504
90,716
66,539
11,350
13,015
4,963
25
(174,397)
(87,875)
(13,600)
(17,504)
(4,211)
(297,586)
(67,306)
(32,081)
183
(17,153)
(2,516)
8,631
(110,242)
(620) bps
(390) bps
(60) bps
(60) bps
(70) bps
(380) bps
(440) bps
(1,725)
(687)
(2,412)
(2,277)
(8,350)
(6,067)
(4,583)
(401)
(23.8)%
(23.2)%
(64.2)%
(24.3)%
(7.6)%
(23.6)%
(49.1)%
(36.1)%
NM
(24.8)%
(8.6)%
NM
(35.4)%
(21.9)%
(13.6)%
(18.7)%
(2.4)%
(11.1)%
(34.8)%
(26.0)%
(7.5)%
Table of Contents
Revenue and Gross Margin Discussion
New Vehicles Retail
We offer a comprehensive selection of new RVs across a wide range of price points, classes and floor plans, from entry level travel trailers to Class A motorhomes, at our dealership
locations and on our website. We have strong strategic alliances with leading RV manufacturers. The core brands that we sell, representing 96.0% of the new vehicles that we sold in 2023,
are manufactured by Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc.
Under our business strategy, we believe that our new RV sales create incremental profit opportunities by providing used RV inventory through trade-ins, arranging of third-party financing,
RV service and insurance contracts, future resale of trade-ins and parts and service work.
New vehicle revenue decreased $146.1 million, or 18.8%, in 2023 compared to 2022 due primarily to a 15.5% decrease in units sold and a decrease of 3.9% in the average selling price per retail
unit. The decrease in units sold was primarily due to a contracting market coming off of a robust 2022.
New vehicle gross profit decreased $66.1 million, or 45.4%, in 2023 compared to 2022, primarily due to less units sold combined with a $5,984 decrease in gross profit per unit. As inventories
continued to normalize and overall sales declined, we discounted towards the end of 2023 ahead of the new model year change to generate sales, which led to the decline in gross profit per
unit.
On a same store basis, new vehicle revenue decreased $174.4 million, or 23.8%, in 2023 compared to 2022, due primarily to a 21.9% decrease in retail units sold and a 2.4% decrease in
average selling prices.
On a same store basis, new vehicle gross profit decreased $67.3 million, or 49.1%, in 2023 compared to 2022, due primarily to less units sold and a 34.8% decrease in gross profit per unit,
excluding LIFO.
Although supply chain and inventory continued to normalize in 2023, our stores focused on positioning themselves for 2024 and 2025 model year inventory by discounting 2022 and 2023
model year units. We ended the fourth quarter of 2023 with approximately 62% of our units being 2024 model year, 36% being 2023 model year and only 2%, or approximately 104 units being
2022 model year.
Pre-Owned Vehicles Retail
Pre-owned vehicle retail sales are currently a strategic focus for growth. Our pre-owned vehicle operations provide an opportunity to generate sales to customers unable or unwilling to
purchase a new vehicle, to sell models other than the store’s new vehicle models, access additional used vehicle inventory through trade-ins and increase sales from finance and insurance
products. We sell a comprehensive selection of pre-owned RVs at our dealership locations. We have established a goal to reach a used to new ratio of 1:1. Strategies to achieve this target
include reducing wholesale sales, procuring additional used RV inventory direct from consumers and selling deeper into the pre-owned RV spectrum. We achieved a used to new ratio of
0.73:1 in 2023.
Pre-owned vehicle retail revenue decreased $71.3 million, or 18.1%, in 2023 compared to 2022 due primarily to a 7.2% decrease in retail units sold and a 11.7% decrease in average selling
price per retail unit. The decrease in retail units sold was primarily due to a contracting market coming off of a robust 2022.
Pre-owned vehicle retail gross profit decreased $29.3 million, or 31.4%, in 2023 compared to 2022 due primarily to fewer units sold, combined with lower gross profit per unit. The decline in
gross profit per unit was primarily due to supply normalizing after increased demand during 2022 saw inventories depleted, which led to higher margins in 2022.
On a same store basis, pre-owned vehicle retail revenue decreased $87.9 million, or 23.2% in 2023 compared to 2022 due primarily to a 11.1% decrease in average selling prices and a 13.6%
decrease in retail units sold.
Pre-owned vehicle retail gross profits on a same store basis decreased $32.1 million, or 36.1% in 2023 compared to 2022. This decrease was a result of a 13.6% decrease in units sold,
combined with a 26.0% decrease in gross profit per unit, excluding LIFO.
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Finance and Insurance
We believe that arranging timely financing is an important part of providing access to the RV lifestyle and we attempt to arrange financing for every vehicle we sell. We also offer related
products such as extended warranties, insurance contracts and other maintenance products.
Finance and insurance ("F&I”) revenues decreased 17.7% during 2023 compared to 2022, primarily due to a 12.3% decrease in total retail units sold and an 6.6% decrease in average F&I
gross profit per unit. The decrease in average F&I gross profit per unit was primarily due to a higher volume of chargebacks during the year.
On a same store basis, F&I revenue decreased 24.3% primarily due to a decrease in total retail units sold of 18.7% and a 7.5% decrease in average F&I gross profit per unit, excluding LIFO.
Certain information regarding our F&I operations was as follows:
Overall
F&I per unit
F&I penetration rate
Same store
F&I per unit
F&I penetration rate
Year Ended December 31,
2023
2022
Change
% Change
$
$
$
$
4,850
61.1 %
4,963
61.1 %
$
$
5,192
64.3 %
5,364
65.0 %
(342)
(320) bps
(401)
(390) bps
(6.6) %
(7.5) %
Service, Body and Parts and Other
With more than 400 service bays, we provide onsite general RV maintenance and repair services at all of our dealership locations. We employ over 300 highly skilled technicians, many of
them certified by the Recreational Vehicle Industry Association ("RVIA”) or the National RV Dealers Association ("RVDA”) and we are equipped to offer comprehensive services and
perform original equipment manufacturer ("OEM”) warranty repairs for most RV components. Earnings from service, body and parts and other have historically been more resilient during
economic downturns, when owners have tended to hold and repair their existing RVs rather than buy a new one.
Service, body and parts and other is a strategic area of focus and an area of opportunity to grow additional earnings.
Our service, body and parts and other revenue and gross profit decreased 0.4% and 1.0%, respectively, in 2023 compared to 2022. The decreases in revenue and gross profit were primarily
due to the closure of the campground in the second quarter of 2023, partially offset by acquisitions and greenfields, combined with more units in operation and increases in warranty rates.
Our same store service, body and parts and other revenue and gross profit decreased 7.6% and 8.6%, respectively, during 2023 compared to 2022.
Depreciation and Amortization
Depreciation and amortization was as follows:
($ in thousands)
Depreciation and amortization
Year Ended December 31,
2023
2022
Change
% Change
$
18,512 $
16,758
$
1,754
10.5 %
The increase in depreciation and amortization in 2023 compared to 2022 was primarily related to the increase in Property and equipment as a result of acquisitions, the expansion of several
dealerships and the opening of new stores.
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Selling, General and Administrative
Selling, general, and administrative ("SG&A”) expenses consist primarily of wage-related expenses, selling expenses related to commissions and advertising, lease expenses, corporate
overhead expenses, transaction costs, and stock-based compensation expense, and do not include depreciation and amortization expense.
SG&A expense was as follows:
($ in thousands)
SG&A expense
SG&A as percentage of gross profit
Stock-based compensation included in SG&A
Year Ended December 31,
2023
2022
Change
% Change
$
$
198,962
87.0 %
2,249
$
$
222,218
67.6 %
2,813
$
$
(23,256)
1,940 bps
(564)
(10.5)%
(20.0)%
The decrease in SG&A in 2023 compared to 2022 was primarily related to decreased marketing expenses, reduced headcount and lower commissions paid due to fewer units sold. Offsetting
the decrease was an impairment charge of $0.6 million in the first quarter of 2023 related to the write-off of capitalized software that we determined we would not utilize.
The increase in SG&A as a percentage of gross profit in 2023 compared to 2022 was primarily related to lower gross profit and the impairment charge mentioned above.
Goodwill Impairment
As discussed in Note 1 - Significant Accounting Policies to our Consolidated Financial Statements, we recognized a goodwill impairment charge of $118.0 million in 2023.
Floor Plan Interest Expense
Floor plan interest expense was as follows:
($ in thousands)
Floor plan interest expense
Year Ended December 31,
2023
2022
Change
% Change
$
24,820
$
8,596
$
16,224
188.7 %
The increase in floor plan interest expense in 2023 compared to 2022 is due to increased interest rates and an increase in acquisition volume.
Other Interest Expense
($ in thousands)
Other interest expense
Year Ended December 31,
2023
2022
Change
% Change
$
10,062
$
7,996
$
2,066
25.8 %
The increase in other interest expense in 2023 compared to 2022 was primarily due to higher revolver balances outstanding and mortgages obtained during the third quarter of 2023.
Change in Fair Value of Warrant Liabilities
Change in fair value of warrant liabilities represents the mark-to-market fair value adjustments to the outstanding PIPE warrants issued in connection with our SPAC merger in March 2018.
The fair value of the warrants fluctuated with
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changes in the value of our common stock. All of the warrants were exercised or expired during the first quarter of 2023 and, accordingly, as of December 31, 2023, no PIPE warrants
remained outstanding.
($ in thousands)
Change in fair value of warrant liabilities
Income Tax Expense
Income tax benefit (expense) was as follows:
($ in thousands)
Income tax benefit (expense)
Effective tax rate
Year Ended December 31,
2023
2022
Change
% Change
$
856
$
12,453
$
(11,597)
(93.1)%
Year Ended December 31,
2023
2022
Change
% Change
$
30,462
(21.6)%
$
(19,183)
$
22.4 %
49,645
258.8 %
The income tax benefit (expense) differs from the statutory rate primarily as a result of state income taxes and the impairment of Goodwill that took place in the fourth quarter of 2023. The
effective tax rate was lower in 2023 compared to 2022 due to the effect of fair value adjustments related to Goodwill. Goodwill was fully impaired as of December 2023 and therefore will no
longer have a meaningful impact on our effective tax rate.
Liquidity and Capital Resources
Our principal needs for liquidity and capital resources are for capital expenditures and working capital as well as for growth through acquisitions and greenfielding. We have historically
satisfied our liquidity needs through cash flows from operations, borrowings under our credit facilities as well as occasional sale-leaseback arrangements. In addition to these sources of
liquidity, potential sources to fund our business strategy include financing of owned real estate, construction loans, and proceeds from debt or equity offerings. We evaluate all of these
options and may select one or more of them depending upon overall capital needs and the availability and cost of capital,although no assurances can be provided that these capital sources
will be available in sufficient amounts or with terms acceptable to us.
As of December 31, 2023 we had cash of $58.1 million and our revolver was fully drawn. We hold approximately $109.9 million of real estate financed under our $35.0 million mortgage facility
that we estimate could provide $47.5 million of additional liquidity at an estimated 75% loan to value as we refinance these properties. We also have other unencumbered real estate that we
estimate can generate additional liquidity of approximately $18 million through financing transactions.
Cash Flow Summary
($ in thousands)
Net income (loss)
Non cash adjustments, net
Changes in operating assets and liabilities
Net cash used in operating activities
Net cash used in investing activities
Net cash provided by financing activities
Net decrease in cash
Year Ended December 31,
2023
2022
$
$
(110,266) $
108,171
(34,385)
(36,480)
(192,964)
225,842
(3,602) $
66,393
9,048
(147,401)
(71,960)
(54,542)
90,069
(36,433)
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Operating Activities
Inventories are the most significant component of our cash flow from operations. As of December 31, 2023, our new vehicle days’ supply was 380 days which was 130 days higher than our
days’ supply as of December 31, 2022. As of December 31, 2023, our days’ supply of pre-owned vehicles was 132 days, which was 54 days higher than our days’ supply at December 31,
2022. We calculate days’ supply of inventory based on current inventory levels and a 90 day historical cost of sales level. We continue to focus on managing our unit mix and maintaining
appropriate levels of new and used vehicle inventory.
Borrowings from and repayments to the M&T Floor Plan Line of Credit related to our new vehicle inventory floor plan financing are presented as financing activities. Additionally, the cash
paid for inventory purchased as part of an acquisition is presented as an investing activity, while the subsequent flooring of the new inventory is included in our floor plan payable cash
activities.
To better understand the impact of these items, a reconciliation of adjusted net cash provided by operating activities, a non-GAAP financial measure to net cash provided by operating
activities, is presented below:
(In thousands)
Net cash used in operating activities, as reported
Net borrowings on floor plan notes payable
Minus borrowings on floor plan notes payable associated with acquired new inventory
Net cash provided by operating activities, as adjusted
Year Ended December 31,
2023
2022
Change
(36,480) $
98,530
(28,751)
33,299 $
(71,960) $
148,180
—
76,220 $
35,480
(49,650)
(28,751)
(42,921)
$
$
Investing Activities
During 2023, net cash used in investing activities of $193.0 million was primarily for $97.7 million spent on acquisitions of 5 dealerships in Nevada, Tennessee, Colorado, Utah and Arizona
as disclosed in Note 3 to the consolidated financial statements, as well as $95.2 million for the purchase of property and equipment related to the construction of our greenfield locations in
Iowa, Florida, Ohio and Arizona.
Financing Activities
During 2023, significant financing activities included $98.5 million of net borrowings under our M&T bank floor plan, $49.5 million of borrowings under M&T revolving credit facility, and
$64.0 million of proceeds from the issuance of long-term debt, which included $35.0 million of proceeds is from the Coliseum Loan and $29 million of proceeds from the Murfreesboro and
Knoxville mortgages. In addition, there was $30.5 million of proceeds from the exercise of warrants.
Short-Term Material Cash Requirements
For at least the next twelve months, our primary capital requirements are capital to maintain our current operations. We may also use our resources for the funding of potential acquisitions
or development of bare land for future dealerhsip locations. Cash used for acquisitions will be dependent upon deal flow and individual targets. Inventory associated with acquisitions and
stocking new greenfield location inventories will primarily be financed using the M&T floorplan facility. Cash used for capital expenditures and acquisitions will also be dependent upon
operational cash flows.
Long-Term Material Cash Requirements
Beyond the next twelve months, our principal demands for funds will be for maintenance of our core business, and continued growth through acquisitions. Additional funds may be spent
on technology and efficiency investments, at our discretion.
We expect to meet our long-term liquidity requirements primarily through current cash on hand and cash generated by operations. We may obtain lease or mortgage financing for land
purchased and the additional costs of building out dealership on these properties. Additionally, we have approximately $109.9 million of property encumbered by our $35.0 million Coliseum
Loan that we estimate we can refinance at higher loan-to-value ratios and lower interest rates, similar to other properties we financed in 2023. We also have other unencumbered real estate
that we estimate can generate additional liquidity of approximately $18.0 million through financing transactions.
For short-term and long-term cash requirements, we believe that our cash flows from operations, combined with our current cash levels, will be adequate to support our ongoing operations
and to fund our operating and growth requirements
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for the next twelve months, as well as beyond the next twelve months. We believe that we have access to additional funds, if needed, through the capital markets under the current market
conditions, but we cannot guarantee that such financing will be available on favorable terms, or at all.
M&T Credit Facility
On February 21, 2023, we amended our Senior Secured Credit Facility with M&T Bank.
The material provisions of the amendment were to: (i) increase the capacity under the Floor Plan Line of Credit to up to $525.0 million from $327.0 million and increase the capacity under the
M&T Revolving Credit Facility to up to $50.0 million from $25.0 million; (ii) remove the Mortgage Loan Facility and Term Loan Facility; (iii) extend the term of the Floor Plan Line of Credit
and the Revolving Credit to February 21, 2027; (iv) lower interest rates on the Floor Plan Line of Credit and the M&T Revolving Credit Facility; and (v) remove certain guarantors.
At the time of the amendment, we paid off the $5.4 million outstanding on the Mortgage Loan Facility and the $6.7 million outstanding on the Term Loan Facility.
At December 31, 2023, there was $446.8 million outstanding on the Floor Plan Line of Credit at an interest rate of 7.48% and $49.5 million outstanding on the Revolving Credit Facility at an
interest rate of 8.35%. We were not in compliance with our financial and restrictive covenants at December 31, 2023 as we exceeded our total leverage ratio of 3.00, but received a waiver from
M&T Bank through the second quarter of 2024, and modified covenants through the fourth quarter of 2024.
The Floor Plan Line of Credit bears interest at: (a) 30-day SOFR plus an applicable margin of 1.90% to 2.05% based on the total net leverage ratio (as defined in the new M&T Facility) or (b)
the Base Rate plus a margin of 0.90% to 1.05% based on the total net leverage ratio (as defined in the new M&T Facility). Base Rate means, for any day, the fluctuating rate per annum equal
to the highest of: (a) the Prime Rate for such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined on a
daily basis, plus 100 Basis Points. The Floor Plan Line of Credit is also subject to an annual unused commitment fee at 0.15% of the average daily unused portion of the Floor Plan.
The M&T Revolving Credit Facility bears interest at: (a) 30-day SOFR plus an applicable margin of 2.15% to 2.90% based on the total net leverage ratio (as defined in the new M&T Facility)
or (b) the Base Rate plus a margin of 1.15% to 1.90% based on the total net leverage ratio (as defined in the new M&T Facility). Base Rate means, for any day, the fluctuating rate per annum
equal to the highest of: (a) the Prime Rate for such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined
on a daily basis, plus 100 Basis Points. The Revolving Credit Facility is also subject to a quarterly unused commitment fee at 0.15% of the average daily unused portion of the M&T
Revolving Credit Facility.
On March 8, 2024, LDRV Holdings Corp, Lazydays RV America, LLC, Lazydays RV Discount, LLC and Lazydays Mile HI RV, LLC, together with certain other subsidiary entities entered into
the First Amendment to Second Amended and Restated Credit Agreement and Consent with Manufacturers and Traders Trust Company as Administrative Agent and other financial
institutions as loan parties (the "Amendment"), to waive and modify certain covenants. This includes waiving the net leverage ratio from the fourth quarter of 2023 through the second
quarter of 2024, current ratio for the fourth quarter of 2023, and fixed charge coverage ratio for the first and second quarters of 2024. Additionally, an additional tier was added to the
definition of applicable margin of the Credit Facilities, setting forth the applicable interest rates corresponding to a total net leverage ratio of 3.00 . This new tier is applicable to the Company
as of March 8, 2024.
Long-Term Debt
Mortgages
In July 2023, we entered into two mortgages for total proceeds of $29.3 million secured by certain real estate assets at our Murfreesboro and Knoxville locations. The loans bear interest
between 6.85% and 7.10% per annum and mature in July 2033.
Coliseum Term Loan
On December 29, 2023, we entered into a $35 million term loan (the "Loan") with the Lender, with a maturity date of December 29, 2026. Certain funds and accounts managed by Coliseum
currently hold 57% of LazyDays common stock (calculated as if the preferred stock has been converted into common stock) as of December 31, 2023 and is therefore
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Table of Contents
considered a related party. The Loan bears interest at a rate of 12% per annum, payable monthly in cash on the outstanding loan balance. For any quarterly period during the Loan term, we
have the option at the beginning of each quarter to make pay-in-kind elections, whereby the entire outstanding balance would be charged interest at 14% per annum and interest amounts
will be added to the outstanding principal. The Loan is secured by certain of our assets. Issuance costs of $2.0 million were recorded as debt discount and are being amortized over the term
of the Loan to interest expense using the effective interest method. The Loan is carried at the outstanding principal balance, less debt issuance costs.
Under the terms of the Loan, for any repayments and prepayments that occur prior to January 1, 2025, we will owe a prepayment penalty of 1% on the outstanding principal balance being
repaid and a make whole premium equal to the remaining interest owed on such balance repaid from date of repayment through January 1, 2025. For repayments and prepayments that occur
after January 1, 2025 through maturity, we will owe a prepayment penalty of 2% on the outstanding principal balance being repaid.
The Loan contains certain reporting and compliance-related covenants. The Loan contains negative covenants, among other things, related to borrowing and events of default. It also
includes certain non-financial covenants and covenants limiting our ability to dispose of assets, undergo a change in control, merge with, acquire stock, or make investments in other
companies, in each case subject to certain exceptions. Upon the occurrence of an event of default, in addition to the lender being able to declare amounts outstanding under the Loan due
and payable or foreclose on the collateral, the lender can elect to increase the interest rate by 7% per annum during the period of default. In addition, the Loan contains a cross default with
M&T Bank. As of December 31, 2023, we were not in compliance with all of the covenants with M&T Bank as we exceed our maximum leverage covenant, however the cross default was
waived for the period ended December 31, 2023.
Summary
Long-term debt was as follows:
(In thousands)
Total long-term debt
Less: current portion
Long-term debt, non-current
Inflation
As of December 31, 2023
As of December 31, 2022
Gross
Principal
Amount
Debt Discount
Total Debt,
Net of Debt
Discount
Gross
Principal
Amount
Debt
Discount
Total Debt,
Net of Debt
Discount
$
$
64,870 $
1,141
63,729 $
(2,300) $
—
(2,300) $
62,570 $
1,141
61,429 $
13,787 $
3,607
10,180 $
(49) $
—
(49) $
13,738
3,607
10,131
We have experienced higher than normal RV retail and wholesale price increases as manufacturers have passed through increased supply chain costs in their pricing to dealers. We monitor
the health of our inventory and focus on discounting prior model year units as needed. While we anticipate the pricing of many 2025 model year units to be lower than 2023 and 2024 model
year units, we cannot accurately anticipate the effect of inflation on our operations from possible continued cost increases, the full impact of the introduction of 2025 model year units into
inventory and the related pricing of those units, consumers’ willingness to accept higher prices and the potential impact on retail demand and margins.
Cyclicality
Unit sales of RV vehicles historically have been cyclical, fluctuating with general economic cycles. During economic downturns the RV retailing industry tends to experience similar periods
of decline and recession as the general economy. We believe that the industry is influenced by general economic conditions and particularly by consumer confidence, the level of personal
discretionary spending, fuel prices, interest rates and credit availability.
Seasonality and Effects of Weather
Our operations generally experience modestly higher volumes of vehicle sales in the first half of each year due in part to consumer buying trends and the hospitable warm climate during the
winter months at our Florida and Arizona locations. In addition, the northern locations in Colorado, Tennessee, Minnesota, Indiana, Oregon, Washington and Wisconsin generally
experience modestly higher vehicle sales during the spring months.
Our largest RV dealership is located near Tampa, Florida, which is in close proximity to the Gulf of Mexico. A severe weather event, such as a hurricane, could cause severe damage to
property and inventory and decrease the traffic to our
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dealerships. Although we believe that we have adequate insurance coverage, if we were to experience a catastrophic loss, we may exceed our policy limits and/or may have difficulty
obtaining similar insurance coverage in the future.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in accordance with GAAP, and in doing so, we must make estimates, assumptions and judgments affecting the reported amounts of
assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities. We base our estimates, assumptions and judgments on historical experience
and on various other factors we believe to be reasonable under the circumstances. Different assumptions and judgments would change estimates used in the preparation of the
consolidated financial statements, which, in turn, could change the results from those reported. We evaluate our critical accounting estimates, assumptions and judgments on an ongoing
basis.
We believe that, of our significant accounting policies (see Note 2 of the consolidated financial statements included in this Form 10-K), the following policies are the most critical:
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Significant estimates include the assumptions used in the valuation of the net assets acquired in business combinations, goodwill and other
intangible assets, provision for charge-backs, LIFO adjustments and the allowance for doubtful accounts.
Impairment of Goodwill and Intangible Assets
Goodwill and indefinite life intangible assets are not amortized but are tested annually as of our annual impairment assessment date, or more frequently if events or changes in
circumstances indicate that the assets might be impaired. In assessing the recoverability of goodwill indefinite life intangible assets, we must make assumptions about the estimated future
cash flows and other factors to determine the fair value of these assets. For goodwill, our assessment is performed at the reporting unit level, and we have determined that we operate as a
single reporting unit. The goodwill impairment test compares the fair value of the reporting unit to the carrying amount, including goodwill. If the fair value of the reporting unit is less than
the carrying amount, an impairment charge is recorded for the difference, limited to the total amount of goodwill allocated to that reporting unit.
Similarly, for the impairment evaluation for indefinite life intangible assets, which includes our trade names, we determine whether the estimated fair value of the indefinite-lived intangible
asset is less than its carrying value. We calculate the estimated fair value of the indefinite-lived intangible asset and compare it to the carrying value. Fair value is estimated primarily using
future discounted cash flow projections in conjunction with qualitative factors and future operating plans. When the carrying value exceeds fair value, an impairment charge is recorded for
the amount of the difference. An intangible asset is determined to have an indefinite useful life when there are no legal, regulatory, contractual, competitive, economic or other factors that
may limit the period over which the asset is expected to contribute directly or indirectly to our future cash flows. We also annually evaluate intangible assets that are not being amortized to
determine whether events and circumstances continue to support an indefinite useful life. If an intangible asset that is not being amortized is determined to have a finite useful life, the asset
will be amortized prospectively over the estimated remaining useful life and accounted for in the same manner as intangible assets subject to amortization.
Revenue Recognition
The core principle of revenue recognition is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services. We apply a five-step model for revenue measurement and recognition.
Revenues are recognized when control of the promised goods or services is transferred to the customers at the expected amount we are entitled to for such goods and services. Taxes
collected on revenue producing transactions are excluded from revenue in the consolidated statements of operations.
Revenue from the sale of vehicles is recognized at a point in time on delivery, transfer of title and completion of financing arrangements.
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Revenue from the sale of parts, accessories, and related service is recognized as services and parts are delivered or as a customer approves elements of the completion of service. Revenue
from the sale of parts, accessories, and related service is recognized in other revenue in the accompanying consolidated statements of operations.
We receive commissions from the sale of insurance and vehicle service contracts to customers. In addition, we arrange financing for customers through various financial institutions and
receive commissions. We may be charged back ("charge-backs”) for financing fees, insurance or vehicle service contract commissions in the event of early termination of the contracts by
the customers. The revenues from financing fees and commissions are recorded at the time of the sale of the vehicles and an estimated allowance for future charge-backs is established
based on historical operating results and the termination provision of the applicable contracts. The estimates for future chargebacks require judgment by management, and as a result, there
may be an element of risk associated with these revenue streams.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information requested by this Item is not applicable as we have elected scaled disclosure requirements available to smaller reporting companies with respect to this Item.
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Item 8. Financial Statements and Supplementary Data
Lazydays Holdings, Inc.
Index to Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 49)
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for the Years ended December 31, 2023 and December 31, 2022
Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2023 and December 31, 2022
Consolidated Statements of Cash Flows for the Years ended December 31, 2023 and December 31, 2022
Notes to Consolidated Financial Statements
35
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Table of Contents
To the Stockholders and the Board of Directors of Lazydays Holdings, Inc.
Report of Independent Registered Public Accounting Firm
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lazydays Holdings, Inc. and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated
statements of operations, stockholders’ equity and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes to the consolidated financial
statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2023 and 2022, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally
accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission in 2013. Our report dated March 12, 2024 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We
are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be
communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill Impairment Testing
As described in Notes 2 and 7 to the consolidated financial statements, goodwill is evaluated at least annually for impairment and more often whenever changes in facts and circumstances
may indicate that the carrying value may not be recoverable. The Company tests goodwill for impairment by comparing the estimated fair value of the Company’s single reporting unit to its
carrying value. When the carrying value of the reporting unit exceeds its estimated fair value, an impairment charge is recorded, not to exceed the carrying amount of goodwill. The
Company tested goodwill for impairment on its annual test date of September 30 and concluded that goodwill was not impaired as of that date. During the fourth quarter of 2023, the
Company concluded changes in facts and circumstances indicated that the carrying value of goodwill may not be recoverable; consequently the Company performed an interim test of
goodwill for impairment at December 31 and concluded that goodwill was fully impaired, resulting in an impairment charge of $118.0 million for the year ended December 31, 2023. The
Company estimated the fair value of its single reporting unit at September 30 using an income approach with a reconciliation of the concluded fair value to the market capitalization of the
Company with consideration of a reasonable control premium. The Company estimated the fair value of its single reporting unit at December 31 using an equity capitalization market
approach with a reconciliation of the concluded fair value to the market capitalization of the Company with consideration of a reasonable control premium.
We identified the Company’s annual goodwill impairment test at September 30 and its interim impairment test at December 31 as a critical audit matter because of the significant estimates
and assumptions management made in determining the fair value of the single reporting unit at each testing date, including the projected revenue, operating margins and discount rate used
in the income approach in the September 30 impairment test and the selected control premium used in the reconciliation to the market capitalization of the Company in both impairment tests.
Auditing
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management’s assumptions involved a high degree of auditor judgment and an increase in audit effort, including the use of our valuation specialists, due to the impact these assumptions
have on the accounting estimate.
Our audit procedures related to the Company’s annual goodwill impairment test as of September 30, 2023 and the interim goodwill impairment test as of December 31, 2023 included the
following, among others:
• We tested the mathematical accuracy of the models used by management to estimate the fair value of the Company’s single reporting unit at both the annual and interim test dates
and tested the source data for accuracy and completeness by agreeing such information to the underlying support.
• We tested the reasonableness of management’s revenue and operating margin projections used in the income approach by comparing to management’s forecasts to historical
results of the Company and external market and industry data.
• We utilized valuation specialists to assist in the following procedures, among others:
◦
Evaluating the reasonableness of the discount rate used by management in the income approach by comparing the underlying source information to publicly available
market data and verifying the accuracy of the calculations.
Calculating an average and median control premium based upon independently sourced market data and comparing the results to the control premium utilized by
management.
◦
/s/ RSM US LLP
We have served as the Company’s auditor since 2021.
Tampa, Florida
March 12, 2024
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To the Stockholders and the Board of Directors of Lazydays Holdings, Inc.
Report of Independent Registered Public Accounting Firm
Opinion on the Internal Control Over Financial Reporting
We have audited Lazydays Holdings, Inc.’s (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, because of the effect of the material weaknesses described below
on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31,
2023 and 2022, and the related consolidated statement of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023 of the Company
and our report dated March 12, 2024 expressed an unqualified opinion.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the
Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management’s
assessment.
•
•
There were deficiencies in the design and implementation of information technology general controls (ITGCs) in the areas of user access, program change management and security
administration that are relevant to preparation of the financial statements. As a result, IT dependent manual and automated controls that rely on the affected ITGCs, or information
from the IT systems with affected ITGCs were also ineffective.
Resource turnover in the fourth quarter resulted in the lack of sufficient evidence to support the effective performance of the Company’s internal control over financial reporting
across all transaction cycles of the financial statements.
These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does
not affect our report dated March 12, 2024 on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ RSM US LLP
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Tampa, Florida
March 12, 2024
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LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
As of December 31,
2023
2022
ASSETS
Current assets
Cash
Receivables, net of allowance for doubtful accounts of $479 and $476
Inventories
Income tax receivable
Prepaid expenses and other
Total current assets
Property and equipment, net of accumulated depreciation of $46,098 and $35,275
Operating lease right-of-use assets
Goodwill
Intangible assets, net
Other assets
Deferred income tax asset
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable
Accrued expenses and other current liabilities
Dividends payable
Income tax payable
Floor plan notes payable, net of debt discount
Financing liability, current portion
Long-term debt, current portion
Operating lease liability, current portion
Total current liabilities
Long-term liabilities
Financing liability, non-current portion, net of debt discount
Revolving line of credit
Long term debt, non-current portion, net of debt discount
Operating lease liability, non-current portion
Deferred income tax liability
Warrant liabilities
Total liabilities
Commitments and contingencies
Series A convertible preferred stock; 600,000 shares, designated, issued, and outstanding and liquidation preference of $60,000 as of
December 31, 2023 and December 31, 2022.
Stockholders’ equity
Preferred stock, $0.0001 par value; 5,000,000 shares authorized;
Common stock, $0.0001 par value; 100,000,000 shares authorized; 17,477,019 and 14,515,253 shares issued and 14,064,797 and
11,112,464 shares outstanding as of December 31, 2023 and December 31, 2022, respectively.
Additional paid-in capital
Treasury stock, at cost, 3,412,222 and 3,402,789 shares as of December 31, 2023 and December 31, 2022, respectively.
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
$
$
$
58,085 $
22,694
456,087
7,419
2,614
546,899
265,726
26,377
—
80,546
2,750
15,444
937,742 $
15,144 $
29,160
—
3
446,783
2,473
1,141
5,276
499,980
91,401
49,500
61,429
22,242
—
—
724,552
56,193
—
—
165,988
(57,128)
48,137
156,997
937,742 $
61,687
25,053
378,881
7,912
3,316
476,849
158,991
26,984
83,460
81,665
2,769
—
830,718
10,843
27,875
1,210
—
348,735
2,281
3,607
5,074
399,625
89,770
—
10,131
22,755
15,536
906
538,723
54,983
—
—
130,828
(57,019)
163,203
237,012
830,718
See the accompanying notes to the consolidated financial statements.
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LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands except share and per share data)
Year Ended December 31,
2023
2022
Revenue
New vehicle retail
Pre-owned vehicle retail
Vehicle wholesale
Finance and insurance
Service, body and parts and other
Total revenue
Cost applicable to revenue
New vehicle retail
Pre-owned vehicle retail
Vehicle wholesale
Finance and insurance
Service, body and parts, other
LIFO
Total cost applicable to revenue
Gross profit
Depreciation and amortization
Selling, general, and administrative expenses
Goodwill impairment
(Loss) income from operations
Other income (expense)
Floor plan interest expense
Other interest expense
Change in fair value of warrant liabilities
Total other expense, net
(Loss) income before income tax expense
Income tax benefit (expense)
Net (loss) income
Dividends on Series A convertible preferred stock
Net (loss) income and comprehensive (loss) income attributable to common stock and participating securities
EPS:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
$
$
$
$
631,748 $
323,258
8,006
62,139
57,596
1,082,747
552,311
259,494
8,178
2,547
27,723
3,752
854,005
228,742
18,512
198,962
117,970
(106,702)
(24,820)
(10,062)
856
(34,026)
(140,728)
30,462
(110,266)
(4,800)
(115,066) $
(8.41) $
(8.45) $
13,689,001
13,689,001
777,807
394,582
21,266
75,482
57,824
1,326,961
632,316
301,565
21,620
2,729
27,657
12,383
998,270
328,691
16,758
222,218
—
89,715
(8,596)
(7,996)
12,453
(4,139)
85,576
(19,183)
66,393
(4,801)
61,592
3.47
2.42
11,701,302
12,797,796
See the accompanying notes to the consolidated financial statements.
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LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands except share data)
Balance at December 31, 2021
Stock-based compensation
Repurchase of treasury stock
Conversion of warrants and options
Shares issued pursuant to the Employee
Stock Purchase Plan
Dividends on Series A preferred stock
Net income
Balance at December 31, 2022
Stock-based compensation
Repurchase of treasury stock
Conversion of warrants, options and
restricted stock units
Shares issued pursuant to the Employee
Stock Purchase Plan
Disgorgement of short-swing profits
Dividends on Series A preferred stock
Net loss
Balance at December 31, 2023
Common Stock
Treasury Stock
Shares
Amount
Shares
Amount
Additional
Paid-In
capital
Retained
Earnings
Total
Stockholders’
Equity
13,694,417 $
—
—
753,951
66,885
—
—
14,515,253
—
—
2,911,803
49,963
—
—
—
17,477,019 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
707,312 $
—
2,695,477
—
(12,515) $
—
(44,504)
—
121,831 $
2,813
—
10,067
96,810 $
—
—
—
—
—
—
3,402,789
—
9,433
—
—
—
—
—
3,412,222 $
—
—
—
(57,019)
—
(109)
—
—
—
—
—
(57,128) $
918
(4,801)
—
130,828
2,249
—
31,876
413
622
—
—
165,988 $
—
—
66,393
163,203
—
—
—
—
—
(4,800)
(110,266)
48,137 $
206,126
2,813
(44,504)
10,067
918
(4,801)
66,393
237,012
2,249
(109)
31,876
413
622
(4,800)
(110,266)
156,997
See the accompanying notes to the consolidated financial statements.
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LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash Flows From Operating Activities
Net (loss) income
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Stock-based compensation
Bad debt expense
Depreciation and amortization of property and equipment
Amortization of intangible assets
Amortization of debt discount
Non-cash lease expense
Loss (gain) on sale of property and equipment
Goodwill Impairment
Deferred income taxes
Change in fair value of warrant liabilities
Impairment charges
Changes in operating assets and liabilities:
Receivables
Inventories
Prepaid expenses and other
Income tax receivable/payable
Other assets
Accounts payable and Accrued expenses and other current liabilities
Total Adjustments
Net Cash Used In Operating Activities
Cash Flows From Investing Activities
Cash paid for acquisitions, net of cash received
Proceeds from sales of property and equipment
Purchases of property and equipment
Net Cash Used In Investing Activities
Cash Flows From Financing Activities
Net borrowings under M&T bank floor plan
Borrowings under revolving line of credit
Principal payments on long-term debt and finance liabilities
Proceeds from issuance of long-term debt and finance liabilities
Debt issuance costs
Payment of dividends on Series A preferred stock
Repurchase of Treasury Stock
Proceeds from shares issued pursuant to the Employee Stock Purchase Plan
Proceeds from exercise of warrants
Proceeds from exercise of stock options
Disgorgement of short-swing profits
Tax benefit related to stock-based awards
Net Cash Provided By Financing Activities
Net Decrease In Cash
Cash - Beginning
Cash - Ending
See the accompanying notes to the consolidated financial statements.
F-8
Year Ended December 31,
2023
2022
$
(110,266) $
2,249
12
10,954
7,558
312
296
28
117,970
(30,980)
(856)
629
2,347
(42,901)
450
492
(199)
5,425
73,786
(36,480)
(97,727)
—
(95,237)
(192,964)
98,530
49,500
(11,130)
64,005
(3,015)
(4,800)
(109)
413
30,543
1,283
622
—
225,842
(3,602)
61,687
58,085 $
$
66,393
2,813
(526)
9,480
7,278
431
173
(20)
—
1,872
(12,453)
—
6,512
(127,594)
(613)
(6,725)
(1,146)
(17,835)
(138,353)
(71,960)
(14,694)
36
(39,884)
(54,542)
148,180
—
(29,657)
11,686
—
(4,801)
(44,504)
918
5,714
2,418
—
115
90,069
(36,433)
98,120
61,687
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LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(In thousands)
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest
Cash paid during the period for income taxes net of refunds received
Cash Paid for Amounts Included in the Measurement of Lease Liability:
Operating cash flows for operating leases
ROU Assets Obtained in Exchange for Lease Liabilities:
Operating leases
Finance lease
Non-Cash Investing and Financing Activities:
Accrued dividends on Series A Preferred Stock
See the accompanying notes to the consolidated financial statements.
F-9
Year Ended December 31,
2023
2022
11,040 $
620
15,558
23,920
6,810 $
6,556
4,826 $
—
4,826 $
886
24
910
— $
1,210
$
$
$
$
$
Table of Contents
LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
NOTE 1 – BUSINESS ORGANIZATION AND NATURE OF OPERATIONS
Lazydays RV Center, Inc., the operating subsidiary of Lazydays Holdings, Inc., operates recreational vehicle ("RV”) dealerships in 24 locations as follows:
Location
Arizona
Colorado
Florida
Tennessee
Minnesota
Indiana
Iowa
Nevada
Ohio
Oklahoma
Oregon
Texas
Utah
Washington
Wisconsin
Number of Dealerships
3
3
3
3
2
1
1
1
1
1
1
1
1
1
1
Lazydays RV sells and services new and pre-owned recreational vehicles and sells related parts and accessories. We also arrange financing and extended service contracts for vehicle sales
through third-party financing sources and extended warranty providers. We also offer our customers ancillary services such as overnight campground and restaurant facilities.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The Consolidated Financial Statements for the years ended December 31, 2023 and 2022 include the accounts of Lazydays Holdings, Inc. and Lazydays RV Center, Inc. and its wholly
owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.
Segments
We operate one reportable segment, which includes all aspects of our RV dealership operations which include sales of new and pre-owned RVs, assisting customers with vehicle financing
and protection plans, servicing and repairing new and pre-owned RVs, sales of RV parts and accessories and campground facilities. We identified our reporting segment by considering the
level at which the operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America ("GAAP”) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the assumptions used in the valuation of the
net assets acquired in business combinations, goodwill and other intangible assets, provision for charge-backs, LIFO adjustments and the allowance for doubtful accounts.
Cash
Cash consists of business checking accounts with our banks.
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Revenue Recognition
The core principle of revenue recognition is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services. We apply a five-step model for revenue measurement and recognition.
Revenues are recognized when control of the promised goods or services is transferred to customers at the expected amount we are entitled to for such goods and services. Taxes collected
on revenue producing transactions are excluded from revenue in the consolidated statements of operations.
Revenue from the sale of vehicle contracts is recognized at a point in time on delivery, transfer of title and completion of financing arrangements.
Revenue from the sale of parts, accessories, and related service is recognized as services and parts are delivered or as a customer approves elements of the completion of service.
We receive commissions from the sale of insurance and vehicle service contracts to customers. In addition, we arrange financing for customers through various financial institutions and
receive commissions. We may be charged back ("charge-backs”) for financing fees, insurance or vehicle service contract commissions in the event of early termination of the contracts by
our customers. The revenues from financing fees and commissions are recorded at the time of the sale of the vehicle and an allowance for future charge-backs is established based on
historical operating results and the termination provision of the applicable contracts. The estimates for future chargebacks require judgment by management, and as a result, there is an
element of risk associated with these revenue streams. We recognized finance and insurance revenues, less the addition to the charge-back allowance as follows:
Gross finance and insurance revenues
Less charge-back allowance
Net finance and insurance revenues
Year Ended December 31,
2023
2022
$
$
69,811 $
(7,672)
62,139 $
82,226
(6,744)
75,482
We have an accrual for charge-backs which totaled $8.8 million and $8.2 million at December 31, 2023 and 2022, respectively, and is included in Accrued expenses and other current liabilities
in the accompanying Consolidated Balance Sheets.
Receivables
We sell to customers and arrange third-party financing, as is customary in the industry. These financing arrangements result in receivables from financial institutions. Interest is not
normally charged on receivables. Management establishes an allowance for doubtful accounts based on our historic loss experience and current economic conditions. Losses are charged
to the allowance when management deems further collection efforts will not produce additional recoveries.
Inventories
Vehicle and parts inventories are recorded at the lower of cost or net realizable value, with cost determined by the last-in, first-out ("LIFO”) method. Cost includes purchase costs,
reconditioning costs, dealer-installed accessories and freight. For vehicles accepted as trade-ins, the cost is the fair value of such pre-owned vehicles at the time of the trade-in. Other
inventory includes parts and accessories, as well as retail travel and leisure specialty merchandise, and is recorded at the lower of cost or net realizable value with cost determined by LIFO
method.
The current replacement costs of LIFO inventories exceeded their recorded values by $24.6 million and $20.8 million as of December 31, 2023 and 2022, respectively.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense in the period incurred.
Improvements and additions are capitalized. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the assets. Leasehold
improvements are amortized using the straight-line method over the lesser of the useful life of the asset or the term of the lease.
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Useful lives range from 15 to 39 years for buildings and improvements and from 5 to 7 years for vehicles and equipment.
Goodwill and Indefinite-lived Intangible Assets
We perform an annual review for the potential impairment of the carrying value of goodwill as of September 30, or more frequently if events or circumstances indicate a possible impairment.
In the third quarter of 2023, we changed the date of our annual review to October 1, 2023. This change in accounting principle was not considered to be material. For purposes of evaluating
goodwill for impairment, we have one reporting unit. In evaluating goodwill for impairment, we may assess qualitative factors to determine whether it is more likely than not (that is, a
likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying amount. If we bypass the qualitative assessment, or if we conclude that it is more likely than not
that the fair value of the reporting unit is less than its carrying value, then we perform a quantitative impairment test by comparing the fair value of the reporting unit with its carrying
amount. Qualitative factors that we consider include, for example, macroeconomic and industry conditions, overall financial performance, and other relevant entity-specific events. If the
qualitative assessment is not conclusive, then a quantitative impairment analysis for goodwill is performed at the reporting unit level. We may also choose to perform this quantitative
impairment analysis instead of the qualitative analysis. The quantitative impairment analysis compares the fair value of the reporting unit, determined using the income, to its recorded
amount. If the recorded amount exceeds the fair value, then a goodwill impairment charge is recorded for the difference up to the recorded amount of goodwill.
Similarly, for the impairment evaluation for indefinite-lived intangible assets, which includes our trade names, we determine whether it is more likely than not that the fair value is less than
the carrying amount. If we conclude that it is more likely than not that the fair value is less than the carrying value, then we perform a quantitative assessment by calculating the estimated
fair value and comparing to the carrying value. Fair value is estimated primarily using the relief from royalty method, in conjunction with qualitative factors and future operating plans. When
the carrying value exceeds fair value, an impairment charge is recorded for the amount of the difference. An intangible asset is determined to have an indefinite useful life when there are no
legal, regulatory, contractual, competitive, economic or other factors that may limit the period over which the asset is expected to contribute directly or indirectly to our future cash flows.
We also annually evaluate intangible assets that are not being amortized to determine whether events and circumstances continue to support an indefinite useful life. If an intangible asset
that is not being amortized is determined to have a finite useful life, the asset will be amortized prospectively over the estimated remaining useful life and accounted for in the same manner
as intangible assets subject to amortization.
Our manufacturer and customer relationships are amortized over their estimated useful lives on a straight-line basis. The estimated useful lives are 8 to 15 years for both the manufacturer
and customer relationships.
Vendor Allowances
As a component of our consolidated procurement program, we frequently enter into contracts with vendors that provide for payments of rebates. These vendor payments are reflected as a
reduction in the carrying value of Inventory when earned or as progress is made towards earning the rebates and as a component of Costs applicable to revenue as the inventory is sold.
Certain of these vendor contracts provide for rebates that are contingent upon us meeting specified performance measures such as a cumulative level of purchases over a specified period
of time. Such contingent rebates are given accounting recognition at the point at which achievement of the specified performance measures is deemed to be probable and reasonably
estimable.
Impairment of Long-Lived and Definite-Lived Intangible Assets
We evaluate the carrying value of long-lived and definite lived intangible assets whenever events or changes in circumstances indicate that the asset’s carrying amount may not be
recoverable. Such circumstances could include, but are not limited to (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in
which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset.
When such circumstances occur, we measure the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected
future net cash flows be less than the carrying amount of the asset being evaluated, an impairment loss would be recognized for the amount by which the carrying value of the asset
exceeds its fair value. The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require
significant judgment and actual results may differ from assumed and estimated amounts.
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In the first quarter of 2023, we recorded an asset impairment charge totaling $0.6 million as a component of Selling, general and administrative expenses related to capitalized software for an
IT project that we decided not to utilize. $0.5 million had been recorded in Prepaid and other assets on our Consolidated Balance Sheets at December 31, 2022.
We have evaluated the impacts of the triggering event as well as other factors as discussed in Note 7- Goodwill and Intangible Assets, and completed a qualitative assessment of long-lived
and intangible asset impairments. As a result of this assessment, we have concluded that long-lived and intangible assets were not impaired during the years ended December 31, 2023 or
2022.
Fair Value of Financial Instruments
We determined the carrying value of Cash, Receivables, Accounts payable and Accrued expenses and other current liabilities approximate their fair values due to the short-term nature of
their terms.
The carrying amount of Floor plan notes payable and amounts outstanding under our Revolving Credit Facility approximate fair value due to their short-term nature or the existence of
variable interest rates that approximate prevailing market rates.
The carrying amount of other bank debt approximates fair value because the debt bears interest at a rate that approximates prevailing market rate at which we could borrow funds with
similar maturities.
Cumulative Redeemable Convertible Preferred Stock
Our Series A Preferred Stock (See Note 15) is cumulative redeemable convertible preferred stock. Accordingly, it is classified as temporary equity and is shown net of issuance costs and the
relative fair value of warrants issued in conjunction with the issuance of the Series A Preferred Stock.
Stock-Based Compensation
We account for stock-based compensation for employees and directors in accordance with Accounting Standards Codification ("ASC”) 718, Compensation. ASC 718 requires all share-
based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Under the provisions of ASC 718,
stock-based compensation costs are measured at the grant date, based on the fair value of the award, and are recognized as expense over the employee’s requisite or derived service period.
Forfeitures are recognized as they occur. In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified as cash flows from financing
activities.
We record excess tax benefits and tax deficiencies resulting from the settlement of stock-based awards as a benefit or expense within Income taxes in the Consolidated Statements of
Operations and Comprehensive Income (Loss) in the period in which they occur.
Earnings Per Share
We compute basic and diluted earnings per share ("EPS”) by dividing net earnings by the weighted average number of shares of common stock outstanding during the period.
We are required, in periods in which we have net income, to calculate EPS using the two-class method. The two-class method is an earnings allocation formula that treats a participating
security as having rights to earnings that otherwise would have been available to common stockholders but does not require the presentation of basic and diluted EPS for securities other
than common stock. The two-class method is required because our Series A convertible preferred stock ("Preferred Stock”) has the right to receive dividends or dividend equivalents
should we declare dividends on our common stock as if such holder of the Preferred Stock had been converted to common stock. Under the two-class method, earnings for the period are
allocated to the common and preferred stockholders taking into consideration Series A preferred stockholders participation in dividends on an as converted basis. The weighted-average
number of common and preferred shares outstanding during the period is then used to calculate basic EPS for each class of shares. Diluted EPS is computed in the same manner as basic
EPS except that the denominator is increased to include the number of contingently issuable share-based compensation awards that would have been outstanding unless those additional
shares would have been anti-dilutive. For the diluted EPS computation, the if-converted method is applied and compared to the two-class method and whichever method results in a more
dilutive impact is utilized to calculate diluted EPS.
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In periods in which we have a net loss, basic loss per share is calculated by dividing the loss attributable to common stockholders by the weighted-average number of common shares
outstanding during the period. The two-class method is not used because the Preferred Stock does not participate in losses. As such, the net loss was attributed entirely to common
stockholders.
Advertising Costs
Advertising and promotion costs are charged to operations in the period incurred as a component of Selling, general and administrative expense. Advertising and promotion costs totaled
$22.0 million and $30.6 million for the years ended December 31, 2023 and 2022, respectively.
Income Taxes
We account for income taxes under ASC 740 Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and
tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. We record a valuation allowance to offset deferred
tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a
change in tax rates is recognized as income or loss in the period that includes the enactment date.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for
financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
Tax benefits claimed or expected to be claimed on a tax return are recorded in our financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than
not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from
such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Uncertain tax positions have had no
impact on our financial condition, results of operations or cash flows. We do not expect any significant changes in our unrecognized tax benefits within twelve months of the reporting date.
Our policy is to classify assessments, if any, for tax related interest and penalties as a component of Income tax benefit (expense).
Vendor Concentrations
We purchase our new RVs and replacement parts from various manufacturers.
Significant manufacturers were as follows:
Thor Industries
Winnebago Industries
Forest River
Year Ended December 31,
2023
2022
41.0 %
32.0 %
23.0 %
We are subject to dealer agreements with each manufacturer. The manufacturer is entitled to terminate the dealer agreement if we are in material breach of the agreement terms.
Geographic Concentrations
Revenues by state that generated 10% or more of revenues were as follows:
Florida
Tennessee
Year Ended December 31,
2023
2022
41 %
14 %
49.1 %
29.1 %
18.3 %
44 %
14 %
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These geographic concentrations increase the exposure to adverse developments related to competition, as well as economic, demographic, weather and other changes in these regions.
Reclassifications
Certain amounts in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no effect on the previously reported net income.
Lease Recognition
At inception of a contract, we determine whether an arrangement is or contains a lease. For all leases, we determine the classification as either operating or financing.
Operating lease assets represent our right to use an underlying asset for the lease term, and Operating lease liability represents our obligation to make lease payments under the lease. Lease
recognition occurs at the commencement date and Operating lease liability amounts are based on the present value of lease payments over the lease term. Our lease terms may include
options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Because most of our leases do not provide information to determine an implicit interest
rate, we use our incremental borrowing rate in determining the present value of lease payments. Operating lease assets also include any lease payments made prior to the commencement
date and exclude lease incentives received. Operating lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with both lease and non-lease
components, which are generally accounted for together as a single lease component.
Leases with lease terms of 12 months or less are expensed on a straight-line basis over the lease term and are not recorded in the Consolidated Balance Sheets.
Most leases include one or more options to renew, with renewal terms that can extend the lease term up to 50 years (some leases include multiple renewal periods). The exercise of lease
renewal options is at our sole discretion. In addition, some of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements neither contain any
residual value guarantees nor impose any significant restrictions or covenants.
Assets under leases that are determined to be finance leases are recorded as Property and equipment with the corresponding liability recorded as Financing liability on on Consolidated
Balance Sheets.
See Note 9 and Note 10 for additional information.
Recently Issued Accounting Standards
Adopted
ASU 2021-08
In October 2021, the Financial Accounting Standards Board ("FASB”) issued Accounting Standards Update ("ASU”) No. 2021-08, Business Combinations (Topic 805): Accounting for
Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08”). This standard requires contract assets and contract liabilities, such as certain receivables and
deferred revenue, acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification
("ASC”) 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts
recorded by the acquiree instead of recording those balances at fair value. This standard should be applied prospectively to acquisitions occurring after the effective date. The adoption of
ASU 2021-08 on January 1, 2023 did not have any effect on our Consolidated Financial Statements.
Not Yet Adopted
ASU 2020-06
In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity
(Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update simplifies the accounting for convertible debt instruments and convertible
preferred stock by reducing the number of accounting models and limiting the number of embedded conversion features separately recognized from the primary contract. The guidance also
includes targeted improvements to the disclosures for convertible instruments and earnings per share. ASU 2020-06 is effective for fiscal
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years beginning after December 15, 2023, including interim periods within those fiscal years. We are currently evaluating the impact that this new standard will have on our Consolidated
Financial Statements.
ASU 2023-07
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. The amendments in this ASU are effective for fiscal years beginning after December
15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are currently evaluating the impact of this guidance on our Consolidated Financial Statements.
ASU 2023-09
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This ASU requires enhanced jurisdictional and other disaggregated disclosures for the
effective tax rate reconciliation and income taxes paid and is effective for fiscal years beginning after December 15, 2024. This ASU requires additional disclosures and, accordingly, we do
not expect the adoption of ASU 2023-09 to have a material effect on our financial position, results of operations or cash flows.
NOTE 3 – BUSINESS COMBINATIONS
During the years ended December 31, 2023 (the "2023 Acquisitions”) and 2022 (the "2022 Acquisitions”) we acquired all of the outstanding equity interest in the following entities:
2023 Acquisitions
•
•
•
•
•
February 15, 2023
July 24, 2023
August 7, 2023
November 6, 2023
November 20, 2023
2022 Acquisition
•
July 23, 2022
Findlay RV in Las Vegas, Nevada (the "Findlay Acquisition”)
Buddy Gregg RVs & Motor Homes in Knoxville, Tennessee (the "Buddy Gregg Acquisition”)
Century RV in Longmont, Colorado (the "Century Acquisition”)
RVZZ LLC in St. George, Utah (the "RVzz Acquisition")
Orangewood RV in Surprise, Arizona (the "Orangewood Acquisition")
Dave’s Claremore RV in Tulsa, Oklahoma
We incurred $2.3 million of acquisition related expenses recorded as a component of Selling, general and administrative in the year ended December 31, 2023.
Revenue and Income from operations contributed by the 2023 Acquisitions subsequent to the date of acquisition were as follows:
(In thousands)
Revenue
Loss from operations
$
Year ended December 31, 2023
The following tables summarize the consideration paid and the preliminary purchase price allocation for identified assets acquired and liabilities assumed as of the acquisition dates:
(In thousands)
Consideration paid in cash
Floor plan notes payable
Total Consideration
Year Ended December 31,
2023
2022
$
$
97,727 $
—
97,727 $
F-16
46,505
(651)
14,694
8,069
22,763
Table of Contents
(In thousands)
Cash
Inventories
Accounts receivable and prepaid expenses
Prepaid expenses and other
Property and equipment
Goodwill
Intangible assets
Total assets acquired
Accounts payable
Accrued expenses and other current liabilities
Total liabilities assumed
Net assets acquired
Year Ended December 31,
2023
2022
2 $
34,305
—
372
22,480
34,285
6,449
97,893
118
49
167
97,726 $
5
9,504
98
—
7,353
4,692
1,140
22,792
—
29
29
22,763
$
$
We accounted for the 2023 Acquisitions and the 2022 Acquisitions as business combinations, which requires us to record the assets acquired and liabilities assumed at fair value as of the
acquisition date. The fair values of the assets acquired and liabilities assumed, which are presented in the table above, and the related acquisition accounting are based on management’s
estimates and assumptions, as well as information compiled by management. Our estimates and assumptions are subject to change during the measurement period, not to exceed one year
from the acquisition date.
Goodwill represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed. The primary items
that generated the goodwill are the value of the synergies between us and the acquired businesses and the growth and operational improvements that drive profitability growth, neither of
which qualify for recognition as a separately identified intangible asset. We expect substantially all of the goodwill related to the 2023 Acquisitions to be deductible for federal income tax
purposes.
See Note 2 - Significant Accounting Policies and Note 7 - Goodwill and Intangible Assets for additional information regarding Goodwill.
The following table summarizes our allocation of the purchase price to the identifiable intangible assets acquired. The allocations are final for the 2023 Acquisitions and the 2022
Acquisitions.
(Dollars in thousands)
Customer Lists
Dealer Agreements
2023
2022
2023
2022
$
— $
6,449
240
900
—
8 years
15 years
10 years
Gross Asset Amount at
Acquisition Date
Weighted Average Amortization
Period
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The following unaudited pro forma financial information presents consolidated information as though the 2023 Acquisitions and the 2022 Acquisitions had been consummated on January
1, 2023 and January 1, 2022, respectively.
(In thousands)
Revenue
(Loss) income before income taxes
Net (loss) income
$
Year Ended December 31,
2023
2022
112,056 $
2,880
2,811
1,427,197
89,165
69,893
These amounts have been adjusted to eliminate business combination expenses, the incremental depreciation and amortization associated with the preliminary purchase price allocation as
well as the income taxes for the previously un-taxed acquired entities to determine pro forma net (loss) income.
NOTE 4 – RECEIVABLES, NET
Receivables consisted of the following:
(In thousands)
Contracts in transit and vehicle receivables
Manufacturer receivables
Finance and other receivables
Less: Allowance for doubtful accounts
As of December 31,
2023
2022
$
$
14,347 $
8,750
76
23,173
(479)
22,694 $
15,442
8,760
1,327
25,529
(476)
25,053
Contracts in transit represent receivables from financial institutions for the portion of the vehicle and other products sales price financed by our customers through financing sources
arranged by us. Manufacturer receivables are due from the manufacturers for incentives, rebates, and other programs. These incentives and rebates are treated as a reduction of Cost of
revenue.
NOTE 5 – INVENTORIES
Vehicle and parts inventories are recorded at the lower of cost or net realizable value, with cost determined by the last-in, first-out ("LIFO”) method. Cost includes purchase costs,
reconditioning costs, dealer-installed accessories and freight. For vehicles accepted as trade-ins, the cost is the fair value of such pre-owned vehicles at the time of the trade-in. Other
inventory includes parts and accessories, as well as retail travel and leisure specialty merchandise, and is recorded at the lower of cost or net realizable value with cost determined by LIFO
method.
Inventories consisted of the following:
(In thousands)
New recreational vehicles
Pre-owned recreational vehicles
Parts, accessories and other
Less: excess of current cost over LIFO
Total
As of December 31,
2023
2022
$
$
385,001 $
86,517
9,144
480,662
(24,575)
456,087 $
342,415
50,457
6,831
399,703
(20,822)
378,881
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NOTE 6 – PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
(In thousands)
Land
Building and improvements, including leasehold improvements
Furniture and equipment
Vehicles
Construction in progress
Less: Accumulated depreciation and amortization
Net PP&E
Depreciation expense was as follows:
(In thousands)
Depreciation
NOTE 7 – GOODWILL AND INTANGIBLE ASSETS
As of December 31,
2023
2022
$
$
76,291 $
157,463
20,364
2,322
55,384
311,824
(46,098)
265,726 $
41,286
113,596
17,503
1,691
20,190
194,266
(35,275)
158,991
Year Ended December 31,
2023
2022
$
10,954 $
9,480
Commencing with the announcement of the Rights Offering, there was a prolonged decline in our share price which did not reverse in the fourth quarter upon cancellation of the Rights
Offering. This resulted in a triggering event in December. As a result of this triggering event, we performed a quantitative assessment as of December 31, 2023.
We calculated the estimated fair value of the reporting unit using an equity market capitalization approach, leveraging our outstanding share price adjusted for preferred stock equity and
applying a 30% control premium. We found this method to be preferable to the income approach used in the September 30, 2023 quantitative assessment, given that we operate in a single
reporting unit, and the emphasis placed on our market capitalization as a result of the depressed share price. As a result of this test, we determined that the carrying value of the reporting
unit exceeded its fair value, resulting in an impairment charge of $118.0 million, which represents the entirety of the goodwill balance previously recorded. The non-cash impairment charge is
recognized in the Goodwill impairment expense line for 2023 in the accompanying Consolidated Statements of Operations.
The changes in the carrying amounts of goodwill were as follows (in thousands):
Balance as of December 31, 2021
Acquisitions
Measurement period adjustments related to prior acquisitions
Balance as of December 31, 2022
Acquisitions
Goodwill impairment
Measurement period adjustments related to current year acquisitions
Balance as of December 31, 2023
F-19
$
$
80,318
4,692
(1,550)
83,460
40,735
(117,970)
(6,225)
—
Table of Contents
Accumulated goodwill impairment losses were $118.0 million and $0 as of December 31, 2023 and December 31, 2022, respectively.
Detail of Intangible assets was as follows:
(In thousands)
Amortizable intangible assets:
Manufacturer relationships
Customer relationships
Non-compete agreements
Non-amortizable intangible assets:
Trade names and trademarks
As of December 31, 2023
As of December 31, 2022
Gross
Carrying
Amount
Accumulated
Amortization
Net
Asset
Value
Gross
Carrying
Amount
Accumulated
Amortization
Net
Asset
Value
$
$
71,849 $
10,395
230
82,474
30,100
112,574 $
26,968 $
4,893
167
32,028
—
32,028 $
44,881 $
5,502
63
50,446
30,100
80,546 $
65,400 $
10,395
230
76,025
30,100
106,125 $
20,346 $
3,993
121
24,460
—
24,460 $
45,054
6,402
109
51,565
30,100
81,665
Amortization expense related to Intangible assets was as follows:
(In thousands)
Amortization
Future amortization of Intangible assets is as follows:
(In thousands)
2024
2025
2026
2027
2028
Thereafter
As of December 31, 2023, the weighted average remaining amortization period was 10.5.
F-20
Year Ended December 31,
2023
2022
$
7,558 $
7,278
$
$
8,138
8,070
7,391
7,080
7,004
12,763
50,446
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NOTE 8 – EARNING PER SHARE
The following table summarizes net (loss) income attributable to common stockholders used in the calculation of basic and diluted (loss) income per common share:
Year Ended December 31,
2023
2022
(In thousands except share and per share amounts)
Distributed (loss) income allocated to common stock
Net (loss) income attributable to common stock and participating securities used to calculate basic (loss) earnings
per share
Net (loss) income allocated to Series A convertible preferred stock
Net (loss) income allocated to common stock and participating securities
$
$
Weighted average common shares outstanding
Dilutive effect of pre-funded warrants
Weighted average shares outstanding - basic
Weighted average common shares outstanding
Weighted average prefunded warrants
Weighted average warrants (equity)
Weighted average warrants (liabilities)
Weighted average options
Weighted shares outstanding - diluted
Basic (loss) income per common share
Diluted (loss) income per common share
— $
(110,266)
(4,800)
(115,066) $
13,388,644
300,357
13,689,001
13,388,644
300,357
—
—
—
13,689,001
$
$
(8.41) $
(8.45) $
—
40,618
20,974
61,592
11,400,945
300,357
11,701,302
11,400,945
300,357
534,137
237,518
324,839
12,797,796
3.47
2.42
245,032
72,459
4,517
322,008
The following common stock equivalent shares were excluded from the computation of the diluted (loss) income per share, since their inclusion would have been anti-dilutive:
Stock options
Restricted stock units
Shares issuable under the Employee Stock Purchase Plan
Share equivalents excluded from EPS
NOTE 9 – FINANCING LIABILITY
Year Ended December 31,
2023
2022
139,650
238,275
27,266
405,191
We have operations at several properties that were previously sold and then leased back from the purchasers over a non-cancellable period of 20 years. The leases contain renewal options
at lease termination, with three options to renew for 10 additional years each and contain a right of first offer in the event the property owner intends to sell any portion or all of the property
to a third party. These rights and obligations constitute continuing involvement, which resulted in failed sale-leaseback (financing) accounting. The financing liabilities have implied interest
rates ranging from 5.0% to 7.9% and have original expiration dates between September 1, 2024 and June 1, 2025. At the conclusion of the 20-year lease period, the financing liability residual
will correspond to the carrying value of the land.
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The Financing liability, net of debt discount, was follows:
(In thousands)
Financing liability
Debt discount
Financing liability, net of debt discount
Less: current portion
Financing liability, non-current portion
Principal and interest payments made were as follows:
(In thousands)
Principal
Interest
As of December 31,
2023
2022
$
$
93,978 $
(104)
93,874
2,473
91,401 $
92,160
(109)
92,051
2,281
89,770
Year Ended December 31,
2023
2022
$
2,177 $
6,021
2,212
7,029
On December 29, 2022, we repurchased real estate in Nashville, Tennessee and Elkhart, Indiana that was previously leased through two finance leases for $24.5 million. Upon the
repurchase, the finance leases were terminated. There were no repurchases of leased properties during the year ended December 31, 2023.
Future minimum payments required by the arrangements are as follows (in thousands):
(In thousands)
2024
2025
2026
2027
2028
Thereafter
NOTE 10 – LEASES
Principal
Interest
Total
Payment
$
$
2,473 $
2,826
3,201
3,616
4,064
77,798
93,978 $
6,410 $
6,231
6,027
5,797
5,536
35,333
65,334 $
8,883
9,057
9,228
9,413
9,600
113,131
159,312
We lease property, equipment and billboards throughout the U.S. primarily under thirty-five operating leases. The related right-of-use ("ROU”) assets for these operating leases are
included in operating lease right-of-use assets. Leases with lease terms of 12 months or less are expensed on a straight-line basis over the lease term and are not recorded in the Condensed
Consolidated Balance Sheets.
Most leases include one or more options to renew, with renewal terms that can extend the lease term up to 50 years (some leases include multiple renewal periods). The exercise of lease
renewal options is at our sole discretion. In addition, some of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements neither contain any
residual value guarantees nor impose any significant restrictions or covenants.
As of December 31, 2023, the weighted-average remaining lease term and weighted-average discount rate of operating leases was 6.2 years and 5.3%, respectively.
Operating lease costs were $6.8 million and $6.6 million for the years ended December 31, 2023 and 2022, respectively, including variable lease costs.
F-22
Table of Contents
Future maturities of our Operating lease liability as of December 31, 2023 are as follows:
(In thousands)
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: Imputed interest
Present value of lease liabilities
NOTE 11 – DEBT
Operating Leases
6,629
5,618
4,374
4,335
4,191
7,257
32,404
4,886
27,518
$
$
M&T Financing Agreement
On February 21, 2023, we amended our $369 million Senior Secured Credit Facility with M&T Bank.
The material provisions of the amendment were to (i) increase the capacity under the Floor Plan Line of Credit to up to $525 million from $327 million and increase the capacity under the
Revolving Credit Facility to up to $50 million from $25 million; (ii) remove the mortgage loan facility ("Mortgage Loan Facility”) and M&T term loan facility (the "M&T Term Loan Facility”);
(iii) extend the term of the M&T floor plan line of credit (the "Floor Plan Line of Credit”) and the revolving credit facility (the "Revolving Credit Facility”) to February 21, 2027; (iv) lower
interest rates on the Floor Plan Line of Credit and the Revolving Credit Facility; and (v) remove certain guarantors.
In the first quarter of 2023, at the time of the amendment, we paid off the $5.4 million outstanding on the Mortgage Loan Facility and the $6.7 million outstanding on the Term Loan Facility.
At December 31, 2023, there was $446.8 million outstanding on the Floor Plan Line of Credit at an interest rate of 7.5% and $49.5 million outstanding on the Revolving Credit Facility at an
interest rate of 8.35%. We were not in compliance with our financial and restrictive covenants at December 31, 2023 as we exceed our maximum total leverage ratio of 3.00, but received a
waiver from M&T bank through the second quarter of 2024, and received modified covenants through the fourth quarter of 2024.
The Floor Plan Line of Credit bears interest at: (a) 30-day SOFR plus an applicable margin of 1.90% to 2.05% based on the total net leverage ratio (as defined in the new M&T Facility) or (b)
the Base Rate plus a margin of 0.90% to 1.05% based on the total net leverage ratio (as defined in the new M&T Facility). Base Rate means, for any day, the fluctuating rate per annum equal
to the highest of: (a) the Prime Rate for such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined on a
daily basis, plus 100 Basis Points. The Floor Plan Line of Credit is also subject to an annual unused commitment fee at 0.15% of the average daily unused portion of the Floor Plan.
The M&T Revolving Credit facility bears interest at: (a) 30-day SOFR plus an applicable margin of 2.15% to 2.90% based on the total net leverage ratio (as defined in the new M&T Facility)
or (b) the Base Rate plus a margin of 1.15% to 1.90% based on the total net leverage ratio (as defined in the new M&T Facility). Base Rate means, for any day, the fluctuating rate per annum
equal to the highest of: (a) the Prime Rate for such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined
on a daily basis, plus 100 Basis Points.
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Table of Contents
The Revolving Credit facility is also subject to a quarterly unused commitment fee at 0.15% of the average daily unused portion of the Credit facility.
The M&T Floor Plan Line of Credit consisted of the following:
(In thousands)
Floor plan notes payable, gross
Debt discount
Floor plan notes payable, net of debt discount
As of December 31,
2023
2022
$
$
447,647 $
(864)
446,783 $
349,117
(382)
348,735
Borrowings under M&T Financing Agreement are secured by a first priority lien on substantially all of our assets.
On March 8, 2024, we entered into the First Amendment to the Second Amended and Restated Credit Agreement and Consent with M&T to waive and modify certain covenants. This
included waiving the net leverage ratio from the fourth quarter of 2023 through the second quarter of 2024, the current ratio for the fourth quarter of 2023, and the fixed charge coverage ratio
for the first and second quarters of 2024. Additionally, an additional tier was added to the definition of applicable margin of the M&T credit facilities, setting forth the applicable interest
rates corresponding to a total net leverage ratio of 3.00 ≤ X. This new tier is applicable as of March 8, 2024.
Long-Term Debt
Mortgages
In July 2023, we entered into two mortgages for total proceeds of $29.3 million secured by certain real estate assets at our Murfreesboro and Knoxville locations. The loans bear interest
between 6.85% and 7.10% per annum and mature in July 2033.
Coliseum Term Loan
On December 29, 2023, we entered into a $35 million term loan (the "Loan") with the Lender, with a maturity date of December 29, 2026. Certain funds and accounts managed by Coliseum
currently hold 57% of LazyDays common stock (calculated as if the preferred stock has been converted into common stock) as of December 31, 2023 and is therefore considered a related
party. The Loan bears interest at a rate of 12% per annum, payable monthly in cash on the outstanding loan balance. For any quarterly period during the Loan term, we have the option at
the beginning of each quarter to make pay-in-kind elections, whereby the entire outstanding balance would be charged interest at 14% per annum and interest amounts will be added to the
outstanding principal. The Loan is secured by certain of our assets. Issuance costs of $2.0 million were recorded as debt discount and are being amortized over the term of the Loan to
interest expense using the effective interest method. The Loan is carried at the outstanding principal balance, less debt issuance costs.
Under the terms of the Loan, for any repayments and prepayments that occur prior to January 1, 2025, we will owe a prepayment penalty of 1% on the outstanding principal balance being
repaid and a make whole premium equal to the remaining interest owed on such balance repaid from date of repayment through January 1, 2025. For repayments and prepayments that occur
after January 1, 2025 through maturity, we will owe a prepayment penalty of 2% on the outstanding principal balance being repaid.
The Loan contains certain reporting and compliance-related covenants. The Loan contains negative covenants, among other things, related to borrowing and events of default. It also
includes certain non-financial covenants and covenants limiting our ability to dispose of assets, undergo a change in control, merge with, acquire stock, or make investments in other
companies, in each case subject to certain exceptions. Upon the occurrence of an event of default, in addition to the lender being able to declare amounts outstanding under the Loan due
and payable or foreclose on the collateral, the lender can elect to increase the interest rate by 7% per annum during the period of default. In addition, the Loan contains a cross default with
M&T Bank. As of December 31, 2023, we were not in compliance with all of the covenants with M&T Bank as we exceed our max leverage covenant, however the cross default was waived
for the period ended December 31, 2023.
F-24
Table of Contents
Summary
Long-term debt was as follows:
(In thousands)
Total long-term debt
Less: current portion
Long-term debt, non-current
Future maturities of long-term debt are as follows:
(In thousands)
2024
2025
2026
2027
2028
Thereafter
Total
NOTE 12 – INCOME TAXES
The components of our income tax (benefit) expense were as follows:
(In thousands)
Current:
Federal
State
Deferred:
Federal
State
Income tax (benefit) expense
As of December 31, 2023
As of December 31, 2022
Gross
Principal
Amount
Debt Discount
Total Debt,
Net of Debt
Discount
Gross
Principal
Amount
Debt
Discount
Total Debt,
Net of Debt
Discount
$
$
64,870 $
1,141
63,729 $
(2,300) $
—
(2,300) $
62,570 $
1,141
61,429 $
13,787 $
3,607
10,180 $
(49) $
—
(49) $
13,738
3,607
10,131
1,141
1,205
35,826
886
950
24,862
64,870
13,389
3,922
17,311
1,651
221
1,872
19,183
$
$
Year Ended December 31,
2023
2022
$
$
539 $
(21)
518
(24,307)
(6,673)
(30,980)
(30,462) $
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Table of Contents
A reconciliation of income taxes calculated using the statutory federal income tax rate (21% in 2023 and 2022) to our income tax expense is as follows:
Income taxes at statutory rate
Non-deductible expense
State income taxes, net of federal tax effect
Stock-based compensation and officer compensation
Change in fair value of warrant liabilities
Impairment of Goodwill
Other credits and changes in estimate
Income tax (benefit) expense
Deferred tax assets and liabilities were as follows:
(In thousands)
Deferred tax assets:
Accounts receivable
Accrued charge-backs
Other accrued liabilities
Goodwill
Financing liability
Operating lease liability
Stock-based compensation
Net operating losses
Interest expense limitation
Other, net
Deferred tax liabilities:
Prepaid expenses
Goodwill
Inventories
Property and equipment
Right of use asset
Intangible assets
Net deferred tax asset (liability)
Year ended
December 31, 2023
Year ended
December 31, 2022
Amount
%
Amount
%
$
$
(29,543)
66
(4,826)
49
(180)
4,502
(530)
(30,462)
21.0 % $
— %
3.4 %
— %
0.1 %
-3.2 %
0.4 %
21.7 % $
17,971
55
3,329
450
(2,615)
—
(7)
19,183
As of December 31,
2023
2022
$
$
120 $
2,199
372
22,677
15,682
6,912
468
2,432
2,528
219
53,609
(507)
—
(6,035)
(13,817)
(6,626)
(11,180)
(38,165)
15,444 $
21.0 %
0.1 %
3.8 %
0.6 %
-3.0 %
— %
-0.1 %
22.4 %
167
2,093
639
—
16,448
8,039
523
—
—
139
28,048
(649)
(1,908)
(6,873)
(14,747)
(8,039)
(11,368)
(43,584)
(15,536)
No significant increases or decreases in the amounts of unrecognized tax benefits are expected in the next 12 months.
We are subject to U.S. federal income tax and income tax in the states of Florida, Arizona, Colorado, Minnesota, Tennessee, Texas, Indiana, Oregon, Wisconsin, Oklahoma and Iowa. We are
no longer subject to the examination by Federal and state taxing authorities for years prior to 2020. We recognize interest and penalties related to income tax matters in Income tax expense.
Interest and penalties were insignificant in the years ended December 31, 2023 and 2022.
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Table of Contents
NOTE 13 – EMPLOYEE BENEFIT PLANS
We have a 401(k) plan with profit sharing provisions (the "Plan”) that covers substantially all employees. The Plan allows employee contributions to be made on a salary reduction basis
under Section 401(k) of the Internal Revenue Code. Under the 401(k) provisions, we make discretionary matching contributions to employees’ 401(k). We made contributions to the Plan of
$1.2 million and $1.7 million for the years ended December 31, 2023 and 2022, respectively.
NOTE 14 - COMMITMENTS AND CONTINGENCIES
Lease Obligations
See Note 9 and Note 10 for information regarding leases
Legal Proceedings
We are a party to multiple legal proceedings that arise in the ordinary course of business. We have certain insurance coverage and rights of indemnification. We do not believe that the
ultimate resolution of these matters will have a material adverse effect on our business, results of operations, financial condition, or cash flows. However, the results of these matters cannot
be predicted with certainty and an unfavorable resolution of one or more of these or other matters could have a material adverse effect on our business, results of operations, financial
condition, or cash flows.
We record legal expenses as incurred in our Consolidated Statements of Operations and Comprehensive Income (Loss).
NOTE 15 – PREFERRED STOCK
In March 2018, we consummated a private placement with institutional investors for the sale of convertible preferred stock, common stock, and warrants for an aggregate purchase price of
$94.8 million (the "PIPE Investment”). At the closing, we issued an aggregate of 600,000 shares of Series A preferred stock for gross proceeds of $60.0 million. The investors in the PIPE
Investment were granted certain registration rights as set forth in the securities purchase agreements. The holders of the Series A Preferred Stock include 500,000 shares owned by funds
managed by a member of our Board of Directors.
The Series A preferred stock ranks senior to all of our other outstanding stock. Holders of the Series A preferred stock are entitled to vote on an as-converted basis together with the
holders of our common stock, and not as a separate class, at any annual or special meeting of stockholders. Each share of Series A preferred stock is convertible at the holder’s election at
any time, at an initial conversion price of $10.0625 per share, subject to adjustment (as applicable, the "Conversion Price”). Upon any conversion of the Series A preferred stock, we will be
required to pay each holder converting shares all accrued and unpaid dividends, in either cash or shares of our common stock, at our option. The Conversion Price will be subject to
adjustment for stock dividends, forward and reverse splits, combinations and similar events, as well as for certain dilutive issuances.
Dividends on the Series A preferred stock accrue at an initial rate of 8% per annum (the "Dividend Rate”), compounded quarterly, on each $100 of Series A preferred stock (the "Issue
Price”) and are payable quarterly in arrears. If there are accrued and unpaid dividends, future dividends will accrue at the then applicable Dividend Rate plus 2% until all accrued dividends
are paid in full in cash. The Dividend Rate will be increased to 11% per annum, compounded quarterly, in the event that our senior indebtedness less unrestricted cash during any trailing
twelve-month period ending at the end of any fiscal quarter is greater than 2.25 times earnings before interest, taxes, depreciation and amortization ("EBITDA”). The Dividend Rate will be
reset to 8% at the end of the first quarterly period when our senior indebtedness less unrestricted cash during the trailing twelve-month period ending at the end of such quarter is less than
2.25 times EBITDA.
If, at any time following the second anniversary of the issuance of the Series A preferred stock, the volume weighted average price of our common stock equals or exceeds $25.00 per share
(as adjusted for stock dividends, splits, combinations and similar events) for a period of thirty consecutive trading days, we may elect to force the conversion of any or all of the
outstanding Series A preferred stock at the Conversion Price then in effect. From and after the eighth anniversary of the issuance of the Series A Preferred Stock, we may elect to redeem all,
but not less than all, of the outstanding Series A preferred stock in cash at the Issue Price plus all accrued and unpaid dividends. From and after the ninth anniversary of the issuance of the
Series A preferred stock, each holder of Series A preferred stock has the right to require us to redeem all of the holder’s outstanding shares of Series A preferred stock in cash at the Issue
Price plus all accrued and unpaid dividends.
F-27
Table of Contents
In the event of any liquidation, merger, sale, dissolution or winding up of our business, holders of the Series A preferred stock will have the right to (i) payment in cash of the Issue Price
plus all accrued and unpaid dividends, or (ii) convert the shares of Series A preferred stock into common stock and participate on an as-converted basis with the holders of common stock.
So long as the Series A preferred stock is outstanding, the holders thereof, by the vote or written consent of the holders of a majority in voting power of the outstanding Series A preferred
stock, shall have the right to designate two members to our Board of Directors.
In conjunction with the issuance of the Series A preferred stock, we issued five-year warrants to purchase 596,273 shares of our common stock at an exercise price of $11.50 per share. The
warrants may be exercised for cash or, at the option of the holder, on a "cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act. The warrants may be
called for redemption in whole and not in part, at a price of $0.01 per share of common stock, if the last reported sales price of our common stock equals or exceeds $24.00 per share for any
20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to warrant holders, if there is a current registration statement in effect with
respect to the shares underlying the warrants.
The Series A preferred stock, while convertible into common stock, is also redeemable at the holder’s option and, as a result, is classified as temporary equity in the Consolidated Balance
Sheets. An analysis of its features determined that the Series A preferred stock was more akin to equity. While the embedded conversion option ("ECO”) was subject to an anti-dilution
price adjustment, and since the ECO was clearly and closely related to the equity host, it was not required to be bifurcated and it was not accounted for as a derivative liability under ASC
815, Derivatives and Hedging.
After factoring in the fair value of the warrants issued in conjunction with the Series A preferred stock, the effective conversion price is $9.72 per share, compared to the market price of
$10.29 per share on the date of issuance. As a result, a $3.4 million beneficial conversion feature was recorded as a deemed dividend in the Consolidated Statement of Operations at the time
of issuance because the Series A preferred stock is immediately convertible, with a credit to Additional paid-in capital.
The fair value of the warrants issued with the Series A Preferred Stock of $2.0 million was recorded as a reduction to the carrying amount of the Series A preferred stock in the Consolidated
Balance Sheets. In addition, aggregate offering costs of $3.0 million cash and the value of five-year warrants to purchase 178,882 shares of our common stock at an exercise price of $11.50
per share issued to the placement agent were recorded as a reduction to the carrying amount of the preferred stock. The $632,000 value of the warrants was determined utilizing the Black-
Scholes option pricing model using a term of 5 years, a volatility of 39%, a risk-free interest rate of 2.61%, and a 0% rate of dividends.
The discount associated with the Series A preferred stock was not accreted during the year ended December 31, 2023 because redemption was not currently deemed to be probable.
We did not declare a dividend payment on the Series A preferred stock totaling $1.2 million for the quarter ended December 31, 2023. As a result, the amount was added to the carrying
amount of the Series A Preferred Stock and the dividend rate is currently at 10% until such dividends are paid. All other dividends to date have been declared and paid.
NOTE 16 – STOCKHOLDERS’ EQUITY
Authorized Capital
We are authorized to issue 100,000,000 shares of common stock, $0.0001 par value, and 5,000,000 shares of preferred stock, $0.0001 par value. The holders of our common stock are entitled
to one vote per share. The holders of Series A preferred stock are entitled to the number of votes equal to the number of shares of common stock into which the holder’s shares are
convertible. Holders of Series A preferred stock also participate in dividends if they are declared by our Board of Directors. See Note 15 for additional information associated with the Series
A preferred stock.
Stock Repurchase Program
On September 13, 2021, our Board of Directors authorized the repurchase of up to $25 million of our common stock through December 31, 2022, which was subsequently extended to
December 31, 2024.
On December 15, 2022, our Board of Directors authorized the repurchase of up to an additional $50.0 million of our common stock through December 31, 2024.
F-28
Table of Contents
Information about purchases was as follows:
Number of shares purchased
Weighted average per share purchase price
Total purchase price (in thousands)
Year Ended December 31,
2023
2022
9,433
11.56 $
109 $
2,695,477
16.51
44,504
$
$
All repurchased shares are included in treasury stock in the consolidated balance sheets. At December 31, 2023, $63.4 million remained available for repurchases. These shares may be
purchased from time-to-time in the open market at prevailing prices, in privately negotiated transactions or through block trades.
2019 Employee Stock Purchase Plan
We reserved a total of 900,000 shares of our common stock for purchase by participants in our 2019 Employee Stock Purchase Plan (the "ESPP”). Participants in the ESPP may purchase
shares of our common stock at a purchase price which will not be less than the lesser of 85% of the fair value per share of our common stock on the first day of the purchase period or the
last day of the purchase period. As of December 31, 2023, 608,294 shares remained available for future issuance.
ESPP activity was as follows:
Year ended December 31, 2023
Shares purchased pursuant to the ESPP
Weighted average per share price of shares purchased
Weighted average per share discount from market value for shares purchased
Stock-based compensation related to ESPP
PIPE Warrants
PIPE warrant activity was as follows:
Outstanding at December 31, 2022
Cancelled or Expired
Exercised
Outstanding at December 31, 2023
49,963
$9.72
$1.46
$179,671
Shares Underlying
Warrants
Weighted
Average
Exercise Price
2,865,068 $
(208,912)
(2,656,156)
—
11.50
11.50
11.50
—
Prefunded Warrants
As of December 31, 2023, there were 300,357 perpetual non-redeemable prefunded warrants outstanding with an exercise price of $0.01 per share. There was no activity related to these
warrants during the year ended December 31, 2023.
2018 Long-Term Incentive Equity Plan
Our 2018 Long-Term Incentive Equity Plan, as amended (the "2018 Plan”) reserves up to 18% of the shares of our common stock outstanding on a fully diluted basis. The 2018 Plan
provides for awards of options, stock appreciation rights, restricted stock, restricted stock units, warrants or other securities which may be convertible, exercisable or exchangeable for or
into our common stock. On May 20, 2019, our stockholders approved the adoption of the Lazydays Holdings, Inc. Amended and Restated 2018 Long Term Incentive Plan (the "Incentive
Plan”). The Incentive Plan amends and restates the previously adopted 2018 Plan in order to replenish the pool of shares of common stock available under the Incentive Plan by adding an
additional 600,000 shares of common stock and making certain changes in light of the Tax Cuts and Jobs Act and its impact on Section 162(m) of the Internal Revenue Code of 1986, as
amended. Stock options are canceled upon termination of employment. On June 9, 2022, our stockholders approved the addition of 510,000 shares of our common stock to the 2018 Plan.
Following this addition, a total of 4,934,566 shares had been authorized for issuance pursuant to the
F-29
Table of Contents
2018 Plan. Stock options are canceled upon termination of employment. As of December 31, 2023, there were 1,091,427 shares of our common stock available to be issued under the 2018
Plan.
Stock Options
Stock option activity is summarized below:
Outstanding at December 31, 2022
Granted
Cancelled or terminated
Exercised
Outstanding at December 31, 2023
Vested at December 31, 2023
Vested and expected to vest at December 31, 2023
Restricted Stock Units
Restricted stock unit ("RSU") activity was as follows:
Outstanding at December 31, 2022
Granted
Vested
Forfeited
Outstanding at December 31, 2023
Stock-Based Compensation
Stock-based compensation was as follows:
(In thousands)
ESPP
2018 Plan
Shares Underlying
Options
Weighted
Average
Exercise Price
Weighted Average
Remaining Contractual
Life (in years)
Aggregate
Intrinsic Value (in
thousands)
1,052,093 $
94,326
(600,418)
(169,061)
376,940
302,585
376,940
12.34
12.38
14.06
8.07
11.21
10.73
2.26 $
(427)
1.91
0.94
(2)
(2)
Number of Restricted Stock Units
Weighted
Average
Grant Date Fair Value
207,822 $
323,679
(110,661)
(182,565)
238,275 $
Year Ended December 31,
2023
2022
$
$
180 $
2,069
2,249 $
14.98
12.44
15.35
12.32
13.35
280
1,697
1,977
F-30
Table of Contents
The fair value of options was based on the following assumptions:
Risk free interest rate
Expected term (years)
Expected volatility
Expected dividends
Year Ended December 31, 2023
ESPP
2018 Plan
4.65%-4.65%
0.50-1.0
50%-52%
0.00 %
4 %
6
70 %
0.00 %
The expected life was determined using the simplified method as the awards were determined to be plain-vanilla options. Expected volatility was based on the historical volatility of our
stock price over a period equal to the expected lives of the awards.
As of December 31, 2023, total unrecognized stock-based compensation was $0.1 million which is expected to be recognized over a weighted average service period of 2.13 years.
Certain other information regarding stock-based compensation was as follows:
Per share weighted average grant date fair value of awards issued
Intrinsic value of stock options exercised (in millions)
Current tax benefit related to stock-based awards (in millions)
NOTE 17 – FAIR VALUE MEASUREMENTS
Year Ended December 31,
2023
2022
$
12.14 $
0.6
0.3
4.28
1.6
0.1
Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad categories:
•
•
•
Level 1 - quoted prices in active markets for identical securities;
Level 2 - other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment spreads, credit risk; and
Level 3 - significant unobservable inputs, including our own assumptions in determining fair value.
There were no changes to our valuation techniques during the year ended December 31, 2023.
See Note 2 and Note 11 for additional information.
Goodwill and Asset Impairment
See Note 2 for discussion of an asset impairment charge recorded in the quarter ended March 31, 2023 and goodwill impairment recorded in the fourth quarter of 2023. There were no other
impairment charges during the years ended December 31, 2023 or 2022.
PIPE Warrants
All of our remaining PIPE warrants were exercised or expired in the first quarter of 2023.
Our PIPE warrants were recorded at fair value at the end of each reporting period and transaction date with changes in fair value recorded in our Consolidated Statements of Operations and
Comprehensive Income (Loss).
The public PIPE warrants traded in active markets with sufficient trading volume to qualify as Level 1 financial instruments as they had observable market prices which were used to
estimate the fair value.
F-31
Table of Contents
The private placement PIPE warrants were not traded in active markets, or were traded with insufficient volume and therefore represented Level 3 financial instruments that were valued
using a Black-Scholes option-pricing model.
The fair value of the PIPE warrant liability was as follows:
(In thousands)
Public PIPE warrants
Private PIPE warrants
Total
Level 3 Disclosures
Changes in the Level 3 private PIPE warrant liability were as follows:
(In thousands)
Balance at December 31, 2021
Measurement adjustment
Balance at December 31, 2022
Measurement adjustment
Balance at December 31, 2023
NOTE 18 - RELATED PARTY TRANSACTIONS
December 31, 2022
Carrying
Amount
Level 1
Level 2
Level 3
$
$
742 $
164
906 $
742 $
—
742 $
— $
—
— $
—
164
164
$
$
1,690
(1,526)
164
(164)
—
On December 29, 2023, we entered into a $35 million term loan with Coliseum, a significant shareholder, with a maturity date of December 29, 2026 that is included in the long-term debt, non-
current portion, net of debt discount financial line item on the consolidated balance sheet. See Note 11 for additional information.
NOTE 19 – SUBSEQUENT EVENTS
On March 8, 2024, we entered into the First Amendment to the Second Amended and Restated Credit Agreement and Consent with M&T to waive and modify certain covenants. See Note
11 for additional information.
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Table of Contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of
the period covered by this report. Our disclosure controls are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is
recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our Chief Executive Officer and
Chief Financial Officer recognize that these controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of these controls will be met.
Based this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2023, the disclosure controls and procedures were not effective as of
December 31, 2023 due to material weaknesses in internal control over financial reporting as described below.
In light of the material weaknesses in the Company’s internal control over financial reporting, we performed additional procedures to ensure that our consolidated financial statements
included in Form 10-K were prepared in accordance with accounting principles generally accepted in the United States ("GAAP”). Following such additional procedures, our management,
including our principal executive officer and principal financial officer, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position,
results of operations and cash flows for the periods presented in this Form 10-K, in conformity with GAAP.
A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in
annual or interim financial statements will not be prevented or detected on a timely basis
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
Our internal control over financial reporting is a framework designed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, and effected by our board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of our financial statements for external purposes in accordance with US GAAP. Internal control over financial reporting, no matter how well designed, has inherent limitations
and may not prevent or detect misstatements. Therefore, even effective internal control over financial reporting can only provide reasonable assurance with respect to the financial
statement preparation and presentation.
As of December 31, 2023, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria for effective internal control
over financial reporting established by the Committee of Sponsoring Organization of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Based on this
evaluation, due to the material weaknesses described below, we concluded that the system of internal control over financial reporting was not effective.
The material weaknesses in our internal control over financial reporting which existed as of December 31, 2023 related to the ineffective design and implementation of information
technology general controls ("ITGCs”) in the areas of user access, program change management and security administration that are relevant to the preparation of our financial statements,
and the turnover of certain accounting positions during the fourth quarter. The Company was unable to attract, develop and retain sufficient resources to fulfill internal control
responsibilities during the fourth quarter which impacted the operating effectiveness of controls during that period. Notwithstanding the material weaknesses, we have concluded that the
financial statements and other financial information included in this Annual Report fairly present in all material
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respects our financial condition, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.
RSM U.S. LLP, an independently registered accounting firm, who audited the financial statements as of and for the year ended December 31, 2023 included in this Annual Report on Form
10-K issued an adverse report on the Company’s internal control over financial reporting reflecting these material weaknesses as of December 31, 2023, as stated in its report which is set
forth herein.
Material Weaknesses
As disclosed in Part II, Item 9A on Form 10-K for the year ended December 31, 2022, we previously identified a material weakness related to ineffective design and implementation of ITGC in
the area of user access, program change management and security administration that are relevant to the preparation of the financial statements. Primarily, we did not design and maintain
controls to ensure (a) access provisioned matched the access requested, (b) user access reviews were performed with complete and accurate data, (c) changes to internally developed
applications were approved prior to deployment to production and (d) security administration was appropriately maintained. As a result, the Company’s related process-level IT dependent
manual and automated controls that rely on the affected ITGCs, or information from IT systems with affected ITGCs, were also deemed ineffective.
As of December 31, 2023, management identified an additional material weakness in our internal control over financial reporting that existed due to the resource turnover during the fourth
quarter which resulted in the lack of sufficient documentation to support the effective performance of the Company’s internal control over financial reporting.
The Company has devoted, and will continue to devote significant time and resources to execute our plan to remediate the aforementioned material weaknesses and enable us to conclude
full remediation once these steps have been completed and operating effectively. The following components of the remediation plan, among others have been implemented:
• Hired a new Chief Financial Officer and Chief Technology Officer with requisite accounting and internal controls knowledge and experience to complement the executive leadership
team;
Engaged third-party assistance to assess our methodologies, policies, and procedures to ensure adequate design and effectiveness of processes supporting internal control over
financial reporting;
•
• Assessed the specific training needs or resource gaps and have begun steps to hire key personnel, including key personnel hired in 2024;
• Designed and implemented controls over change management and security administration for all key financial systems.
While we have completed significant steps in our remediation, management will continue to implement its remediation plan, including its determination if additional updates are appropriate
in the enumerated points above and through taking additional actions to remediate the material weaknesses in internal control over financial reporting, which include but are not limited to
the following:
•
•
Perform and implement a user role redesign for certain systems, which includes rationalization of user roles and permissions and considers segregation of duties;
Continue to use third-party assistance to assess the specific training needs for newly hired and existing personnel and develop and deliver training programs, designed to uphold
our internal control;
• Continue to expand the available resources at the Company with experience in designing and implementing both ITGC and business process control activities.
With the actions already taken and our planned remediation steps in fiscal 2024, when fully implemented and operated consistently, we believe we will remediate the material weaknesses.
The material weaknesses will not be considered remediated until the remediation actions, including those above and any other determined appropriate have been completed and have
operated effectively for a sufficient period of time. The Company is committed to validating that changes made are operating as intended within our remediation plan.
Changes in Internal Control Over Financial Reporting
The Company is in the process of implementing certain changes in its internal controls to remediate the material weaknesses described above. Other than those described above, there were
no changes in our internal control over financial
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reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
During the fourth quarter of 2023, none of the Company’s officers or directors adopted or terminated any "Rule 10b5-1 trading arrangement” or any "non-Rule 10b5-1 trading arrangement,”
as each term is defined in Item 408 of Regulation S-K.
On March 8, 2024, LDRV Holdings Corp, Lazydays RV America, LLC, Lazydays RV Discount, LLC and Lazydays Mile HI RV, LLC, together with certain other subsidiary entities entered into
the First Amendment to Second Amended and Restated Credit Agreement and Consent with Manufacturers and Traders Trust Company as Administrative Agent and other financial
institutions as loan parties (the "Amendment"), to waive and modify certain covenants. This includes waiving the net leverage ratio from the fourth quarter of 2023 through the second
quarter of 2024, current ratio for the fourth quarter of 2023, and fixed charge coverage ratio for the first and second quarters of 2024. Additionally, an additional tier was added to the
definition of applicable margin of the Credit Facilities, setting forth the applicable interest rates corresponding to a total net leverage ratio of 3.00 ≤ X. This new tier is applicable to the
Company as of March 8, 2024. All of the lenders under the Amendment or their affiliates have various other relationships with the Company and its subsidiaries involving the provision of
financial services, and some may serve as a source of retail financing for the Company’s customers. This description of the Amendment is qualified in its entirety by reference to the
complete terms and conditions of the Amendment which is filed as exhibit 10.27 to this Annual Report on Form 10-K and is incorporated by reference in its entirety into this Item 9B.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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Item 10. Directors, Executive Officers and Corporate Governance
PART III
We have adopted a Code of Business Conduct applicable to all of our directors, officers and employees. A copy of the Code of Business Conduct is available on our corporate website at
www.lazydays.com by clicking on the link "Investor Relations” on our homepage and then clicking on the link "Governance” and then clicking on the link "Code of Business Conduct”
under "Governance Documents.” You also may obtain a printed copy of the Code of Business Conduct by sending a written request to: Investor Relations, Lazydays Holdings, Inc., 4042
Park Oaks Blvd, Suite 350, Tampa, FL 33610, or by contacting Investor Relations at investors@lazydays.com or 855-629-3995. In the event that we amend or waive any of the provisions of
the Code of Business Conduct that relate to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, we intend to disclose the same on our Investor
Relations website.
The other information required by this item will be contained in, and is incorporated by reference from, the proxy statement for our 2024 annual meeting of stockholders, which will be filed
with the SEC pursuant to Regulation 14A within 120 days after the end of the year covered by this report.
Item 11. Executive Compensation
The information required by this item will be contained in, and is incorporated by reference from, the proxy statement for our 2024 annual meeting of stockholders, which will be filed with
the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item will be contained in, and is incorporated by reference from, the proxy statement for our 2024 annual meeting of stockholders, which will be filed with
the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be contained in, and is incorporated by reference from, the proxy statement for our 2024 annual meeting of stockholders, which will be filed with
the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.
Item 14. Principal Accounting Fees and Services
The information required by this item will be contained in, and is incorporated by reference from, the proxy statement for our 2024 annual meeting of stockholders, which will be filed with
the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.
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Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this Report:
1. Financial statements
PART IV
Reference is made to the information set forth in Part II, Item 8 of this Report, which information is incorporated by reference.
2. Consolidated Financial Statement Schedules
All required Financial Statement Schedules are included in the Consolidated Financial Statements or the Notes to Consolidated Financial Statements.
3. Exhibits
The following exhibits are filed as a part of this Report:
Exhibit
Number
Description
2.1 Agreement and Plan of Merger, dated as of October 27, 2017, by and among Andina Acquisition Corp. II, Andina II Holdco Corp., Andina II Merger Sub Inc.,
Lazy Days’ R.V. Center, Inc. and A. Lorne Weil (included as Annex A to the Proxy Statement/Prospectus/Information Statement filed on February 14, 2018 and
incorporated herein by reference).
2.2 Asset Purchase Agreement among BYRV, Inc., BYRV Washington, Inc., Bruce Young, Mark Bretz, The Bruce A. Young Revocable Trust, The Bruce A.
Young 2021 Gift Trust and Lazydays RV of Oregon, LLC, effective as of July 9, 2021 (filed as Exhibit 2. 1 to the Quarterly Report on Form 10-Q filed on
November 5, 2021 and incorporated herein by reference).
3.1 Amended and Restated Certificate of Incorporation of Lazydays Holdings, Inc., including the Certificate of Designations of Series A Convertible Preferred
Stock (filed as Exhibit 3.1 to the Current Report on Form 8-K filed on June 3, 2022 and incorporated herein by reference).
3.2 Amended and Restated Bylaws of Lazydays Holdings, Inc., effective January 25, 2023 (filed as Exhibit 3.1 to the Current Report on Form 8-K filed on January
27, 2023 and incorporated herein by reference).
4.1 Specimen Common Stock Certificate of Lazydays Holdings, Inc. (filed as Exhibit 4.5 to the Registration Statement on Form S-4 (SEC File No. 333-221723) filed
on January 16, 2018 and incorporated herein by reference).
4.2 Form of Unit Purchase Option (filed as Exhibit 4.5 of Andina’s Form S-1/A filed on November 6, 2015 and incorporated herein by reference).
4.3 Warrant Agreement between Continental Stock Transfer & Trust Company and Andina (filed as Exhibit 4.7 of Andina’s Form S-1/A filed on November 6, 2015
and incorporated herein by reference).
4.4 Form of Specimen Series A Preferred Stock Certificate (filed as Exhibit 4.4 to the Registration Statement on Form S-1 (SEC File No. 333-224063) filed on March
30, 2018 and incorporated herein by reference).
4.5 Form of Common Stock purchase warrant (filed as Exhibit 4.5 to the Registration Statement on Form S-1 (SEC File No. 333-224063) filed on March 30, 2018 and
incorporated herein by reference).
4.6 Form of Pre-Funded Common Stock Purchase warrant (filed as Exhibit 4.6 to the Registration Statement on Form S-1 (SEC File No. 333-224063) filed on March
30, 2018 and incorporated herein by reference).
4.7 Description of Registrant's Securities.*
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Exhibit
Number
Description
10.1 Registration Rights Agreement between Andina and certain security holders of Andina (incorporated by reference to Exhibit 10.1 of Andina’s Current Report
on Form 8-K filed on December 1, 2015 and incorporated herein by reference).
10.2 2018 Long-Term Incentive Plan+ (included as Annex C to the Proxy Statement/Prospectus/Information Statement filed on February 14, 2018 and incorporated
herein by reference).
10.3 Employment Agreement between Lazydays Holdings, Inc. and William Murnane+ (filed as Exhibit 10.11 to the Registration Statement on Form S-4 (SEC File
No. 333-221723) and incorporated herein by reference).
10.4 Employment Agreement, by and between the Company and Robert DeVincenzi, dated January 3, 2022 + (filed as Exhibit 10.1 to the Quarterly Report on Form
10-Q for the quarter ended March 31, 2022 and incorporated herein by reference).
10.5 Amended and Restated Employment Agreement, dated September 6, 2022, by and between the Company and John North+ (filed as Exhibit 10.1 to the
Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 and incorporated herein by reference).
10.6 Employment Agreement, by and between the Company and Kelly Porter, dated October 3, 2022. + (filed as Exhibit 10.6 to form 10-K filed March 1, 2023 and
incorporated herein by reference).
10.7 Transition Agreement, dated October 19, 2022, by and between the Company and Nicholas Tomashot. + (filed as Exhibit 10.7 to Form 10-K filed March 1, 2023
and incorporated herein by reference).
10.8.1 Form of Securities Purchase Agreement (Preferred) (filed as Exhibit 10.13.1 to the Registration Statement on Form S-4 (SEC File No. 333-221723) and
incorporated herein by reference).
10.8.2 Form of Securities Purchase Agreement (Unit) (filed as Exhibit 10.13.2 to the Registration Statement on Form S-4 (SEC File No. 333-221723) and incorporated
herein by reference).
10.9 Lease Agreement by and between Cars MTI-4 L.P., as Landlord, and LDRV Holdings Corp., as Tenant (filed as Exhibit 10.14 to the Registration Statement on
Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.10 Lease Agreement between Chambers 3640, LLC, as Landlord, and Lazydays Mile HI RV, LLC, as Tenant (filed as Exhibit 10.15 to the Registration Statement on
Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.11 Lease Agreement between 6701 Marketplace Drive, LLC, as Landlord, and Lazydays RV America, LLC, as Tenant (filed as Exhibit 10.16 to the Registration
Statement on Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.12 Lease Agreement between DS Real Estate, LLC, as Landlord, and Lazydays RV Discount, LLC, as Tenant (filed as Exhibit 10.17 to the Registration Statement
on Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.13 Restated Credit Agreement, dated as of July 14, 2021, by and among LDRV Holdings Corp., Lazydays RV America, LLC, Lazydays RV Discount, LLC and
Lazydays Mile HI RV, LLC, Manufacturers and Traders Trust Company, as Administrative Agent, Swingline Lender, Issuing Bank and a Lender, and other
financial institutions as Lender parties thereto (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on November 5, 2021 and incorporated herein by
reference).
10.14 First Amendment to Amended and Restated Credit Agreement, dated as of May 13, 2022, by and among LDRV Holdings Corp., Lazydays RV America, LLC,
Lazydays RV Discount, LLC and Lazydays Mile HI RV, LLC, Manufacturers and Traders Trust Company, as Administrative Agent, Swingline Lender, Issuing
Bank and a Lender, and other financial institutions as Lender parties (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on May 17, 2022 and
incorporated herein by reference).
10.15 Second Amended and Restated Credit Agreement dated February 21, 2023 with Manufacturers and Traders Trust Company ("M&T”), as Administrative
Agent, Swingline Lender, Issuing Bank and a Lender, and other financial institutions as Lender parties (filed as Exhibit 10.1 to the form 10-Q filed on April 28,
2023 and incorporated herein by reference).
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Exhibit
Number
Description
10.16 First Amendment, dated February 21, 2023, to Second Amended and Restated Credit Agreement and Consent between LDRV Holdings Corp. and
Manufacturers and Traders Trust Company*.
10.17 Security Agreement, dated March 15, 2018, by and between LDRV Holdings Corp., Lazydays RV America, LLC, Lazydays RV Discount, LLC, and Lazydays
Mile HI RV, LLC, as Borrowers, Lazydays Holdings Inc., Lazy Days’ R.V. Center, Inc., Lazydays RV America, LLC, and Lazydays Land Holdings, LLC, as
Guarantors, and Manufacturers and Traders Trust Company, as administrative agent under the Credit Agreement of even date therewith (filed as Exhibit
10.11 to the Form 8-K filed on March 21, 2018 and incorporated herein by reference).
10.18 Guaranty Agreement, dated March 15, 2018, by certain parties named therein (filed as Exhibit 10.12 to the Form 8-K filed on March 21, 2018 and incorporated
herein by reference).
10.19 Form of Registration Rights Agreement between Lazydays Holdings, Inc. and the PIPE investors (filed as Exhibit 10.13 to the Registration Statement on
Form S-1 (SEC File No. 333-224063) filed on March 30, 2018 and incorporated herein by reference).
10.20 Form of Registration Rights Agreement between Lazydays Holdings, Inc. and the PIPE investors (filed as Exhibit 10.14 to the Registration Statement on
Form S-1 (SEC File No. 333-224063) filed on March 30, 2018 and incorporated herein by reference).
10.21 Employment Offer Letter between Lazydays Holdings, Inc. and Nicholas Tomashot+ (filed as Exhibit 10.15 to Amendment No. 2 to the Registration
Statement on Form S-1 (SEC File No. 333-224063) filed on May 22, 2018 and incorporated herein by reference).
10.22 Lazydays Holdings, Inc. 2019 Employee Stock Purchase Plan (filed as Exhibit 10.1 to the Form 8-K filed on May 23, 2019 and incorporated herein by
reference).
10.23 Lazydays Holdings, Inc. Amended and Restated 2018 Long Term Incentive Plan.+ (filed as Exhibit 10.21 to Form 10-K filed March 1, 2023 and incorporated
herein by reference).
10.24 Form of Term Note (U.S. Small Business Administration Paycheck Protection Program) in favor of M&T Bank (filed as Exhibit 10.1 to the Form 8-K filed on
May 4, 2020 and incorporated herein by reference).
10.25 Waiver Agreement, dated September 12, 2023, by and between the Company and Park West (filed as Exhibit 10.1 to Form 8-K filed on September 12, 2023
and incorporated herein by reference).
10.26 Waiver Agreement, dated September 12, 2023, by and between the Company , Coliseum and Park West (filed as Exhibit 10.2 to Form 8-K filed on September
12, 2023 and incorporated herein by reference).
10.27 Loan Agreement, dated December 29, 2023, between LD Real Estate, LLC, Lazydays RV of Ohio, LLC, Airstream of Knoxville at Lazydays RV, LLC, Lone Star
Acquisition LLC, Lazydays Land of Phoenix, LLC and Lazydays Land of Chicagoland, LLC, as Borrower and Coliseum Holdings I, LLC, as Lender (filed as
Exhibit 10.1 to Form 8-K filed on January 2, 2024 and incorporated herein by reference).
21.1 Subsidiaries of the Company.*
23.1 Consent of RSM US LLP.*
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.*
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.*
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).**
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).**
97.0 Lazydays Holdings, Inc. Clawback Policy.*
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Exhibit
Number
101 The following financial statements from the Company’s Annual Report on Form 10-K for the period ended December 31, 2023, formatted in inline XBRL,
include: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Stockholders’ Equity, (iv)
Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
104 Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)*
Description
* Filed herewith.
** Furnished herewith.
+ Management compensatory plan or arrangement.
Item 16. Form 10-K Summary
None.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SIGNATURES
LAZYDAYS HOLDINGS, INC.
/s/ John North
John North
Chief Executive Officer
Date: March 12, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature
/s/ John North
John North
/s/ Kelly Porter
Kelly Porter
/s/ Christopher S. Shackelton
Christopher S. Shackelton
/s/ Robert DeVincenzi
Robert DeVincenzi
/s/ Jordan Gnat
Jordan Gnat
/s/ Susan Scarola
Susan Scarola
/s/ James J. Fredlake
James J. Fredlake
/s/ Suzanne Tager
Suzanne Tager
/s/ Jerry Comstock
Jerry Comstock
Title
Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
Director and Chairman of the Board
Lead Independent Director
Director
Director
Director
Director
Director
43
Date
March 12, 2024
March 12, 2024
March 12, 2024
March 12, 2024
March 12, 2024
March 12, 2024
March 12, 2024
March 12, 2024
March 12, 2024
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
EXHIBIT 4.7
As of December 31, 2023, Lazydays Holdings, Inc. (the "Company,” "Lazydays,” "Registrant,” "we,” "us,” or "our”) had one class of securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended: our common stock.
The following is a description of the material terms of our common stock and preferred stock as set forth in our Amended and Restated Certificate of Incorporation
(the "Certificate of Incorporation”), our Amended and Restated Bylaws (the "Bylaws”), and our Certificate of Designations of Series A Preferred Stock (the
"Certificate of Designations”), which govern the rights of our common stock and preferred stock. This description is only a summary. You should read it together with
the Certificate of Incorporation, Bylaws, and Certificate of Designations, which are included as exhibits to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2023 and incorporated by reference herein.
General
Our Certificate of Incorporation provides for the issuance of 100,000,000 shares of common stock, par value $0.0001 per share, and 5,000,000 shares of preferred
stock, par value $0.0001 per share. As of December 31, 2023, we had 14,064,797 shares of common stock outstanding and 600,000 shares of Series A Preferred
Stock outstanding.
Common Stock
The holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting
with respect to the election of directors, with the result that the holders of more than 50% of our shares voted for the election of directors can elect all of the directors.
Holders of our common stock do not have any conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to
our common stock.
We have not paid any cash dividends on our common stock and do not plan to pay any cash dividends on our common stock in the foreseeable future. Our board of
directors ("Board”) will determine our future dividend policy on the basis of many factors, including results of operations, capital requirements, and general business
conditions, subject to any restrictions under our credit facility and the Certificate of Designations for the Series A Preferred Stock.
Our Board currently consists of eight (8) directors who are divided into three classes including two (2) directors designated by the holders of the Series A Preferred
Stock. Directors in each class serve a three-year term. The terms of each class expire at successive annual meetings so that the stockholders elect one class of
directors at each annual meeting. The current classification of our Board is: (i) Class A – has two (2) directors with a term expiring at the 2025 annual meeting of
stockholders; (ii) Class B – has three (3) directors with a term expiring at the 2026 annual meeting of stockholders; and (iii) Class C – has three (3) directors with a
term expiring at the 2024 annual meeting of stockholders.
Preferred Stock
Our Certificate of Incorporation authorizes the issuance of 5,000,000 shares of blank check preferred stock with such designations, rights and preferences as may be
determined from time to time by our Board. Any designated series of preferred stock shall have such powers, designations, preferences and relative, participation or
optional or other special rights and qualifications, limitations or restrictions as shall be expressed in the resolution adopted by the Board. Once designated by our
Board, each series of preferred stock will have specific financial and other terms that will be described in a prospectus supplement. The description of the preferred
stock that is set forth in any prospectus supplement is not complete without reference to the documents that govern the preferred stock. These include our Certificate
of Incorporation and any certificates of designations that our Board may adopt. Prior to the issuance of shares of each series of preferred stock, the Board is required
by the Delaware General Corporation Law ("DGCL”) and our Certificate of Incorporation to adopt resolutions and file a certificate of designations with the Secretary
of State of the State of Delaware. The certificate of designations fixes for each class or series the designations, powers, preferences, rights, qualifications, limitations
and restrictions, including, but not limited to, some or all of the following: (i) entitled to voting powers, full or limited; (ii) subject to redemption at such time or times and
at such price or prices as our Board may establish; (iii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions,
and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series as our Board may
establish; (iv) entitled to such rights upon the dissolution of us, or upon any distribution of our assets, as our Board may establish; or (v) convertible into, or
exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of ours at such price or prices
or at such rates of exchange and with such adjustments as our Board may establish.
Series A Preferred Stock
In connection with the PIPE Investment on March 15, 2018, we designated 600,000 shares as
Series A Preferred Stock.
The material terms of the Series A Preferred Stock are as follows:
The Series A Preferred Stock ranks senior to all outstanding capital stock of the Company. Except as required by law or by the Certificate of Designations, holders of
the Series A Preferred Stock will be entitled to vote on an as-converted basis together with the holders of our common stock, and not as a separate class, at any
annual or special meeting of Company stockholders. However, the Certificate of Designations provides holders of the Series A Preferred Stock with a separate vote
requiring the vote or consent of a majority of the Series A Preferred Stock (unless otherwise waived by a majority in voting power of the outstanding shares of the
Series A Preferred Stock) relating to certain actions, including: (i) the voluntary initiation of any liquidation, dissolution or winding up of the Company if the holders of
Series A Preferred Stock will not have the option to receive the full liquidation preference; (ii) any amendment or repeal of the Certificate of Incorporation or Bylaws
that adversely modifies the rights, preferences, privileges or voting powers of the Series A Preferred Stock; (iii) any authorization or issuance of a new class or series of
stock or any other securities convertible into equity securities, having rights, preferences or privileges senior to or on parity with the Series A Preferred Stock
(including additional shares of Series A Preferred Stock); (iv) any increase or decrease in the authorized number of Series A Preferred Stock; (v) any increase in the
number of members of the Board above eight (8); (vi) certain issuances of senior indebtedness or certain incurrences of floor plan financing; (vii) any sale or agreement
to license any material asset or material portion of the assets of the Company or any subsidiary other than in the ordinary course of business; (viii) the making of capital
expenditures during any four consecutive fiscal quarters in excess of 25% of earnings before interest, taxes, depreciation, and amortization ("EBITDA”) for such four
(4) fiscal quarters, on a non-cumulative basis; and (ix) any change by the Company or any subsidiary in its principal line of business or entry into an additional line of
business.
The Series A Preferred Stock will be convertible into shares of our common stock at the holder’s election at any time, and such holder will receive such number of
shares of common stock as is equal to the product obtained by multiplying the conversion rate then in effect by the number of shares of Series A Preferred Stock being
converted, plus cash in lieu of fractional shares. The conversion rate is calculated as the quotient obtained by dividing the liquidation preference then in effect by the
conversion price. Currently, the conversion rate is 9.9378882 calculated by dividing the liquidation preference currently in effect of $100 by the initial conversion price
of $10.0625. The conversion price will be subject to adjustment for stock dividends, forward and reverse splits, combinations and similar events, as well as for certain
dilutive issuances. The liquidation preference and initial conversion price are set forth in the Certificate of Designations and were determined based on the valuation of
the securities of Andina taking into account the impact of the mergers and the rights and preferences of the Series A Preferred Stock in connection with our business
combination in March 2018. As a result, the 600,000 shares of Series A Preferred Stock are convertible into 5,962,733 shares of common stock (this excludes
accrued dividends which the Company may elect to pay in cash or shares of common stock).
Dividends on the Series A Preferred Stock will accrue at an initial rate of 8% per annum (the "Dividend Rate”), compounded quarterly, and be payable quarterly in
arrears on January 1, April 1, July 1 and October 1 of each year (unless any such day is not a business day, in which event such preferred dividends shall be payable
on the next succeeding business day, without accrual to the actual payment date). If we do not declare and pay dividends on any dividend payment date, such accrued
and unpaid dividends, until paid in full in cash, will accrue at the then applicable Dividend Rate plus 2%. The Dividend Rate will be increased to 11% per annum,
compounded quarterly, in the event our senior indebtedness less unrestricted cash during any trailing twelve month period ending at the end of any fiscal quarter is
greater than 2.25 times EBITDA (as defined in the Certificate of Designations of the Series A Preferred Stock) for such preceding twelve (12)-month period. The
Dividend Rate will be reset to 8% at the end of the first fiscal quarter when our senior indebtedness less unrestricted cash during the trailing twelve month period ending
at the end of such quarter is less than 2.25 times EBITDA for such preceding twelve (12)-month period.
If, at any time following the second anniversary of the issuance of the Series A Preferred Stock, the volume weighted average price of our common stock equals or
exceeds $25.00 (as adjusted for stock dividends, splits, combinations and similar events) for a period of thirty consecutive trading days, we may force the conversion
of any or all of the outstanding Series A Preferred Stock at the conversion price then in effect. From and after the eighth anniversary of the issuance of the Series A
Preferred Stock, we may elect to redeem all, but not less than all, of the outstanding Series A Preferred Stock at a redemption price per share equal to the liquidation
preference then in effect. From and after the ninth anniversary of the issuance of the Series A Preferred Stock, each holder of Series A Preferred Stock has the right to
require us to redeem all of such holder’s outstanding shares of Series A Preferred Stock at a redemption price per share equal to the liquidation preference then in
effect.
In the event of any liquidation, merger, sale, dissolution or winding up of the Company, holders of the Series A Preferred Stock will have the right to (i) payment in
cash equal to the liquidation preference thereof plus all accrued and unpaid dividends, or (ii) convert the shares of Series A Preferred Stock into our common stock
and participate on an as-converted basis with our holders of common stock.
So long as the Series A Preferred Stock is outstanding, the holders thereof, by the vote or written consent of the holders of a majority in voting power of the
outstanding Series A Preferred Stock, shall have the right to designate two members to our Board.
The holders of Series A Preferred Stock may elect in writing to the Company to be subject to a beneficial ownership limitation, initially set at 9.99% (but which may
subsequently be set at a higher or lower percentage by the electing holder) of the shares of common stock then outstanding after giving effect to the issuance of shares
of common stock upon conversion of the Series A Preferred Stock held by such holder. If a holder of the Series A Preferred Stock has elected to be subject to a
beneficial ownership limitation, the Company shall not effect any conversion of the Series A Preferred Stock and the holder shall not have any right to convert any
portion of the Series A Preferred Stock if after giving effect to such conversion, the holder would beneficially own in excess of its then applicable beneficial ownership
limitation.
The securities purchase agreement entered into in connection with the sale of the Series A Preferred Stock also includes the following rights:
● Subject to applicable securities laws and regulations, any purchaser that continues to hold Series A Preferred Stock convertible into 5% or more of the then issued
and outstanding shares of our common stock shall also have a preemptive right to purchase its pro rata share of all equity securities that we may, from time to time,
propose to sell and issue after the consummation of the Mergers (subject to certain exceptions).
● If we seek to consummate any debt financings (other than (i) non-distressed floor plan financings on customary terms and conditions and with an interest rate of not
greater than 5% per annum, (ii) the replacement or refinancing of existing indebtedness where the replaced or refinanced indebtedness does not exceed the existing
amount of indebtedness and are not on terms materially worse than the indebtedness being replaced or refinanced, and (iii) advances or other extensions of credit
under a revolving credit facility or floor plan credit facility) after the consummation of the Mergers, Coliseum Capital Management, LLC shall be entitled to a right of
first refusal to provide the funding necessary for such debt financings provided that it still holds an aggregate of at least $10 million of the Series A Preferred Stock.
Coliseum Capital Management, LLC will have a period of 15 business days to notify us of its intention to exercise its right.
There are no sinking fund provisions applicable to our shares of Series A Preferred Stock.
Provisions of Delaware Law, the Certificate of Incorporation and Bylaws
Provisions of the Delaware General Corporation Law (the "DGCL”), the Certificate of Incorporation, the Bylaws and other relevant documents described below could
make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions,
summarized below, are expected to discourage types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire
control of us to first negotiate with us. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation
of these proposals could result in an improvement of their terms.
Delaware Anti-Takeover Statute. We have elected to be subject to Section 203 of the DGCL, an anti-takeover statute. In general, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination” with an "interested stockholder” for a period of three years following the time the person became
an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is
approved in a prescribed manner. Generally, a "business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the
interested stockholder. Generally, an "interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the
determination of interested stockholder status did own) 15 percent or more of a corporation’s voting stock. The existence of this provision would be expected to have
an anti-takeover effect with respect to transactions not approved in advance by the Board of Directors, including discouraging attempts that might result in a premium
over the market price for the shares of Common Stock.
Limitation of Liability and Indemnification of Officers and Directors. The DGCL authorizes corporations to limit or eliminate the personal liability of directors to
corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors. The Certificate of Incorporation and Bylaws include
provisions that indemnify, to the fullest extent allowable under the DGCL, the personal liability of directors or officers for monetary damages for actions taken as a
director or officer of the Company, or for serving at our request as a director or officer or in another position at another corporation or enterprise, as the case may be.
The Bylaws also provide that we must indemnify and advance expenses to our directors and officers, subject to our receipt of an undertaking from the indemnitee to
repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Company and such terms and conditions as are deemed
appropriate by the Board. We are also expressly authorized to carry directors’ and officers’ insurance to protect the Company and our directors, officers, employees
and agents from certain liabilities.
The limitation of liability and indemnification provisions in the Certificate of Incorporation and the Bylaws may discourage stockholders from bringing a lawsuit against
directors for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers,
even though such an action, if successful, might otherwise benefit us and our stockholders. We may be adversely affected to the extent that, in a class action or direct
suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Authorized but Unissued Shares of Common Stock. Our authorized but unissued shares of common stock will be available for future issuance without approval by
the holders of common stock. We may use additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, employee
benefit plans and as consideration for or to finance future acquisitions, investments or other purposes. The existence of authorized but unissued shares of common
stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Undesignated Preferred Stock. Our Certificate of Incorporation and Bylaws authorize 5,000,000 shares of undesignated preferred stock and 600,000 of these
shares have been designated as Series A Preferred Stock. As a result, our Board of Directors may, without the approval of holders of common stock, issue 4,400,000
shares of preferred stock with super voting, special approval, dividend or other rights or preferences that could impede the success of any attempt to acquire us. These
and other provisions may have the effect of deferring, delaying or discouraging hostile takeovers or changes in control or management of the Company.
Classified Board. As discussed above, our Board currently consists of eight (8) directors who are divided into three classes. Pursuant to the Certificate of
Incorporation, directors in each class serve a three-year term. The terms of each class expire at successive annual meetings so that the stockholders elect one class of
directors at each annual meeting. The classified board provisions in the Certificate of Incorporation could make it more difficult to acquire us by means of a proxy
contest or to remove incumbent directors.
Exclusive Forum. Unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum for: (i) any derivative action or
proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the
Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or the Certificate of
Incorporation or Bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or if the
Court of Chancery does not have jurisdiction, another state court located within the State of Delaware, or if no state court located within the State of Delaware has
jurisdiction, the federal district court for the District of Delaware) in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as
defendants. Section 27 of the Securities Exchange Act of 1934, as amended, provides for exclusive federal jurisdiction over suits brought to enforce any duty or
liability created by the Exchange Act or the rules and regulations thereunder, and as such the exclusive jurisdiction clauses set forth above would not apply to such
suits. Furthermore, Section 22 of the Securities Act of 1933, as amended, provides for concurrent jurisdiction for federal and state courts over all suits brought to
enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, and as such the exclusive jurisdiction clauses set forth above would
not apply to such suits.
Listing
Our shares of common stock are listed on the Nasdaq Capital Market under the symbol "GORV.” We cannot assure you that our common stock will continue to be
listed on the Nasdaq Capital Market as we might not meet certain continued listing standards in the future. Our shares of Series A Preferred Stock are currently not
listed or traded on any exchange or marketplace and
we do not intend to apply for listing or quotation of our Series A Preferred Stock on any exchange or marketplace in the future.
Transfer Agent
The transfer agent for our shares of common stock is Continental Stock Transfer & Trust Company, 1 State Street, 30th Floor, New York, New York 10004.
Execution Version
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AND CONSENT
, dated as of March 8,
This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND CONSENT
2024 (this "Amendment”), is made and entered into by and among LDRV HOLDINGS CORP., a Delaware corporation (the "Borrower Representative”), each of the
other Loan Parties party hereto, each of the Lenders and MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation, as
Administrative Agent.
RECITALS:
WHEREAS, reference is made to the Second Amended and Restated Credit Agreement dated as of February 21, 2023 (as amended, restated,
supplemented or otherwise modified prior to the date hereof, the "Existing Credit Agreement,” and as amended by this Amendment, the "Credit Agreement”), by and
among the Borrower Representative, the Loan Parties party thereto, the lenders from time to time party thereto (the "Lenders”), and the Administrative Agent;
Credit Agreement and consent to certain accommodations as further set forth herein; and
WHEREAS, the Borrower Representative has requested that the Administrative Agent and the Lenders agree to certain amendments to the Existing
Existing Credit Agreement and the requested consents as set forth herein subject to the conditions set forth herein.
WHEREAS, the Lenders party hereto, comprising the Required Lenders under the Existing Credit Agreement, have agreed to the amendments to the
of which are hereby acknowledged, the parties hereto agree as follows:
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt
Credit Agreement. This Amendment is a "Credit Document”, as defined in the Credit Agreement.
SECTION 1. Defined Terms; Interpretation; Etc. Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the
SECTION 2. Amendments to Existing Credit Agreement. Subject to the terms and conditions set forth herein, effective upon the occurrence of the First
Amendment Effective Date, the parties hereto agree as follows:
(a)
the Existing Credit Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example:
stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in Annex
A attached hereto, except that any Schedule or Exhibits to the Credit Agreement not amended pursuant to the terms of this Amendment shall remain in effect
without any amendment or other modification thereto;
(b)
(c)
the Existing Credit Agreement is hereby amended by replacing Exhibit G thereto with Exhibit G attached hereto as Annex B; and
the Existing Credit Agreement is hereby amended by replacing Exhibit B thereto with Exhibit B attached hereto as Annex C.
The parties hereto acknowledge and agree that this Amendment is not a novation of the Existing Credit Agreement, any other Credit Document or of any credit facility
or guaranty provided thereunder or in respect thereof. As used in the Credit Agreement, the terms "Agreement”, "this Agreement”, "herein”, "hereinafter”, "hereto”,
"hereof” and words of similar import shall, unless the context otherwise requires, from and after the First Amendment Effective Date, mean or refer to the Credit
Agreement, as further amended, supplemented or modified from time to time in accordance with its terms. As used in any other
LDRV – First Amendment and Incremental Agreement
Credit Document, from and after the First Amendment Effective Date, all references to the "Credit Agreement” in such Credit Documents shall, unless the context
otherwise requires, mean or refer to the Credit Agreement, as further amended, supplemented or modified from time to time in accordance with its terms.
SECTION 3. Consent. Subject to the terms and conditions set forth herein, effective upon the occurrence of the First Amendment Effective Date, the
parties hereto agree that, notwithstanding anything else in the Credit Agreement to the contrary, the Loan Parties shall not have to comply with the (a) Total Net Leverage
Ratio test set forth in Section 6.12 of the Credit Agreement (as in effect prior to this Amendment) for the Measurement Period ending December 31, 2023 and (b) the
Consolidated Current Ratio test set forth in Section 6.14 of the Credit Agreement (as in effect prior to this Amendment) for the Measurement Period ending December 31,
2023. Each Loan Party acknowledges and agrees that the consent contained in the foregoing shall not waive or amend (or be deemed to be or constitute an amendment to
or waiver of) any other covenant, term or provision in the Credit Agreement or hinder, restrict or otherwise modify the rights and remedies of the Lenders and the
Administrative Agent following the occurrence of any other present or future Default or Event of Default under the Credit Agreement or any other Credit Document.
(such date, the "First Amendment Effective Date”):
SECTION 4. Conditions Precedent. This Amendment shall become effective as of the date on which the following conditions precedent are satisfied
(a )
The Administrative Agent (or its counsel) shall have received from each Borrower, each other Loan Party and the Required Lenders a
counterpart of this Amendment duly executed and delivered on behalf of such party;
(b)
The Administrative Agent shall have received a landlord’s waiver and consent executed by Coliseum with respect to the real property mortgaged
in connection with the Coliseum Agreement and with respect to which any Loan Party has a leasehold interest on terms and conditions satisfactory to the
Administrative Agent;
(c)
The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the First Amendment Effective Date and
reimbursement or payment of all reasonable and documented out-of-pocket expenses (including reasonable and documented fees, charges and disbursements of
counsel) required to be reimbursed or paid by any Loan Party pursuant to the terms of the Credit Agreement;
(d)
The Administrative Agent shall have received all documentation and other information required by any Lenders or the Issuing Bank to evidence or
facilitate both the Borrowers’ and each Lender’s compliance with all applicable Laws and regulations, including, all "know your customer” rules in effect from
time to time pursuant to the Bank Secrecy Act, the USA Patriot Act and other applicable Laws on or prior to the date which is five (5) Business Days prior to the
First Amendment Effective Date; and
(e)
The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower Representative either (i) certifying that all
shareholder and corporate consents and approvals, material governmental and third party consents and approvals required in connection with the execution and
delivery of this Amendment (all of which shall be final with no waiting period to expire or ongoing governmental inquiry or investigation) shall have been duly given
or recorded, and that any such consents, licenses, approvals and agreements shall be in full force and effect, or (ii) stating that no such consents, licenses or
approvals are so required upon giving effect to this Amendment.
The Administrative Agent shall notify the Borrowers and the Lenders of the First Amendment Effective Date, and such notice shall be conclusive and binding.
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SECTION 5. Representations and Warranties. In order to induce the Lenders and the Administrative Agent to enter into this Amendment, each Loan Party
hereby represents and warrants to the Lenders and the Administrative Agent on and as of the First Amendment Effective Date that:
(a)
Authorization; No Contravention. The execution and delivery by each Loan Party of this Amendment and performance by each Loan Party of
this Amendment and the Credit Agreement have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a)
contravene the terms of any of such Loan Party’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any
Lien (except pursuant to the Security Documents) under, or require any payment to be made under (i) any Material Contract to which such Person is a party or
affecting such Person or the properties of such Person or any Loan Party, or (ii) any order, injunction, writ or decree of any Governmental Authority or any
arbitral award to which such Person or its property is subject; or (c) violate any Law; except, in the case of clause (b) or (c), to the extent such contravention,
conflict or violation would not reasonably be expected to have Material Adverse Change. No Default or Event of Default has occurred and is continuing.
(b)
Binding Effect. This Amendment has been duly executed and delivered by each Loan Party which is a party hereto, and each of this Amendment
and the Existing Credit Agreement as amended by this Amendment constitute the legal, valid and binding obligation of each Loan Party party thereto, enforceable
in accordance with its respective terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar Laws affecting creditors’ rights
generally and general principles of equity.
(c)
Representations and Warranties. The representations and warranties of the Loan Parties contained in this Amendment and each other Credit
Document are true and correct in all material respects (and, in the case of any representation or warranty that is qualified by materiality or Material Adverse
Change, are true and correct in all respects) on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct in all material respects (and, in the case of any representation or warranty that is qualified by materiality or
Material Adverse Change, are true and correct in all respects) as of such earlier date.
SECTION 6. Reaffirmation of Guaranty Agreements and Security Interests. Each Loan Party hereby acknowledges its receipt of a copy of this
Amendment and its review of the terms and conditions hereof and consents to the terms and conditions of this Amendment and the transactions contemplated hereby.
Except as provided in this Amendment, including as it relates to the scope of Obligations secured by the Collateral on and after the First Amendment Effective Date, each
Loan Party hereby (a) affirms and confirms its guarantees, pledges, grants and other undertakings under the Existing Credit Agreement, the Guaranty Agreements and the
other Credit Documents to which it is a party, and (b) agrees that (i) each Credit Document to which it is a party shall continue to be in full force and effect and (ii) all
guarantees, pledges, grants and other undertakings thereunder shall continue to be in full force and effect and shall accrue to the benefit of the Secured Parties. In
furtherance of the foregoing, each Loan Party party hereto affirms and confirms its guarantee of the Obligations as a "Guarantor” party to the Guaranty Agreements.
SECTION 7. Miscellaneous.
(a)
No Waiver. Nothing contained herein shall be deemed to constitute a waiver of compliance with, or consent to any deviation from, any term or
condition contained in the Credit Agreement or any of the other Credit Documents except as expressly stated herein, or constitute a course of conduct or dealing
among the parties. The Administrative Agent and the Lenders reserve all rights, privileges and remedies under the Credit Documents.
(b)
Fees and Expenses. The Borrowers shall reimburse the Administrative Agent for all reasonable and documented out-of-pocket costs and
expenses (including all outstanding reasonable and documented attorneys’ fees of counsel to the Administrative Agent) incurred by the Administrative Agent in
connection with the preparation, negotiation, and execution of this
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Amendment and the other agreements and documents executed and delivered in connection herewith in addition to any other outstanding fees and expenses owing,
in each case, in accordance with the terms of the Credit Agreement and incurred prior to the date hereof.
(c)
Governing Law. This Amendment and any claims, disputes or causes of action (whether in contract or tort) arising out of or related to this
Amendment and the transaction contemplated hereby shall be governed by, and construed in accordance with, the laws of the Governing State.
(d)
JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE
ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT
OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, OR ANY RELATED PARTY OF THE FOREGOING IN
ANY WAY RELATING TO THIS AMENDMENT OR ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR
THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE
UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF,
AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING, OR ANY OTHER
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT OR ANY OTHER CREDIT DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AMENDMENT OR IN
ANY OTHER CREDIT DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AMENDMENT OR ANY OTHER CREDIT DOCUMENT AGAINST ANY
LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(e)
VENUE. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT OR ANY OTHER CREDIT DOCUMENT IN ANY COURT REFERRED
TO IN SECTION 10.21 OF THE CREDIT AGREEMENT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT.
(f)
SERVICE OF PROCESS. EACH LOAN PARTY IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 10.10 OF THE CREDIT AGREEMENT. NOTHING IN THIS AMENDMENT WILL AFFECT THE RIGHT OF
ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
( g) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREB Y IRREVOCAB LY WAIVES, TO THE FULLEST EXTENT
PERMITTED B Y APPLICAB LE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL B Y JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT OR ANY OTHER CREDIT DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
4
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND
THE OTHER PARTIES HERETO HAVE B EEN INDUCED TO ENTER INTO THIS AMENDMENT AND THE OTHER CREDIT
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
(h)
Benefits. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.
(i)
Release. In consideration of the agreements of Administrative Agent and each Lender contained in this Amendment and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the Loan Parties (collectively, the "Releasors”), on behalf of itself
and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges
Administrative Agent and each Lender, each of their successors and assigns, each of their respective affiliates, and their respective affiliates’ present and former
shareholders, members, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (the Administrative Agent,
Lenders and all such other Persons being hereinafter referred to collectively as the "Releasees,” and individually as a "Releasee”), of and from all demands,
actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all
other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually a "Claim” and collectively, "Claims”) of every name and
nature, either known or unknown, both at law and in equity, which Releasors, or any of them, or any of their successors, assigns or other legal representatives may
now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing
whatsoever which arises at any time on or prior to the date hereof, including, without limitation, for or on the account of, or in relation to, or in any way in
connection with the Credit Agreement, or any of the other Credit Documents or transactions thereunder or related thereto.
(j)
Counterparts and Integration. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Amendment and the other Credit Documents
constitute the entire contract among the parties party hereto relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. This Amendment shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the
other parties hereto. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (i.e., "pdf” or "tif”) format shall be
just as effective as the delivery of a manually executed counterpart of this Amendment.
[Remainder of this page intentionally left blank]
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first
above written.
BORROWER REPRESENTATIVE AND BORROWERS:
LDRV HOLDINGS CORP.
By: /s/ John North
Name: John North
Title: CEO
LAZYDAYS RV AMERICA, LLC
LAZYDAYS RV DISCOUNT, LLC
LAZYDAYS MILE HI RV, LLC
LAZYDAYS OF MINNEAPOLIS LLC
LDRV OF TENNESSEE LLC
LDRV OF NASHVILLE, LLC
LAZYDAYS RV OF CHICAGOLAND, LLC
LAZYDAYS OF CENTRAL FLORIDA, LLC
LONE STAR DIVERSIFIED, LLC
LAZYDAYS RV OF PHOENIX, LLC
LAZYDAYS RV OF ELKHART, LLC
LAZYDAYS RV OF OREGON, LLC
LAZYDAYS RV OF WISCONSIN, LLC
LAZYDAYS RV OF IOWA, LLC
LAZYDAYS RV OF OKLAHOMA, LLC
LD OF LAS VEGAS, LLC
LAZYDAYS RV OF KNOXVILLE, LLC
LAZYDAYS RV OF WILMINGTON, LLC
LAZYDAYS RV OF LONGMONT, LLC
LDL OF FORT PIERCE, LLC
LAZYDAYS RV OF ST. GEORGE, LLC
LAZYDAYS RV OF SURPRISE, LLC
By: LDRV Holdings Corp.,
its Manager
By: /s/ John North
Name: John North
Title: CEO
LDRV – First Amendment to Second A&R Credit Agreement
GUARANTORS:
LAZYDAYS HOLDINGS, INC.
LAZYDAYS’ R.V. CENTER, INC.
By: /s/ John North
Name: John North
Title: CEO
LAZYDAYS RV OF MARYVILLE, LLC
LAZYDAYS RV OF RENO, LLC
LAZYDAYS SUPPORT SERVICES, LLC
By: /s/ John North
Name: John North
Title: CEO
LDRV – First Amendment to Second A&R Credit Agreement
ADMINISTRATIVE AGENT:
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ Michael A. Gollnitz
Name: Michael A. Gollnitz
Title: Senior Vice President
LDRV – First Amendment to Second A&R Credit Agreement
LENDER:
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ Michael A. Gollnitz
Name: Michael A. Gollnitz
Title: Senior Vice President
LDRV – First Amendment to Second A&R Credit Agreement
LENDER:
ROCKLAND TRUST COMPANY
By: /s/ Steven J. Ingalls
Name: Steven J. Ingalls
Title: Vice President
LDRV – First Amendment to Second A&R Credit Agreement
LENDER:
FLAGSTAR SPECIALTY FINANCE COMPANY, LLC as successor-in-interest to NYCB SPECIALTY
FINANCE COMPANY, LLC
By: /s/ Mark C. Mazmanian
Name: Mark C. Mazmanian
Title: First Senior Vice President
LDRV – First Amendment to Second A&R Credit Agreement
LENDER:
WELLS FARGO COMMERCIAL DISTRIBUTION FINANCE, LLC
By: /s/ Thomas M. Adamski
Name: Thomas M. Adamski
Title: Managing Director
LDRV – First Amendment to Second A&R Credit Agreement
Annex A
Credit Agreement
See attached.
LDRV – First Amendment and Incremental Agreement
43661692
Execution Version
Conformed through First Amendment
_________________________________________________________________________________
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Among
LDRV HOLDINGS CORP.,
a Delaware Corporation, and
LAZYDAYS RV AMERICA, LLC, LAZYDAYS RV DISCOUNT, LLC, AND LAZYDAYS MILE HI RV, LLC,
Each a Delaware Limited Liability Company
VARIOUS OTHER AFFILIATED ENTITIES HEREAFTER PARTIES HERETO,
And
as Borrowers
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Administrative Agent, Swingline Lender and Issuing Bank
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
AND VARIOUS OTHER FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO
as Lenders
Dated: To Be Effective As Of February 21, 2023
_________________________________________________________________________________
LEGAL02/44139400v8
TABLE OF CONTENTS
ARTICLE 1 CERTAIN DEFINITIONS; RULES OF CONSTRUCTION 1
Section 1.01. Certain Definitions.................................................................. 1
Section 1.02. Terms Generally.................................................................. 5455
Section 1.03. [Reserved]........................................................................... 5556
Section 1.04. Accounting Principles......................................................... 5556
Section 1.05. Proforma Calculations........................................................ 5556
Section 1.06. Divisions.....................................................................… ........ 56
Section 1.07. Reallocation; Effect of Amendment and Restatement.......... 5657
Section 1.08. SOFR Rate............................................................................ 5758
ARTICLE 2 CREDIT FACILITIES......................................................... 5758
Section 2.01. Floor Plan Loans...................................................................... 58
2.01.1. Floor Plan Loan Promissory Notes........................................... 5859
2.01.2. Procedure For Floor Plan Loan Borrowings............................. 5960
2.01.3. Overadvances............................................................................ 5960
2.01.4. Settlement Of Floor Plan Loans Among Floor Plan Lenders... 6061
2.01.5. Repayment Of Floor Plan Loans............................................... 6061
2.01.6. Payments Due Upon Sale or Ineligibility Of Floor Plan Vehicles or Units 6061
2.01.7. Eligible New Floor Plan Unit Curtailment............................... 6061
2.01.8. Eligible Used Floor Plan Unit Curtailment.............................. 6162
2.01.9. Permitted Company Vehicle Curtailment................................. 6162
2.01.10. Out Of Balance Floor Plan Vehicles or Units.......................... 6162
2.01.11. Deposit And Application Of Payment....................................... 6162
2.01.12. Permitted Purposes Of Floor Plan Loans................................ 6162
2.01.13. Title Documents........................................................................ 6162
2.01.14. Power of Attorney..................................................................... 6263
2.01.15. Floor Plan Unused Commitment Fees...................................... 6263
2.01.16. Permanent Reduction Of Floor Plan Line of Credit Dollar Cap 6263
2.01.17. Floor Plan Interest Reduction Arrangement........................... 6364
2.01.18. Payments Due Upon Casualty Event........................................ 6465
Section 2.02. M&T Advances..................................................................... 6465
2.02.1. Advances................................................................................... 6465
2.02.2. Automated Sweep Program....................................................... 6566
2.02.3. Repayment Obligations of Borrowers....................................... 6566
Section 2.03. Revolving Credit Loans..................................................... 6566
2.03.1. Revolving Credit Loan Promissory Notes................................. 6567
2.03.2. Procedure For Revolving Credit Loan Borrowings................. 6667
2.03.3. Repayment Of Revolving Credit Loans..................................... 6667
2.03.4. Permitted Purposes Of Revolving Credit Loans....................... 6667
2.03.5. Revolving Credit Unused Commitment Fees............................ 6668
2.03.6. Permanent Reduction Of Revolving Credit Dollar Cap........... 6768
2.03.7. Borrowing Base Overadvance.................................................. 6768
Section 2.04. Swingline Loan Subfacility............................................... 6768
2.04.1. Advances................................................................................... 6869
2.04.2. Repayment of Swingline Loans Upon Swingline Conversion Event 6869
2.04.3. Participations............................................................................ 6870
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2.04.3. Obligations Absolute................................................................. 6970
Section 2.05. Letter of Credit Subfacility............................................. 6971
2.05.1. Request for Issuance; Amendment; Renewal; Extension; Certain Conditions 7071
2.05.2. Expiration Date......................................................................... 7072
2.05.3. Agreement of Lenders To Purchase Proportionate Share of Letters of Credit 7072
2.05.4. Reimbursement Obligations of the Borrower........................... 7172
2.05.5. Borrowers’ Reimbursement Obligations Are Absolute............. 7173
2.05.6. Applicability of ISP98............................................................... 7273
2.05.7. Interim Interest.......................................................................... 7273
2.05.8. Cash Collateralization.............................................................. 7273
2.05.9. Letter of Credit Fees................................................................. 7274
2.05.10. Letters of Credit Issued for Other Loan Parties or Subsidiaries 7374
Section 2.06. Reserved............................................................................ 7374
Section 2.07. Interest Terms Applicable To The Loans......................... 7374
2.07.1. Adjusted Base Rate................................................................... 7374
2.07.2. SOFR Borrowing Option.......................................................... 7374
2.07.3. Breakage Costs......................................................................... 7576
2.07.4. Illegality.................................................................................... 7577
2.07.5. Termination Of Right to Elect SOFR Borrowings.................... 7677
2.07.6. Calculation Of Interest............................................................. 7677
2.07.7. Default Interest......................................................................... 7677
2.07.8. Maximum Rate Of Interest........................................................ 7678
2.07.9. Late Payment Charges.............................................................. 7778
2.07.10. Effect of Benchmark Transition Event...................................... 7778
2.07.11. Adjusted Term SOFR Conforming Changes............................. 7880
Section 2.08. Pro Rata Treatment And Payments................................... 7980
2.08.1. Distribution Of Payments To Lenders...................................... 7980
2.08.2. Funding Of Loans..................................................................... 7981
2.08.3. Ratable Sharing........................................................................ 8081
2.08.4. Setoffs, Counterclaims, Other Payments.................................. 8082
Section 2.09. Application Of Payments................................................... 8182
Section 2.10. Increased Costs.................................................................. 8182
2.10.1. Increased Costs Generally........................................................ 8183
2.10.2. Capital Requirements................................................................ 8283
2.10.3. Certificate for Reimbursement.................................................. 8283
2.10.4. Delay in Requests...................................................................... 8283
Section 2.11. Taxes..................................................................................... 8284
2.11.1. Defined Terms........................................................................... 8284
2.11.2. Payments Free of Taxes............................................................ 8284
2.11.3. Payment of Other Taxes by the Loan Parties........................... 8384
2.11.4. Indemnification......................................................................... 8384
2.11.5 Indemnification by Lenders....................................................... 8384
2.11.6 Evidence of Payments............................................................... 8385
2.11.7 Status of Lenders....................................................................... 8385
2.11.8 Treatment of Certain Refunds................................................... 8586
2.11.9 Survival..................................................................................... 8587
Section 2.12 Mitigation, Obligations; Replacement of Lenders........ 8687
2.12.1 Designation of a Different Lending Office................................ 8687
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2.12.2 Replacement of Lenders............................................................ 8687
Section 2.13 Certain Credit Support Events......................................... 8688
Section 2.14 Defaulting Lenders........................................................... 8788
2.14.1 Defaulting Lender Adjustments................................................. 8788
2.14.2 Defaulting Lender Cure............................................................ 9091
2.14.3 New Swingline Loans/Letters of Credit/M&T Advances.......... 9092
Section 2.15 Fees....................................................................................... 9092
Section 2.16 Payments.............................................................................. 9092
Section 2.17 Advancements...................................................................... 9092
Section 2.18 Co-Borrower Provisions................................................... 9192
2.18.1 Borrower Representative.......................................................... 9192
2.18.2 Subordination............................................................................ 9193
2.18.3 Postponement of Subrogation................................................... 9193
2.18.4 No Discharge............................................................................ 9293
2.18.5 Waivers..................................................................................... 9294
2.18.6 Cross-Guaranty; Joint and Several Liability of Co-Borrowers 9294
2.18.7 Obligations Among Loan Parties.............................................. 9395
Section 2.19 Swap Obligations; Keepwell.............................................. 9495
Section 2.20 Acknowledgment and Consent to Bail-In of Affected Financial Institutions........................................................ 9496
Section 2.21 Reserves............................................................................... 9596
Section 2.22 Increase in Commitments................................................... 9597
ARTICLE 3 REPRESENTATIONS AND WARRANTIES................. 9799
Section 3.01 Organization and Qualification....................................... 9799
Section 3.02 Capitalization and Ownership........................................... 9799
Section 3.03 Subsidiaries.......................................................................... 9899
Section 3.04 Power and Authority....................................................... 98100
Section 3.05 Validity and Binding Effect............................................ 98100
Section 3.06 No Conflict....................................................................... 98100
Section 3.07 Litigation........................................................................... 98100
Section 3.08 Financial Statements; Financial Projections............... 99100
3.08.1 Financial Statements............................................................... 99100
3.08.2 Books and Records.................................................................. 99100
3.08.3 Absence of Material Liability.................................................. 99101
3.08.4 Financial Projections.............................................................. 99101
Section 3.09 Margin Stock..................................................................... 99101
Section 3.10 Full Disclosure................................................................ 99101
Section 3.11 Tax Returns and Payments............................................. 100101
Section 3.12 Consents and Approvals................................................ 100102
Section 3.13 No Event of Default; Compliance with Instruments. 100102
Section 3.14 Compliance with Laws.................................................... 100102
Section 3.15 ERISA Compliance........................................................... 100102
3.15.1 Plans and Contributions....................................................... 100102
3.15.2 Pending Claims..................................................................... 100102
3.15.3 ERISA Events........................................................................ 101102
Section 3.16 Title to Properties......................................................... 101102
Section 3.17 Insurance......................................................................... 101103
Section 3.18 Employment Matters...................................................... 101103
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Section 3.19. Solvency........................................................................... 101103
Section 3.20 Material Contracts; Burdensome Restrictions......... 101103
Section 3.21 Patents, Trademarks, Copyrights, Licenses, Etc........ 102103
Section 3.22 Liens.................................................................................. 102104
Section 3.23. Environmental Compliance........................................... 102104
Section 3.24. Anti-Corruption; Anti-Terrorism................................. 103105
Section 3.25. Affected Financial Institution.................................... 103105
Section 3.26. Beneficial Ownership..................................................... 103105
Section 3.27. Covered Entities............................................................. 103105
ARTICLE 4 CONDITIONS PRECEDENT....................................... 103105
Section 4.01. Conditions to Closing.................................................... 103105
4.01.1. Closing Submissions............................................................. 103105
4.01.2. Fees....................................................................................... 105107
4.01.3. Credit Party Expenses........................................................... 105107
4.01.4 No Material Adverse Change................................................ 105107
4.02.1. Representations And Warranties.......................................... 106108
4.02.2. Absence Of Defaults And Events Of Default......................... 106108
4.02.3. No Material Adverse Changes.............................................. 106108
4.02.3. Loan Request......................................................................... 106108
ARTICLE 5 AFFIRMATIVE COVENANTS................................... 106108
Section 4.02. Conditions To Advances Of Proceeds Of Loans And Issuance Of Letters Of Credit After Closing Date.. 106108
Section 5.01. Payment and Performance............................................ 107108
Section 5.02. Insurance......................................................................... 107108
Section 5.03. Collection Of Accounts; Sale Of Inventory.............. 107109
Section 5.04. Notice Of Litigation And Proceedings........................ 107109
Section 5.05. Payment Of Liabilities To Third Persons..................... 107109
Section 5.06. Notice Of Change Of Business Location Or Of Jurisdiction of Organization; Notice of Name Change.................. 107109
Section 5.07. Payment Of Taxes............................................................ 108109
Section 5.08. Notice Of Events Affecting Collateral; Compromise Of Receivables; Returned Or Repossessed Goods.......... 108110
Section 5.09. Reporting Requirements................................................ 108110
5.09.1 [Reserved] 108Monthly Liquidity Certificate....................... 110
5.09.2. Monthly Financial Statements.............................................. 108110
5.09.3. Annual Financial Statements................................................ 108110
5.09.4. Management Letters.............................................................. 109111
5.09.5. Compliance Certificate......................................................... 109111
5.09.6. Reports To Other Creditors.................................................. 109111
5.09.7. Management Changes........................................................... 109111
5.09.8. Projections............................................................................ 109111
5.09.9. Notice of Defaults and Events of Default.............................. 109111
5.09.10. ERISA Event.......................................................................... 109111
5.09.11. SEC Filings........................................................................... 109111
5.09.12. Beneficial Ownership............................................................ 110112
5.09.13. General Information............................................................. 110112
5.09.14. Borrowing Base Certificates................................................. 110112
5.09.14. Notice and Consent Coliseum..................................................... 112
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Section 5.10. Preservation of Existence, Etc.................................... 110113
Section 5.11. Maintenance of Assets and Properties........................ 111113
Section 5.12. Compliance with Laws.................................................... 111113
Section 5.13. Inspection Rights............................................................ 111113
Section 5.14. Environmental Matters................................................. 111113
Section 5.15. Additional Subsidiaries.................................................. 111114
5.15.1. Subsidiaries........................................................................... 111114
5.15.2. [Reserved]............................................................................. 112114
5.15.3. Joinder of Additional Borrowers.......................................... 112114
Section 5.16. Deposit and Operating Accounts................................. 112115
Section 5.17. Landlord Waivers........................................................... 112115
Section 5.18. Post-Closing Deliverables............................................ 113115
Section 5.05. UCC and Floor Plan Units; Repurchase Agreements 113115
Section 5.19. Further Assurances....................................................... 113115
Section 5.20. Delivery of Floor Plan Unit Titles and Vehicle Title Documentation............................................................... 113115
Section 5.22. Designation of Subsidiaries........................................... 114116
ARTICLE 6 NEGATIVE COVENANTS........................................... 114117
Section 6.01. Liens.................................................................................. 115117
Section 6.02. Investments And Loans................................................... 115117
Section 6.03. Indebtedness.................................................................... 116118
Section 6.04. Fundamental Changes................................................... 117119
Section 6.05. Dispositions..................................................................... 118120
Section 6.06. Restricted Payments...................................................... 118121
Section 6.07. Change in Nature Of Business....................................... 119122
Section 6.08. Transactions With Affiliates........................................ 119122
Section 6.09. Burdensome Agreements; Negative Pledges.............. 120122
Section 6.10. Use Of Proceeds............................................................. 120122
Section 6.10. Tax Consolidation.......................................................... 120122
Section 6.12. Maximum Total Net Leverage Ratio............................. 120122
Section 6.13. Minimum Consolidated Fixed Charge Coverage Ratio 120123
Section 6.14. Minimum Consolidated Current Ratio........................ 120123
Section 6.15. Anti-Money Laundering/International Trade Law Compliance...................................................................... 120123
Section 6.16 Amendments to Amended Charter, Securities Purchase Agreement, or Certificate of Designations............... 121123
Section 6.17. Capital Expenditures..................................................... 121124
Section 6.18. Minimum Consolidated EBITDA.......................................... 124
Section 6.19. Minimum Liquidity................................................................. 124
Section 6.20. Ratio Adjustment Period..................................................... 125
ARTICLE 7 EVENTS OF DEFAULT................................................ 121125
Section 7.01. Failure To Pay................................................................. 121125
Section 7.02. Violation Of Covenants................................................. 121125
Section 7.03. Representation Or Warranty........................................ 121125
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ARTICLE 8 RIGHTS AND REMEDIES OF CREDIT PARTIES ON THE OCCURRENCE OF AN EVENT OF DEFAULT.............................. 123127
Section 7.04. Cross Default................................................................. 122126
Section 7.05. Judgments........................................................................ 122126
Section 7.06. Levy By Judgment Creditor........................................... 122126
Section 7.07. Involuntary Insolvency Proceedings.......................... 122126
Section 7.08. Voluntary Insolvency Proceedings............................. 122126
Section 7.09. Attempt To Terminate Or Limit Guaranties................. 122126
Section 7.10. ERISA................................................................................ 122127
Section 7.11. Injunction........................................................................ 123127
Section 7.12. Invalidity of Credit Documents................................... 123127
Section 7.13. Invalidity of Security Documents................................ 123127
Section 7.14. Licenses and Agreements............................................... 123127
Section 7.15. Change In Control......................................................... 123127
Section 8.01. Credit Parties’ Specific Rights And Remedies............ 123127
Section 8.02. Automatic Acceleration................................................ 124128
Section 8.03. Consent To Appointment Of Receiver.......................... 124128
Section 8.04. Remedies Cumulative..................................................... 124128
Section 8.05. Application Of Funds..................................................... 124128
Section 8.06. Cash Collateral Account............................................. 125129
ARTICLE 9 THE ADMINISTRATIVE AGENT.............................. 126130
Section 9.01. Appointment.................................................................... 126130
Section 9.02. Exculpatory Provisions................................................. 126130
9.02.1. No Fiduciary, Discretionary or Implied Duties.................... 126130
9.02.2. No Liability for Certain Actions........................................... 127131
9.02.3. Knowledge............................................................................. 127131
9.02.4. No Duty to Inquire................................................................ 127131
Section 9.03. Reliance by Administrative Agent................................. 127131
Section 9.04. Delegation of Duties..................................................... 127131
Section 9.05. Resignation of Administrative Agent........................... 128132
Section 9.06. Non-Reliance on Administrative Agent and Other Lenders 128132
Section 9.07. Administrative Agent May Hold Collateral For Lenders and Others...................................................................... 128133
Section 9.08. The Administrative Agent In Its Individual Capacity. 129133
Section 9.09. Administrative Agent May File Proofs of Claim........ 129133
Section 9.10. Collateral and Guaranty Matters............................... 129134
Section 9.11. No Reliance on Administrative Agent’s Customer Identification Program................................................. 130134
Section 9.12. No Other Duties, Etc..................................................... 130134
Section 9.13. Erroneous Payments...................................................... 130134
Section 9.14. Indemnification of Administrative Agent.................... 132136
ARTICLE 10 MISCELLANEOUS....................................................... 133137
Section 10.01. Waivers and Amendments............................................... 133137
Section 10.02. Successors and Assigns.................................................. 135139
10.02.1. Successors and Assigns Generally........................................ 135139
10.02.2. Assignments By Lenders....................................................... 135139
10.02.3. Certain Additional Payments................................................ 136140
10.02.4. Register................................................................................. 136140
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10.02.5. Procedures for Implementing Lender Assignments.............. 136141
10.02.6. Cashless Settlements............................................................. 137141
Section 10.03. Participations................................................................. 137141
Section 10.04. Pledges............................................................................ 138142
Section 10.05. Resignation Of Issuing Bank And Swingline Lender... 138142
Section 10.06. No Advisory or Fiduciary Responsibility..................... 138142
Section 10.07. Right of Setoff............................................................... 139143
Section 10.08. Expenses; Indemnity; Damage Waiver........................... 139143
10.08.1. Costs and Expenses............................................................... 139143
10.08.2. Indemnification by the Borrowers........................................ 139144
10.08.3. Reimbursement by Lenders................................................... 140144
10.08.4. Waiver of Consequential Damages, Etc............................... 140145
10.08.5. Payments............................................................................... 141145
10.08.6. Survival................................................................................. 141145
Section 10.09. Course of Conduct........................................................ 141145
Section 10.10. Notices; Effectiveness; Electronic Communication. 141146
10.10.1. Notices Generally.................................................................. 141146
10.10.2. Electronic Communications.................................................. 142146
10.10.3. Change of Address, etc......................................................... 142147
10.10.4. Platform................................................................................ 142147
Section 10.11. Treatment of Certain Information; Confidentiality 143147
Section 10.12. Counterparts And Integration..................................... 143148
Section 10.13. Electronic Execution.................................................... 144148
Section 10.14. Severability..................................................................... 144148
Section 10.15. Survival............................................................................ 144148
Section 10.16. Time................................................................................... 144149
Section 10.17. Advertisement................................................................. 144149
Section 10.18. Acknowledgments.......................................................... 145149
Section 10.19. Governing Law................................................................ 145149
Section 10.20. Jurisdiction..................................................................... 145149
Section 10.21. Venue................................................................................ 145150
Section 10.22. Service Of Process......................................................... 145150
Section 10.23. Waiver of Jury Trial....................................................... 145150
Section 10.24. USA Patriot Act Notice................................................. 146150
Section 10.25.
Section 10.25.
Acknowledgement Regarding Any Supported QFCs
Acknowledgement Regarding Any Supported QFCs
146150
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SCHEDULES
Schedule 1.01 Lenders and Commitments
Schedule 1.01(a) Borrowers
Schedule 1.01(b) Concentrated Customers
Schedule 1.02 Existing Letters of Credit
Schedule 1.03 Preferred Stockholders
Schedule 1.04 Facilities
Schedule 1.05 Liens
Schedule 3.20 Material Contracts
Schedule 5.18 Post-Closing Deliverables
Schedule 5.22 Designated Real Estate Subsidiaries
Schedule 6.02(b) Investments
Schedule 6.02(h) Real Estate Investments
Schedule 6.03 Indebtedness
EXHIBITS
Exhibit A Form of Assignment And Assumption
Exhibit B Form of Compliance Certificate
Exhibit C Form of Floor Plan Loan Note
Exhibit D Form of Lender Addendum
Exhibit E Form of Revolving Credit Note
Exhibit F Form of Swingline Note
Exhibit G [Reserved]Form of Liquidity Certificate
Exhibit H Form of Loan Request
Exhibit IA [Reserved]
Exhibit IB Form of Notice of Election (Revolving Credit Loans)
Exhibit IC Form of Notice of Election (Floor Plan Loans)
Exhibit J-1 Form of Certificate pursuant to §881(c)
Exhibit J-2 Form of U.S. Tax Compliance Certificate
Exhibit J-3 Form of U.S. Tax Compliance Certificate
Exhibit J-4 Form of U.S. Tax Compliance Certificate
Exhibit K Form of Joinder Agreement and Counterpart
Exhibit L Form of Borrowing Base Certificate
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is dated to be effective as of February 21, 2023, by and between LDRV HOLDINGS
CORP., a Delaware corporation ("LDRV”), LAZYDAYS RV AMERICA, LLC, LAZYDAYS RV DISCOUNT, LLC, and LAZYDAYS MILE HI RV, LLC, each
a Delaware limited liability company (together with LDRV and each Subsidiary of LDRV identified on the signature pages hereto as a "Borrower”, each a "Borrower”
and, collectively, the "Borrowers”), each lender from time to time that is a party hereto (each a "Lender” and collectively, the "Lenders”), and MANUFACTURERS
AND TRADERS TRUST COMPANY, a New York banking corporation, as Administrative Agent, Swingline Lender and Issuing Bank.
RECITALS:
The Borrowers, certain of the Lenders (the "Existing Lenders”) and Manufacturers and Traders Trust Company, as administrative agent, are parties to that
certain Amended and Restated Credit Agreement, dated as of July 14, 2021, (as amended, modified or supplemented from time to time through the date hereof, the
"Existing Credit Agreement”).
The Borrowers have requested that the Existing Lenders and the Administrative Agent amend and restate the Existing Credit Agreement and the Lenders
establish (a) a floor plan line of credit facility in an aggregate amount of up to $525,000,000.00 and (b) a revolving credit facility in an aggregate amount of up to
$50,000,000.00 in favor of the applicable Borrowers, in each case on the terms and conditions of this Agreement.
Subject to the terms and conditions of this Agreement, the Existing Lenders and the Administrative Agent are willing to amend and restate the Existing Credit
Agreement, and the Lenders, to the extent of their respective Commitments as defined herein, are willing severally to establish the requested floor plan line of credit facility
and revolving credit facility, in favor of the applicable Borrowers, in each case on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and other valuable consideration, and intending to be legally
bound hereby, the parties hereby covenant and agree as follows:
CERTAIN DEFINITIONS; RULES OF CONSTRUCTION
ARTICLE 1
Section 1.01.
Certain Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings,
respectively, unless the context hereof clearly requires otherwise:
"Account” means any "account” within the meaning of that term under the Uniform Commercial Code.
obligated to pay an Account.
"Account Debtor” means any "account debtor” within the meaning of that term under the Uniform Commercial Code, including any Person who is
provide any portion of any Facility Increase in accordance with Section 2.22.
"Additional Lender” means, at any time, any Person that, in any case, is not an existing Lender but, in any event, is an "Eligible Assignee” and agrees to
"Adjusted Base Rate” means that rate of interest equal to the Base Rate plus the Applicable Margin.
"Adjusted Base Rate Borrowing” means each amount of the unpaid principal balance of a Loan which accrues interest at the Adjusted Base Rate.
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"Adjusted Daily SOFR Borrowing” means each unpaid principal balance of a Loan which accrues interest at the Adjusted Daily SOFR Rate.
of: (a) the Daily SOFR Rate; plus (b) the Applicable Margin.
"Adjusted Daily SOFR Rate” means with respect to the unpaid principal balances of the Floor Plan Loans, that rate per annum that is equal to the sum
for such Interest Period plus the Applicable Margin.
"Adjusted SOFR Rate” means for any SOFR Borrowing for any Interest Period, an interest rate per annum that is equal to the sum of the SOFR Rate
"Adjusted SOFR Rate Borrowing” means each unpaid principal balance of a Loan which accrues interest at the Adjusted SOFR Rate.
Spread Adjustment; provided that if Adjusted Term SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR shall be deemed to be the Floor.
"Adjusted Term SOFR” means, for purposes of any calculation, the rate per annum equal to (a) Term SOFR for such calculation plus (b) the SOFR
successors and assigns in such capacity as authorized by the terms of this Agreement.
"Administrative Agent” means M&T Bank, in its capacity as Administrative Agent for the Lenders in accordance with this Agreement, and its
"Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
Controlled by or is under common Control with the Person specified.
"Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is
"Agent Parties” has the meaning provided to such term in Section 10.10.4 of this Agreement.
"Agreement” means this Credit Agreement, as it may be amended or modified from time to time, together with all schedules and exhibits hereto.
"Amended Charter” means (i) the Amended and Restated Certificate of Incorporation attached as Exhibit A to the Certificate of Merger of Andina
Acquisition Corp. II and Andina II Holdco Corp. dated March 15, 2018, and filed with the office of the Secretary of State for the State of Delaware on March 15, 2018,
and including the Certificate of Designations, and (ii) the Amended and Restated Certificate of Incorporation attached as Exhibit A to the Certificate of Merger of Lazy
Days’ R.V. Center, Inc. and Andina II Merger Sub, Inc. dated March 15, 2018 and as filed with the office of the Secretary of State for the State of Delaware on March
15, 2018.
Foreign Corrupt Practices Act of 1977.
"Anti-Corruption Laws” means all applicable Laws of any jurisdiction concerning or relating to bribery or corruption, including without limitation, the
of 1977) and any regulation, order (including executive orders), or directive promulgated, issued or enforced pursuant to such Laws.
"Anti-Terrorism Laws” means any Laws of the United States relating to terrorism or money laundering (including the U.S. Foreign Corrupt Practices Act
"Applicable Credit Facility” means the Floor Plan Facility and the Revolving Credit Facility, as the context may require.
the date that a curtailment payment is due based on the following methodology: The phrase "Applicable Curtailment Date” is typically followed by
"Applicable Curtailment Date” means, with respect to any Floor Plan Vehicle or Unit and a Floor Plan Loan relating to such Floor Plan Vehicle or Unit,
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a numeral, which represents the number of days after the Applicable Starting Date for the Floor Plan Vehicle or Unit. For example, "Applicable Curtailment Date 365”
refers initially to a date (a "Target Date”) that is 365 days after the date of the Applicable Starting Date for the Floor Plan Vehicle or Unit. However, the Target Date is
not necessarily the actual payment date. The actual curtailment payment date is the tenth (10 ) day of the month following the calendar month that contains the Target
Date. Again, as an example, if the Applicable Starting Date for a Floor Plan Vehicle or Unit was January 20, 2023, then "Applicable Curtailment Date 365” for that unit
th
would be the tenth (10 ) day in February 2024.
th
"Applicable Margin” has the following meanings with respect to the Applicable Credit Facility:
Leverage Ratio in effect as of the most recent Calculation Date:
(a) with respect to the Revolving Credit Facility, Applicable Margin means, from time to time, the following percentages corresponding to the Total Net
Tier Level
1
12
23
34
45
Total Net Leverage Ratio
3.00 ≤ X
2.50 ≤ X < 3.00
2.00 ≤ X < 2.50
1.50 ≤ X < 2.00
X < 1.50
Applicable Rate For
SOFR Borrowings
3.25%
2.90%
2.65%
2.40%
2.15%
Applicable Rate For Base Rate Borrowings
2.25%
1.90%
1.65%
1.40%
1.15%
(b) with respect to the Floor Plan facility, Applicable Margin means, from time to time, the following percentages corresponding to the Total Net Leverage Ratio in
effect as of the most recent Calculation Date:
Tier Level
1
12
23
34
Total Net Leverage Ratio
3.00 ≤ X
2.00 ≤ X < 3.00
1.50 ≤ X < 2.00
X < 1.50
Applicable Rate For
SOFR Borrowings
2.40%
2.05%
2.00%
1.90%
Applicable Rate For Base Rate Borrowings
1.40%
1.05%
1.00%
0.90%
For the Floor Plan Facility, the initial Applicable Margin commencing on the First Amendment Effective Date shall be based on Tier Level 31. For the Revolving Credit
Facility, the initial Applicable Margin commencing on the First Amendment Effective Date shall be based on Tier Level 41. Beginning with the Calculation Date
immediately following the Fiscal Quarter of the Borrowers ending on March 31, 20232024 and after each consecutive Fiscal Quarter thereafter, the Applicable Margin
shall be determined and adjusted by the then current Total Net Leverage Ratio as determined in accordance with the quarterly Compliance Certificates to be provided by
the Borrowers in accordance with this Agreement. If the Borrowers fail to timely provide a Compliance Certificate for any Fiscal Quarter of the Borrowers as required by
and within the time limitations set forth in this Agreement, the Applicable Margin from the applicable date of such failure shall be based on Tier Level 1 until five (5)
Business Days after a Compliance Certificate has been provided, whereupon the applicable Tier Level shall be determined by the Total Net Leverage Ratio set forth in
such Compliance Certificate. Except as set forth above, each Applicable Margin shall be effective from a Calculation Date until the next Calculation Date. If, as a result
of any restatement of or other adjustment to the financial statements of the Borrowers and their Subsidiaries or for any other reason, the Borrowers or the Lenders
determine that (a) the Total Net Leverage Ratio (or any component thereof) as calculated by the Borrowers as of any applicable date was inaccurate, and (b) a proper
calculation would have resulted in higher pricing for such period, the Borrowers shall immediately and retroactively be obligated to pay to the Administrative Agent for the
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account of the applicable Lenders or the Issuing Bank promptly on demand by Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for
relief with respect to the Borrowers under the Bankruptcy Code, automatically and without further action by Administrative Agent, any Lender or the Issuing Bank), an
amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period.
The obligations of the Borrowers to make such payment shall survive the termination of the Commitments and the repayment of all other Obligations hereunder.
"Applicable Starting Date” means, with respect to any Eligible New Floor Plan Unit, Permitted Company Vehicle, or Eligible Used Floor Plan Unit, the
date of the original borrowing of Floor Plan Loans for such Floor Plan Vehicle or Unit. For the avoidance of doubt, if an M&T Advance is made with respect to any such
Floor Plan Vehicle or Unit, the Applicable Starting Date shall be the date of such M&T Advance.
that administers or manages a Lender.
"Approved Fund” means a Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity
"Arranger” means M&T Bank, in its capacity as arranger.
Administrative Agent, substantially in the form of Exhibit A or any other form approved by the Administrative Agent.
"Assignment And Assumption” means an Assignment And Assumption entered into by a Lender and an Eligible Assignee, and accepted by the
"Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the
remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease
were accounted for as a Capital Lease.
"Authorized Officer” means, with respect to any Person (other than a natural Person), any officer, partner, member, manager or other representative
authorized to act on behalf of such Person and shall include, with respect to any Loan Party, those Persons duly designated as such in any incumbency certificates
delivered to the Administrative Agent from time to time.
"Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a
term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (y)
otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of
making payments of interest calculated with reference to such Benchmark, in each case, as of such date.
Exposure on such date.
"Availability” means, as of any applicable date, the amount by which the Line Cap at such time exceeds the aggregate amount of the Revolving Credit
"Availability Period” means:
(a) in the case of the Floor Plan Facility, the period from and including the Closing Date to the earliest of (i) the Floor Plan Line of Credit Termination Date, (ii) the
date of termination of all of the Floor Plan Commitments pursuant to Section 2.01.16, and (iii) the date of termination of the Floor Plan Commitments pursuant to
Section 8.01; or
(b) in the case of the Revolving Credit Facility, the period from and including the Closing Date to the earliest of (i) the Revolving Credit Termination Date, (ii) the date
of termination of all Revolving Credit Commitments pursuant to Section 2.03.6, and (iii) the date of termination of the Revolving Credit Commitments pursuant to
Section 8.01.
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Affected Financial Institution.
"Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an
"Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European
Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In
Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law,
regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates
(other than through liquidation, administration or other insolvency proceedings).
"Bank Products” means any one or more of the following types of services or facilities extended to any of the Loan Parties by any Credit Party or
Affiliate of a Credit Party: (a) Automated Clearing House (ACH) transactions and other similar money transfer services; (b) cash management, lockbox services,
controlled disbursement accounts, treasury management arrangements, and other similar services; (c) the establishment and maintenance of depository accounts; (d) credit
cards, debit cards, purchase cards, or stored value cards; (e) merchant services; (f) foreign currency exchange; and (g) other similar or related bank products and
services.
amended or supplemented.
"Bankruptcy Code” means the bankruptcy code of the United States of America codified in Title 11 of the United States Code, as from time to time
"Base Rate” means, for any day, the fluctuating rate per annum equal to the highest of (a) the Prime Rate for such day, (b) the Federal Funds Rate in
effect on such day plus fifty (50) Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined on a daily basis, plus one hundred (100) Basis Points;
provided that to the extent such highest rate as calculated above shall, at any time, be less than zero percent (0.00%), such rate shall be deemed to be zero percent
(0.00%) for all purposes herein. Any change in the Base Rate shall be effective on the opening of business on the day of such change.
"Base Rate Loan” means a Loan that bears interest based on the Base Rate.
"Basis Point” means one one-hundredth (.01) of one percent.
"Benchmark” means the Term SOFR Reference Rate or any subsequent Benchmark Replacement that has become effective hereunder.
can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
"Benchmark Replacement” means the first alternative set forth in the order below that is applicable (based on the applicability restrictions below) and
(1) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;
(2) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower Representative as the replacement for the then-
current Benchmark giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the
Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement for the then-current
Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment;
provided that, if the Benchmark Replacement as so determined would be less than the Floor, such Benchmark Replacement will be deemed to be the Floor for the
purposes hereof.
Replacement for any applicable Available Tenor, the spread adjustment, or method for calculating or determining such spread adjustment, (which
"Benchmark Replacement Adjustment” means with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark
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may be a positive or negative value or zero) that has been selected by the Administrative Agent in consultation with the Borrower Representative, giving due consideration
to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark
with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a
spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark
Replacement for U.S. dollar-denominated syndicated credit facilities at such time.
"Benchmark Replacement Conforming Changes” means with respect to any Benchmark Replacement, any technical, administrative or operational
changes (including changes to the definition of "Base Rate,” the definition of "Business Day,” the definition of "Interest Period” or any similar or analogous definition (or
the addition of a concept of "interest period”), the definition of "U.S. Government Securities Business Day,” timing and frequency of determining rates and making
payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions
and other technical, administrative or operational matters) that the Administrative Agent decides in its reasonable discretion may be appropriate to reflect the adoption and
implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market
practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent
determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent
decides is reasonably necessary in connection with the administration of this Agreement and the other Credit Documents).
"Benchmark Replacement Date” means the earlier to occur of the following events with respect to the then-current Benchmark:
(I)
therein and (ii) the date on which the administrator of the Benchmark permanently or indefinitely ceases to provide the Benchmark; or
in the case of clause (a) of the definition of "Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced
(b) in the case of clause (b) of the definition of "Benchmark Transition Event,” the later of (i) the date of the public statement or publication of
information referenced therein, and (ii) the announced or stated date as of which all applicable tenors of such Benchmark will no longer be representative.
"Benchmark Transition Event” means, with respect to any then-current Benchmark, the occurrence of a public statement or publication of information
by or on behalf of the administrator of the then-current Benchmark, the regulatory supervisor for the administrator of such Benchmark, the Board of Governors of the
Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority
with jurisdiction over the administrator for such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such
Benchmark, announcing or stating that (a) such administrator has ceased, or will cease on a specified date, to provide such Benchmark (or all tenors of such Benchmark
applicable to the loan evidenced hereby), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will
continue to provide any applicable tenors of such Benchmark or (b) all applicable tenors of such Benchmark are or as of a specified date will no longer be representative
of the underlying market and economic reality that such Benchmark is intended to measure and indicating that representativeness will not be restored.
"Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such
time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Credit Documents in accordance with Section
2.07.10 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Credit Documents
in accordance with Section 2.07.10.
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"Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
"Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
entities.
"Borrower” means each of the entities set forth in the preamble to this Agreement and identified as a Borrower and "Borrowers” means all of such
refinancing of existing Indebtedness for which such Borrower is an obligor.
"Borrower Pro Rata Share” means the amount of proceeds of the Loans advanced to or for the benefit of a Borrower, including without limitation the
"Borrower Representative” means LDRV, and any successor thereto as appointed by all of the Borrowers.
"Borrowing” means, as the context requires, a (a) Floor Plan Borrowing, (b) M&T Advance or (c) a Revolving Borrowing.
"Borrowing Base” means an amount equal to:
100% of the New Unit Invoiced Amount of all Eligible New Floor Plan Units and Permitted Company Vehicles; plus
85% of the Used Unit Book Value of all Eligible Used Floor Plan Units that are the then-current model year or any of the previous seven model years;
plus
65% of the Used Unit Book Value of all Eligible Used Floor Plan Units that are any of the previous eighth, ninth or tenth model years; plus
40% of the Used Unit Book Value of all Eligible Used Floor Plan Units that are any of the previous eleventh and twelfth model years; plus
the face amount of Eligible Contracts in Transit multiplied by 100%; plus
the face amount of Eligible Accounts multiplied by 80%;
the Value of Eligible Inventory multiplied by 50%;
the net book value of the Eligible Equipment multiplied by 40%; plus
50% of Unrestricted Cash and Equivalents; minus
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
the then-amount of all Reserves.
"Borrowing Base Certificate” has the meaning provided to such term in Section 5.09.14.
"Borrowing Base Test Date” means (i) the last day of each calendar month for which a Borrowing Base Certificate has been delivered in accordance
with Section 5.09.14, and (ii) if the Borrower Representative either (x) voluntarily has delivered a Borrowing Base Certificate (including in connection with a Permitted
Acquisition) or (y) is requesting a Borrowing or an issuance of a Letter of Credit in accordance with Section 4.02.4, as of the last day of the calendar month ended at least
fourteen (14) days (or such lesser number of days as the Borrower Representative may elect in its discretion) prior to the date on which such Borrowing Base Certificate
was delivered.
Revolving Credit Loans, that M&T advances
"Borrowing Date” means any Business Day on which the Borrowers have requested that the Lenders advance proceeds of the Floor Plan Loans or
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proceeds of the M&T Advances, or that the Swingline Lender advances proceeds of the Swingline Loans, as the case may be, to or for the account of the Borrowers.
authorized or required by law or other governmental action to remain closed for business.
"Business Day” means any day other than a Saturday, Sunday or other day on which commercial banking institutions in New York, New York are
"Calculation Date” means each of the dates upon which the Applicable Margins are to be determined and adjusted, which adjustments shall be made
quarterly on the date occurring five (5) Business Days after the date on which the Administrative Agent receives the quarterly Compliance Certificate in accordance with
the provisions of this Agreement, or otherwise as required by the terms of this Agreement.
"Capital Expenditures” means for any Person for any period of determination thereof, (a) all net expenses incurred during such period by such Person in
connection with capital replacements, additions, renewals or improvements to any of the capital assets of such Person which are required to be capitalized on the books
and accounts of such Person in accordance with GAAP, and (b) the amount of Capital Lease Obligations paid by such Person during such period; provided, however,
Capital Expenditures shall not include (i) expenditures for fixed assets acquired in connection with a Permitted Acquisition, (ii) the acquisition of any Permitted Company
Vehicles if such Permitted Company Vehicles are financed with Floor Plan Loans; (iii) amounts spent on property acquisition or development to be funded by lessors on
real property leases, or (iv) amounts spent on acquired or developed assets which are in the process of being financed or are financed within nine (9) months of having
been acquired or developed.
by a factor of eight (8).
"Capitalized Rents” means, as of any date of determination, the total amount of all operating rents and leases due for the Measurement Period multiplied
asset and the incurrence of a liability in accordance with GAAP.
"Capital Lease” means, with respect to any Person, any lease by that Person which requires such Person to concurrently recognize the acquisition of an
such Capital Lease that would, in accordance with GAAP, appear as a liability on a balance sheet of such Person.
"Capital Lease Obligations” means, with respect to any Person and a Capital Lease, the amount of the obligations of such Person as the lessee under
"Capital Stock” means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the
case of a limited liability company, membership interests, and (e) any other interest or participation that confers on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing Person.
Issuing Bank and the Revolving Credit Lenders, and under the Administrative Agent’s sole dominion and control.
"Cash Collateral Account” means a special deposit account maintained by the Administrative Agent, for the benefit of the Administrative Agent, the
"Cash Collateralize” means, to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the M&T Bank, in its capacity as lender
of the M&T Advances, the Issuing Bank and/or Lenders, as collateral for Obligations in respect of M&T Advances, L/C Obligations or obligations of Lenders to fund
participations in respect of L/C Obligations, or as otherwise required under this Agreement with respect to other Obligations, cash or deposit account balances or, if M&T
Bank, the Administrative Agent and the Issuing Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and
substance satisfactory to M&T Bank, the Administrative Agent and the Issuing Bank. "Cash Collateral” shall have a meaning correlative to the foregoing and shall
include the proceeds of such cash collateral and other credit support.
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"Cash Equivalents” means (a) securities issued or directly and fully guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than one year from the date of acquisition, (b) time deposits, certificates of deposit and Eurodollar time deposits with
maturities of not more than six months from the date of acquisition, bankers’ acceptances with maturities not exceeding six months from the date of acquisition and
overnight bank deposits, in each case with the Administrative Agent or any Lender or with any domestic commercial bank having capital and surplus in excess of Five
Hundred Million Dollars ($500,000,000.00), (c) repurchase obligations with a term of not more than thirty (30) days for underlying securities of any of the types described
in clause (a) or (b) and entered into with any bank meeting the qualifications specified in clause (b) above, (d) commercial paper maturing in one hundred eighty (180) days
or less rated not lower than A-1 or A-2 by Standard & Poor’s Ratings Group or P-1 or P-2 by Moody’s Investors Service, Inc. on the date of acquisition, and (e) interests
in pooled investment funds (including mutual funds and money market funds) the assets of which are invested in investments referred to in items (a) through (d) above.
"Cash Taxes” means, with respect to any referenced Person, for any applicable period, the taxes paid in cash by such Person during such period.
insurance proceeds, or proceeds of a condemnation award or other compensation.
"Casualty Event” means any loss of or damage to, or any condemnation or other taking of, any of the Collateral for which any Loan Party receives
"CEA” means the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended from time to time, and any successor statute.
"CFTC” means the Commodity Futures Trading Commission.
"Certificate of Designations” means the Certificate of Designations of Series A Convertible Preferred Stock Par Value $0.0001 Per Share of Lazydays
Holdings, Inc. pursuant to Section 151 of the General Corporation Law of the State of Delaware duly adopted by the Board of Directors of Lazydays Holdings, Inc., a
Delaware corporation (Pubco Guarantor hereunder and under the Credit Documents), which has not been amended, restated, supplemented or otherwise modified since
the date of the Existing Credit Agreement.
"CFC” means a "controlled foreign corporation” within the meaning of Section 957(a) of the Code.
"CFC Holdco” means a Subsidiary that has no material assets other than (i) the Capital Stock and Indebtedness, if any, of one or more Subsidiaries that
are CFCs or (ii) the Capital Stock and Indebtedness, if any, of one or more Subsidiaries that hold no material assets other than the assets described in the immediately
preceding clause (i).
"Change in Control” means an event or series of events by which:
all Liens, except Liens in favor of the Credit Parties; or
(a) (i) Pubco Guarantor does not own legally and beneficially, directly or indirectly, 100% of the Equity Interests of Parent Guarantor, free and clear of
except Liens in favor of the Credit Parties;
(ii) Parent Guarantor does not own legally and beneficially, directly or indirectly, 100% of the Equity Interests of LDRV, free and clear of all Liens,
Discount, LLC, and Lazydays Mile Hi RV, LLC free and clear of all Liens, except Liens in favor of the Credit Parties; or
(iii) LDRV does not own legally and beneficially, directly or indirectly 100% of the Equity Interests of Lazydays RV America, LLC, Lazydays RV
benefit plan of such person or its
(b) any "person” or "group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee
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subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than Coliseum, becomes the
"beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have "beneficial
ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right,
an "option right”)), directly or indirectly, of, in the case of Permitted Holders, forty percent (40%) or more, or, in any other case, twenty-five percent (25%) or more, of the
Capital Stock of Pubco Guarantor entitled to vote for members of the board of directors or equivalent governing body of Pubco Guarantor on a fully-diluted basis (and
taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or
(c) during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of
Pubco Guarantor, Parent Guarantor, or LDRV cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of
such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time
of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing
body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or
equivalent governing body; or
(d) any Person or two or more Persons, other than Coliseum, acting in concert shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the
management or policies of Pubco Guarantor, or control over the equity securities of Pubco Guarantor entitled to vote for members of the board of directors or equivalent
governing body of Pubco Guarantor on a fully-diluted basis (and taking into account all such securities that such Person or group has the right to acquire pursuant to any
option right) representing, in the case of Permitted Holders, forty percent (40%) or more, or, in any other case, twenty-five percent (25%) or more, or more of the
combined voting power of such securities; or
(e) there is consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the
assets of any of the Loan Parties to any Person or group of Persons, together with any Affiliates thereof; or
(f) the direct or indirect holders of Equity Interests of the Borrower Representative or Parent Guarantor approve any plan or proposal for the liquidation or
dissolution of the Parent Guarantor, LDRV or any of the other Borrowers; or
Capital Stock of all of the Parent Guarantor, the Borrowers and their Subsidiaries.
(f) the Administrative Agent ceases to hold for the ratable benefit of the Secured Parties a perfected, first priority Lien in all issued and outstanding
"Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, rule,
regulation or treaty, (b) any change in any Law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Governmental Authority; provided that
notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee
on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case
be deemed to be a "Change in Law”, regardless of the date enacted, adopted or issued.
Loans or Commitments, (b) when used with respect to Commitments, refers to whether such Commitments are Floor Plan Commitments or
"Class” means, (a) when used with respect to Lenders, refers to whether such Lenders have Loans or Commitments with respect to a particular Class of
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Revolving Credit Commitments, in each case not designated part of another existing Class, and (c) when used with respect to Loans or a Borrowing, refers to whether
such Loans, or the Loans comprising such Borrowing, are Floor Plan Loans or Revolving Credit Loans, in each case not designated part of another existing Class.
Commitments (and, in each case, the Loans made pursuant to such Commitments) that have different terms and conditions shall be construed to be in different Classes.
Commitments (and, in each case, the Loans made pursuant to such Commitments) that have identical terms and conditions shall be construed to be in the same Class.
"Closing” means the execution and delivery of this Agreement by the parties hereto.
"Closing Date” means the above stated effective date of this Agreement.
"Closing Date Transactions” means, collectively, (a) the execution of this Agreement and the other Credit Documents, (b) the funding of the initial Floor
Plan Loans, and any Revolving Credit Loans, (c) the repayment of the Term Loans and the Mortgage Loans under and as defined in the Existing Credit Agreement, in
each case on the Closing Date, (d) the consummation of any other transactions in connection with the foregoing and (e) the payment of fees and expenses incurred in
connection with any of the foregoing.
"CME” means CME Group Benchmark Administration Ltd.
import, and the rules and regulations thereunder, as from time to time in effect.
"Code” means the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar
Securities Purchase Agreement or otherwise a holder of Preferred Stock under a Securities Purchase Agreement.
"Coliseum” means Coliseum Capital Management, LLC, any affiliate thereof, or any successor thereto which is the "Coliseum Purchaser” under the
"Coliseum Agreement” has the meaning given to such term in Section 5.09.15 of this Agreement.
"Collateral” means all of the assets, rights, and interests in property, including tangible and intangible assets and personal property, in which the
Administrative Agent on behalf of the Credit Parties is from time to time granted a Lien under any Security Document as security for all or any portion of the Obligations;
provided, however, that Collateral shall not include any Excluded Property.
by an Authorized Officer of a Loan Party.
"Collateral Information Certificate” means each of the Collateral Information Certificates prepared, executed and delivered to the Administrative Agent
which may be utilized as the means of advancing funds under the Loans.
"Commercial Account” means the commercial checking account to be established and maintained with the Administrative Agent by the Borrowers and
Commitment Percentage, and with respect to all Lenders, all of the Floor Plan Loan Commitment Percentages and all of the Revolving Credit Commitment Percentages.
"Commitment Percentages” means, with respect to any Lender, such Lender’s Floor Plan Loan Commitment Percentage and Revolving Credit
"Commitments” means, with respect to any Lender, such Lender’s Floor Plan Loan Commitment, obligations hereunder to purchase participations in M&T
Advances, Revolving Credit Commitment, and obligations hereunder to purchase participations in L/C Obligations and Swingline Loans, and with respect to all Lenders, all
Floor Plan Loan Commitments, obligations of all Lenders hereunder to purchase participations in M&T Advances, Revolving Credit Commitments, and obligations of all
Lenders hereunder to purchase participations in L/C Obligations and Swingline Loans.
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"Communications” has the meaning provided to such term in Section 10.10.4 of this Agreement.
Representative in accordance with the requirements of Section 5.09.5 of this Agreement in form and substance as Exhibit B attached hereto.
"Compliance Certificate” means a certificate provided by the Chief Financial Officer, Chief Executive Officer or President of the Borrower
upon a Loan Party’s request, subject to approval by Administrative Agent in its Permitted Discretion.
"Concentrated Customer” means each of the Loan Party customers identified on the attached Schedule 1.01(b), as may be revised from time to time
franchise Taxes or branch profits Taxes.
"Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are
"Consolidated Current Assets” means, at any date, all unrestricted amounts that would, in conformity with GAAP, be set forth opposite the caption "total
current assets” (or any like caption) on a consolidated balance sheet of Pubco Guarantor and its Subsidiaries at such date, but excluding such amounts to the extent
included as deferred tax assets and excluding the LIFO Reserve as of such date.
"Consolidated Current Liabilities” means, at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption "total current
liabilities” (or any like caption) on a consolidated balance sheet of Pubco Guarantor and its Subsidiaries at such date (including any Floor Plan Loans), but excluding, to the
extent included in current liabilities (i) liabilities relating to earnouts or deferred Taxes based on income or profits, (ii) accruals of any costs or expenses related to
restructuring reserves or severance, (iii) to the extent included on Pubco Guarantor’s consolidated balance sheet as liabilities, amounts under clauses (a)(iv) through (vii) of
the definition of Consolidated EBITDA, (iv) [reserved] and (v) liabilities related to real estate lease payments in respect of dealership locations.
"Consolidated Current Ratio” means, as of any date of determination, the ratio of Consolidated Current Assets to Consolidated Current Liabilities.
amount equal to:
"Consolidated EBITDA” means, for any Measurement Period, for Pubco Guarantor and its Subsidiaries on a consolidated basis, without duplication, an
(a) Consolidated Net Income for the most recently completed Measurement Period plus
(b) the following to the extent deducted in accordance with GAAP in calculating such Consolidated Net Income (without duplication):
(1) Consolidated Interest Expense for such period (other than Consolidated Interest Expense with respect to the Floor Plan Loans),
(2)
(3)
(4)
(5)
the provision for Federal, state, local and foreign income taxes payable by Pubco Guarantor and its Subsidiaries for such period,
depreciation and amortization expense for such period,
non-recurring cash fees, costs and expenses incurred in connection with the Closing Date Transactions, in an aggregate amount not to exceed Two Million
Dollars ($2,000,000.00) for such period,
non-cash charges for such period (including, without limitation, stock-based compensation expense, non-cash expenses related to the recognition of a change
in the fair market value of warrants issued by Pubco Guarantor, currency translations, impairment charges, gains or losses on asset dispositions, and the net
change in the LIFO Reserve, but excluding noncash charges related to receivables) which do not represent a cash item in such period or any future period,
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(6)
(7)
non-recurring cash fees, costs and expenses incurred in connection with Permitted Acquisitions and other permitted Investments, in each case, whether or
not consummated, for such period in an aggregate amount not to exceed (Seven Hundred Fifty Thousand Dollars ($750,000.00) in any Measurement Period,
and
reasonable out of pocket general administrative fees, costs and expenses of Pubco Guarantor or Parent Guarantor for such period (which may include out of
pocket legal, accounting and filing costs, director fees and other reasonable and customary corporate overhead expenses incurred in the ordinary course of
business), and other extraordinary or non-recurring cash fees, costs, expenses and losses for such period, in an aggregate amount not to exceed, in any
Measurement Period, five percent (5%) of Consolidated EBITDA for such Measurement Period (before giving effect to such addback) and minus
(c) the following to the extent included in calculating such Consolidated Net Income:
(i) Federal, state, local and foreign income tax credits of Pubco Guarantor or any of its Subsidiaries for such period; and
(ii) all non-cash items increasing Consolidated Net Income for such period (including non-cash gains related to the recognition of a change in the
fair market value of warrants issued by Pubco Guarantor), excluding any non-cash gains that represent the reversal of any accrual of, or cash reserve for,
anticipated cash items in any prior period.
"Consolidated EBITDAR” means, for any Measurement Period, for Pubco Guarantor and its Subsidiaries on a consolidated basis, without duplication, an
amount equal to Consolidated Net Income for such period plus, (a) the following to the extent deducted in accordance with GAAP in calculating such Consolidated Net
Income (without duplication): (i) items (b)(i) – (vii) in the definition of Consolidated EBITDA above, plus (ii) net rents (excluding non-cash capitalized or deferred rents as
required under FASB ASC 840-10, 840-20 and 420-10), and minus (b) the following to the extent included in calculating such Consolidated Net Income: (i) Federal, state,
local and foreign income tax credits of Pubco Guarantor or any of its Subsidiaries for such period and (ii) all non-cash items increasing Consolidated Net Income for such
period, excluding any non-cash gains that represent the reversal of any accrual of, or cash reserve for, anticipated cash items in any prior period. For the avoidance of
doubt, for the determination of "net rents” in clause (a)(ii) above in this definition, real property leases shall be deemed operating leases rather than capital leases
regardless of their treatment under GAAP, as further set forth in Section 1.04 of this Agreement.
"Consolidated Fixed Charges” means, for any period of determination, for Pubco Guarantor and its Subsidiaries determined on a consolidated basis, the
sum of (a) the sum of all scheduled principal payments upon Consolidated Funded Indebtedness made during such period (including the principal components of Capital
Lease payments during such period), plus (b) Consolidated Interest Expense (other than Consolidated Interest Expense on account of the Floor Plan Loans), including
Letter of Credit Fees and other fees paid in connection with Letters of Credit, including fronting, issuance, amendment and processing fees. For purposes of this definition,
"scheduled principal payments” shall (a) be determined without giving effect to any reduction of such scheduled payments resulting from the application of any mandatory
or voluntary prepayments made during the applicable period, (b) shall be deemed to include the Attributable Indebtedness in respect of Capital Lease Obligations and
Synthetic Lease Obligations, and (c) shall not include any principal payment required to be made on the maturity date of any such Consolidated Funded Indebtedness.
"Consolidated Fixed Charge Coverage Ratio” means, as of the date of determination for any Measurement Period, the ratio for such Measurement
Period of (a) Consolidated EBITDA of Pubco Guarantor and its Subsidiaries for such period minus (i) the aggregate amount of all Non-Financed Capital Expenditures of
Pubco Guarantor and its Subsidiaries for such period, (ii) Cash Taxes For Pubco Guarantor and its Subsidiaries on a consolidated basis paid during such period, (iii) all
dividends, distributions, and other Restricted Payments paid in cash by Pubco Guarantor or any Subsidiary on a consolidated basis during such period, to (b) Consolidated
Fixed Charges for such period.
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"Consolidated Funded Indebtedness” means, as of any date of determination, all Indebtedness of Pubco Guarantor and its Subsidiaries on a consolidated
basis, excluding Indebtedness of the type described in clauses (b) (unless drawn) and (c). For the avoidance of doubt, Consolidated Funded Indebtedness shall not include
Indebtedness in the nature of the clause (g) of the definition of Indebtedness to preferred shareholders with respect to the Series A Convertible Preferred Stock of Pubco
Guarantor under the Securities Purchase Agreement, the Certificate of Designation, or other related documents.
"Consolidated Interest Expense” means, for any period, for the Pubco Guarantor and its Subsidiaries on a consolidated basis, the sum of (a) all interest,
premium payments, debt discount, fees, charges and related expenses of Pubco Guarantor and its Subsidiaries in connection with Consolidated Funded Indebtedness, in
each case to the extent treated as interest in accordance with GAAP, and (b) the portion of rent expense of Pubco Guarantor and its Subsidiaries with respect to such
period under Capital Leases that is treated as interest in accordance with GAAP.
and its Subsidiaries (excluding extraordinary gains and extraordinary losses) for such period, determined in accordance with GAAP.
"Consolidated Net Income” means, for any period, for Pubco Guarantor and its Subsidiaries on a consolidated basis, the net income of Pubco Guarantor
like caption) on a consolidated balance sheet of Pubco Guarantor and its Subsidiaries as of the last day of the most recently ended Test Period.
"Consolidated Total Assets” means, at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption "total assets” (or any
investigation, clean-up or remediation under any Environmental Law.
"Contamination” means the presence of any Hazardous Substance at any real property owned or leased by any Loan Party which may require
paying all or any portion of the purchase price of, any Floor Plan Unit sold or leased by such Loan Party in the ordinary course of business.
"Contract In Transit” means any right of any Loan Party in any written agreement with any finance company that is providing financing for, or that is
"Control” means with respect to a Person (a) the direct or indirect ownership of, or power to vote twenty-five percent (25%) or more of the issued and
outstanding Equity Interests of such Person, or (b) the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling” and "Controlled” have meanings correlative thereto.
"Credit Documents” means collectively, this Agreement, the Notes, the Guaranty Agreement, all Borrowing Base Certificates, the Security Documents,
the L/C Documents, and all agreements, instruments and documents evidencing or securing the Obligations, including without limitation each document listed as a "Credit
Document” on a Closing Index dated as of the Closing Date, and all amendments and modifications thereto; provided, however, that the definition of "Credit Documents”
is not intended to include Swap Agreements.
Lender, and the Issuing Bank, and their respective successors and assigns as permitted by the terms of this Agreement.
"Credit Parties” means the Administrative Agent, the Lenders (including but not limited to M&T in connection with the M&T Advances), the Swingline
"Credit Party Expenses” means, without duplication (a) all costs and expenses incurred by the Administrative Agent, the Arranger, and their Affiliates,
including the reasonable fees, charges, and disbursements of counsel for the Administrative Agent arising out of, pertaining to, or in any way connected with this
Agreement, any of the other Credit Documents or the Obligations, the administration thereof, the due diligence performed in connection with the transactions contemplated
hereby, the syndication of the credit facilities provided for herein, or otherwise in connection with such credit facilities, (b) all costs and reimbursements required to be paid
by the Borrowers to the Administrative Agent by the terms of the Credit Documents, (c) all costs and expenses incurred by the Administrative Agent and the Arranger
relating to the Platform or to Intralinks, SyndTrak or to any other dedicated agency web page on the internet to distribute to the Lenders and to other investors or potential
investors
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any required documentation and financial information regarding the Credit Documents and the Loans, (d) taxes and insurance premiums advanced or otherwise paid by the
Administrative Agent or any other Credit Party in connection with the Collateral or on behalf of any of the Loan Parties, (e) filing and recording costs, title insurance
premiums, environmental and consulting fees, audit fees, search fees, appraisal fees, and other expenses paid or incurred by the Administrative Agent, (f) reasonable costs
and expenses incurred by the Administrative Agent in the collection of the accounts (with or without the institution of legal action), or to enforce any provision of this
Agreement or any other Credit Document on behalf of the Credit Parties, or in gaining possession of, maintaining, handling, evaluating, preserving, storing, shipping, selling,
preparing for sale and/or advertising to sell or foreclose upon the Collateral or any other property of any of the Loan Parties whether or not a sale is consummated, (g)
reasonable costs and expenses of litigation incurred by the Credit Parties, including reasonable attorney’s fees, in enforcing or defending this Agreement or any portion
hereof or any other Credit Document, or in collecting any of the Obligations after the occurrence and during the continuance of any Event of Default, (h) reasonable
attorneys’ fees and expenses incurred by the Administrative Agent in obtaining advice or the services of its attorneys with respect to the structuring, drafting, negotiating,
reviewing, amending, terminating, waiving, enforcing or defending of this Agreement and the other Credit Documents, or any agreement or matter related hereto, whether
or not litigation is instituted, (i) reasonable travel expenses of the Administrative Agent or its agents (including its counsel and consultants) related to any of the foregoing,
and (j) all reasonable costs and expenses, including reasonable attorneys’ fees and expenses, incurred by the Administrative Agent or the Issuing Bank in connection with
the Letters of Credit and L/C Obligations.
"Daily Simple SOFR” means for any day (a "SOFR Rate Day”), a rate per annum equal to SOFR for the day (such day "i”) that is three (3) U.S.
Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day, or (ii) if such SOFR Rate
Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such
SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. If by 5:00 pm (ET) on the second (2nd) U.S. Government Securities Business Day
immediately following any day "i”, the SOFR in respect of such day "i” has not been published on the SOFR Administrator’s Website (and a Benchmark Replacement
Date with respect to the Daily Simple SOFR has not occurred), then the SOFR for such day "i” will be the SOFR as published in respect of the first preceding U.S.
Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; provided that any SOFR determined pursuant to this
sentence shall be utilized for purposes of calculation of Daily Simple SOFR for no more than three (3) consecutive SOFR Rate Days. Any change in Daily Simple SOFR
due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower Representative.
"Daily SOFR Rate” means, for any day, on any date in any month, Adjusted Term SOFR determined for a one-month Interest Period commencing the
first day of that month, or if such day is not a U.S. Government Securities Business Day, then the immediately preceding U.S. Government Securities Business Day. The
Daily SOFR Rate shall fluctuate and be adjusted with each change in such rate.
moratorium, rearrangement, receivership, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.
"Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship, insolvency, assignment for the benefit of creditors,
"Default” means any occurrence, event or condition which with notice, the passage of time, or both would constitute an Event of Default.
"Default Rate” means (a) with respect to Loans accruing interest by reference to Adjusted Term SOFR, such Loans shall bear interest at a rate per
annum of 2% in excess of the rate otherwise then applicable thereto, (b) with respect to all other Loans and outstanding Obligations, including Loans accruing interest by
reference to Adjusted Term SOFR as the Interest Periods for such Loans then in effect expire, such Loans and other Obligations shall bear interest at the Adjusted Base
Rate plus two hundred (200) Basis Points per annum; or (c) with respect to the Letters of Credit, the Letter of Credit Fees otherwise payable under this Agreement plus
two hundred (200) Basis Points per annum.
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"Defaulting Lender” means, subject to Section 2.14.2, any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business
Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrowers in writing that such failure is
the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall
be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, M&T as the lender of the M&T Advances, any Issuing Bank, any
Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in M&T Advances, Letters of Credit,
or Swingline Loans) within two (2) Business Days of the date when due, (b) has notified the Borrowers, the Administrative Agent, M&T, the Issuing Bank, or the
Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or
public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition
precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be
satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrowers, to confirm in writing to the Administrative
Agent and the Borrowers that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant
to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrowers), or (d) has, or has a direct or indirect parent company that has,
(i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the
benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other
state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely
by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such
ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or
writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with
such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be
conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.14.2) upon delivery of written notice of
such determination to the Borrowers, the Issuing Bank, the Swingline Lender, and each Lender.
hereunder by written notice to the Administrative Agent in accordance with Section 5.22.
"Designated Real Estate Subsidiary” means any Subsidiary designated by the Borrower Representative as a Designated Real Estate Subsidiary
"Disposition” means the sale, transfer, license, lease or other disposition (including any Sale and Leaseback Transaction) of any real or personal property
by any Loan Party or any Subsidiary of a Loan Party, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated therewith; provided that the term Disposition shall not include the sale or lease of (a) Inventory in the ordinary course of
business of any Loan Party or any Subsidiary of a Loan Party or (b) real estate by any Designated Real Estate Subsidiary.
"Dollar,” "Dollars,” "U.S. Dollars” and the symbol "$” means lawful money of the United States of America.
"EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the
supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this
definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is
subject to consolidated supervision with its parent.
"EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
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Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
"EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member
"Eligibility Date” means, with respect to each Loan Party and each Swap, the date on which this Agreement or any other Credit Document becomes
effective with respect to such Swap. For the avoidance of doubt, the Eligibility Date shall be the date such Swap becomes effective if this Agreement or any other Credit
Document is then in effect with respect to such Loan Party; otherwise, it shall be the Closing Date of this Agreement with respect to a Borrower or with respect to any
other Loan Party the date of execution and delivery of the applicable Credit Documents by such Loan Party unless such Credit Documents specify a subsequent effective
date.
"Eligible Accounts” means all Accounts owned by each Loan Party and properly reflected as "Eligible Accounts” in the most recent Borrowing Base
Certificate delivered by Borrower Representative to the Administrative Agent, except any Account to which any of the exclusionary criteria set forth below applies.
Eligible Accounts shall not include the following Accounts of any Loan Party:
ninety (90) days following its original invoice date;
(a) any Account that is not paid within the earlier of sixty (60) days following its due date or, except with respect to manufacturer rebates,
Account Debtor are ineligible under the other criteria set forth in clause (a) of this definition;
(b) Accounts that are the obligations of an Account Debtor if fifty percent (50%) or more of the Dollar amount of all Accounts owing by that
assigned and delivered to the Administrative Agent, satisfactory to the Administrative Agent in its Permitted Discretion as to form, amount and issuer;
(c) Accounts that are the obligations of an Account Debtor located in a foreign country unless payment thereof is assured by a letter of credit
(d) Accounts that are the obligation of an Account Debtor that is the United States government or a political subdivision thereof, or any state,
county or municipality or department, agency or instrumentality thereof unless the Administrative Agent, in its sole discretion, has agreed to the contrary in writing,
or the applicable Loan Party has complied with respect to such obligation with the Federal Assignment of Claims Act of 1940, or any applicable state, county or
municipal law restricting the assignment thereof with respect to such obligation to the Administrative Agent’s satisfaction at its Permitted Discretion;
Debtor to any Loan Party or any Subsidiary thereof but only to the extent of the potential offset;
(e) Accounts to the extent any Loan Party or any Subsidiary thereof is liable for goods sold or services rendered by the applicable Account
be ineligible only to the extent of the amount of such defense, counterclaim, setoff or dispute;
(f) any Account to the extent that any defense, counterclaim, setoff or dispute is asserted as to such Account; provided that such Account shall
(g) Accounts that arise from a sale to any Affiliate of any Loan Party;
(h) (i) Accounts owing by an Account Debtor (other than a Concentrated Customer) to the extent the aggregate amount of Accounts owing by
such Account Debtor and its Affiliates as of any date of determination exceeds twenty percent (20%) of all Eligible Accounts of all Loan Parties, but only to the
extent such Accounts exceed such limit; and (ii) with regard to Accounts owing by a Concentrated Customer, to the extent the aggregate amount of Accounts
owing by such Concentrated Customer and its Affiliates as of any date of determination exceeds the percentage of all Eligible Accounts of all Loan Parties that is
specified for such Concentrated Customer on the attached Schedule 1.01(b), but only to the extent such Accounts exceed such limit;
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Administrative Agent in its sole discretion, otherwise demonstrating an obligation to make payment) has not been sent to the applicable Account Debtor;
(i) Accounts with respect to which an invoice or electronic transmission constituting a request for payment (or, if acceptable to the
(j) Accounts where:
to pay its debts generally as they come due; or
(i) the Account Debtor obligated upon such Account suspends business, makes a general assignment for the benefit of creditors or fails
state or foreign (including any provincial) receivership, insolvency relief or other law or laws for the relief of debtors;
(ii) a petition is filed by or against any Account Debtor obligated upon such Account under any bankruptcy law or any other federal,
Loan Party;
(k) Accounts that arise from a sale to any director, officer, other employee, or to any entity that has any common officer or director with any
(l) Accounts (i) as to which the applicable Loan Party is not able to bring suit or otherwise enforce its remedies against the Account Debtor
through judicial process, or (ii) if the Account represents a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a
contract under which the Account Debtor’s obligation to pay that invoice is subject to the applicable Loan Party’s completion of further performance under such
contract or is subject to the equitable lien of a surety bond issuer;
(m) Accounts that arise with respect to goods that are delivered on a bill-and-hold basis;
(n) Accounts that arise with respect to goods that are delivered on a cash-on-delivery basis;
(o) Accounts that are payable in any currency other than United States Dollars;
to the security interest of the Administrative Agent, Liens granted under the Credit Documents;
(p) Accounts that are subject to any right, claim, Lien or other interest of any other Person, other than Permitted Encumbrances that are junior
Debtor is conditional;
(q) Accounts that arise with respect to goods that are placed on guaranteed sale or other terms by reason of which the payment by the Account
(r) Accounts that are evidenced by a judgment, instrument or chattel paper;
or services rendered and accepted by the applicable Account Debtor;
(s) Accounts that are not true and correct statements of bona fide indebtedness incurred in the amount of such Account for merchandise sold to
including, without limitation, sales of Equipment and bulk sales; or
(t) Accounts that do not arise from the sale of goods or the performance of services by a Loan Party in the ordinary course of business,
(v) Accounts that are otherwise determined likely to be uncollectable by the Administrative Agent in its Permitted Discretion.
expressly excluded below) approved (each such
"Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any other Person (other than those Persons
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approval not to be unreasonably withheld or delayed) by (i) in all cases, the Administrative Agent, (ii) in the case of any assignment of a Floor Plan Loan Commitment,
M&T Bank as the provider of M&T Advances, (iii) in the case of any assignment of a Revolving Credit Commitment, the Issuing Bank, and the Swingline Lender, and
(iv) unless either a Default or Event of Default has occurred and is continuing, the Borrowers; provided that notwithstanding the foregoing, the definition of "Eligible
Assignee” shall not include (A) any Defaulting Lender or a Subsidiary thereof, (B) any natural Person (or a holding company, investment vehicle or trust for, or owned and
operated for the primary benefit of a natural Person), or (C) any Loan Party or any Affiliate or Subsidiary of a Loan Party. The Borrowers shall be deemed to have
approved any proposed assignee unless the Borrowers object to such proposed assignee by written notice to the Administrative Agent within five (5) Business Days after
having received notice of the proposal of such assignee.
"Eligible Contract Participant” means an "eligible contract participant” as defined in the CEA and regulations thereunder.
"Eligible Contracts In Transit” means all Contracts In Transit owned by each Loan Party and properly reflected as "Contracts In Transit” in the most
recent Borrowing Base Certificate delivered by Borrower Representative to the Administrative Agent, except any Contracts In Transit to which any of the exclusionary
criteria set forth below applies. Eligible Contracts In Transit shall not include the following Contracts In Transit of any Loan Party:
(a) any Contract In Transit that is not paid within ten (10) days following the sale date of the Floor Plan Unit giving rise to such Contract In Transit;
and delivered to the Administrative Agent, satisfactory to the Administrative Agent in its Permitted Discretion as to form, amount and issuer;
(b) Contracts In Transit that are the obligations of an issuer located in a foreign country unless payment thereof is assured by a letter of credit assigned
provided that such Contract In Transit shall be ineligible only to the extent of the amount of such defense, counterclaim, setoff, chargeback or dispute;
(c) any Contract In Transit to the extent that any defense, counterclaim, setoff, chargeback or dispute is asserted as to such Contract in Transit;
(d) Contracts In Transit where:
(8)
(9)
the issuer obligated upon such Contracts In Transit suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts
generally as they come due; or
a petition is filed by or against any issuer obligated upon such Contracts In Transit under any bankruptcy law or any other federal, state or foreign (including
any provincial) receivership, insolvency relief or other law or laws for the relief of debtors;
judicial process;
(e) Contracts In Transit as to which the applicable Loan Party is not able to bring suit or otherwise enforce its remedies against the issuer through
to the security interest of the Administrative Agent, Liens granted under the Credit Documents;
(f) Contracts In Transit that are subject to any right, claim, Lien or other interest of any other Person, other than Permitted Encumbrances that are junior
including, without limitation, sales of Equipment and bulk sales; or
(g) Contracts In Transit that do not arise from the sale of goods or the performance of services by a Loan Party in the ordinary course of business,
(i) Contracts In Transit that are otherwise determined likely to be uncollectable by the Administrative Agent in its Permitted Discretion.
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"Eligible Equipment” means Specified Equipment owned by any Loan Party which is in good order, repair, running and marketable condition (ordinary
wear and tear excepted) and in each case properly reflected as "Eligible Equipment” in the most recent Borrowing Base Certificate delivered by Borrower Representative
to the Administrative Agent, except any Specified Equipment to which any of the exclusionary criteria set forth below applies. Eligible Equipment shall not include:
(a) Specified Equipment that is (i) in transit for longer than seven (7) days to the premises of such Loan Party or a customer of such Loan Party, (ii)
subject to an open and incomplete work order of such Specified Equipment, for longer than fourteen (14) days or (iii) temporarily stored at a lay-down yard or similar
premises other than those owned and controlled by any Loan Party for longer than fourteen (14) days, except, in the case of each of the foregoing, (x) any Equipment
which would otherwise be deemed Eligible Equipment that is not located at premises owned and controlled by any Loan Party shall nevertheless be considered Eligible
Equipment if the Administrative Agent shall have received a landlord waiver from the Person in possession and control of such premises and such Specified Equipment,
duly authorized, executed and delivered by such Person, (y) any Equipment which would otherwise be deemed Eligible Equipment that is in transit to or from, or located at,
a recreational vehicle show, camping show, or similar show or marketing and sales event shall nevertheless be considered Eligible Equipment, and (z) any Equipment the
aggregate fair market value of which does not exceed $1,600,000.00 and which would otherwise be deemed Eligible Equipment, that is at a short term overflow location,
including in connection with the reflooring or cycling of seasonal and new model Floor Plan Units in the ordinary course of business, to the extent such location is
substantially adjacent to or otherwise in the general regional proximity of a location that otherwise complies with clause (b) of the definition of Eligible New Floor Plan Unit
or Eligible Used Floor Plan Unit, shall nevertheless be considered Eligible Equipment;
(b) Specified Equipment that is not located in one of the states of the United States of America or the District of Columbia;
(c) Specified Equipment that is not subject to the first priority, valid and perfected Lien of the Administrative Agent;
(d) worn or obsolete Specified Equipment or Specified Equipment not used or usable in the ordinary course of such Loan Party’s business;
(e) Specified Equipment consisting of Floor Plan Units;
(g) Specified Equipment which is purchased on consignment;
(h) Specified Equipment which is not covered by casualty or liability insurance (subject to customary deductibles) in accordance with the terms hereof;
(i) Specified Equipment which is not separately identifiable from goods of third parties stored on the same premises as such Specified Equipment;
(j) Specified Equipment which is not at premises owned or leased by the Loan Parties, unless the aggregate value of all Eligible Equipment at any such
premises not so owned or leased is less than $100,000.00, or unless such Specified Equipment is in transit or at another location and is not ineligible under clause (a) or (m)
of this definition;
rental in the ordinary course of business;
(k) Specified Equipment noted on the books of the relevant Loan Party as "missing,” "sold,” "junked” or other similar notation indicating unavailability for
(l) is acquired by a Loan Party after the Closing Date (other than from another Loan Party), unless and until such time as the Administrative Agent
shall have received or conducted a customary due diligence investigation as to such Specified Equipment, the results of which are reasonably satisfactory to the
Administrative Agent in its Permitted Discretion; provided that, notwithstanding the foregoing, Specified Equipment acquired pursuant to such transaction that has not yet
been appraised in
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accordance with this clause (l) but that is otherwise not ineligible under any other clause of this definition shall be permitted to be included in the Borrowing Base in an
aggregate amount of up to 10% of the Borrowing Base until the date that is 90 days after the date such asset is acquired.
(m) Specified Equipment being leased by a customer of a Loan Party and used by such customer or the lessee of such customer, unless the equipment is
at a location in the United States pursuant to the terms of a rental agreement entered into between such customer and a Loan Party or such customer and its lessee, as
applicable, and as reflected in the records of the applicable Loan Party, or in transit to or from such location in the ordinary course of business; or
to the security interest of the Administrative Agent and Liens granted under the Credit Documents.
(n) Specified Equipment that is subject to any right, claim, Lien or other interest of any other Person, other than Permitted Encumbrances that are junior
"Eligible Floor Plan Vehicle or Unit” means any Eligible New Floor Plan Unit, Eligible Used Floor Plan Unit or Permitted Company Vehicle.
"Eligible Inventory” means Specified Inventory owned by each Loan Party and properly reflected as "Eligible Inventory”, in the most recent Borrowing
Base Certificate delivered by Borrower Representative to the Administrative Agent, except any Specified Inventory to which any of the exclusionary criteria set forth
below or in the component definitions herein applies. Eligible Inventory shall not include the following Specified Inventory of a Loan Party:
(a) Specified Inventory that is excess, obsolete, unsaleable, shopworn or seconds;
(b) Specified Inventory that is damaged, returned, rejected or otherwise unfit for sale;
(c) [reserved];
(d) Specified Inventory that is placed on consignment;
(e) Specified Inventory that (i) is not either located on premises owned, leased or rented by a Loan Party or stored with a bailee or warehouseman
(other than a processor), (ii) is stored at a leased or rented location, unless a landlord waiver in respect of such location has been delivered to the Administrative Agent in
form reasonably satisfactory to the Administrative Agent, (iii) is stored with a bailee or warehouseman unless an acknowledged bailee letter has been received by the
Administrative Agent with respect thereto in form reasonably satisfactory to the Administrative Agent, or (iv) is located at an owned location subject to a mortgage in
favor of a Person other than the Administrative Agent, unless a mortgagee waiver in respect of such location has been delivered to the Administrative Agent in form
reasonably satisfactory to the Administrative Agent;
(f) Specified Inventory that is not located in the United States;
(g) Specified Inventory that is not covered by casualty insurance in accordance with the terms hereof;
(h) Specified Inventory that is not owned by a Loan Party or is subject to Liens (other than Permitted Encumbrances that are junior to the security
interest of the Administrative Agent, Liens granted under the Credit Documents) or other rights of any other Person (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure a Loan Party’s performance with respect to that Specified Inventory);
Parties;
(i) Specified Inventory that is not subject to a perfected first priority Lien in favor of the Administrative Agent on behalf of itself and the Secured
(j) [reserved];
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(k) Specified Inventory subject to any licensing, trademark, trade name or copyright agreements with any third parties which would require any consent
of any third party for the sale or Disposition of that Specified Inventory (which consent has not been obtained) or the payment of any monies to any third party upon such
sale or other Disposition (to the extent of such monies);
(l) Specified Inventory that consists of packing or shipping materials, or manufacturing supplies;
(m) Specified Inventory that consists of tooling;
(n) Specified Inventory that consists of display items;
(o) Specified Inventory that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available;
order to such Loan Party; and
(p) Specified Inventory that is custom made for a particular customer of a Loan Party for which such Loan Party’s customer did not issue a purchase
(q) Specified Inventory that is otherwise determined to be unacceptable by the Administrative Agent in its Permitted Discretion.
"Eligible New Floor Plan Unit” means any Floor Plan Unit of any Borrower that is new and unused, including, without limitation, any Floor Plan Unit
purchased by any Borrower from another dealer of Floor Plan Units, and in any case, that the Administrative Agent, in its sole discretion, deems to be an Eligible New
Floor Plan Unit; provided that in no event shall any Floor Plan Unit be deemed an Eligible New Floor Plan Unit unless all representations and warranties set forth in the
Security Documents with respect to such Floor Plan Unit are true and correct and such Floor Plan Unit:
the Administrative Agent free and clear of any other Liens;
(a) is an asset to which a Borrower has good and marketable title, is freely assignable, and is subject to a perfected, first priority Lien in favor of
(b) is located at any of the Facilities listed on Schedule 1.04 or such other locations as are approved in writing by the Administrative Agent and,
in the case of facilities not owned by a Borrower, that are at all times subject to landlord waiver agreements in form and substance satisfactory to the Administrative
Agent;
the then current model year;
(c) is a Class A, Class B, or Class C recreational vehicle and/or towable as classified by the Recreational Vehicle Industry Association and is of
combined period (including the sum of any periods of ownership by any Borrower or any such dealer) of more than 24 months; and
(d) has not been owned or held by any Borrower or, if applicable, any dealer from whom any Borrower purchased such Floor Plan Unit for a
applicable thereto, free from any defects that might adversely affect the market value thereof.
(e) is not obsolete or slow moving, and is of good and merchantable quality and complies in all respects with all governmental standards
For the avoidance of doubt, in no event shall a Permitted Company Vehicle be an Eligible New Floor Plan Unit.
"Eligible Used Floor Plan Unit” means any Floor Plan Unit of any Borrower that is used (i.e., a Floor Plan Unit that has been previously sold at retail,
has been registered, documented or titled in any state or jurisdiction, or has been purchased or acquired by such Borrower from a source other than the original
Manufacturer, including trade-in inventory), or any Floor Plan Unit that is new and unused but otherwise does not meet the conditions for being an Eligible New Floor Plan
Unit, and, in any case, that the Administrative Agent, in its sole discretion, deems to be an Eligible Used Floor Plan Unit; provided that in no event shall any Floor Plan Unit
be deemed an Eligible Used Floor Plan Unit unless all
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representations and warranties set forth in the Security Documents with respect to such Floor Plan Unit are true and correct and such Floor Plan Unit:
the Administrative Agent free and clear of any other Liens;
(a) is an asset to which a Borrower has good and marketable title, is freely assignable, and is subject to a perfected, first priority Lien in favor of
(b) is located at any of the Facilities listed on Schedule 1.04, or such other locations as are approved in writing by the Administrative Agent and,
in the case of facilities not owned by a Borrower, that are at all times subject to landlord waiver agreements in form and substance satisfactory to the Administrative
Agent;
(at the time of any Floor Plan Loan with respect thereto) of the then current model year or the previous twelve model years; and
(c) is a Class A, Class B, or Class C recreational vehicle and/or towable as classified by the Recreational Vehicle Industry Association and is
applicable thereto, free from any defects that might adversely affect the market value thereof.
(d) is not obsolete or slow moving, and is of good and merchantable quality and complies in all respects with all governmental standards
"Environmental Laws” means any and all federal, state, local, and foreign statutes, Laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any
materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.
"Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of
any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant
to which liability is assumed or imposed with respect to any of the foregoing.
"Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities.
"Equipment” means any "equipment” within the meaning of that term under the Uniform Commercial Code.
"Equity Balance” has the meaning given to such term in Section 2.01.17 of this Agreement.
"Equity Interests” means, with respect to any Person, the shares of Capital Stock of (or other ownership or profit interests in) such Person, warrants,
options or other rights for the purchase or acquisition from such Person of shares of Capital Stock of (or other ownership or profit interests in) such Person, securities
convertible into or exchangeable for shares of Capital Stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all other ownership or profit interests in such Person, whether voting or nonvoting, and whether
or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
Party.
"Equity Issuance” means any issuance of any Equity Interests by any Loan Party or any Subsidiary of a Loan Party to any Person which is not a Loan
"Equity Offset” has the meaning given to such term in Section 2.01.17 of this Agreement.
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"Equity Transaction” has the meaning given to such term in Section 2.01.17 of this Agreement.
"ERISA” means the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time.
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
"ERISA Affiliate” means any trade or business (whether or not incorporated) under common Control with the Loan Parties within the meaning of Section
"ERISA Event” means (a) a Reportable Event with respect to a Pension Plan, (b) a withdrawal by a Loan Party or any ERISA Affiliate from a Pension
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) or a cessation of operations
that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer
Plan, (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan, (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan, or (f) the imposition of any liability under Title IV of ERISA, other
than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.
"Erroneous Payment” has the meaning given to such term in Section 9.13(a) of this Agreement.
"Erroneous Payment Deficiency Assignment” has the meaning given to such term in Section 9.13(d) of this Agreement.
"Erroneous Payment Impacted Class” has the meaning given to such term in Section 9.13(d) of this Agreement.
"Erroneous Payment Return Deficiency” has the meaning given to such term in Section 9.13(d) of this Agreement.
in effect from time to time.
"EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as
"Event of Default” has the meaning given to such term in Article 7 hereof of this Agreement.
"Excluded Property” means (a) any property of the Loan Parties to the extent that the grant of a security interest therein (i) is prohibited by any
Requirement of Law of a Governmental Authority or (ii) constitutes a breach or default under or results in the termination of or requires any consent (it being agreed that
the Borrowers shall use commercially reasonable efforts to obtain such consent) not obtained under, any contract, license, agreement, instrument or other document
evidencing or giving rise to such property, except to the extent that such Requirement of Law or the term in such contract, license, agreement, instrument or other
document providing for such prohibition, breach, default or termination or requiring such consent is ineffective under Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or
any successor provision or provisions) of any relevant jurisdiction or any other applicable Law (including the Bankruptcy Code) or principles of equity; provided, however,
that such property shall cease to be Excluded Property and the Administrative Agent’s security interest shall attach to such property immediately at such time as such
Requirement of Law is not effective or applicable, or such prohibition, breach, default or termination is no longer applicable or is waived, and to the extent severable, shall
attach immediately to any portion of the Collateral that does not result in such consequences, (b) any intent-to-use trademark or service mark application before the filing
of a statement of use or amendment to allege use, or any other intellectual property, to the extent that applicable Law prohibits the creation of a Lien or would otherwise
result in the loss of rights from the creation of such
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Lien or from the assignment of such rights upon an Event of Default; provided that, upon the filing of a "Statement of Use” or "Amendment to Allege Use”, such
trademark application will cease to be Excluded Property, (c) equipment and other assets (together with all proceeds thereof) that are acquired with purchase money
Indebtedness (and refinancings thereof) or that are subject to Capital Leases, in each case as permitted by the terms of this Agreement, for so long as the grant of a Lien
thereon would violate the terms of any applicable agreement evidencing such purchase money Indebtedness (and refinancings thereof) or Capital Leases, and (d) real
property, buildings and improvements thereon.
"Excluded Subsidiary” means (a) any Subsidiary to the extent a guarantee by such Subsidiary is prohibited or restricted by contract, including pursuant to
any joint venture or similar agreement (so long as either (x) such contract is in existence on the Closing Date or (y) such contract is in existence at the time of acquisition
or formation of such Subsidiary or joint venture arrangement and the prohibition or restriction in such contract is not entered into in contemplation thereof) or applicable
Law, rule or regulation (including any requirement to obtain Governmental Authority consent, approval, license or authorization to provide a guarantee of the Obligations or
to pledge Collateral to secure the Obligations unless such consent, approval, license or authorization has been received); (b) any Subsidiary that is a direct or indirect
Subsidiary of a CFC or CFC Holdco; (c) any CFC or CFC Holdco; (d) any Designated Real Estate Subsidiary and (e) any Subsidiary to the extent the Administrative
Agent and the Borrower Representative mutually and reasonably determine the cost of providing a guarantee is excessive in relation to the value afforded thereby.
"Excluded Swap Liabilities” means, with respect to any Loan Party, each of its Swap Obligations if, and only to the extent that, all or any portion of this
Agreement or any other Credit Document that relates to such Swap Obligation is or becomes illegal under the CEA, or any rule, regulation or order of the CFTC, solely by
virtue of such Loan Party’s failure to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap. Notwithstanding anything to the contrary contained in
the foregoing or in any other provision of this Agreement or any other Credit Document, the foregoing is subject to the following provisos: (a) if a Swap Obligation arises
under a master agreement governing more than one Swap, this definition shall apply only to the portion of such Swap Obligation that is attributable to Swaps for which a
guarantee of payment or the granting of a security interest is or becomes illegal under the CEA, or any rule, regulations or order of the CFTC, solely as a result of the
failure by such Loan Party for any reason to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap, (b) if a co-borrower agreement or a
guarantee of a Swap Obligation would cause such obligation to be an Excluded Swap Liability but the grant of a security interest would not cause such obligation to be an
Excluded Swap Liability, such Swap Obligation shall constitute an Excluded Swap Liability for purposes of the co-borrower agreement or the guaranty (as applicable) but
not for purposes of the grant of the security interest, and (c) if a Swap Obligation would be an Excluded Swap Liability with respect to one or more of the Loan Parties,
but not all of them, the definition of Excluded Swap Liabilities with respect to each such Loan Party shall only be deemed applicable to (i) the particular Swap Obligations
that constitute Excluded Swap Liabilities with respect to such Loan Party, and (ii) the particular Loan Party with respect to which such Swap Obligations constitute
Excluded Swap Liabilities.
"Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to
a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of
such Recipient being organized under the Laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction
imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on
amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a Law in effect on the date on which (i)
such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrowers under Section 2.12) or (ii) such Lender
changes its lending office, except in each case to the extent that, pursuant to Section 2.11, amounts with respect to such Taxes were payable either to such Lender's
assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such
Recipient’s failure to comply with Section 2.10.7 and (d) any U.S. federal withholding Taxes imposed under FATCA.
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"Existing Credit Agreement” has the meaning set forth in the preamble of this Agreement.
"Existing Lenders” has the meaning set forth in the preamble of this Agreement.
hereto.
"Existing Letters of Credit” means, collectively, the letters of credit for the account of a Loan Party and further described on Schedule 1.02 attached
"Facilities” means all real property and the improvements thereon owned or occupied by any Loan Party and all other real property and improvements
used or occupied or leased by any of the Loan Parties or otherwise used at any time by any of the Loan Parties in the operation of their respective businesses or for the
storage or location of any of the Collateral. As of the Closing Date the Facilities of the Loan Parties are listed on Schedule 1.04 attached hereto.
"Facility Increase” means a Floor Plan Increase or a Revolving Credit Increase, as applicable.
"FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.
"FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof and any agreement entered into
pursuant to Section 1471(b)(1) of the Code.
"Federal Funds Rate” means, for any day, the rate per annum, (rounded, if necessary, to the next greater 1/100 of 1%) determined (which determination
shall be conclusive and binding, absent manifest error) by the Administrative Agent to be equal to the weighted average of the rates on overnight Federal funds
transactions with member banks of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Administrative Agent (in its individual capacity) on such day on such
transactions as determined by the Administrative Agent (which determination shall be conclusive and binding, absent manifest error).
"Fee Letter” means the letter agreement dated as of December 9, 2022 between M&T Bank and LDRV.
"First Amendment Effective Date” shall mean March 8, 2024.
October during the term of this Agreement.
"Fiscal Quarter” means each three (3) month fiscal period of the Borrowers beginning on the first (1 ) day of each consecutive January, April, July, and
st
"Fiscal Year” means each 12-month fiscal period of the Borrowers beginning each January 1 and ending on the immediately succeeding December 31.
"Floor” means zero percent (0.0%).
become a Borrower under the Floor Plan Facility pursuant to a Joinder Agreement.
"Floor Plan Borrowers” means (a) the Borrowers listed on Schedule 1.01(a) as of the Closing Date and (b) any other Subsidiaries that from time to time
Lender as a M&T Advance subject
"Floor Plan Borrowing” means a borrowing consisting of simultaneous Floor Plan Loans of the same Type, or a borrowing advanced by M&T Advance
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to pro-rata participations by the Floor Plan Lenders, all as set forth in Sections 2.01 and 2.02 of this Agreement.
by the Floor Plan Lenders.
"Floor Plan Facility” means the floor plan facility described in Sections 2.01, 2.02 and 2.22 providing for Floor Plan Loans to the Floor Plan Borrowers
"Floor Plan Interest Reduction Arrangement” has the meaning given to such term in Section 2.01.17 of this Agreement.
"Floor Plan Increase” has the meaning set forth in Section 2.22.1.
"Floor Plan Lender” means a Lender holding a Floor Plan Commitment, or if the Floor Plan Commitments have terminated, holding Floor Plan Loans.
the Borrowers by the Lenders.
"Floor Plan Line of Credit” means the Floor Plan Line of Credit described in Sections 2.01 and 2.02 of this Agreement providing for Floor Plan Loans to
accordance with Section 2.01.16 or increased pursuant to Section 2.22 of this Agreement.
"Floor Plan Line of Credit Dollar Cap” means Five Hundred Twenty-Five Million Dollars ($525,000,000.00), as such amount may be decreased in
"Floor Plan Line of Credit Termination Date” means February 21, 2027.
"Floor Plan Loan Adjustment Date” means each of: (a) the last Business Days of the second and fourth calendar weeks of each consecutive calendar
month; and (b) the first Business Day after three (3) Business Days prior written notice from either the Administrative Agent or M&T Bank to the other Lenders
requesting thereon the scheduling of settlement on account of Floor Plan Loans among the Lenders and M&T Bank.
"Floor Plan Loan Advance Limit” means with respect to any (a) Eligible New Floor Plan Unit, 100% of the New Unit Invoiced Amount of such Eligible
New Floor Plan Unit; (b) Permitted Company Vehicle, 100% of the New Unit Invoiced Amount of such Vehicle; and (c) Eligible Used Floor Plan Unit that is (i) of the
then current model year or any of the previous seven (7) model years, 85% of the Used Unit Book Value of such Unit, (ii) from eight (8) to ten (10) model years old, 65%
of Used Unit Book Value of such Unit, and (iii) eleven (11) to twelve (12) model years old, 40% of Used Unit Book Value of such Unit. For the avoidance of doubt, no
advances will be permitted for Units in excess of twelve (12) model years old.
"Floor Plan Loan Commitment” means, as to any Lender, the amount initially set forth opposite its name on Schedule 1.01 attached hereto in the column
labeled "Floor Plan Loan Commitment,” and thereafter on any relevant Lender Addendum Assignment And Assumption, or as otherwise thereafter modified in
accordance with the terms set forth in this Agreement, and "Floor Plan Loan Commitments” means the aggregate Floor Plan Loan Commitments of all of the Lenders.
"Floor Plan Loan Commitment Percentage” means, as to any Lender, the percentage initially set forth opposite its name on Schedule 1.01 attached
hereto in the column labeled "Floor Plan Loan Commitment Percentage” and thereafter on any relevant Lender Addendum Assignment And Assumption, or as
otherwise modified in accordance with the terms set forth in this Agreement.
Loans and such Lender’s participation in, and obligation to participate in, M&T Advances at such time.
"Floor Plan Loan Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of such Lender’s outstanding Floor Plan
hereto, together with all amendments and replacements thereof.
"Floor Plan Loan Notes” means, collectively, the promissory notes of the Borrowers evidencing the Floor Plan Loans in the form of Exhibit C attached
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obligors in accordance with the provisions of Section 2.01 of this Agreement, including the M&T Advances pursuant to Section 2.02 of this Agreement.
"Floor Plan Loans” means collectively the revolving credit loans extended from time to time by the Lenders to the Borrowers as joint and several
the proceeds of Floor Plan Loan Commitments for which any Loan Party receives casualty insurance proceeds or proceeds of a condemnation award.
"Floor Plan Unit Casualty Event” means any loss of or damage to, or any condemnation or other taking of, any Floor Plan Vehicle or Unit financed with
course of their businesses. Floor Plan Units do not include supplies or spare parts inventory.
"Floor Plan Units” means inventory of the Borrowers consisting of recreational vehicles and/or towables sold or leased by the Borrowers in the ordinary
"Floor Plan Unused Commitment Fee” has the meaning given to such term in Section 2.01.15 of this Agreement.
"Floor Plan Vehicle or Unit” means any Floor Plan Unit or Permitted Company Vehicle.
Lender that is resident or organized under the Laws of a jurisdiction other than that in which the Borrowers are resident for tax purposes.
"Foreign Lender” means (a) if the Borrowers are U.S. Persons, a Lender that is not a U.S. Person, and (b) if the Borrowers are not U.S. Persons, a
"Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to the Issuing Bank, such Defaulting Lender’s Revolving Credit
Commitment Percentage of the outstanding L/C Obligations with respect to Letters of Credit issued by the Issuing Bank other than L/C Obligations as to which such
Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, (b) with respect to the
Swingline Lender, such Defaulting Lender’s Revolving Credit Commitment Percentage of outstanding Swingline Loans made by such Swingline Lender other than
Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof, and (c) with
respect to M&T Bank, such Defaulting Lender’s Floor Plan Loan Commitment Percentage of outstanding M&T Advances other than M&T Advances as to which such
Defaulting lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof.
loans, bonds and similar extensions of credit in the ordinary course of its business.
"Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial
"GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such
other entity as may be recognized by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination,
consistently applied.
"Governing State” means the State of New York.
"Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
"Guarantors” means collectively: (a) Pubco Guarantor, (b) Parent Guarantor, and (c) each direct or indirect Subsidiary of Pubco Guarantor and/or Parent
Guarantor that executes the Guaranty Agreement and Security Agreement or a joinder thereto in its capacity as a guarantor of the Obligations and grantor and otherwise
pursuant to, and subject to the terms and conditions of, the Guaranty Agreement and Security Agreement.
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"Guaranty Agreement” means, the Second Amended and Restated Guaranty Agreement, dated as of the Closing Date, made by the Loan Parties and
certain Subsidiaries of Pubco Guarantor from time to time party thereto in favor of the Administrative Agent for the benefit of the Credit Parties as modified by each
joinder agreement, security agreement supplement or pledge agreement supplement thereto delivered from time to time.
"Guaranty Obligation” or "Guarantee” (or "guaranty” or "guarantee”) means any obligation, direct or indirect, by which a Person undertakes to
guaranty, assume or remain liable for the payment of another Person’s obligations, including but not limited to (a) endorsements of negotiable instruments, (b) discounts
with recourse, (c) agreements to pay upon a second Person’s failure to pay, (d) agreements to maintain the capital, working capital solvency or general financial condition
of a second Person, and (e) agreements for the purchase or other acquisition of products, materials, supplies or services, if in any case payment therefor is to be made
regardless of the nondelivery of such products, materials or supplies or the non-furnishing of such services.
"Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
"Historical Financial Statements” means (i) audited consolidated balance sheets and related statements of income, stockholders’ equity and cash flows
of the Borrowers and their Subsidiaries for the twelve-month period ended December 31, 2021 and (ii) the unaudited consolidated balance sheets and related statements of
income, stockholders’ equity and cash flows of the Borrowers and their Subsidiaries for each fiscal month ended after December 31, 2021 and at least 30 days prior to the
Closing Date.
"Increase Effective Date” has the meaning set forth in Section 2.22.3.
"Incremental Lender” has the meaning set forth in Section 2.22.2.
"Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities
in accordance with GAAP (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments, (b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments, (c) net obligations of such Person under any Swap Agreement, (d) all obligations of such Person to pay
the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and, in each case, not past due for more than one
hundred eighty (180) days after the date on which such trade account payable was created), (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse, (f) obligations under any leases which, subject to the terms of Section 1.04, are "Capital
Leases” under GAAP as in effect at the time such lease becomes effective (even if such lease is subsequently determined as a result of a Change In Law or a change in
GAAP not to be a "Capital Lease”), but not including any operating lease which, subsequently to the time such lease becomes a "Capital Lease” as a result of a Change in
Law or a change in GAAP, (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such
Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends, (h) all Guarantees of such Person in respect of any of the foregoing, (i) all obligations secured by any Lien on the assets of such Person, (j) all payments
required of such Person under any "non-compete” or similar agreements, (k) all Synthetic Lease Obligations of such Person, (l) all other obligations of such Persons that
are the functional equivalent of the Indebtedness referred to above in clauses (a) through (k). For purposes of this definition, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general
partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to
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such Person. The amount of any net obligation under any Swap Agreement on any date shall be deemed to be the Swap Termination Value thereof as of such date. The
amount of any Capital Lease as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. Indebtedness of any Person
shall not include warrants classified as a liability of such Person solely by reason of the SEC staff statement issued on April 12, 2021 regarding the accounting treatment of
warrants issued by Special Purpose Acquisition Companies.
of any Loan Party under any Credit Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
"Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation
"Indemnitee” has the meaning provided to such term in Section 10.08.2 of this Agreement.
"Information” means all information received from any Loan Party relating to the Loan Parties or any of their respective businesses, other than any such
information that is available to the Credit Parties on a nonconfidential basis prior to disclosure by the Loan Parties, provided that, in the case of information received from
the Loan Parties after the date hereof, such information is clearly identified at the time of delivery as confidential.
"Insolvency Plan” means any plan of reorganization or plan of liquidation pursuant to any Debtor Relief Laws.
provision of the Bankruptcy Code or under any other Debtor Relief Laws.
"Insolvency Proceeding” means, with respect to any referenced Person, any case or proceeding commenced by or against such Person, under any
"Intangible Assets” means assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software,
copyrights, trade names, trademarks, patents, franchises, licenses, unamortized deferred charges, unamortized debt discount and capitalized research and development
costs.
Loan Party may have from or against any other Loan Party.
"Intercompany Indebtedness” means any and all claims, rights of payment, subrogation rights, rights of contribution, reimbursement or indemnity that any
"Interest Payment Date” means (a) with respect to any Adjusted Base Rate Borrowing, the first Business Day of each consecutive month, (b) with
respect to any Adjusted Daily SOFR Borrowing, the first Business Day of each consecutive month, and (c) with respect to any SOFR Borrowing at the Adjusted SOFR
Rate, the last Business Day of each Interest Period therefor.
"Interest Period” means: with respect to any SOFR Borrowing of any Class of Revolving Credit Loans, the period commencing on the date of such
SOFR Borrowing, or continuation or conversion of such Class of Loans as SOFR Rate Loans, and ending on the numerically corresponding day in the calendar month that
is one (1) month thereafter (provided that (i) if any Interest Period would end on a day other than a U.S. Government Securities Business Day, such Interest Period shall
be extended to the next succeeding U.S. Government Securities Business Day, unless such next succeeding U.S. Government Securities Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next preceding U.S. Government Securities Business Day, (ii) any Interest Period that
commences on the last U.S. Government Securities Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last U.S. Government Securities Business Day of the last calendar month of such Interest Period, provided,
further, that, in the event an Interest Period is extended to the next U.S. Government Securities Business Day in a month, the succeeding Interest Period will end on the
day it would have ended had the preceding Interest Period not been so extended (e.g., if the preceding period is extended to the 16th because the 15th is not a U.S.
Government Securities Business Day, the succeeding period will end on the 15th as long as it is a U.S. Government Securities Business Day), and (iii) the Borrowers may
not select any Interest Period which would end after the Maturity Date for the applicable
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Class of Loans). For purposes hereof, the date of a SOFR Borrowing initially shall be the date on which such SOFR Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such SOFR Borrowing.
"Inventory” means any "inventory” within the meaning of that term under the Uniform Commercial Code.
"Inventory Reserves” means, without duplication of any adjustments already accounted for in determining eligibility criteria under the definition of Eligible
Inventory or other reserves, reserves as may be established from time to time by the Administrative Agent in its Permitted Discretion to reflect risks or contingencies
arising after the Closing Date that negatively impact the market value of Eligible Inventory owned by any Loan Party, including any material change in salability of Eligible
Inventory.
"Investment” means, as to any referenced Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of Capital Stock or other Equity Interests in or securities of another Person, (b) a loan, advance or capital contribution to, guarantee or assumption of
debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such
other Person, (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit, or (d) any
other investment in securities, deposits, or the obligations of other Persons. For purposes of covenant compliance, the amount of any Investment shall be the amount
actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.
"IRS” means the United States Internal Revenue Service.
Practice (or such later version thereof as may be in effect at the time of issuance).
"ISP” means, with respect to any Letter of Credit, the "International Standby Practices 1998” published by the Institute of International Banking Law &
Credit.
"Issuing Bank” means M&T Bank, in its capacity as the issuer of Letters of Credit hereunder, or its successors hereunder as the issuer of Letters of
"Joinder Agreement” means each Joinder Agreement and Counterpart, substantially in the form of Exhibit K (amended as required to apply to the
capacities of the applicable Borrower and to the Collateral to be granted), executed and delivered by a Subsidiary or any other Person to the Administrative Agent in
connection with this Agreement.
"L/C Commitment” means (a) the commitment of the Issuing Bank to issue Letters of Credit in an aggregate amount at any time outstanding not to exceed
the Letter of Credit Sublimit, and (b) with respect to each Lender, the commitment of such Lender to purchase participation interests in the L/C Obligations up to such
Lender’s Revolving Credit Commitment Percentage multiplied by the Letter of Credit Sublimit. The L/C Commitment of each Lender is included in and is part of each
Lender’s Revolving Credit Commitment and is not in addition to the Lenders’ respective Revolving Credit Commitments.
amount thereof.
"L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the
by the Issuing Bank under any Letter of Credit, and any taxes, charges, or other costs or expenses incurred by the Issuing Bank in connection with any such payment.
"L/C Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit, including but not limited to the amount of any draft paid
therewith, any Letter of Credit Application therefor, and any agreements, instruments, guarantees or other documents (whether general in application
"L/C Documents” means, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection
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or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned, or (b) any collateral security for such
obligations.
next preceding Business Day).
"L/C Expiration Date” means the day that is thirty (30) days prior to the Revolving Credit Termination Date (or, if such day is not a Business Day, the
"L/C Obligations” means, at any time, the sum of (a) the aggregate Stated Amount of all issued and outstanding Letters of Credit, plus (b) the aggregate
unpaid principal amount of all Reimbursement Obligations of the Revolving Credit Borrower at such time due and payable in respect of all drawings made under such
Letter of Credit. For purposes of this Agreement, a Lender (other than the Lender then acting as Issuing Bank with respect to the related Letter of Credit) shall be
deemed to hold a L/C Obligation in an amount equal to its participation interest under Section 2.05 in the related Letter of Credit, and the Lender then acting as Issuing
Bank with respect to such related Letter of Credit shall be deemed to hold a L/C Obligation in an amount equal to its retained interest in the related Letter of Credit after
giving effect to the acquisition by the Revolving Credit Lenders (other than the Lender then acting as Issuing Bank with respect to such related Letter of Credit) of their
participation interests under such Section. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms, but any amount
may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be "outstanding” in the amount so remaining
available to be drawn.
decree or award of any Governmental Authority.
"Law” means any law (including common Law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ,
agrees to become a Lender holding the Commitments and Commitment Percentages set forth therein.
"Lender Addendum” means a Lender Addendum substantially in the form of Exhibit D attached hereto pursuant to which a financial institution or Fund
"Lenders” means collectively the Floor Plan Lenders, the Revolving Credit Lenders and the Persons that are parties to this Agreement as of the Closing
Date as a "Lender” or are parties to a Lender Addendum as a "Lender” after the Closing Date and any other Person that thereafter shall have become party hereto as a
"Lender” pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto as a "Lender” pursuant to an Assignment and
Assumption. Unless the context requires otherwise, the term "Lenders” includes the Swingline Lender and the Issuing Bank, and M&T in connection with its funding of
the M&T Advances.
of the Borrowers or any Affiliate thereof in accordance with the terms of this Agreement.
"Letter of Credit” means (a) each of the Existing Letters of Credit and (b) any letter of credit issued by the Issuing Bank for the account of one or more
Credit.
"Letter of Credit Application” means the Issuing Bank’s then current form of application and agreement for the issuance or amendment of a Letter of
"Letter of Credit Fees” has the meaning provided to such term in Section 2.05.9 of this Agreement.
"Letter of Credit Sublimit” means an amount equal to Five Million Dollars ($5,000,000.00).
"Lien” means any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever,
whether voluntarily or involuntarily given, including but not limited to any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease
intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is
created or exists at the time of the filing).
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"LIFO Reserve” means, as of any date of determination, the amount by which the book value of the Inventory of the Borrowers and their Subsidiaries, as
reported on the consolidated and consolidating financial statements of Pubco Guarantor and its Subsidiaries as of such date, would be lower if the first-in, first-out method,
calculated in accordance with GAAP, were used to value such Inventory as of such date.
Plan Loans.
"Line Cap” means the lesser of (i) the Revolving Credit Commitments and (ii) (x) the Borrowing Base minus (y) the Outstanding Amount of the Floor
"Liquidity” means, as of any date of determination, the sum of (i)(a) the Line Cap minus (b) the aggregate amount of Revolving Credit Exposure plus (ii)
the aggregate amount of Unrestricted Cash and Equivalents held in accounts with the Administrative Agent or, alternatively, in deposit accounts covered by a tri-party
control agreement by and among a Loan Party, the Administrative Agent and a depositary bank in form and substance satisfactory to the Administrative Agent.
in accordance with the requirements of Section 5.09.1 of this Agreement in form and substance as Exhibit G attached hereto.
"Liquidity Certificate” means a certificate provided by the Chief Financial Officer, Chief Executive Officer or President of the Borrower Representative
"Loan Parties” means, collectively, the Borrowers and the Guarantors (including Persons that become Borrowers or Guarantors after the Closing Date).
"Loan Request” means notice in the form of Exhibit H attached hereto from the Borrower Representative in accordance with the Loans as set forth in
this Agreement. In connection with Floor Plan Loans and M&T Advances, for Floor Plan Vehicles or Units which are not new from the Manufacturer, the Loan Request
shall be accompanied by a vendor invoice, certificate or statement of origin or certificate of title, as applicable and such other information as is required in this Agreement.
"Loans” means, collectively, the Floor Plan Loans including the M&T Advances, Revolving Credit Loans and the Swingline Loans.
"M&T Advance” has the meaning provided to such term in Section 2.02.
"M&T Advance Lender” means M&T Bank.
"M&T Bank” means Manufacturers and Traders Trust Company, a New York banking corporation, and its successors and assigns.
referred to as "OEM”) and other vendors and suppliers of a Floor Plan Vehicle or Unit.
"Manufacturer” means the manufacturer, vendor, or supplier of a Floor Plan Vehicle or Unit, including original equipment manufacturers (commonly
"Material Adverse Change” means (a) any set of circumstances or events which has or could reasonably be expected to have a material adverse effect
upon the operations, businesses, properties, liabilities (actual or contingent), conditions (financial or otherwise) or prospects of any Loan Party or any Subsidiary of a Loan
Party; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Credit Document to which it is a party; or (c) any circumstances or
events having a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Credit Document to which it is a party.
"Material Intellectual Property” means any intellectual property that, individually or collectively, (a) is (i) necessary to the business of Pubco Guarantor
and its Subsidiaries as currently constructed or (ii) is otherwise material to the business or operations of Pubco Guarantor and its Subsidiaries, taken as a whole or (b) has a
fair market value (as reasonably determined by the Borrower Representative in good faith) in excess of $1,000,000.00.
5.0% of the total assets of Pubco
"Material Subsidiary” shall mean at any time each any direct or indirect Subsidiary of Pubco Guarantor having: (a) assets in an amount equal to at least
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Guarantor and its Subsidiaries determined on a consolidated basis as of the last day of the most recent Fiscal Quarter at such time; or (b) revenues or net income in an
amount equal to at least 5.0% of the total revenues or net income of Pubco Guarantor and its Subsidiaries on a consolidated basis for the 12-month period ending on the
last day of the most recent Fiscal Quarter at such time.
Termination Date.
"Maturity Dates” means collectively (a) the Floor Plan Line of Credit Termination Date, (b) the Revolving Credit Termination Date and (c) the Swingline
"Measurement Period” means, as of any date of determination, the four (4) consecutive trailing Fiscal Quarters most recently ended.
"Minimum Borrowing Amount” means: (a) with respect to Floor Plan Loans, M&T Advances, and settlement among M&T Bank and the other Lenders
on account of M&T Advances on a Floor Plan Loan Adjustment Date, no Minimum Borrowing Amount shall be applicable; (b) with respect to the Revolving Credit Loans
(i) no Minimum Borrowing Amount shall be applicable for Adjusted Base Rate Borrowings and (ii) Five Hundred Thousand Dollars ($500,000.00) (or such lesser amount
as may be approved by the Administrative Agent) for SOFR Borrowings with minimum increments of Fifty Thousand Dollars ($50,000.00); and (c) with respect to the
Swingline Loans, any whole Dollar increment.
"Multiemployer Plan” means any employee benefit plan which is a "multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to
which any Loan Party or ERISA Affiliate is then making or accruing an obligation to make contributions or, within the preceding five (5) plan years, has made or had an
obligation to make such contributions.
"Net Available Proceeds” means any cash payments, and the fair market cash value of any non-cash consideration, received by any Loan Party or its
Subsidiaries directly or indirectly in connection with a Floor Plan Unit Casualty Event or Disposition, in each case net of (a) net of reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses (but excluding any such fees and expenses paid to an Affiliate), and (b) any repayments (including
reasonable expenses in connection therewith) of Indebtedness to the extent that (x) such Indebtedness is secured by a Lien on an asset that is the subject of the
transaction, and (y) the transferee of (or holder of a Lien on) such asset requires that such Indebtedness be repaid as a condition to the subject transaction.
"New Unit Invoiced Amount” means, with respect to any Eligible New Floor Plan Unit or any Permitted Company Vehicle, the amount of the
Manufacturer or vendor invoice (including freight charges) as specified to the Administrative Agent from time to time by the applicable Manufacturer or vendor of such
Eligible New Floor Plan Unit or Permitted Company Vehicle.
all affected Lenders in accordance with the terms of Section 10.01 and (b) has been approved by the Required Lenders.
"Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders or
"Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.
"Non-Financed Capital Expenditures” means, with respect to any Person for any applicable period, the Capital Expenditures of such Person made in
cash during such period, excluding any Capital Expenditures paid from proceeds of Indebtedness (other than proceeds of Indebtedness arising from borrowings under the
Revolving Credit Loans, the Swingline Loan, or the Floor Plan Loans).
"Notes” means, collectively, the Floor Plan Loan Notes, the Revolving Credit Notes and the Swingline Note.
"Obligations” means, collectively, the obligations of the Borrowers or of any other Loan Party to pay to the Credit Parties or to perform for the benefit of
the Credit Parties, M&T Bank or any of their Affiliates (a) sums due arising out of or in connection with the Loans or otherwise pursuant to the terms of the Notes, and
the other Credit Documents, including without limitation all unpaid principal, accrued interest (including interest that accrues during any Insolvency Proceedings), fees and
expenses,
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(b) indemnification and reimbursement duties and obligations owed in accordance with the terms of any of the Credit Documents, (c) Credit Party Expenses, (d)
reimbursement, repayment or indemnity obligations owed by the Borrowers or any of the other Loan Parties to any Credit Party or to an Affiliate of a Credit Party arising
out of or related to Bank Products, (e) all payment and indemnification obligations owed by the Borrowers to the Issuing Bank or to any other Credit Party which arise out
of or relate to any Letters of Credit, including all of the L/C Obligations, (f) all obligations or sums due to any Swap Provider under or in connection with any Swap
Obligations, (g) payments owed to the Arranger, the Administrative Agent or M&T Bank in accordance with the Fee Letter, (h) any indebtedness or liability which may
exist or arise as a result of any payment made by or for the benefit of any of the Credit Parties being avoided or set aside for any reason including any payment being
avoided as a preference under Sections 547 and 550 of the Bankruptcy Code, as amended, or under any other Debtor Relief Law, and (i) any interest on any portion of the
Loans that accrues after the commencement of any Insolvency Proceeding.
"OFAC” mean the U.S. Department of Treasury’s Office of Foreign Asset Control.
"Organization Documents” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction), (b) with respect to any limited liability company, the certificate or articles of formation or
organization and operating agreement, and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other
applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization
with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of
such entity. For the avoidance of doubt, with respect to Pubco Guarantor, the Organization Documents include the Amended Charter and the Securities Purchase
Agreement.
"Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient
and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or
assigned an interest in any Loan or Credit Document).
"Other Taxes” means all present or future stamp, court, documentary, intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to,
any Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to
Section 2.12).
"Out Of Balance” means with respect to any Floor Plan Vehicle or Unit, that the outstanding principal amount of the Floor Plan Loans allocable to such
Floor Plan Vehicle or Unit exceeds the Floor Plan Loan Advance Limit applicable to such Floor Plan Vehicle or Unit or that the payments required pursuant to Sections
2.01.6, 2.01.7, 2.01.8 or 2.01.9 have not been paid as agreed.
"Outstanding Amount” means (a) with respect to Floor Plan Loans (including M&T Advances) on any date, the aggregate outstanding principal amount
thereof after giving effect to any borrowings and prepayments or repayments of Floor Plan Loans, as the case may be, occurring on such date, (b) with respect to
Revolving Credit Loans and Swingline Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or
repayments of Revolving Credit Loans and Swingline Loans, as the case may be, occurring on such date; and (c) with respect to any L/C Obligations on any date, the
amount of such L/C Obligations on such date after giving effect to any L/C Credit Extensions occurring on such date and any other changes in the aggregate amount of
the L/C Obligations as of such date, including as a result of any reimbursements made by the Borrowers.
"Parent Guarantor” means Lazy Days’ R.V. Center, Inc., a Delaware corporation.
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"Participant” has the meaning provided to such term in Section 10.03 of this Agreement.
"Participant Register” has the meaning provided to such term in Section 10.03 of this Agreement.
Commitments, Loans and rights and obligations under this Agreement and the other Credit Documents.
"Participation” means an undivided participation interest sold by a Lender, in accordance with the provisions of Section 10.03, in such Lender’s
"Payment Notice” has the meaning provided to such term in Section 9.13(b) of this Agreement.
"Payment Recipient” has the meaning provided to such term in Section 9.13(a) of this Agreement.
"PBGC” means the Pension Benefit Guaranty Corporation.
"Pension Plan” means any "employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by a Borrower or any ERISA Affiliate or to which a Borrower or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the
immediately preceding five plan years.
"Permitted Acquisition” means any Investment after the Closing Date by one (1) or more Borrowers in any Person located within the United States,
whose business operations are within the same scope of business operations as the applicable Borrowers, or a similar or related line of business to the business of the
applicable Borrowers or a complementary or ancillary business that allows for vertical integration by the Loan Parties, provided that:
Investment there will not be any Defaults, Events of Default or Material Adverse Change,
(a) there are no then continuing Defaults or Events of Default and no Material Adverse Change has occurred, and immediately after giving effect to such
(b) with respect to such Investment, the applicable Borrowers shall have submitted to the Administrative Agent, not less than thirty (30) days before the
Borrowers become bound under any agreement to make such Investment or, in the case of clause (iii) immediately below, upon the request of the Administrative Agent, (i)
a description of the transaction pursuant to which such Investment is to be made, accompanied by substantially final drafts of all material definitive documents for such
transaction, (ii) pro forma financial statements for the Borrowers and their Subsidiaries giving effect to such Investment, and (iii) updated and revised financial projections
which incorporate the target’s projected results of operations into the financial projections of the applicable Borrowers and their Subsidiaries then most recently submitted
to the Administrative Agent, projecting the compliance by the Borrowers and their Subsidiaries with all covenants of this Agreement (including financial covenants) after
giving effect to the Investment,
(c) on or prior to the consummation of such proposed acquisition, the Borrower Representative shall deliver a certificate of an Authorized Officer of the
Borrowers (i) certifying compliance with the requirements of clauses (a) through (f) of this definition and containing the calculations (in reasonable detail) required by
clause (g) below and (ii) (1) attaching a copy of each form of material franchise or framework agreement for each Manufacturer of Floor Plan Units sold by such
Borrower, or, if previously delivered, stating that such agreements were previously delivered to the Administrative Agent and (2) certifying that no consents or waivers are
required pursuant to any such material franchise or framework agreement that have not been obtained that would enable the applicable Manufacturer to terminate such
material franchise or framework agreement, as applicable,
(d) the target shall be organized and domiciled in the United States,
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(e) such acquisition shall have been approved or consented to by the board of directors or similar governing body of the target,
as are required pursuant to Section 5.15 hereof,
(f) each new Subsidiary shall, at the time it becomes a Subsidiary, execute and/or deliver all such certifications, opinions, resolutions and Credit Documents
in Sections 6.12, 6.13, and 6.14 as of the most recently ended Measurement Period, after giving effect to such proposed acquisition, and
(g) on the date of the consummation of such proposed acquisition, the Loan Parties shall be in pro forma compliance with the financial covenants set forth
(h) the Administrative Agent shall have completed all due diligence on the Persons (directly or indirectly) to be (or whose assets are to be) acquired in
connection with such proposed acquisition, the scope and results of which shall be reasonably satisfactory to the Agent, including (i) review of agreements of such Persons
with OEMs and material franchise or framework agreements to which such Persons are a party, (ii) unless previously delivered and acknowledged in writing by the
Administrative Agent, receipt of an inspection and a floor plan audit of such Persons performed by an independent third party or the Administrative Agent with results
reasonably acceptable to the Administrative Agent and (iii) such other information as Administrative Agent shall reasonably request, including without limitation as may be
required by the Credit Parties to complete their "know your customer” due diligence, as applicable.
Notwithstanding the foregoing, "Permitted Acquisition” also includes the acquisition of real estate related to the development of an RV dealership or service center and
any such acquisition shall be subject to the foregoing conditions and requirements set forth in clauses (a) – (d) in this definition (regardless of whether it is within the
definition of "Investment”) and each new Subsidiary formed or acquired in connection with such Permitted Acquisition shall, at the time it becomes a Subsidiary, execute
and/or deliver all such certifications, opinions, resolutions and Credit Documents as are required pursuant to Section 5.15 hereof.
"Permitted Company Vehicles” means Vehicles purchased by a Borrower for use in its business in the ordinary course (including use by officers and
employees), which Vehicles are of the then current model year or the previous model year when so purchased, and in any case, that the Administrative Agent, in its sole
discretion, deems to be a Permitted Company Vehicle; provided that in no event shall any such Vehicle be deemed a Permitted Company Vehicle unless all representations
and warranties set forth in the Security Documents with respect to such Vehicle are true and correct and such Vehicle:
the Administrative Agent free and clear of any other Liens;
(a) is an asset to which a Borrower has good and marketable title, is freely assignable, and is subject to a perfected, first priority Lien in favor of
(b) is located at any of the Facilities listed on Schedule 1.04 or such other locations as are approved in writing by the Administrative Agent and,
in the case of facilities not owned by a Borrower, that are at all times subject to landlord waiver agreements in form and substance satisfactory to the Administrative
Agent;
(c) has not been owned or held by any Borrowers for more than 23 months;
(d) has an odometer reading of no greater than 45,000 miles;
applicable thereto, free from any defects that might adversely affect the market value thereof; and
(e) is not obsolete or slow moving, and is of good and merchantable quality and complies in all respects with all governmental standards
(f) is not a recreational vehicle or towable.
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"Permitted Discretion” means a determination made in good faith and in the exercise of reasonable credit or business judgement, from the perspective of
a secured asset based lender in accordance with customary business practices of the Administrative Agent for comparable asset-based transactions for similarly situated
borrowers, which in the context of establishing or modifying any eligibility criteria or Reserve provided for in this Agreement, the Administrative Agent from time to time
determines following consultation with the Borrower Representative as being appropriate, in each case of clauses (a), (b), (c) and (d) below, to the extent such items have
not otherwise been included in the calculation of the Borrowing Base, (a) to reflect items that could reasonably be expected to adversely affect the Administrative Agent’s
ability to realize upon the Collateral relevant to that Loan Party, including, without limitation, items that could reasonably be expected to adversely affect the value of any
Collateral relevant to the Loan Party, the enforceability or priority of the Administrative Agent’s Liens on Collateral relevant to that Loan Party, the timing of any
enforcement action, or the amount that any secured party would be likely to receive in the liquidation of Collateral relevant to that Loan Party, (b) to reflect claims and
liabilities that have priority as a matter of law that the Administrative Agent determines will need to be satisfied in connection with the realization upon that Collateral, (c) to
reflect criteria, events, conditions, contingencies or risks that differ materially from facts or events occurring or known to the Administrative Agent on the Closing Date and
which directly and adversely affect any component of the Borrowing Base, or (d) to address any collateral report or other financial information received by the
Administrative Agent from any Loan Party to the extent such report is incomplete, inaccurate or misleading in any material respect.
"Permitted Encumbrances” means collectively:
(a) Liens for taxes, assessments, governmental levies or similar charges incurred in the ordinary course of business and which are not yet due
and payable, or if due and payable, (i) are being contested in good faith and by appropriate and lawful proceedings diligently conducted, but only so long as such
proceedings could not subject any Credit Party to any civil or criminal penalties or liabilities and (ii) for which such reserves or other appropriate provisions, if any, as shall
be required by GAAP shall have been made and (iii) which shall be paid in accordance with the terms of any final non-appealable judgments or orders relating thereto
within thirty (30) days after the entry of such judgments or orders;
(b) Pledges or deposits made in the ordinary course of business to secure payment of worker’s compensation, or to participate in any fund in
connection with worker’s compensation, unemployment insurance, old-age pensions, other social security programs or similar program or to secure liability to insurance
carriers under insurance or self insurance agreements or arrangement;
(c) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default, or if such Liens
are due and payable, (i) are being contested in good faith and by appropriate and lawful proceedings diligently conducted and (ii) for which such reserves or other
appropriate provisions, if any, as required by GAAP shall have been made and (iii) which shall be paid in accordance with the terms of any final non-appealable judgments
or orders relating thereto within thirty (30) days after the entry of such judgments or orders;
(d) Pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment
of borrowed money) or leases, not in excess of the aggregate amounts due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other
similar bonds required in the ordinary course of business;
(e) (i) Encumbrances consisting of zoning restrictions, easements, rights-of-way, or other restrictions on the use of real property, (ii) defects
in title to real property, and (iii) Liens, encumbrances, and title defects affecting real property not known by the Borrowers or their Subsidiaries, as applicable, and not
discoverable by a search of the public records, none of which materially impairs the use of such property;
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(f) Liens securing the Obligations;
Default under Section 7.05 or Section 7.06; provided such Lien is subject and subordinate to the Lien of the Security Documents;
(g) Liens securing judgments for the payment of money (or appeal or other surety bonds relating to such judgments) not constituting an Event of
(h) Liens existing on the Closing Date and listed on Schedule 1.05 hereof, and any renewals, modifications, replacements or extensions thereof;
provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except as contemplated by Section 6.03(b),
and (iii) the direct or any contingent obligor with respect thereto is not changed;
(i) Liens upon fixed assets or equipment securing Indebtedness permitted under Section 6.03(f) (for the avoidance of doubt, subject to the
monetary limitation set forth therein with respect thereto in Section 6.03 and to the limitation set forth in Section 6.17 of this Agreement); provided that: (i) such Liens do
not at any time encumber any property other than the property financed by such Indebtedness, (ii) the Indebtedness secured thereby does not exceed the cost (negotiated
on an arm’s length basis) of the property being acquired on the date of acquisition, and (iii) such Liens attach to such property concurrently with or within ninety (90) days
after the acquisition thereof;
Subsidiaries in the ordinary course of business and covering only the assets so leased, licensed or subleased;
(j) any interest or title of a lessor, licensor or sublessor under any lease, license or sublease entered into by Pubco Guarantor or any of its
(k) Liens of a collection bank arising under Section 4-210 of the UCC on items in the course of collection;
applicable Law in the ordinary course of business, covering only the goods sold and securing only the unpaid purchase price for such goods and related expenses;
(l) Liens of sellers of goods to Borrowers or any Subsidiary arising under Article 2 of the Uniform Commercial Code or similar provisions of
(m) Liens, if any, in favor of the Administrative Agent on Cash Collateral delivered pursuant to Section 2.05.8;
6.03(m) hereof; provided that any such Lien shall not encumber any assets of any Loan Party other than the real property financed by such Indebtedness; and
(n) Liens placed upon assets securing Indebtedness incurred to finance real property to the extent such Indebtedness is permitted under Section
(o) Liens that are normal and customary contractual rights of setoff, relating to (i) the establishment of depository relationships with banks or
other financial institutions not given in connection with the incurrence of any Indebtedness, and (ii) purchase orders and other agreements entered into with customers of
the Borrowers or any Subsidiary in the ordinary course of business.
to vote in the election of the Board of Directors of Pubco Guarantor.
"Permitted Holder” means those direct and indirect beneficial owners of the Capital Stock of Pubco Guarantor that, as of the Closing Date, are entitled
venture, government or political subdivision or agency thereof, or any other entity.
"Person” means any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.
"Plan” means any "employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by any Loan Party or, with respect to any such
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"Platform” means Debt Domain, Intralinks, SyndTrak or a substantially similar electronic transmission system.
Schedule 1.03 attached hereto and their successors and assigns.
"Preferred Stockholders” means the holders of Series A Preferred Stock of Pubco Guarantor which are, as of the Closing Date, the Persons listed on
"Prime Rate” means the rate of interest per annum publicly announced from time to time by the Administrative Agent, in its sole discretion, as its prime
lending rate of interest. Such announced rate bears no inference, implication, representation or warranty that such announced rate is charged to any particular customer or
customers of Administrative Agent. The Administrative Agent’s prime lending rate of interest is but one of several interest rate bases used by the Administrative Agent.
Changes in the applicable interest rate shall be made as of, and immediately upon the occurrence of, changes in the Administrative Agent’s prime rate.
Business Day prior to such day). The first Principal Payment Date is March 15, 2023.
"Principal Payment Date” means the fifteenth (15 ) day of each consecutive month (provided, however, if any such day is not a Business Day, the
th
"Pro Rata Share” means, as to each Lender, the ratio, expressed as a percentage of (a) the aggregate amount of such Lender’s Floor Plan Commitment
and Revolving Credit Commitment to (b) the aggregate amount of the Floor Plan Commitments and Revolving Credit Commitment of all Lenders; provided, however, that
if at the time of determination the Floor Plan Commitments and Revolving Credit Commitments have terminated or been reduced to zero, the "Pro Rata Share” of each
Lender shall be the ratio, expressed as a percentage of (A) the sum of the unpaid principal amount of all outstanding Floor Plan Loans and Revolving Credit Loans, owing
to such Lender as of such date to (B) the sum of the aggregate unpaid principal amount of all outstanding Floor Plan Loans and Revolving Credit Loans of all Lenders as
of such date. If at the time of determination any Commitments have been terminated or reduced to zero and there are no outstanding Loans, then the Pro Rata Shares of
the Lenders shall be determined as of the most recent date on which such Commitments were in effect or Loans were outstanding. For purposes of this definition, a Floor
Plan Lender shall be deemed to hold a M&T Advance to the extent such Floor Plan Lender has acquired a participation therein under the terms of this Agreement and has
not failed to perform its obligations in respect of such participation.
Section 408 of ERISA and for which neither an individual nor a class exemption has been issued by the United States Department of Labor.
"Prohibited Transaction” means any prohibited transaction as defined in Section 4975 of the Code or Section 406 of ERISA that is not exempt under
"Property” means, any parcel of real property, whether owned in fee or leased, of any of the Loan Parties.
"Pubco Guarantor” means Lazydays Holdings, Inc., a Delaware corporation, formerly known as Andina II Holdco Corp, a Delaware corporation.
"Ratio Adjustment Period” means, the period commencing on the First Amendment Effective Date and ending on the date which is the date the
Borrower Representative has delivered a Compliance Certificate pursuant to Section 5.09.5 which contains calculations demonstrating that the Total Net Leverage Ratio is
less than 3:00 to 1.00 for the applicable Measurement Period.
"Real Estate Subsidiary Designation” has the meaning set forth in Section 5.22 of this Agreement.
"Receivables Reserves” means, without duplication of any adjustments already accounted for in determining eligibility criteria under the definition of
Eligible Accounts or Eligible Contracts in Transit or other reserves, reserves as may be established from time to time by the Administrative Agent in its Permitted
Discretion to reflect risks or contingencies arising after the Closing Date that negatively impact the market value of Eligible Accounts or Eligible Contracts in Transit
owned
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by any Loan Party, including any material change in collectability of Eligible Accounts or Eligible Contracts in Transit.
"Recipient” means (a) the Administrative Agent, (b) any Lender or (c) any Issuing Bank, as applicable.
"Reflooring Loan” has the meaning provided to such term in Section 2.01(b) of this Agreement.
"Register” has the meaning provided to such term in Section 10.02.4 of this Agreement.
other term having similar import) or is otherwise subject to special requirements in connection with the use, storage, transportation, disposition or other handling thereof.
"Regulated Substance” means any substance which, pursuant to any Environmental Law, is identified as a Hazardous Material, hazardous substance (or
Depository Institutions,” codified at 12 CFR § 204, et seq., as amended and in effect from time to time.
"Regulation D” means certain regulations issued by the Federal Reserve Board generally known as Regulation D and entitled "Reserve Requirements of
drawing honored by such Issuing Bank under a Letter of Credit.
"Reimbursement Obligation” means the absolute, unconditional and irrevocable obligation of a Revolving Borrower to reimburse an Issuing Bank for any
administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.
"Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees,
now or hereafter amended.
"Release” means a "release” as defined in Section 101(22) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
"Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a
committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York or any successor
thereto.
been waived.
"Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty (30) day notice period has
"Repurchase Agreement” means an agreement between the Administrative Agent and a Manufacturer providing Floor Plan Units to any Borrower (or a
manufacturer or supplier of Floor Plan Units to another dealer that subsequently sold such Floor Plan Units to any Borrower) providing for such manufacturer's or
supplier’s agreement to repurchase from such Borrower the Floor Plan Units sold to such Borrower by such manufacturer, supplier or other dealer.
"Required Floor Plan Lenders” means (a) if there are one or two Floor Plan Lenders, all Floor Plan Lenders; (b) if there are three Floor Plan Lenders,
at least two unaffiliated Floor Plan Lenders who hold in the aggregate at least sixty-six and two-thirds percent (66.67%) of either (i) the total Floor Plan Commitments of
all Floor Plan Lenders, or (ii) in the event the Floor Plan Commitments have been terminated, the aggregate Floor Plan Loan Exposure of all Floor Plan Lenders, and (c) if
there are four or more Floor Plan Lenders, at least two unaffiliated Floor Plan Lenders who hold in the aggregate more than fifty percent (50%) of either (i) the total Floor
Plan Commitments of all Floor Plan Lenders, or (ii) in the event the Floor Plan Commitments have been terminated, the aggregate Floor Plan Lona Exposure of all Floor
Plan Lenders; provided that for purposes of calculating the "Required Floor Plan Lenders,” the Floor Plan Commitments and Floor Plan Loan Exposure of any Defaulting
Lenders shall be deemed zero. For purposes of this definition a Floor Plan Lender shall be deemed to hold an M&T Advance to the extent such Floor Plan Lender has
acquired a participation therein under the terms of this Agreement and has not failed to perform its obligations in respect to such participation.
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"Required Lenders” means (a) if there are one or two Lenders, all Lenders; (b) if there are three Lenders, at least two unaffiliated Lenders who hold in
the aggregate at least sixty-six and two-thirds percent (66.67%) of either (i) the total Commitments of all Lenders, or (ii) in the event the Commitments have been
terminated, the aggregate outstanding Loans of all Lenders, and (c) if there are four or more Lenders, at least two unaffiliated Lenders who hold in the aggregate more
than fifty percent (50%) of either (i) the total Commitments of all Lenders, or (ii) in the event the Commitments have been terminated, the aggregate outstanding Loans of
all Lenders, including the Administrative Agent; provided that for purposes of calculating the "Required Lenders,” the Commitments and Loans of any Defaulting Lenders
shall be deemed zero.
"Required Revolving Credit Lenders” means (a) if there are one or two Revolving Credit Lenders, all Revolving Credit Lenders; (b) if there are three
Revolving Credit Lenders, at least two unaffiliated Revolving Credit Lenders who hold in the aggregate at least sixty-six and two-thirds percent (66.67%) of either (i) the
total Revolving Credit Commitments of all Revolving Credit Lenders, or (ii) in the event the Revolving Credit Commitments have been terminated, the aggregate Revolving
Credit Exposure of all Revolving Credit Lenders, and (c) if there are four or more Revolving Credit Lenders, at least two unaffiliated Revolving Credit Lenders who hold in
the aggregate more than fifty percent (50%) of either (i) the total Revolving Credit Commitments of all Revolving Credit Lenders, or (ii) in the event the Revolving Credit
Commitments have been terminated, the aggregate Revolving Credit Exposure of all Revolving Credit Lenders; provided that for purposes of calculating the "Required
Revolving Credit Lenders,” the Revolving Credit Commitments and Revolving Credit Exposure of any Defaulting Lenders shall be deemed zero and a Revolving Credit
Lender (other than the Swingline Lender with respect to such Swingline Loan) shall be deemed to hold a Swingline Loan and a Revolving Credit Lender (other than the
Issuing Bank with respect to such L/C Obligation) shall be deemed to hold a L/C Obligation, in each case, to the extent such Revolving Credit Lender has acquired a
participation therein under the terms of this Agreement and has not failed to perform its obligations in respect of such participation.
"Requirement of Law” means, with respect to any Person, any Law and the interpretation, implementation, application, or administration thereof by, and
other rulings, determinations, directives, guidelines, requirements or requests of, any Governmental Authority, in each case whether or not having the force of law and that
are applicable to or binding upon such Person or any of its assets or property or to which such Person or any of its assets or property is subject.
"Reserves” means, in each case as may be established by the Administrative Agent in accordance with customary business practices and in its Permitted
Discretion, the sum (calculated without duplication and without including any items otherwise addressed or excluded through eligibility criteria or any other reserve) of (a)
the Inventory Reserves, (b) the Receivables Reserves, (c) the aggregate amount of liabilities secured by Liens upon Collateral in the Borrowing Base that are senior to the
Administrative Agent’s Liens, and (d) such additional reserves established by the Administrative Agent that it deems necessary in its Permitted Discretion.
"Resolution Authority” means the EEA Resolution Authority or, with respect to any UK Financial Institution, the UK Resolution Authority.
"Restricted Payment” means collectively (a) any dividend or other distribution (whether in cash, securities or other property) with respect to any Capital
Stock or other Equity Interests of any of the Loan Parties or their Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Capital Stock or other Equity Interests, or on
account of any return of capital to a Loan Party’s stockholders, partners or members (or the equivalent Person thereof), (b) any redemption, repurchase, conversion,
exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, by such Person of any Equity Interest in such Person now
or hereafter outstanding, including without limitation, any redemption of the Series A Preferred Stock issued by a Loan Party in accordance with the provisions of the
Amended Charter, the Securities Purchase Agreement and/or the Certificate of Designations, (c) any payment of any accrued dividends, any payments in connection with
any permitted repurchases, payments of all or any portion of a redemption price, any payments of redemption interest, or any payments of any default or increased interest,
or premiums upon any payments that are not paid when due, or any risk-adjusted payment or
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premium, due to the Preferred Stockholders under the terms of the Amended Charter, the Securities Purchase Agreement, and/or the Certificate of Designations, (d) any
sinking fund or other prepayment or installment payment on account of any Capital Stock or other Equity Interests of a Loan Party, (e) any payment made by such Person
to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire Equity Interests in such Person now or hereafter outstanding, (f) any loan
or advance to a shareholder or other equity holder of a Loan Party on account of such Person being a shareholder or other equity holder, (g) any forgiveness or release
without adequate consideration by a Loan Party of any Indebtedness or other obligation owing to a Loan Party by a shareholder or other equity holder of a Loan Party, or
(h) any payment by such Person of any management, consulting or similar fees.
"Revolving Borrowing” means a borrowing consisting of simultaneous Revolving Credit Loans of the same Class and Type.
to time become a Borrower under the Revolving Credit Facility pursuant to a Joinder Agreement.
"Revolving Credit Borrowers” means (a) the Borrowers listed on Schedule 1.01(a) as of the Closing Date and (b) any other Subsidiaries that from time
"Revolving Credit Commitment” means, as to any Lender, the amount initially set forth opposite its name on Schedule 1.01 attached hereto in the column
labeled "Revolving Credit Commitment,” and thereafter as set forth on any relevant Lender Addendum or Assignment And Assumption, as such amount may be adjusted
from time to time in accordance with this Agreement, and "Revolving Credit Commitments” means the aggregate Revolving Credit Commitments of all of the Lenders.
"Revolving Credit Commitment Percentage” means, as to any Lender, the percentage initially set forth opposite its name on Schedule 1.01 attached
hereto in the column labeled "Revolving Credit Commitment” and thereafter on any relevant Lender Addendum or Assignment And Assumption, if applicable, as the same
may be adjusted from time to time pursuant to this Agreement.
Section 2.03.6 of this Agreement or increased as appropriate to reflect any increase effected in accordance with Section 2.22.
"Revolving Credit Dollar Cap” means Fifty Million Dollars ($50,000,000.00), as such sum may be decreased from time to time by the operation of
Credit Loans and such Lender’s participation in, and obligation to participate in, L/C Obligations and Swingline Loans at such time.
"Revolving Credit Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of such Lender’s outstanding Revolving
Swingline Loans and the issuance of Letters of Credit to the Revolving Credit Borrowers by the Revolving Credit Lenders.
"Revolving Credit Facility” means the revolving credit facility described in Sections 2.03, 2.04, 2.05 and 2.22 providing for Revolving Credit Loans,
"Revolving Credit Increase” has the meaning set forth in Section 2.22.1.
Swingline Loans or Letters of Credit.
"Revolving Credit Lenders” means a Lender having a Revolving Credit Commitment and any Lender holding a Revolving Credit Loan or participation in
accordance with Section 2.03 of this Agreement.
"Revolving Credit Loans” means collectively, the Revolving Credit Loans made by the Lenders to the Borrowers as joint and several obligors in
amendments or replacements thereto. The Revolving Credit Notes shall be in the form of Exhibit E attached hereto.
"Revolving Credit Notes” means, collectively, the promissory notes of the Borrowers evidencing the Revolving Credit Loans, together with all
"Revolving Credit Termination Date” means February 21, 2027.
"Revolving Credit Unused Commitment Fee” has the meaning given to such term in Section 2.03.5 of this Agreement.
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"Sale and Leaseback Transaction” means any arrangement, directly or indirectly, whereby a Loan Party or any of its Subsidiaries (excluding any
Designated Real Estate Subsidiary) sells or transfers any real property, whether now owned or hereinafter acquired, and thereafter, any Affiliate thereof, rents or leases
such property.
financing or other contingencies.
"Sale Dated” means, in connection with the sale of a Floor Plan Vehicle or Unit, that closing of the sale of such Floor Plan Vehicle or Unit is pending
"Sanction(s)” means applicable economic sanctions administered or enforced by the United States government (including without limitation, OFAC).
Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, the so-called Donetsk People’s Republic and the Luhansk People’s Republic regions of Ukraine.
"Sanctioned Country” means a country or region the target of a comprehensive Sanctions program, which includes as of the date of this Agreement,
"Sanctioned Person” means (a) a Person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC and, as of the
date hereof, available at http://www.treas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf, or as otherwise published from time to time or otherwise recognized as a specially
designated, prohibited, or sanctioned Person under any Sanctions, or (b) (i) an agency of the government of a Sanctioned Country, (ii) an organization controlled by a
Sanctioned Country, or (iii) a Person resident in a Sanctioned Country, to the extent the same would violate Sanctions.
"SEC” has the meaning provided to such term in Section 5.09.11 of this Agreement.
"Secured Parties” means, collectively, the Administrative Agent, the Lenders (including but not limited to the Swingline Lender and M&T Bank as
provider of the M&T Advances), the Issuing Bank, the Swap Provider, and any other Persons the Obligations owing to which are or are purposed to be secured by the
Collateral under the terms of the Security Documents.
Stockholder and Pubco Guarantor.
"Securities Purchase Agreement” means collectively each Securities Purchase Agreement dated October 27, 2017 by and between a Preferred
"Security Agreement” means the Second Amended and Restated Security Agreement, dated as of the Closing Date, made by the Loan Parties and
certain Subsidiaries of Pubco Guarantor from time to time party thereto in favor of the Administrative Agent for the benefit of the Credit Parties as modified by each
joinder agreement, security agreement supplement or pledge agreement supplement thereto delivered from time to time.
"Security Documents” means, collectively, the Security Agreement, all other security agreements, pledges, mortgages, deeds of trust, control agreements,
or other agreements, instruments, documents or filings pursuant to which any of the Loan Parties, from time to time, pledges or grants Liens for the benefit of the Credit
Parties in or to any of the Collateral.
"SOFR” means: (a) for the Revolving Credit Facility, with respect to any U.S. Government Securities Business Day, a rate per annum equal to the
secured overnight financing rate for such U.S. Government Securities Business Day as published by the Term SOFR Administrator; and (b) for the Floor Plan Facility,
with respect to any day, a rate per annum equal to the secured overnight financing rate for such day as published by the Term SOFR Administrator.
"SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
"SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any
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SOFR Borrowing or an Adjusted SOFR Rate Borrowing.
"SOFR Borrowing” means each unpaid principal balance of a Loan which accrues interest at calculated based upon SOFR, whether an Adjusted Daily
for such Interest Period and (b) with respect to the Floor Plan Facility, the Daily SOFR Rate.
"SOFR Rate” means (a) with respect to the Revolving Credit Facility, for any SOFR Borrowing for an Interest Period, Adjusted Term SOFR determined
"SOFR Rate Day” has the meaning specified in the definition of Daily Simple SOFR.
"SOFR Rate Loan” means a Loan that bears interest based on the SOFR Rate.
"SOFR Spread Adjustment” means 0.10% with respect to an Interest Period of one month.
"Solvent” means, 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, without limitation, 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 probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to pay its debts and
other liabilities as they mature in the normal course of business, (d) 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 (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a
transaction, for which such Person’s property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which
such Person is engaged or about to be engaged, as the case may be. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual
or matured liability.
"Specified Equipment” means fixtures, furniture and Equipment.
"Specified Inventory” means Inventory consisting of parts and accessories.
(regardless of whether any conditions for drawing could then be met).
"Stated Amount” means as to any Letter of Credit, the lesser of (a) the face amount thereof, or (b) the remaining available undrawn amount thereof
"Subsidiary” means, with respect to any Person (the "parent”) at any date, any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other
ownership interests representing more than fifty percent (50%) of the equity or more than fifty percent (50%) of the ordinary voting power or, in the case of a partnership,
more than fifty percent (50%) of the general partnership interests are, as of such date, owned, controlled or held by the parent or one or more subsidiaries of the parent.
"Subsidiary Redesignation” has the meaning set forth in Section 5.22 of this Agreement.
"Supermajority Lenders” means two or more unaffiliated Lenders who hold in the aggregate at least sixty-six and two-thirds percent (66.67%) of either
(i) the total Commitments of all Lenders, or (ii) in the event the Commitments have been terminated, the aggregate outstanding Loans of all Lenders; provided that (i) at
any time when there is only one Lender holding either (i) the total Commitments, or (ii) in the event the Commitments have been terminated, the aggregate outstanding
Loans, Supermajority Lenders means such Lender and (ii) for purposes of calculating the "Supermajority Lenders,” the Commitments and Loans of any Defaulting
Lenders shall be deemed zero.
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of, a board of trade designated as a contract market under Section 5 of the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation 32.3(a).
"Swap” means any "swap” as defined in Section 1a(47) of the CEA and regulations thereunder, other than (a) a swap entered into, or subject to the rules
"Swap Agreement” means (a) any "Swap Agreement” as defined in §101(53B) of the Bankruptcy Code, (b) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or
options, interest rate options, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any
such transaction is governed by or subject to any master agreement, and (c) any and all transactions of any kind, and the related confirmations, which are subject to the
terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "Master Agreement”), including any
such obligations or liabilities under any Master Agreement.
"Swap Obligations” means (a) all obligations or sums due to any Swap Provider under or in connection with any Swap or Swap Agreement.
"Swap Provider” means any Credit Party or Affiliate of a Credit Party (regardless of whether such Swap Provider ceases to be a Credit Party or
Affiliate of a Credit Party after such Swap Agreement is entered into) that has entered into, or subsequently enters into a Swap Agreement from time to time with a Loan
Party for Swaps with respect to the Loans, the Letters of Credit, or any of the other Obligations, but excluding, for the avoidance of doubt, any Swap Agreement entered
into by a Credit Party or its Affiliates after its Commitments have been fully cancelled in accordance with the terms of this Agreement or after it has assigned all of its
rights under the credit facilities established by this Agreement.
"Swap Termination Value" means, in respect of any one or more Swap Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Agreements: (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s); and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-
market value(s) for such Swap Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in
such Swap Agreements (which may include a Lender or any Affiliate of a Lender).
"Swingline Commitment” means (a) the commitment of the Swingline Lender to make Swingline Loans in an aggregate principal amount at any time not
to exceed the Swingline Committed Amount, and (b) with respect to each Lender, the commitment of such Lender to purchase participation interests in the Swingline
Loans up to such Lender’s Revolving Credit Commitment Percentage multiplied by the Swingline Committed Amount. The Swingline Commitment is included in and is part
of the Revolving Credit Commitment held by each Lender and is not in addition thereto.
"Swingline Committed Amount” means Ten Million Dollars ($10,000,000.00).
in a Material Adverse Change, or (b) a Default or Event of Default.
"Swingline Conversion Event” means (a) an event, change, circumstance or other occurrence resulting or which could reasonably be expected to result
"Swingline Lender” means M&T Bank, and its successors and assigns.
"Swingline Loans” has the meaning provided to such term in Section 2.04 of this Agreement.
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such promissory note may be amended, modified, restated, supplemented, extended, renewed or replaced from time to time.
"Swingline Note” means the promissory note of the Borrowers in favor of the Swingline Lender evidencing the Swingline Loan in the form of Exhibit F as
"Swingline Termination Date” means that date which occurs five (5) Business Days prior to the Revolving Credit Termination Date.
"Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b)
an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
"Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other
"Term SOFR” means, for any Interest Period with respect to a SOFR Rate Loan, the rate per annum (rounded upward to the nearest 1/100 of 1%) equal
to Term SOFR Reference Rate published for the date that is two (2) U.S. Government Securities Business Days (the "Rate Determination Date”) prior to the
commencement of such Interest Period and having a term equivalent to such Interest Period, for a tenor comparable to the applicable Interest Period on the day (such day,
the "Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Day prior to the first day of such Interest Period, as such rate is
published by the Term SOFR Administrator; provided that, if as of 5:00 p.m. on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the
applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not
occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government
Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S.
Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day.
Notwithstanding any provision above, the practice of rounding to determine the Term SOFR Reference Rate may be discontinued at any time in the Administrative
Agent’s sole discretion.
Rate selected by the Administrative Agent and the Floor Plan Agent in their reasonable discretion).
"Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference
"Term SOFR Reference Rate” means the rate per annum determined by the Administrative Agent as the forward-looking term rate based on SOFR.
"Term SOFR Conforming Changes” means, with respect to the use or administration of Term SOFR, any technical, administrative or operational
changes (including, without limitation, changes to the definitions of "Business Day,” "U.S. Government Securities Business Day,” or "Interest Period,” timing and
frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback
periods, the applicability of breakage provisions and other technical, administrative or operational matters) that the Administrative Agent decides in its reasonable discretion
may be appropriate to reflect the adoption and implementation of Term SOFR and to permit the administration thereof by the Administrative Agent in a manner
substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or
if the Administrative Agent determines that no market practice for the administration of Term SOFR exists, in such other manner of administration as the Administrative
Agent decides is reasonably necessary in connection with the administration of the loan evidenced hereby).
"Threshold Amount” means Five Million Dollars ($5,000,000.00).
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Exposure of such Lender at such time.
"Total Credit Exposure” means, as to any Lender at any time, the unused Commitments, the Floor Plan Loan Exposure and the Revolving Credit
"Total Floor Plan Loan Outstandings” means the aggregate Outstanding Amount of all Floor Plan Loans including M&T Advances.
"Total Net Leverage Ratio” means, as of any date of determination for any Measurement Period, the ratio of (a) (i) Consolidated Funded Indebtedness
(excluding Indebtedness on account of the Floor Plan Loans) as of such date of determination, minus the aggregate amount, as of the date of determination, of cash (from
operations and not cash proceeds of any Indebtedness being incurred on such date or other borrowed funds) held (A) in accounts on the consolidated balance sheet of
Pubco Guarantor and its consolidated Subsidiaries as of such date characterized as "unrestricted accounts” to the extent that (x) the same are subject to a Lien in favor of
the Administrative Agent for the benefit of the Secured Parties and (y) the use thereof for application to payment of Indebtedness is not prohibited by Law or any contract
to which any such Person is a party, and (B) without duplication, as the Equity Balance held under the Floor Plan Interest Reduction Arrangement reported on the
consolidated balance sheet of Pubco Guarantor and its consolidated subsidiaries, plus (ii) Capitalized Rents to (b) Consolidated EBITDAR for such period.
Obligations.
Agreement.
"Total Revolving Credit Outstandings” means the aggregate Outstanding Amount of all Revolving Credit Loans, all Swingline Loans and all L/C
"Trade Date” means that date an assigning Lender enters into a binding agreement to sell and assign all or a portion of its rights and obligations under this
"Type” means, with respect to any Loan, its character as a Base Rate Loan or a SOFR Rate Loan.
"UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time)
promulgated by the United Kingdom Prudential Regulation Authority) or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time)
promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain Affiliates of such credit
institutions or investment firms.
"UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK
Financial Institution.
"Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
"Uniform Commercial Code” or "UCC” means the Uniform Commercial Code as adopted and in effect from time to time in the Governing State.
"Unrestricted Cash and Equivalents” means, at any date, the unrestricted cash and equivalents on the balance sheet of the Loan Parties that is subject
to the security interest granted in favor of the Administrative Agent under the applicable Security Document, and excluding (x) any cash held by any Loan Party in escrow,
trust or other fiduciary capacity for or on behalf of any other Person and (y) the Equity Balance.
2001, Public Law 107-56.
"USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
"U.S. Borrower” means any Borrower that is a U.S. Person.
"U.S. Person” means any Person that is a "United States Person” as defined in Section 7701(a)(30) of the Code.
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"U.S. Government Securities Business Day” means any day other than Saturday, Sunday or other day on which the Securities Industry and Financial
Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government
securities.
"U.S. Tax Compliance Certificate” has the meaning specified in Section 2.10.7(b)(ii)(C).
"Used Unit Book Value” means, with respect to any Eligible Used Floor Plan Unit, the trade-in (wholesale) value of such Eligible Used Floor Plan Unit,
as determined by reference to the most recently published National Automobile Dealers Association RV Industry Appraisal Guide or such comparable report or source of
information reasonably designated by the Administrative Agent.
with GAAP.
"Value” means, with respect to Eligible Inventory, the value of such Eligible Inventory based on the lower of cost or market, as applicable, in accordance
"Vehicle” means any automobile or truck (other than a recreational vehicle or towable), approved for highway use by any state of the United States.
"Withholding Agent” means the Borrowers and the Administrative Agent.
"Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA
Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in
the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel,
reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that
liability into shares, securities or obligations of such Person or any other Person, to provide that any such contract or instrument is to have effect as if a right had been
exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those
powers.
Section 1.02.
Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include,” "includes” and "including” shall be deemed
to be followed by the phrase "without limitation.” The word "will” shall be construed to have the same meaning and effect as the word "shall.” Unless the context
requires otherwise, (a) any definition of or reference to any agreement, instrument or document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words "herein,”
"hereof” and "hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this
Agreement, (e) the words "asset” and "property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights, (f) each reference to a time shall be a reference to the prevailing Eastern U.S. time, and
(g) Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this Agreement.
Section 1.03.
[Reserved].
Section 1.04.
Accounting Principles. (a) Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial
matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or
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financial terms shall have the meanings ascribed to such terms by GAAP. In the event GAAP changes after the date hereof in a manner that causes
noncompliance with the covenants hereof, the parties hereto shall agree in good faith to modify the covenants and the related defined terms to compensate for
such change in GAAP. Notwithstanding the foregoing, all leases and obligations of Pubco Guarantor and its Subsidiaries that are or would be characterized as
operating leases or operating lease obligations in accordance with GAAP as in effect prior to the date of implementation of FASB ASU No. 2016-02, Leases
(Topic 842) (whether or not such operating lease or operating lease obligations were in effect on such date) shall continue to be (or shall be, in the case of any
such leases or obligations not in effect on such date) accounted for as operating leases and operating lease obligations (and not as capital leases, finance leases or
Capitalized Lease Obligations) for all purposes under this Agreement and the other Credit Documents, regardless of any change in GAAP that would otherwise
require such leases to be treated or recharacterized as capital leases or finance leases or such obligations to be treated or recharacterized (on a prospective or
retroactive basis or otherwise) as finance lease obligations or Capitalized Lease Obligations and without giving effect to the implementation of FASB ASU No.
2016-02, Leases (Topic 842).
Section 1.05.
Proforma Calculations. (a) All pro forma calculations required to be made hereunder giving effect to any Permitted Acquisition, Disposition, or
issuance, incurrence or assumption of Indebtedness, or other transaction made during the Fiscal Quarter or Fiscal Year to which the required calculation relates
shall, in each case, be calculated (i) as if such transaction was consummated on the first day of the relevant period and (ii) giving pro forma effect thereto and to
the historical earnings and cash flows associated with the assets acquired or disposed of and any Indebtedness incurred and repaid in connection therewith, and
any synergies or cost savings, in each case, in a method consistent with Regulation S-X of the Securities Act of 1933.
(b) As at any date that any financial covenants are required to be calculated under this Agreement (each, a "date of determination”), if the Borrowers or any of
their Subsidiaries has consummated a Permitted Acquisition or a Disposition on or after the first day of the period as to which the calculation is required to be made (and
on or before the last day of such period), then the calculation of the applicable financial covenants on the date of determination shall be made as if such Permitted
Acquisition or Disposition had occurred on the first day of the applicable period (including, the inclusion of the Consolidated EBITDA of the target, excluding the
Consolidated EBITDA of the division or assets disposed of, the inclusion of the Indebtedness incurred for the Permitted Acquisition and the exclusion of the Indebtedness
repaid with the disposition).
Section 1.06.
Divisions. For all purposes under the Credit Documents, in connection with any division or plan of division under Delaware law (or any
comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a
different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into
existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.
Section 1.07.
Reallocation; Effect of Amendment and Restatement. (a) Prior to the Closing Date, certain loans were previously made by the Existing Lenders
under the Existing Credit Agreement to the Borrowers under the Existing Credit Agreement which remain outstanding as of the date of this Agreement (such
outstanding loans being hereinafter referred to as the "Existing Loans”). Subject to the terms and conditions set forth in this Agreement, the Borrowers and each
of the Lenders agree that on the Closing Date, but subject to the satisfaction or waiver of the conditions precedent set forth in Section 4.01 and 4.02 hereof and
the reallocation and other transactions described in this Section 1.07: (i)(A) all outstanding "Revolving Credit Loans” (as such term is defined in the Existing Credit
Agreement) shall be deemed to be Revolving Credit Loans outstanding hereunder and (B) all outstanding "Floor Plan Loans” (as such term is defined in the
Existing Credit Agreement) shall be deemed to be Floor Plan Loans outstanding hereunder, and (ii)(A) the commitments under the "Revolving Credit
Commitment” (as defined in the Existing Credit Agreement) of each of the applicable Existing
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Lenders shall be reallocated among the Lenders in accordance with their respective Revolving Credit Commitment Percentages (determined in accordance with
the aggregate amount of their respective Revolving Credit Commitments as set forth opposite such Lender’s name on Schedule 1.01 attached hereto) and (B) the
Existing Loans that are "Floor Plan Loans” (as such term is defined in the Existing Credit Agreement) of each of the applicable Existing Lenders shall be
reallocated among the Lenders in accordance with their respective Floor Plan Loan Commitment Percentages (determined in accordance with the aggregate
amount of their respective Floor Plan Loan Commitments as set forth opposite such Lender’s name on Schedule 1.01 attached hereto), and in order to effect such
reallocations, all requisite assignments shall be deemed to be made in amounts from each Existing Lender to each Lender, as appropriate, with the same force and
effect as if such assignments were evidenced by the applicable Assignment And Assumption (as defined in the Existing Credit Agreement) under the Existing
Credit Agreement but without the payment of any related assignment fee, and no other documents or instruments shall be, or shall be required to be, executed in
connection with such assignments (all of which such requirements are hereby waived).
(b) Upon this Agreement becoming effective pursuant to Section 4.01 and 4.02 hereof and the reallocation and other transactions described in this Section 1.07,
from and after the Closing Date (i) all terms and conditions of the Existing Credit Agreement and any other "Credit Document” as defined therein, as amended by this
Agreement and the other Credit Documents being executed and delivered on the Closing Date, shall be and remain in full force and effect, as so amended, and shall
constitute the legal, valid, binding and enforceable obligations of the Loan Parties party thereto; (ii) the terms and conditions of the Existing Credit Agreement shall be
amended as set forth herein and, as so amended, shall be restated in their entirety, but shall be amended only with respect to the rights, duties and obligations among the
Borrowers, Lenders and Administrative Agent accruing from and after the Closing Date; (iii) this Agreement shall not in any way release or impair the rights, duties,
Obligations or Liens created pursuant to the Existing Credit Agreement or any other loan document related thereto or affect the relative priorities thereof, in each case to
the extent in force and effect thereunder as of the Closing Date, except as modified hereby or as modified hereafter in accordance with the terms hereof or by documents,
instruments and agreements executed and delivered in connection herewith, and all of such rights, duties, Obligations and Liens are assumed, ratified and affirmed by the
Borrowers; (iv) all indemnification obligations of each Borrower and each Guarantor under the Existing Credit Agreement and any other loan document related thereto
shall survive the execution and delivery of this Agreement and shall continue in full force and effect for the benefit of Lenders, Administrative Agent, and any other Person
indemnified under the Existing Credit Agreement or any other Credit Document at any time prior to the Closing Date; (v) the Obligations incurred under the Existing Credit
Agreement shall, to the extent outstanding on the Closing Date, continue outstanding under this Agreement and shall not be deemed to be paid, released, discharged or
otherwise satisfied by the execution of this Agreement, and this Agreement shall not constitute a refinancing, substitution or novation of such Obligations or any of the
other rights, duties and obligations of the parties hereunder; (vi) the execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right,
power or remedy of any lender or the administrative agent under the Existing Credit Agreement, nor constitute a waiver of any covenant, agreement or obligation under
the Existing Credit Agreement, except to the extent that any such covenant, agreement or obligation is no longer set forth herein or is modified hereby; and (vii) any and all
references in the loan documents to the Existing Credit Agreement shall, without further action of the parties, be deemed a reference to the Existing Credit Agreement, as
amended and restated by this Agreement, and as this Agreement shall be further amended or amended and restated from time to time hereafter.
Section 1.08.
SOFR Rate.
1.08.i. The Administrative Agent does not warrant or accept responsibility for, and shall not have any liability with respect to (a) the continuation of, administration
of, submission of, calculation of or any other matter related to the Benchmark, any component definition thereof or rates referenced in the definition thereof or
any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any
such alternative, successor or replacement rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence
of, or have the same volume or liquidity as, the Benchmark or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect,
implementation or
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composition of any Benchmark Replacement Conforming Changes. The Administrative Agent may select information sources or services in its reasonable
discretion to ascertain the Benchmark, in each case pursuant to the terms hereof, and shall have no liability to the Borrowers or any other person or entity for
damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or
otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or
service.
1.08.ii. Each Borrower acknowledges and understands that (i) Term SOFR is established, administered and regulated by third parties, and its continuing existence
and ongoing viability as a source and basis for establishing contractual interest rates is entirely outside the control of the Administrative Agent, (ii) Term SOFR
is a derivative of SOFR, based on expectations derived from the derivatives markets and dependent upon derivatives market liquidity, (iii) certain industry
groups have advised that Term SOFR is not recommended for all financing facilities, and (iv), the Administrative Agent does not warrant or accept
responsibility for, and shall not have any liability with respect to (a) the continuation of, administration of, submission of, calculation of or any other matter
related to Term SOFR, or any component definition thereof or rates referenced in the definition thereof, or any alternative, successor or replacement rate
thereto (including any Benchmark Replacement) or (b) the effect, implementation or composition of any Term SOFR Conforming Changes. Notwithstanding
the above, each Borrower has knowingly and voluntarily requested and/or accepted utilization of Term SOFR for all purposes provided for herein, accepting
any inherent risks associated with such utilization, and hereby waives any claims or defenses against the Administrative Agent in connection therewith.
ARTICLE 2
CREDIT FACILITIES
Section 1.01.
Floor Plan Loans. (a) Subject to the terms and conditions of this Agreement and the other Credit Documents, each of the Floor Plan Lenders severally
agrees to make Floor Plan Loans in Dollars to the Floor Plan Borrowers as joint and several obligors from time to time on any Borrowing Date during the Availability
Period for the Floor Plan Facility ; provided, however, that (i) with regard to each Floor Plan Lender, the Floor Plan Loan Exposure of such Floor Plan Lender shall not at
any time exceed the amount of such Floor Plan Lender’s Floor Plan Loan Commitment, (ii) the Total Floor Plan Loan Outstandings shall not at any time exceed the Floor
Plan Line of Credit Dollar Cap, (iii) the aggregate outstanding principal amount of advances of proceeds of the Floor Plan Loans (including M&T Advances) used to
finance (A) Used Floor Plan Units shall not exceed Ninety Million Dollars ($90,000,000.00), and (B) Permitted Company Vehicles shall not exceed One Million Dollars
($1,000,000.00); (iv) each Floor Plan Loan (including M&T Advances) shall be advanced against an individual Floor Plan Vehicle or Unit, subject, in each case, to the
applicable Floor Plan Loan Advance Limit applicable to such Floor Plan Vehicle or Unit; (v) the aggregate principal amount of each advance of proceeds of the Floor Plan
Loans (including M&T Advances) requested in each Loan Request shall not exceed the sum of the Floor Plan Loan Advance Limit amounts for each Floor Plan Vehicle
or Unit to be financed on such Loan Request, and (vi) the Total Floor Plan Loan Outstandings shall not, at any time, exceed any of the limitations set forth in the
Certificate of Designations. The Administrative Agent may at any time in its sole and absolute discretion establish limits on the aggregate outstanding amount of any Floor
Plan Loans available to be used by the Floor Plan Borrowers to finance purchases of Eligible New Floor Plan Units from a particular Manufacturer, supplier or dealer. The
Floor Plan Borrowers shall not request any advances of proceeds of the Floor Plan Loans which would cause the aggregate unpaid principal balances of the Floor Plan
Loans (including M&T Advances) to exceed the above-stated limitations. In the event that the aggregate unpaid principal balances of the Floor Plan Loans (including
M&T Advances) exceed the above-stated limitations in any respect, the Floor Plan Borrowers shall immediately make such payments to the Administrative Agent as will
be sufficient to reduce the aggregate unpaid principal balances of the Floor Plan Loans to an aggregate amount which will not be in excess of such limitations. Subject to
the application and satisfaction of the terms and conditions of this Agreement and of the other Credit Documents, during the Availability Period in respect of the Floor Plan
Facility, the Floor Plan Borrowers may borrow, prepay, and reborrow the Floor Plan Loans in whole or in part.
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(b) The Floor Plan Borrowers may request to reborrow any Floor Plan Loan against an individual Eligible Floor Plan Vehicle or Unit originally financed as an Eligible
New Floor Plan Unit or Permitted Company Vehicle that is repaid in full before its scheduled maturity (based on mandatory curtailment payments due under Sections
2.01.7, 2.01.8, and 2.01.9) (any such reborrowed Floor Plan Loan hereinafter called a "Reflooring Loan”). Reflooring Loans shall be at the sole discretion of the
Administrative Agent, and in such amounts, at such advance rates, and subject to such conditions precedent (including without limitation, the absence of any Default, Event
of Default or Material Adverse Change, and each of the other Conditions Precedent to funding of Floor Plan Loans under this Agreement and under the other Credit
Documents) as the Administrative Agent may determine; provided, however, that any such Reflooring Loan shall not have terms less favorable to the Floor Plan Lenders
than the Floor Plan Loan that originally financed such Eligible New Floor Plan Unit or Permitted Company Vehicle.
(c) Each Floor Plan Loan extended by a Floor Plan Lender shall be in a principal amount equal to such Floor Plan Lender’s Floor Plan Loan Commitment Percentage
of the aggregate principal amount of the Floor Plan Loans requested on such occasion.
2.01.a
Floor Plan Loan Promissory Notes. The joint and several obligations of the Floor Plan Borrowers to repay the Floor Plan Loans to each Floor Plan
Lender shall be evidenced by a Floor Plan Loan Note. On the Closing Date, the Floor Plan Borrowers shall deliver a Floor Plan Loan Note executed by an
Authorized Officer of each Floor Plan Borrower to each of the Floor Plan Lenders, with the face amount of such Floor Plan Loan Notes to be in the amount of
the Floor Plan Loan Commitment of the respective Floor Plan Lender. Any Floor Plan Lender may request upon the Increase Effective Date a revised Floor Plan
Loan Note in respect of a Floor Plan Increase.
2.01.b
Procedure For Floor Plan Loan Borrowings. (a) The Floor Plan Borrowers may borrow Floor Plan Loans during the Availability Period in respect of
the Floor Plan Facility, provided, that the Borrower Representative on behalf of the Floor Plan Borrowers delivers to the Administrative Agent or causes to be
delivered to the Administrative Agent an irrevocable, written, fully completed Loan Request (or through such other online system as the Administrative Agent may
allow in its sole discretion). Loan Requests must be received by the Administrative Agent prior to 10:00 a.m. Eastern Time one (1) Business Day prior to the
requested Borrowing Date for any Floor Plan Vehicles or Units. Any Loan Request delivered to the Administrative Agent by the Borrower Representative on
behalf of the Floor Plan Borrowers shall be in the form approved by the Administrative Agent executed by an Authorized Officer of the Borrower Representative.
Each Loan Request shall specify: (a) the aggregate amount to be borrowed, (b) the requested Borrowing Date, (c) whether the borrowing is to be an Adjusted
Daily SOFR Borrowing or an Adjusted Base Rate Borrowing, and (d) the required information and calculations evidencing compliance with the limitations set forth
in Section 2.01 above, and shall be accompanied by the Floor Plan Borrowers’ inventory worksheet and a copy of the title to any Eligible Used Floor Plan Unit.
Loan Requests may be delivered to the Administrative Agent via facsimile or by other electronic transmission, it being agreed that the Administrative Agent may
rely on the authority of the Person making any such request without receipt of any other confirmation. Unless M&T Bank elects to fund a submitted Loan Request
as an M&T Advance in accordance with Section 2.02 of this Agreement, the Administrative Agent shall promptly notify each Floor Plan Lender of the
Administrative Agent’s receipt of each notice and the contents thereof. Each Floor Plan Lender shall make the amount of its pro rata share (calculated in
accordance with its respective Floor Plan Loan Commitment Percentage) of each requested borrowing available to the Administrative Agent for the accounts of
the Floor Plan Borrowers at the offices of the Administrative Agent specified in this Agreement prior to 2:00 pm (Eastern Time) on the Borrowing Date requested
by the Borrower Representative in U.S. Dollars and in funds immediately available to the Administrative Agent.
(b) With respect to financing any Floor Plan Borrower’s purchase of an Eligible New Floor Plan Unit or a Permitted Company Vehicle, each of the Floor Plan
Borrowers hereby authorizes the Administrative Agent and M&T Bank (with respect to M&T Advances) to receive and receive and process funding requests directly
from Manufacturers, compile such requests into a spreadsheet on the Administrative Agent’s standard form and forward same to the Borrower Representative for
approval.
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Upon such approval, the Floor Plan Borrower authorizes the Administrative Agent (and M&T Bank with respect to M&T Advances) to pay the New Unit Invoiced
Amount on account of the relevant Eligible New Floor Plan Unit or Permitted Company Vehicle directly to the applicable Manufacturer or vendor. In the case of any other
borrowing of Floor Plan Loans, including a Reflooring Loan, such borrowing will be made available thereafter by the Administrative Agent crediting the Commercial
Account with the aggregate of the amounts made available to the Administrative Agent by the Floor Plan Lenders and in like funds as received by the Administrative
Agent.
2.01.c
Overadvances. If any Loan Request otherwise in compliance with the conditions set forth in this Agreement is presented as the basis for an advance of
proceeds on account of the Floor Plan Loans which advance would cause (a) the aggregate principal amount of all Floor Plan Loans (including any M&T
Advances) then outstanding, plus (b) the aggregate principal amount of such Loan Request together with all other pending unfunded Loan Requests as of such day
to exceed the Floor Plan Line of Credit Dollar Cap or any sublimits thereunder as applicable to each respective Floor Plan Borrower as set forth in Section 2.01
hereof, then, in such event, the Floor Plan Borrowers shall either immediately reduce the amount of any pending Loan Requests (which are not invoices for Eligible
New Floor Plan Units or Permitted Company Vehicles) or make a payment of principal on the unpaid principal balances of the Floor Plan Loans in an amount
which would prevent the aggregate amounts described in (a) and (b) above from exceeding the aggregate Floor Plan Line of Credit Dollar Cap or such sublimits.
If such Loan Request is pursuant to an invoice for an Eligible New Floor Plan Unit or Permitted Company Vehicle, such invoice shall be funded at such time as
sufficient availability exists under the Floor Plan Loan Commitments.
2.01.d
Settlement Of Floor Plan Loans Among Floor Plan Lenders. It is agreed that each Floor Plan Lender’s funded portion of the aggregate outstanding
principal balances of Floor Plan Loans is intended by the Floor Plan Lenders to be equal at all times to such Floor Plan Lender’s respective Floor Plan Loan
Commitment Percentage of the aggregate outstanding principal balances of the Floor Plan Loans. Notwithstanding such agreement, the several and not joint
obligation of each Floor Plan Lender to extend Floor Plan Loans in accordance with the terms of this Agreement ratably in accordance with such Floor Plan
Lender’s Floor Plan Loan Commitment Percentage and each Floor Plan Lender’s right to receive its ratable share of principal payments upon the Floor Plan
Loans in accordance with its Floor Plan Loan Commitment Percentage, the Floor Plan Lenders agree that in order to facilitate the administration of this
Agreement and the Credit Documents, settlement among the Floor Plan Lenders may take place periodically on Floor Plan Loan Adjustment Dates. On each Floor
Plan Loan Adjustment Date payments shall be made by or to M&T Bank on account of the M&T Advances and by or to the other Floor Plan Lenders so that as
of each Floor Plan Loan Adjustment Date, and after giving effect to the transactions to take place on such Floor Plan Loan Adjustment Date, each Floor Plan
Lender’s funded portion of the aggregate outstanding principal balance of the Floor Plan Loans shall equal such Floor Plan Lender’s Floor Plan Loan Commitment
Percentage of such aggregate balance.
2.01.e
Repayment Of Floor Plan Loans. The Floor Plan Borrowers unconditionally, jointly and severally, promise to pay to the Administrative Agent for the
accounts of the Floor Plan Lenders the then aggregate unpaid principal balances of each Floor Plan Loan of the Floor Plan Lenders on or before the Floor Plan
Line of Credit Termination Date (or on any earlier date on which the Floor Plan Loans become due and payable as required by the stated provisions of this
Agreement). The Borrowers unconditionally, jointly and severally, promise to pay to the Administrative Agent for the ratable accounts of the Floor Plan Lenders
all interest which has accrued upon the unpaid principal balances of the Floor Plan Loans from time to time outstanding from the date of Closing until the date of
payment in full of the Floor Plan Loans at the rates per annum and on the dates set forth in Section 2.07 of this Agreement. All sums due to the Floor Plan
Lenders in connection with the Floor Plan Loans shall be paid in full on or before the Floor Plan Line of Credit Termination Date.
2.01.f
Payments Due Upon Sale or Ineligibility Of Floor Plan Vehicles or Units. Upon the sale or other disposition of any Floor Plan Vehicle or Unit by any
of the Floor Plan Borrowers, the
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Floor Plan Borrowers shall pay in full the Floor Plan Loans made with respect to such sold Floor Plan Vehicle or Unit immediately upon the earliest to occur of: (a)
with respect to any Floor Plan Vehicle or Unit for which cash has been received upon the sale or disposition thereof, within three (3) Business Days from receipt
of payment, and (b) with respect to each Sale Dated Floor Plan Vehicle or Unit, within ten (10) days of the date such Floor Plan Vehicle or Unit was sold or
otherwise disposed of. The Floor Plan Borrowers shall pay in full the Floor Plan Loans made with respect to any Floor Plan Vehicle or Unit within one (1)
Business Day after such Floor Plan Vehicle or Unit ceases to qualify as an Eligible New Floor Plan Unit, Eligible Used Floor Plan Unit or Permitted Company
Vehicle, as the case may be, as initially identified and financed under the Floor Plan Loans. Floor Plan Vehicles or Units shall also be subject to curtailment as set
forth below.
2.01.g
Eligible New Floor Plan Unit Curtailment. If not previously sold or otherwise disposed of, each Eligible New Floor Plan Unit shall be paid in full on or
before Applicable Curtailment Date 730, and the Floor Plan Borrowers promise to pay to the Administrative Agent for the accounts of the Floor Plan Lenders (a)
5% of the original principal amount of the Floor Plan Loans made as to such Floor Plan Unit on the Principal Payment Date in the 12 month following the
Applicable Starting Date for such Floor Plan Unit, (b) 3% of the original principal amount of the Floor Plan Loans made as to such Floor Plan Unit on the Principal
Payment Date in each of the 13 through 23 months following the Applicable Starting Date, and (c) the full remaining balance of the original principal amount of
the Floor Plan Loans made as to such Floor Plan Unit on the Principal Payment Due in the 24 month following the Applicable Starting Date.
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2.01.h
Eligible Used Floor Plan Unit Curtailment. If not previously sold or otherwise disposed of, each Eligible Used Floor Plan Unit shall be paid in full on or
before Applicable Curtailment Date 365, and the Floor Plan Borrowers promise to pay to the Administrative Agent for the accounts of the Floor Plan Lenders (a)
5% of the original principal amount of the Floor Plan Loans made as to such Floor Plan Unit on the Principal Payment Date in the 6 month following the
Applicable Starting Date for such Floor Plan Unit, (b) 5% of the original principal amount of the Floor Plan Loans made as to such Floor Plan Unit on the Principal
Payment Date in each of the 7 through 11 months following the Applicable Starting Date, and (c) the full remaining balance of the original principal amount of
the Floor Plan Loans made as to such Floor Plan Unit on the Principal Payment Due in the 12 month following the Applicable Starting Date.
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2.01.i
Permitted Company Vehicle Curtailment. If not previously sold or otherwise disposed of, each Permitted Company Vehicle shall be paid in full on or
before Applicable Curtailment Date 730, and the Floor Plan Borrowers promise to pay to the Administrative Agent for the accounts of the Floor Plan Lenders (a)
2% of the original principal amount of the Floor Plan Loans made as to such Floor Plan Vehicle or Unit on the Principal Payment Date in each month beginning
with the tenth (10 ) day in the first month following the Applicable Starting Date and continuing thereafter on each tenth (10 ) day of the month through and
including the 23 month following the Applicable Starting Date for such Floor Plan Unit, and (b) the full remaining balance of the original principal amount of the
Floor Plan Loans made as to such Floor Plan Unit on the Principal Payment Due in the 24 month following the Applicable Starting Date.
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2.01.j
Out Of Balance Floor Plan Vehicles or Units. To the extent that any Floor Plan Vehicle or Unit is Out Of Balance, the Floor Plan Borrowers shall
immediately pay to the Administrative Agent for the accounts of the Floor Plan Lenders such sums as are necessary so that the outstanding balance of the Floor
Plan Loans allocable to each such Floor Plan Vehicle or Unit is paid in accordance with Sections 2.01.6, 2.01.7, 2.01.8, and 2.01.9.
2.01.k
Deposit And Application Of Payment. All payments required to be made by the Floor Plan Borrowers as required in Sections 2.01.6, 2.01.7, 2.01.8,
2.01.9, and 2.01.10 shall be promptly delivered to the Administrative Agent in payment of the Floor Plan Loans, and shall be applied to the then outstanding
principal balances of the Floor Plan Loans then allocated to the subject Floor Plan Vehicles or Units.
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2.01.l
Permitted Purposes Of Floor Plan Loans. The proceeds of the Floor Plan Loans shall be used by the Borrowers solely to finance the purchase and
holding by the Floor Plan Borrowers of Floor Plan Vehicles or Units as set forth above in this Section 2.01 and subsections thereof.
2.01.m
Title Documents. All original Manufacturer’s or vendor’s invoices and title documents evidencing the ownership of each Floor Plan Borrower of Floor
Plan Vehicles or Units financed by the Floor Plan Loans, including, without limitation, the applicable Manufacturer’s Certificates, shall be maintained in
safekeeping by the respective Floor Plan Borrowers in a manner and location acceptable to the Administrative Agent, unless and until an Event Of Default has
occurred and is continuing. After the occurrence and during the continuance of an Event Of Default, the Administrative Agent may request and the Floor Plan
Borrowers shall deliver or cause to be delivered within two (2) Business Days of such request, all such original Manufacturer’s Certificates and Manufacturer’s
and vendor’s invoices and title documents being maintained by the Borrowers at the time of such request and, immediately, all such original Manufacturer’s
Certificates and Manufacturer’s and vendor’s invoices and title documents that later come into the possession of any of the Floor Plan Borrowers, to the
Administrative Agent, and the Administrative Agent shall retain or hold all such original Manufacturer’s Certificates and Manufacturer’s and vendor’s invoices
and title documents so received. Thereafter, for so long as such Event Of Default shall be continuing, all such original Manufacturer’s Certificates, Manufacturer’s
and vendor’s invoices and title documents shall remain in the Administrative Agent’s possession until the Floor Plan Loan advances in connection therewith or
such ratable portion thereof in respect of a Floor Plan Vehicle or Unit sold by the Floor Plan Borrowers have been paid in full; provided that, upon the occurrence
of an Event Of Default and during the continuance thereof, the Administrative Agent may transfer, as applicable, Manufacturer’s Certificates and title documents
delivered to facilitate the sale of Floor Plan Vehicles or Units.
2.01.n
Power of Attorney. For the purpose of expediting the financing of Floor Plan Units and Permitted Company Vehicles in accordance with the terms of this
Agreement and for other purposes relating to such financing transactions, each Floor Plan Borrower irrevocably constitutes and appoints the Administrative Agent
and any of its officers, and each of them, severally, as its true and lawful attorneys-in-fact or attorney-in-fact with full authority to act on behalf of it, and in the
name of, place, and stead of it, upon the occurrence and during the continuance of an Event Of Default, to prepare, execute, and deliver any and all instruments,
documents, and agreements required to be executed and delivered by such Floor Plan Borrowers necessary to evidence borrowings of proceeds of the Floor Plan
Loans hereunder and/or to evidence, perfect, or realize upon the Liens granted by this Agreement and/or any of the Credit Documents. The foregoing power of
attorney shall be deemed to be coupled with an interest, and shall be irrevocable so long as this Agreement remains in effect or any Obligations remain
outstanding. Each of said attorneys-in-fact shall have the power to act hereunder with or without the other. The Administrative Agent may, but shall not be
obligated to, notify the Floor Plan Borrowers of any such instruments or documents the Administrative Agent has executed on behalf of any of the Floor Plan
Borrowers prior to such execution
2.01.o
Floor Plan Unused Commitment Fees. For each Fiscal Quarter until the termination of the Floor Plan Loan Commitments, the Floor Plan Borrowers
jointly and severally promise to pay to the Administrative Agent for the ratable accounts of the Floor Plan Lenders (in proportion to such Floor Plan Lender’s Floor
Plan Loan Commitment) a per annum fee (the "Floor Plan Unused Commitment Fee”) equal to (a) an amount equal to the average daily unused portion of the
Floor Plan Loan Commitments (calculated as (i) the amount of the Aggregate Floor Plan Loan Commitments less (ii) the sum of the average daily aggregate
principal amount drawn under the Floor Plan Loans), multiplied by (b) 0.15%, calculated on the basis of the actual number of days elapsed in a year of 360 days.
Loan balances outstanding as M&T Advances shall be deemed usage with respect to the Floor Plan Commitments of M&T Bank. The Floor Plan Unused
Commitment Fee shall be payable in arrears on the first Business Day of each succeeding Fiscal Quarter with the first of such payments to be scheduled for
payment on April 1, 2023.
2.01.p
Permanent Reduction Of Floor Plan Line of Credit Dollar Cap. The Floor Plan Borrowers shall have the right at any time, upon not less than ten (10)
Business Days prior
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written notice to the Administrative Agent, to permanently reduce, in whole or in part, without premium or penalty, the Floor Plan Line of Credit Dollar Cap,
provided that (a) each reduction shall be in an amount of not less than Ten Million Dollars ($10,000,000.00), and (b) no reduction shall be permitted if, after giving
effect thereto, and to any repayments of the Floor Plan Loans made on the effective date thereof, the sum of the aggregate principal balances of the Floor Plan
Loans then unpaid and outstanding plus the aggregate unpaid balances of M&T Advances would exceed the Floor Plan Line of Credit Dollar Cap then in effect.
2.01.q
Floor Plan Interest Reduction Arrangement. (a) In connection with the Floor Plan Line of Credit and at the Floor Plan Borrowers’ request, the
Administrative Agent and the Floor Plan Borrowers hereby enter into a floor plan aggregate interest reduction payment arrangement set forth in this Section (the
"Floor Plan Interest Reduction Arrangement”), on the terms and subject to the conditions set forth in this Section, as a basis for potential reductions in interest
payable on account of the Floor Plan Loans. The Floor Plan Interest Reduction Arrangement does not constitute a deposit account. Under the Floor Plan Interest
Reduction Arrangement, the Floor Plan Borrowers may, at their election, deliver cash, checks or other good funds instruments to the Administrative Agent
("Equity Transaction”) to be held as Collateral and security for the Obligations for the pro-rata benefit of the Floor Plan Lenders, and the Administrative Agent
agrees to account to the Floor Plan Borrowers for the total of such deliveries (such deliveries, the "Equity Balance”). The Equity Balance shall not exceed 25% of
the aggregate balances outstanding under the Floor Plan Loans.
(b) Absent any Default, Event of Default, or Material Adverse Change, the Floor Plan Borrowers may complete an Equity Transaction on any Business Day. Equity
Transactions received by the Administrative Agent in immediately available funds at or prior to 3:00 p.m. shall be added to the Equity Balance on the same Business Day.
Equity Transactions received by the Administrative Agent in immediately available funds after 3:00 p.m. will be added to the Equity Balance on the following Business
Day. In the event that the Administrative Agent is notified of an insufficient funds transaction, the Administrative Agent shall reverse the respective Equity Transaction.
(c) Each monthly billing period for which an interest payment is due under the Floor Plan Line of Credit on account of the Floor Plan Loans, the Administrative Agent
shall afford the Floor Plan Borrowers the benefit of a setoff against such interest due to the Floor Plan Lenders on account of the Floor Plan Loans (calculated on a pro-
rata basis). Interest upon the Equity Balance shall be accrued on a daily basis based upon end of day cash balances and a rate equal to the interest rate then applicable to
the Floor Plan Loans ("Equity Offset”). At the end of each month (or, at the election of the Administrative Agent, on the Floor Plan Loan Adjustment Date occurring in
the fourth calendar week of any calendar month), the Equity Offset interest accrued shall be applied to accrued and unpaid interest on account of the Floor Plan Loans as
billed by the Administrative Agent, reducing, pro-rata, the interest receivable of each Floor Plan Lender. Interest accrued in the Equity Offset shall not exceed the
aggregate Loan interest receivable of the Floor Plan Lenders at any given time, and Equity Offset excess balances shall automatically transfer to a secondary non-interest
bearing Equity Offset.
(d) The Administrative Agent on behalf of the Floor Plan Lenders shall have the use of any Equity Balance in its possession and may commingle any Equity Balance
with other funds of the Administrative Agent.
(e) Each of the Floor Plan Borrowers hereby grants to the Administrative Agent for the benefit of the Floor Plan Lenders a continuing security interest in the Equity
Balance and all accrued interest thereon and proceeds thereof, and acknowledges and agrees that the Equity Balance shall constitute Collateral under this Agreement and
the Security Documents. The Administrative Agent shall have such rights to the Equity Balance as may be afforded by the Security Agreement and by applicable Law.
The security interest in the Equity Balance and accrued interest and proceeds hereby granted by each of the Floor Plan Borrowers is in addition to any other rights of the
M&T Bank, as Administrative Agent and otherwise, against any or all of the Floor Plan Borrowers, and shall be and remain under the exclusive possession, use, and
control, and subject to rights of setoff, of M&T Bank in its various capacities hereunder and under the Security Documents.
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(f) This Floor Plan Interest Reduction Arrangement may be terminated (i) by the Administrative Agent, (A) upon ten (10) days prior written notice to the Borrower
Representative, and (B) in its sole discretion, without prior notice upon the occurrence of any Default, Event of Default, or Material Adverse Change, or a determination
by the Administrative Agent that this Floor Plan Interest Reduction Arrangement would have an adverse effect on the Administrative Agent or any Floor Plan Lender, and
(ii) by the Floor Plan Borrowers upon ten (10) days prior written notice from the Borrower Representative to the Administrative Agent. Upon any termination of the Floor
Plan Interest Reduction Arrangement in the absence of any Default, Event of Default, or Material Adverse Change, the amounts held therein shall be applied to the
payment of accrued and unpaid interest on account of the Floor Plan Loans, or, at the option of the Borrower Representative remitted to the Borrowers by deposit to the
Commercial Account, and upon any termination of the Floor Plan Interest Reduction Arrangement upon the occurrence and/or during the continuance of any Default,
Event of Default, or Material Adverse Change, the amounts held therein shall be applied to any balances of principal and/or interest due on account of the Floor Plan
Loans or to any other Obligations, as the Administrative Agent shall determine, and in accordance with Section 8.05 of this Agreement. This Floor Plan Interest Reduction
Arrangement, the Equity Balances and Equity Offset, and funds therein shall not, in any event, affect curtailments or other principal payments due on account of the Floor
Plan Loans or reduce the outstanding amount of the Floor Plan Loans for purposes of determining availability under the Floor Plan Line of Credit.
(g) In order to induce the Administrative Agent to enter into the Floor Plan Interest Reduction Arrangement on the terms set forth above, each of the Floor Plan
Borrowers hereby represents and warrants to the Administrative Agent and the Floor Plan Lenders that each of them is directly obligated for repayment of all amounts
due under the Floor Plan Credit Facility and all of the other Obligations, and has a substantial interest in the satisfactory performance of the Floor Plan Credit Facility, the
other Loans, and the Credit Documents.
2.01.r
Payments Due Upon Casualty Event. Within three (3) Business Days after the receipt by a Floor Plan Borrower of any Net Available Proceeds in
respect of a Floor Plan Unit Casualty Event, such Floor Plan Borrower shall deliver to the Administrative Agent, or authorize the Administrative Agent to debit
from a deposit account of such Floor Plan Borrower with the Administrative Agent, the amount of such Net Available Proceeds received by such Floor Plan
Borrower (for the avoidance of doubt, any remaining principal amount of the Floor Plan Loan with respect to such Floor Plan Vehicle or Unit shall be paid in
accordance with Section 2.01.9); provided that, in the case of less than total destruction or damage to the applicable Floor Plan Vehicle or Unit, in lieu of making
such payment, the applicable Floor Plan Borrowers may elect to use such Net Available Proceeds received to promptly repair the physical destruction or damage
to such Floor Plan Vehicle or Unit to the extent that the physical destruction or damage and/or any repairs made to remedy such destruction or damage does not
void any applicable warranty with respect to such applicable Floor Plan Vehicle or Unit.
Section 1.02. M&T Advances.
(a)
Advances. Between Floor Plan Loan Adjustment Dates, M&T Bank may (but shall not be obligated to) fund to the Floor Plan Borrowers
solely out of M&T Bank’s own funds the entire principal amount of any Loan Request (any such funding being referred to as an "M&T Advance”). Each Floor Plan
Lender shall purchase an irrevocable and unconditional participation in each M&T Advance, in an amount equal to such Floor Plan Lender’s respective Floor Plan Loan
Commitment Percentage of the principal amount of such M&T Advance, effective immediately upon the funding of each M&T Advance. Each Floor Plan Lender shall
have the unconditional and irrevocable obligation to pay, and does hereby agree to pay, to M&T Bank, on each Floor Plan Loan Adjustment Date, an amount equal to
such Floor Plan Lender’s Floor Plan Loan Commitment Percentage of each M&T Advance, and settlement shall occur between M&T Bank and all other Floor Plan
Lenders on each Floor Plan Loan Adjustment Date such that after each such settlement, the Floor Plan Lenders shall each hold that percentage of the then aggregate
outstanding principal balances of the Floor Plan Loans equal to such Floor Plan Lender’s respective Floor Plan Loan Commitment Percentage. Each Floor Plan Lender
acknowledges and agrees that its obligation to acquire participations in M&T Advances and make payments to M&T Bank on account of such participations pursuant to
this Section is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and
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continuance of a Default or Event of Default (including, without limitation, the commencement of a proceeding under the Bankruptcy Code or other Debtor Relief Laws
with respect to any of Floor Plan Borrowers) or the reduction or termination of the Floor Plan Loan Commitments, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever. All payments of principal, interest and any other amount with respect to each outstanding M&T Advance shall be
payable to and received by the Administrative Agent for the account of M&T Bank. Any payments received by the Administrative Agent between Floor Plan Loan
Adjustment Dates that in accordance with the terms of this Agreement are to be applied to the reduction of the outstanding aggregate principal balances of the Floor Plan
Loans, shall be paid over to and retained by M&T Bank for such application to the outstanding M&T Advances and credited against the Floor Plan Lenders’ respective
purchases of participation interests in the respective M&T Advances, subject to the provisions of Section 2.14.
Bank from time to time to facilitate automatic M&T Advances to cover submitted Loan Requests.
(b)
Automated Sweep Program. M&T Bank may elect to process M&T Advances under any automated sweep program in effect at M&T
(c )
Repayment Obligations of Borrowers. For the avoidance of doubt, the Floor Plan Borrowers hereby jointly and severally and
unconditionally promise to pay to the Administrative Agent for the account of M&T Bank all amounts outstanding on account of the M&T Advances, together with
accrued interest thereon, on the terms and subject to the conditions applicable to the Floor Plan Loans and the Floor Plan Loan Notes. Nothing in this Section 2.02,
including but not limited to the purchase of participations in an M&T Advance pursuant to this Section 2.02, shall relieve the Floor Plan Borrowers of any obligation for
payments under the Floor Plan Loans and Floor Plan Loan Notes, or under the M&T Advances, or for any default by the Floor Plan Borrowers in the payment thereof.
The Floor Plan Borrowers hereby authorize the Administrative Agent, in its discretion, to apply the Equity Offset to payments due to M&T under the M&T Advances.
Section 1.01.
Revolving Credit Loans. Subject to the terms and conditions of this Agreement and the other Credit Documents, each of the Revolving Credit
Lenders severally agrees to make revolving credit loans (the "Revolving Credit Loans”) to the Revolving Credit Borrowers as joint and several obligors from time
to time during the Availability Period for the Revolving Credit Facility, in an aggregate amount outstanding not to exceed such Revolving Credit Lender’s
Revolving Credit Commitment Percentage multiplied by the Line Cap; provided, however, that after giving effect to any Revolving Borrowing, (a) the Total
Revolving Credit Outstandings shall not at any time exceed the Revolving Credit Dollar Cap, (b) the aggregate Revolving Credit Exposure of any Revolving Credit
Lender shall not exceed such Lender’s Revolving Credit Commitment and (c) the Total Revolving Credit Outstandings shall not exceed the Line Cap. Each
Revolving Credit Loan extended by a Revolving Credit Lender shall be in a principal amount equal to such Revolving Lender’s Revolving Credit Commitment
Percentage of the aggregate principal amount of the Revolving Credit Loans requested on such occasion. Subject to the application and satisfaction of the terms
and conditions of this Agreement and of the other Credit Documents, the Borrowers may borrow, prepay, and reborrow the Revolving Credit Loans in whole or in
part until the Revolving Credit Termination Date. Revolving Credit Loans may consist of Adjusted Base Rate Borrowings or a SOFR Borrowing at the Adjusted
SOFR Rate, or a combination thereof, as the Borrowers may request in accordance with the terms hereof.
(a)
Revolving Credit Loan Promissory Notes. The joint and several obligations of the Revolving Credit Borrowers to repay the Revolving
Credit Loans to each Revolving Credit Lender shall be evidenced by a Revolving Credit Note. The Revolving Credit Borrowers shall deliver a Revolving Credit Note on
the date of Closing to each of the Revolving Credit Lenders executed by an Authorized Officer of each Revolving Credit Borrower, with the face amount of each of such
Revolving Credit Notes to be in the amount of the Revolving Credit Commitment of the respective Revolving Credit Lender. Any Revolving Credit Lender may request a
Revolving Credit Note upon the Increase Effective Date in respect of a Revolving Credit Increase.
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(b)
Procedure For Revolving Credit Loan Borrowings. The Revolving Credit Borrowers may borrow proceeds of the Revolving Credit
Loans during the Availability Period in respect of the Revolving Credit Facility, provided, that the Borrower Representative on behalf of the Revolving Credit Borrowers
delivers to the Administrative Agent an irrevocable, written, fully completed Loan Request executed by an Authorized Officer of the Borrower Representative (which
Loan Request must be received by the Administrative Agent prior to 11:00 a.m. Eastern Time) (a) three (3) U.S. Government Securities Business Days prior to the
requested Borrowing Date, if all or any part of the requested advances of proceeds of the Revolving Credit Loans are to be initially Adjusted SOFR Rate Borrowings, or
(b) one (1) Business Day prior to the requested Borrowing Date if all of the requested advances of proceeds of the Revolving Credit Loans are to be initially Adjusted
Base Rate Borrowings. Each Loan Request shall (A) specify: (i) the aggregate amount to be borrowed, (ii) the requested Borrowing Date, and (iii) whether the borrowing
is to be an Adjusted SOFR Rate Borrowing, an Adjusted Base Rate Borrowing, or a combination thereof and (B) be accompanied by a Borrowing Base Certificate as
required by Section 5.09.14. The Loan Requests may be delivered to the Administrative Agent via facsimile or by other electronic transmission it being agreed that the
Administrative Agent may rely on the authority of the Person making any such request without receipt of any other confirmation. The Administrative Agent shall promptly
notify each Revolving Credit Lender of the Administrative Agent’s receipt of each notice and the contents thereof. Each Revolving Credit Lender shall make the amount
of its pro rata share (calculated in accordance with its respective Revolving Credit Commitment Percentage) of each requested borrowing available to the Administrative
Agent for the accounts of the Revolving Credit Borrowers at the offices of the Administrative Agent specified in this Agreement prior to 1:00 pm (Eastern Time) on the
Borrowing Date requested by the Borrowers in U.S. Dollars and in funds immediately available to the Administrative Agent. Such borrowing will be made available
thereafter by the Administrative Agent crediting the Commercial Account with the aggregate of the amounts made available to the Administrative Agent by the Revolving
Credit Lenders and in like funds as received by the Administrative Agent.
(c)
Repayment Of Revolving Credit Loans. The Revolving Credit Borrowers unconditionally, jointly and severally, promise to pay to the
Administrative Agent for the accounts of the Revolving Credit Lenders the then unpaid principal amount of each Revolving Credit Loan of the Revolving Credit Lenders
on or before the Revolving Credit Termination Date (or on any earlier date on which the Revolving Credit Loans become due and payable as required by the stated
provisions of this Agreement). The Revolving Credit Borrowers unconditionally, jointly and severally, promise to pay to the Administrative Agent for the ratable accounts
of the Revolving Credit Lenders all interest which has accrued upon the unpaid principal amounts of the Revolving Credit Loans from time to time outstanding from the
date of Closing until the date of payment in full of the Revolving Credit Loans at the rates per annum and on the dates set forth in Section 2.07 of this Agreement. All sums
due to the Revolving Credit Lenders in connection with the Revolving Credit Loans shall be paid in full on or before the Revolving Credit Termination Date.
Permitted Purposes Of Revolving Credit Loans. The proceeds of the Revolving Credit Loans shall be used by the Borrowers solely for
the general working capital needs and for the general corporate purposes of the Borrowers and their Subsidiaries, including for Permitted Acquisitions and issuances of
Letters of Credit.
(d)
(e)
Revolving Credit Unused Commitment Fees. For each Fiscal Quarter until the termination of the Revolving Credit Commitments, the
Revolving Credit Borrowers jointly and severally promise to pay to the Administrative Agent for the ratable accounts of the Revolving Credit Lenders a per annum fee
(the "Revolving Credit Unused Commitment Fee”) (calculated on the basis of the actual number of days elapsed in a year of 360 days) equal to (a) 0.15% times (b) the
average daily unused portion of the Revolving Credit Commitments. In calculating the Revolving Credit Unused Commitment Fees, (x) the aggregate Stated Amount of
L/C Obligations shall be deemed usage of Revolving Credit Commitments, but (y) Swingline Loans shall not be deemed usage of Revolving Credit Commitments. The
Revolving Credit Unused Commitment Fee shall be payable in arrears on the first Business Day of each succeeding Fiscal Quarter with the first of such payments to be
scheduled for payment on April 1, 2023.
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(f)
Permanent Reduction Of Revolving Credit Dollar Cap. The Revolving Credit Borrowers shall have the right at any time, upon not less
than ten (10) Business Days prior written notice to the Administrative Agent, to permanently reduce, in whole or in part, without premium or penalty, the Revolving Credit
Dollar Cap, provided that (a) each reduction shall be in an amount of not less than Two Hundred Fifty Thousand Dollars ($250,000.00) or, if greater, a multiple of Fifty
Thousand Dollars ($50,000.00), and (b) no reduction shall be permitted if, after giving effect thereto, and to any repayments of the Revolving Credit Loans made on the
effective date thereof, the sum of the aggregate principal balances of the Revolving Credit Loans then unpaid and outstanding plus the aggregate unpaid balances of
Swingline Loans plus the aggregate amount of L/C Obligations outstanding would exceed the Line Cap then in effect.
(g)
Borrowing Base Overadvance. If, on any Borrowing Base Test Date, the aggregate Revolving Credit Exposure of all Lenders exceeds
the Line Cap (such amount in excess of the Line Cap, the "Overexposure Amount”), then no later than the date that is one (1) Business Day following the date which a
Borrowing Base Certificate has been delivered in respect of such Borrowing Base Test Date, the Revolving Credit Borrowers shall repay such outstanding Revolving
Credit Loans, Swingline Loans and Reimbursement Obligations (and thereafter Cash Collateralize such outstanding L/C Obligations, to the extent remaining) in an amount
equal to 100% of such Overexposure Amount to the Administrative Agent, which such amount shall be applied to the Revolving Credit Loans ratably in accordance with
Section 2.08.3; provided, however, that the Revolving Credit Borrowers shall have an additional five (5) days to make any such repayment to the extent that the
Overexposure Amount results from the establishment or modification of any Reserves or the modification of any eligibility standards pursuant to Section 2.21. All such
repayments shall be applied (i) first, to prepay the outstanding Swingline Loans to the full extent thereof, (ii) second, to prepay the Revolving Credit Loans to the full extent
thereof, (iii) third, to prepay outstanding Reimbursement Obligations, and (v) fourth, to Cash Collateralize Letters of Credit in an amount equal to the Minimum Collateral
Amount.
Section 1.02.
Swingline Loan Subfacility. During the Availability Period for the Revolving Credit Facility, subject to the terms and conditions set forth herein,
the Swingline Lender agrees to make certain revolving credit loans (each, a "Swingline Loan” and collectively, the "Swingline Loans”) to the Revolving Credit
Borrowers in Dollars from time to time on any Business Day provided that, (a) the aggregate amount of Swingline Loans outstanding at any time shall not exceed
the Swingline Committed Amount, (b) the Revolving Credit Exposure of any Revolving Credit Lender shall not exceed such Revolving Credit Lender’s Revolving
Credit Commitment, (c) the Total Revolving Credit Outstandings shall not exceed the Line Cap, and (d) the Total Revolving Credit Outstandings shall not exceed
the Revolving Credit Dollar Cap. Swingline Loans may be repaid and reborrowed in accordance with the provisions of this Agreement. Notwithstanding the
foregoing, the Swingline Lender shall not be required to make a Swingline Loan if any Credit Party shall have notified the Swingline Lender and the Revolving
Credit Borrowers in writing at least one (1) Business Day prior to the Borrowing Date with respect to such Swingline Loan, that the conditions set forth in Section
4.02 have not been satisfied and such conditions remain unsatisfied as of the requested time of the making such Swingline Loan. Each Swingline Loan shall be
due and payable in full on the earlier of (a) the Swingline Termination Date, or (b) such earlier maturity date as may be agreed to by the Swingline Lender and the
Revolving Credit Borrowers. Swingline Loans may only be Adjusted Base Rate Borrowings and may not be SOFR Borrowings.
1.04.i.Advances. The Revolving Credit Borrowers shall request each Swingline Loan by a notification from an Authorized Officer of the Borrower
Representative to the Administrative Agent and to the Swingline Lender by telephone (confirmed electronically) or electronically not later than 11:00 a.m. Eastern Time on
the proposed Borrowing Date. Each such notice shall be irrevocable and shall specify (a) the aggregate principal amount to be borrowed, (b) the requested Borrowing
Date, and (c) the requested maturity date of the requested Swingline Loan. The Swingline Lender will make the requested amount available promptly on the Borrowing
Date, to the Administrative Agent (for the accounts of the Revolving Credit Borrowers) who, thereupon, will promptly make such amount available to the Revolving Credit
Borrowers on such Borrowing Date in like funds as provided therein. Each Swingline Loan shall be in an amount not less than the applicable Minimum Borrowing Amount.
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1.04.ii.Repayment of Swingline Loans Upon Swingline Conversion Event. Each Revolving Credit Borrower agrees to repay each Swingline Loan
made to it within one Business Day of demand therefor by the Swingline Lender and, in any event, within five (5) Business Days after the date such Swingline Loan was
made; provided, that the proceeds of a Swingline Loan may not be used to pay a Swingline Loan. Notwithstanding the foregoing, the Revolving Credit Borrowers shall
repay the entire outstanding principal amount of, and all accrued but unpaid interest on, the Swingline Loans on the Swingline Termination Date (or such earlier date as the
Swingline Lender and the Revolving Credit Borrowers may agree in writing). In lieu of demanding repayment of any outstanding Swingline Loan from the Revolving Credit
Borrowers, the Swingline Lender may, on behalf of the Revolving Credit Borrowers (which hereby irrevocably directs the Swingline Lender to act on its behalf for such
purpose), request a borrowing of Revolving Credit Loans that are Base Rate Loans from the Revolving Credit Lenders (with notice to the Borrower Representative) in an
amount equal to the principal balance of such Swingline Loan. The minimum borrowing amount limitations contained in Section 2.04.1 shall not apply to any borrowing of
such Revolving Credit Loans made pursuant to this subsection. The Swingline Lender shall give notice to the Administrative Agent of any such borrowing of Revolving
Credit Loans not later than 11:00 a.m. at least one Business Day prior to the proposed date of such borrowing. Promptly after receipt of such Loan Notice from the
Swingline Lender under the immediately preceding sentence, the Administrative Agent shall notify each Revolving Credit Lender and the Borrower Representative of the
proposed borrowing. Not later than 10:00 a.m. on the proposed date of such borrowing, each Revolving Credit Lender will make available to the Administrative Agent at
the offices of the Administrative Agent specified in this Agreement for the account of the Swingline Lender, in immediately available funds, the proceeds of the Revolving
Credit Loan to be made by such Revolving Credit Lender. The Administrative Agent shall pay the proceeds of such Revolving Credit Loans to the Swingline Lender,
which shall apply such proceeds to repay such Swingline Loan. Each Revolving Credit Lender irrevocably agrees to extend its pro rata share of the requested Revolving
Credit Loans notwithstanding (a) that the amount of the borrowing may not satisfy the Minimum Borrowing Amount for Revolving Credit Loans, (b) that a Default or
Event of Default may exist, (c) the failure of any request or deemed request for the Revolving Credit Loans to be timely made, (d) that the date of such borrowing is not a
date on which Revolving Credit Loans are otherwise permitted to be made, or (e) any reduction or termination of the Revolving Credit Commitments.
1.04.iii.Participations. Immediately upon the making of a Swingline Loan, each Revolving Credit Lender shall be deemed to have purchased, and hereby
irrevocably and unconditionally agrees to purchase, from the Swingline Lender, without recourse or warranty, an undivided interest and participation to the extent of such
Revolving Credit Lender’s Revolving Credit Commitment Percentage of such Swingline Loan. In the event that outstanding Swingline Loans cannot be repaid with the
proceeds of Revolving Credit Loans pursuant to Section 2.04.2 for any reason (including, without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code or other Debtor Relief Laws with respect to the Borrowers), the Revolving Credit Lenders will, as of the date such proposed borrowing otherwise would
have occurred but adjusted for any payments received in respect of such Swingline Loan(s) by or for the account of the Revolving Credit Borrowers on or after such date
and prior to such purchase, immediately fund their respective participations in the outstanding Swingline Loans as necessary to cause such Revolving Credit Lenders to
share in such Swingline Loan(s) proportionately in accordance with their respective Revolving Credit Commitment Percentages in respect of the Revolving Credit
Commitments. Any amounts received by the Swingline Lender from the Revolving Credit Borrowers (or from any other Person on behalf of the Revolving Credit
Borrowers) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the
Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the applicable Revolving Credit
Lenders that shall have made their payments pursuant to this Section and to the Swingline Lender, as their interests may appear. The purchase of participations in a
Swingline Loan pursuant to this Section shall not relieve the Revolving Credit Borrowers of any default by the Revolving Credit Borrowers in the payment thereof;
provided, however, that in the event any such payment received by the Administrative Agent is subsequently set aside or is required to be refunded, returned or repaid,
such Revolving Credit Lender will repay to the Administrative Agent its proportionate share thereof.
unconditional and shall not be affected by any circumstance whatsoever, including without limitation, (i) any claim of setoff, counterclaim, recoupment,
1.04.iv. Obligations Absolute. A Revolving Credit Lender’s obligation to purchase such a participation in a Swingline Loan shall be absolute and
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defense or other right which such Revolving Credit Lender or any other Person may have or claim against the Administrative Agent, any Swingline Lender or any other
Person whatsoever, (ii) the occurrence or continuation of a Default or Event of Default (including without limitation, any of the Defaults or Events of Default described in
Sections 7.01.7 or 7.01.8), or the termination of any Revolving Credit Lender’s Revolving Credit Commitment, (iii) the existence (or alleged existence) of an event or
condition which has had or could have a Material Adverse Change, (iv) any breach of any Credit Document by the Administrative Agent, any Lender, any Borrower or
any other Loan Party, or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If such amount is not in fact made
available to the Swingline Lender by any Revolving Credit Lender, the Swingline Lender shall be entitled to recover such amount on demand from such Revolving Credit
Lender, together with accrued interest thereon for each day from the date of demand thereof, at the Federal Funds Rate. If such Revolving Credit Lender does not pay
such amount forthwith upon the Swingline Lender’s demand therefor, and until such time as such Revolving Credit Lender makes the required payment, the Swingline
Lender shall be deemed to continue to have outstanding Swingline Loans in the amount of such unpaid participation obligation for all purposes of the Credit Documents
(other than those provisions requiring the other Revolving Credit Lenders to purchase a participation therein). Further, such Revolving Credit Lender shall be deemed to
have assigned any and all payments made of principal and interest on its Revolving Credit Loans, and any other amounts due it hereunder, to the Swingline Lender to fund
Swingline Loans in the amount of the participation in Swingline Loans that such Revolving Credit Lender failed to purchase pursuant to this Section until such amount has
been purchased (as a result of such assignment or otherwise).
Section 1.03.
Letter of Credit Subfacility. During the Availability Period for the Revolving Credit Commitments, subject to the terms and conditions set forth in
this Agreement, an Authorized Officer of the Borrower Representative may request on behalf of the Revolving Credit Borrowers the issuance of, and the Issuing
Bank in reliance upon the agreements of the Revolving Credit Lenders set forth in Section 2.05.3 agrees to issue, Letters of Credit for the accounts of the
Revolving Credit Borrowers or any of its Subsidiaries, in a form acceptable to the Issuing Bank, at any time and from time to time on any Business Day from the
Closing Date through, but not including the L/C Expiration Date, provided, however, that the Issuing Bank shall not be obligated to issue any Letter of Credit if,
after giving effect to such issuance, (a) the aggregate amount of L/C Obligations (after giving effect to any requested issuance) exceeds the Letter of Credit
Sublimit, (b) the Revolving Credit Exposure of any Lender exceeds such Lender’s Revolving Credit Commitment or (c) the aggregate Revolving Credit Exposure
of all Lenders exceeds the Line Cap. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any
form of Letter of Credit Application or other L/C Document submitted by the Borrowers to, or entered into by the Borrowers with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
1.05.i.Request for Issuance; Amendment; Renewal; Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), an Authorized Officer of the Borrower Representative on behalf of the applicable Revolving Credit Borrower or
Revolving Credit Borrowers shall deliver to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal
or extension) a written notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended together with a Letter
of Credit Application, and specifying the proposed date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with Section 2.05.2), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. Such written notice may be transmitted electronically or by facsimile, if
arrangements for doing so have been approved by the Issuing Bank. Upon receipt of the Letter of Credit Application executed by an Authorized Officer of the Borrower
Representative, the Issuing Bank shall process such Letter of Credit Application and issue the Letter of Credit requested thereby, provided all fees and expenses in
connection with such Letter of Credit have been paid and all other conditions precedent to the issuance of Letters of Credit have been satisfied and, provided further, the
Issuing Bank shall not be required to issue any Letter of Credit earlier than three (3) Business Days after receipt by the Issuing Bank of the Letter of Credit Application
and of all of
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the certificates, documents and other papers and information required by the Issuing Bank which relate thereto. The Issuing Bank shall promptly furnish a copy of each
Letter of Credit to the Administrative Agent and to the Borrower Representative. A Letter of Credit shall be issued, amended, renewed or extended only if (and, upon
issuance, amendment, renewal or extension of each Letter of Credit, the Revolving Credit Borrowers shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension, the provisos set forth in Section 2.05(a) through (g) are satisfied. The Issuing Bank shall not be obligated to amend any
Letter of Credit if the Issuing Bank would not be required at such time to issue such Letter of Credit in its amended form under the terms of this Agreement. Upon the
issuance by the Issuing Bank of a Letter of Credit and until such Letter of Credit shall have expired or been cancelled, the Revolving Credit Commitment of each
Revolving Credit Lender shall be deemed to be utilized for all purposes of this Agreement in an amount equal to the product of (i) such Revolving Credit Lender’s
Revolving Credit Commitment Percentage and (ii) the sum of (A) the Stated Amount of such Letter of Credit plus (B) without duplication of any amounts included under
clause (A), any related Reimbursement Obligations then outstanding.
1.05.ii.Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (a) the date that is 365 days after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, 365 days after such renewal or extension) and (b) the L/C Expiration Date,
provided that any Letter of Credit may provide for the automatic renewal thereof for additional 365-day periods (which shall in no event extend beyond the L/C Expiration
Date).
1.05.iii.Agreement of Lenders To Purchase Proportionate Share of Letters of Credit. Upon receipt by the Issuing Bank from the beneficiary of a
Letter of Credit issued by the Issuing Bank of any demand for payment under such Letter of Credit and the Issuing Bank’s determination that such demand for payment
complies with the requirements of such Letter of Credit, the Issuing Bank shall promptly notify the applicable Revolving Credit Borrower or the Borrower Representative
and the Administrative Agent of the amount to be paid by the Issuing Bank as a result of such demand and the date on which payment is to be made by the Issuing Bank
to such beneficiary in respect of such demand; provided, however, that the Issuing Bank’s failure to give, or delay in giving, such notice shall not discharge the applicable
Revolving Credit Borrower in any respect from the applicable Reimbursement Obligation. In order to induce the Issuing Bank to issue Letters of Credit for the accounts of
the Borrowers in accordance with the terms of this Agreement, each Revolving Credit Lender unconditionally and irrevocably agrees to accept and purchase and hereby
accepts and purchases from the Issuing Bank, on the terms and conditions hereinafter stated, for such Lender’s own account and risk an undivided interest and
participation equal to such Lender’s Revolving Credit Commitment Percentage in the Issuing Bank’s obligations and rights under each Letter of Credit issued hereunder
and the amount of each L/C Disbursement of the Issuing Bank.
1.05.iv.Reimbursement Obligations of the Borrowers. Each Revolving Credit Lender unconditionally and irrevocably covenants to the Issuing Bank
that, if an L/C Disbursement is made by the Issuing Bank with respect to any Letter of Credit for which the Issuing Bank is not immediately reimbursed in full by the
Revolving Credit Borrowers, such Lender shall pay to the Administrative Agent, for the account of the Issuing Bank, upon the demand by the Administrative Agent, an
amount equal to such Lender’s Revolving Credit Commitment Percentage of the unreimbursed amount of such L/C Disbursement not later than 1:00 p.m. Eastern Time on
the Business Day specified by the Administrative Agent in its demand for payment. Any payment made by a Lender pursuant to this Section 2.05.3 to reimburse the
Issuing Bank for any L/C Disbursement shall not constitute a Loan and shall not relieve the Borrowers of their joint and several obligations to reimburse such L/C
Disbursement; provided, however, that the Revolving Credit Borrowers unconditionally and irrevocably, jointly and severally, covenant to reimburse the Issuing Bank by
paying to the Administrative Agent, for the account of the Issuing Bank, the amount of such L/C Disbursement by the not later than 12:00 noon on (i) the Business Day
that the Revolving Credit Borrowers receive notice of such drawing, if such notice is received by the Revolving Credit Borrowers prior to 10:00 a.m., or (ii) the Business
Day immediately following the day that the Revolving Credit Borrowers receive such notice, if such notice is not received prior to such time, for the amount of (x) such
L/C Disbursement and (y) any amounts incurred by such Issuing Bank in connection with such payment; provided, further, that in respect of any drawing under any Letter
of Credit, the maximum amount that any Revolving Credit Lender shall be required to fund, whether as a Revolving Credit Loan or as a participation, shall not exceed such
Revolving Credit Lender’s Revolving Credit
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Commitment Percentage of such drawing except as otherwise provided in Section 2.14. Each Revolving Credit Lender’s obligation to make such payments to the
Administrative Agent under this subsection, and the Administrative Agent’s right to receive the same for the account of the Issuing Bank, shall be absolute, irrevocable and
unconditional and shall not be affected in any way by any circumstance whatsoever, including without limitation, (i) the failure of any other Revolving Credit Lender to
make its payment under this subsection, (ii) the financial condition of the Revolving Credit Borrowers or any other Loan Party, (iii) the existence of any Default or Event of
Default, including any Event of Default described in Section 7.01.7 or 7.01.8, (iv) the termination of the Revolving Credit Commitments or (v) the delivery of Cash
Collateral. Each such payment to the Administrative Agent for the account of the Issuing Bank shall be made without any offset, abatement, withholding or deduction
whatsoever.
1.05.v.Borrowers’ Reimbursement Obligations Are Absolute. The Revolving Credit Borrowers’ joint and several reimbursement obligations hereunder
shall be absolute and unconditional under all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Revolving Credit Borrowers may
have or have had against the Administrative Agent, the Issuing Bank, any of the Lenders, any beneficiary of a Letter of Credit or any other Person. The Revolving Credit
Borrowers agree and acknowledge that none of the Administrative Agent, the Issuing Bank, or the Lenders shall be responsible for, nor shall the Revolving Credit
Borrowers’ duties and obligations hereunder under the Credit Documents be affected by, among other things (a) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any documents or of any endorsements thereon presented in connection with any draft upon a Letter of Credit, even though such documents shall in fact
prove to be invalid, fraudulent or forged, (b) any dispute between or among any Revolving Credit Borrower and any beneficiary of any Letter of Credit or any other party
to which such Letter of Credit may be transferred, or (c) any claims whatsoever of the Revolving Credit Borrowers against any beneficiary of such Letter of Credit or any
such transferee. None of the Administrative Agent, the Issuing Bank, or any of the Lenders shall be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in connection with the issuance, administration, or payment of any drafts presented against any Letter
of Credit. The Revolving Credit Borrowers agree and acknowledge that any action taken or omitted by the Administrative Agent, the Issuing Bank, or the Revolving Credit
Lenders under or in connection with any Letter of Credit or the related drafts or documents shall be binding on the Revolving Credit Borrowers and shall not result in any
liability of any of the Administrative Agent, the Issuing Bank, or the Revolving Credit Lenders to the Borrowers, absent gross negligence or willful misconduct. In
furtherance and not in limitation of the foregoing, the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary, and the Issuing Bank shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
issued the rules of the ISP shall apply to each standby Letter of Credit.
1.05.vi.Applicability of ISP98. Unless otherwise expressly agreed by the Issuing Bank and the Revolving Credit Borrowers, when a Letter of Credit is
1.05.vii.Interim Interest. If the Issuing Bank shall make any L/C Disbursement, then, unless the Revolving Credit Borrowers shall reimburse such L/C
Disbursement in full on the date such L/C Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such L/C
Disbursement is made to but excluding the date that the Revolving Credit Borrowers reimburse such L/C Disbursement at the Adjusted Base Rate then applicable to
Revolving Credit Loans; provided that the Default Rate shall apply during any continuing Event of Default. Interest accrued pursuant to this Section shall be for the
account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.05.3 to purchase a participation from the
Issuing Bank shall be for the account of such purchasing Lender to the extent of such payment.
1.05.viii.Cash Collateralization. Upon the request of the Administrative Agent (a) if the Issuing Bank has honored any full or partial drawing request
under any Letter of Credit and such drawing has resulted in Reimbursement Obligation (unless such Reimbursement Obligation has been reimbursed by the proceeds of a
Revolving Credit Loan in accordance with Section 2.05.4), or (b) if, as of the L/C Expiration Date, any Letter of Credit for any reason remains outstanding and partially or
wholly undrawn,
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or (c) a continuing Event of Default exists and the Loans have been accelerated and have become due and payable in accordance with Section 8.01 of this Agreement, the
Borrowers shall immediately Cash Collateralize all then outstanding L/C Obligations (in an amount determined as of the date of such Reimbursement Obligation or the L/C
Expiration Date or the date of acceleration of the Loans, as the case may be), but an amount not less than 110% of the outstanding L/C Obligations, unless otherwise
agreed by the Issuing Bank and the Required Revolving Credit Lenders.
1.05.ix.Letter of Credit Fees. The Borrowers shall pay to the Administrative Agent, for the ratable accounts of the Lenders, letter of credit fees (the
"Letter of Credit Fees”) on the aggregate daily Stated Amount of each outstanding Letters of Credit at the rate equal to the Applicable Margin applicable to Revolving
Credit Loans for SOFR Rate Loans then in effect, provided, that upon the implementation of the Default Rate and for so long as the same shall continue, the Letter of
Credit Fees shall be increased to the Default Rate. Letter of Credit Fees shall be payable (a) quarterly in arrears on the last Business Day of each Fiscal Quarter
occurring during the term of this Agreement, and (b) on the last day of the Availability Period for the Revolving Credit Commitments. The Borrowers shall pay to the
Administrative Agent, for the sole account of the Issuing Bank, those fees specified in the Fee Letter, plus such fronting fees and customary issuance, presentation,
amendment and processing fees and all standard costs or charges of the Issuing Bank relating to letters of credit, as are from time to time in effect. Such fees and costs
and charges shall be due and payable on demand and shall be nonrefundable.
1.05.x.Letters of Credit Issued for Other Loan Parties or Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in
support of any obligations of, or is for the account of another Loan Party or a Subsidiary of a Borrower or of another Loan Party, each Revolving Credit Borrower shall be
jointly and severally obligated with all other Borrowers to reimburse the Issuing Bank hereunder for any and all drawings under such Letter of Credit. Each Revolving
Credit Borrower hereby acknowledges that the issuance of Letters of Credit for the accounts of other Loan Parties and Subsidiaries of such Borrower and any other Loan
Party inures to the benefit of such Borrower, and that its business derives substantial benefits from the businesses of such other Loan Parties and Subsidiaries.
Section 1.04.
[Reserved].
Section 1.05.
Interest Terms Applicable To The Loans. Interest shall accrue upon the unpaid principal balances of the Loans until the Loans have been repaid
in full at the rate or rates described below in this Section 2.07. The Borrowers promise to pay to the Administrative Agent for the ratable benefit of the Lenders in
each Class all accrued interest owing in respect of such Class of Loans in arrears on the applicable Interest Payment Dates.
1.07.i.
Adjusted Base Rate. Swingline Loans advanced and outstanding shall bear interest at the Adjusted Base Rate. Absent a timely election by the
Borrower Representative of a SOFR Borrowing in accordance with Section 2.07.2 of this Agreement, the unpaid balances of the Floor Plan Loans (including M&T
Advances) and Revolving Credit Loans, including any balances of any Adjusted SOFR Rate Borrowings for which the applicable Interest Period has expired without an
effective continuation, shall be deemed automatically to bear interest at the Adjusted Base Rate. Changes in the Adjusted Base Rate shall be made when and as changes
in the Base Rate occur. Each election by the Borrower Representative of an Adjusted Base Rate Borrowing shall be in the Minimum Borrowing Amount, or any multiple
thereof. Payments on account of Adjusted Base Rate Borrowings shall be due and payable in arrears monthly on the Interest Payment Date in each consecutive month.
1.07.ii.SOFR Borrowing Option. Subject to the terms of this Section, interest may accrue at the election of the Borrower Representative (a) with
respect to Revolving Credit Loans, at the Adjusted SOFR Rate for Interest Periods and on portions of the unpaid principal balances of the Revolving Credit Loans, as
selected by the Borrower Representative and (b) with respect to Floor Plan Loans, at the Adjusted Daily SOFR Rate on the principal balances outstanding of the Floor
Plan Loans. With respect to the Revolving Credit Loans, the Borrowers shall have the option to elect a series of consecutive Interest Periods applicable to portions of the
unpaid principal balances of Revolving Credit Loans to be designated at the time of an initial election for SOFR Borrowings; provided that SOFR shall be redetermined on
the terms set forth in this Agreement for each Interest Period and interest payments
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shall be made at the end of each Interest Period. For the avoidance of doubt, the SOFR Borrowing option shall not be available for Swingline Loans.
(I)
Interest Payment and Computation.
Interest shall accrue from and including the first day of each Interest Period selected by the Borrower Representative to (but not including) the last day of such Interest
Period at the Adjusted SOFR Rate determined as applicable to such Interest Period upon the amount of the unpaid principal balances of the Revolving Credit Loans.
SOFR Rate Borrowings shall be due and payable in arrears on each applicable Interest Payment Date.
(II)
Interest Payment and Computation (Floor Plan Loans).
Subject to the last sentence of this clause (b) and to the operation and effect of Sections 2.07.4 and 2.07.5 hereof, the principal balance of any advanced and outstanding
Floor Plan Loans shall bear interest at the Adjusted Daily SOFR Rate. With respect to the Floor Plan Loans, there shall only be one (1) applicable interest rate in effect for
all of the Floor Plan Loans at any time and each interest rate election shall apply to the entire aggregate unpaid principal balances of the Floor Plan Loans. Payments on
account of interest applicable to Floor Plan Loans shall be applied by the Administrative Agent to outstanding balances of such Loans accruing or having accrued interest
at the Adjusted Daily SOFR Rate and balances of such Loans accruing or having accrued interest at the Adjusted Base Rate, in such order or proportion as the
Administrative Agent, in its sole discretion, shall determine. Adjusted Daily SOFR Borrowings on account of Floor Plan Loans shall be due and payable monthly in arrears
on the Interest Payment Date in each consecutive month.
(c) Continuation and Conversion. Provided that no Default or Event of Default has occurred and is then continuing, the Borrower Representative shall have the option
to (a) convert at any time, subject to the notice requirements herein, all or any portion of any outstanding Base Rate Loans (other than Swingline Loans) in a principal
amount equal to $2,000,000.00 or any whole multiple of $1,000,000.00 in excess thereof (or such lesser amount as shall represent all of the Base Rate Loans then
outstanding) into one or more SOFR Rate Loans and (b) upon the expiration of any Interest Period therefor, (i) convert all or any part of any outstanding SOFR Rate
Loans in a principal amount equal to $1,000,000.00 or a whole multiple of $500,000.00 in excess thereof (or such lesser amount as shall represent all of the SOFR Rate
Loans then outstanding) into Base Rate Loans (other than Swingline Loans) or (ii) continue any SOFR Rate Loans as SOFR Rate Loans, provided that, unless notice is
otherwise given by the Borrower Representative to convert or continue any SOFR Rate Loans, upon the expiration of any Interest Period in respect of such SOFR Rate
Loans, such SOFR Rate Loans shall automatically continue as SOFR Rate Loans having the same Interest Period as such expiring Interest Period. Whenever the
Borrower Representative desires to convert or continue Loans as provided above (other than an automatic continuation of a SOFR Rate Loan as provided in clause (b)(ii)
above), the Borrower Representative shall give the Administrative Agent irrevocable prior written notice in the form attached as Exhibit I (a "Notice of
Conversion/Continuation”) not later than 11:00 a.m. three (3) U.S. Government Securities Business Days before the day on which a proposed conversion or continuation
of such Loan is to be effective specifying (A) the Loans to be converted or continued, and, in the case of any SOFR Rate Loan to be converted or continued, the last day
of the Interest Period therefor, (B) the effective date of such conversion or continuation (which shall be a Business Day), (C) the principal amount of such Loans to be
converted or continued, and (D) in the case of any SOFR Rate Loans, the Interest Period to be applicable to such converted or continued SOFR Rate Loan. If the
Borrower Representative fails to deliver a timely Notice of Conversion/Continuation with respect to a SOFR Rate Loan prior to the end of the Interest Period therefor,
then, unless such SOFR Rate Loan is repaid as provided herein, the Borrower Representative shall be deemed to have selected that such SOFR Rate Loan shall
automatically be continued as SOFR Rate Loans having the same Interest Period as such expiring Interest Period. If the Borrower Representative requests a conversion
to, or continuation of, a SOFR Rate Loan, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. Notwithstanding
anything to the contrary herein, a Swingline Loan may not be converted to a
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Eurocurrency Rate Loan. The Administrative Agent shall promptly notify the affected Lenders of such Notice of Conversion/Continuation.
(d) Manner of Payment. Except as otherwise expressly provided herein, each payment by a Borrower on account of the principal of or interest on the Loans or of any
fee, commission or other amounts (including the Reimbursement Obligation) payable to the Lenders under this Agreement shall be made not later than 1:00 p.m. on the
date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent’s Office for the account of the Lenders entitled to such payment
in Dollars, and shall be made without any setoff, counterclaim or deduction whatsoever. Any payment received after 1:00 p.m. shall be deemed to have been made on the
next succeeding Business Day for all purposes. Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each such
Lender at its address for notices set forth herein its Pro Rata Share in respect of the relevant facility (or other applicable share as provided herein) of such payment and
shall wire advice of the amount of such credit to each Lender. Each payment to the Administrative Agent on account of the principal of or interest on the Swingline Loans
or of any fee, commission or other amounts payable to the Swingline Lender shall be made in like manner, but for the account of the Swingline Lender. Each payment to
the Administrative Agent of any Issuing Bank’s fees shall be made in like manner, but for the account of such Issuing Bank. Each payment to the Administrative Agent of
Administrative Agent’s fees or expenses shall be made for the account of the Administrative Agent and any amount payable to any Lender under Sections 2.07.3, 2.10,
2.11 or 10.08 shall be paid to the Administrative Agent for the account of the applicable Lender. Subject to the definitions of Interest Period and Interest Payment Date, if
any payment under this Agreement shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business
Day and such extension of time shall in such case be included in computing any interest if payable along with such payment. Notwithstanding the foregoing, if there exists
a Defaulting Lender each payment by the Borrowers to such Defaulting Lender hereunder shall be applied in accordance with Section 2.14.1(b).
1.07.iii.Breakage Costs. The Borrowers jointly and severally promise to compensate the Lenders from time to time, upon demand from any Lender
through the Administrative Agent, for all losses, expenses, lost earnings, costs and liabilities (including all interest paid to lenders of funds borrowed by the Lenders to carry
SOFR Borrowings) which any of the Lenders sustains if: (1) any repayment or prepayment of any SOFR Borrowings (including any payment resulting from the
acceleration of the Loans in accordance with the terms of this Agreement or from an assignment required by Section 2.11 of this Agreement) or any conversion of SOFR
Borrowings for any reason occurs on a date which is not a Business Day and, with respect to any SOFR Borrowing on account of a Revolving Credit Loan is not the last
day of an Interest Period; or (2) any failure by the Borrowers to borrow a SOFR Borrowing or convert an Adjusted Base Rate Borrowing to a SOFR Borrowing on the
date for such borrowing or conversion specified in the relevant notice of election given by the Borrower Representative to the Administrative Agent in accordance with the
terms of this Agreement.
1.07.iv.Illegality. If the Administrative Agent or the Required Lenders shall determine that the introduction of any law (statutory or common), treaty, rule,
regulation, guideline or determination of an arbitrator or of a governmental authority or in the interpretation or administration thereof, has made it unlawful, or that any
central bank or other governmental authority has asserted that it is unlawful for any of the Lenders to make Loans at the SOFR Rate and/or the Daily SOFR Rate, then,
on notice thereof by the Administrative Agent to the Borrower Representative, the Administrative Agent may suspend the making of Loans at the SOFR Rate and the
Daily SOFR Rate until the Administrative Agent shall have notified the Borrower Representative that the circumstances giving rise to such determination shall no longer
exist. If the Administrative Agent or the Required Lenders shall determine that it is unlawful to maintain any Loans at the SOFR Rate and/or the Daily SOFR Rate, the
Borrowers shall immediately convert all outstanding SOFR Rate Borrowings and/or Adjusted Daily SOFR Borrowings, as applicable, to Adjusted Base Rate Borrowings
or pay to the Administrative Agent for the benefit of the Lenders the aggregate principal amount of all affected Loans then outstanding at the SOFR Rate or Daily SOFR
Rate, together with accrued interest and related Credit Party Expenses.
other rights and remedies of the Lenders, the Required Lenders during any continuing Default or Event of Default may suspend the right
1.07.v.Termination Of Right To Elect SOFR Borrowings. Notwithstanding anything to the contrary set forth in this Agreement, and without limiting any
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of the Borrowers to elect any new SOFR Borrowing or to convert any Adjusted Base Rate Borrowing into a SOFR Borrowing, to permit any SOFR Borrowing to be
renewed as a SOFR Borrowing, or to permit any SOFR Borrowing at the Adjusted Daily SOFR Rate to continue as a SOFR Borrowing, in which case, all SOFR
Borrowings, other than SOFR Borrowings at the Adjusted Daily SOFR Rate, shall be converted on the last days of the respective Interest Periods therefor or continued,
as the case may be, as Adjusted Base Rate Borrowings, and all SOFR Borrowings at the Adjusted Daily SOFR Rate shall be converted to Adjusted Base Rate
Borrowings on the date selected by the Required Lenders.
1.07.vi.Calculation Of Interest. Interest shall be calculated upon Adjusted Base Rate Borrowings on the basis of a 365 or 366 days per year factor
applied to the actual days on which there exists an unpaid balance of the Adjusted Base Rate Borrowings. Interest shall be calculated upon SOFR Borrowing on the basis
of a 360 day per year factor applied to the actual days on which there exists an unpaid balance of the SOFR Borrowing.
1.07.vii.Default Interest.
(1) During the existence an Event of Default under Sections 7.01.1, 7.01.7 or 7.01.8, automatically and without the requirement of any notice, and at the
request of the Administrative Agent or the Required Lenders during the existence of any other Event of Default, the principal amount of all Loans
outstanding, Reimbursement Obligations and all fees and other Obligations owed hereunder, including, to the extent permitted by applicable law, any
interest payments on the Loans, shall thereafter bear interest (including post-petition interest in any proceeding under the Debtor Relief Laws or other
applicable bankruptcy laws) payable on demand at the applicable Default Rate; provided, in the case of Loans accruing interest at the SOFR Rate (other
than Floor Plan Loans), upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Loans shall
thereupon accrue interest at the Base Rate and shall thereafter bear interest payable upon demand at the Default Rate. Payment or acceptance of the
increased rates of interest provided for in this Section 2.07.7 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event
of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender. Imposition of the Default Rate may, at the
election of the Required Lenders, be applied retroactively to the date of the occurrence of the Event of Default.
(2) Without limiting any other rights and remedies available to the Credit Parties by this Agreement or applicable Laws, accrued and unpaid interest on past
due amounts (including interest on past due interest) shall be due and payable upon demand.
1.07.viii.Maximum Rate Of Interest. Any provision contained in the Credit Documents to the contrary notwithstanding, the Lenders shall not be entitled to
receive or collect, nor shall the Borrowers be obligated to pay, interest, fees, or charges thereunder in excess of the maximum rate of interest permitted by any applicable
Law, and if any provision of this Agreement, the Notes or any of the other Credit Documents is construed or held by any court of law or Governmental Authority having
jurisdiction to permit or require the charging, collection or payment of any amount of interest in excess of that permitted by such Laws, the provisions of this Section shall
control and shall override any contrary or inconsistent provision. The intention of the parties is to at all times conform strictly with all applicable usury requirements and
other Laws limiting the maximum rates of interest which may be lawfully charged upon the Loans. The interest to be paid pursuant to the Notes shall be held subject to
reduction to the amount allowed under said usury or other Laws as now or hereafter construed by the courts having jurisdiction, and any sums of money paid in excess of
the interest rate allowed by applicable Law shall be applied in reduction of the principal amount owing pursuant to the Notes.
1.07.ix.Late Payment Charges. Any payment of principal, interest or fees due upon any of the Loans (including any final payment) which is received by
the Administrative Agent more than fifteen (15) calendar days after its due date shall incur a late payment charge equal to five percent (5%) of the amount of the payment
due, which charge shall be immediately due and payable. The existence of the right by the Lenders to receive a late payment charge shall not be deemed to constitute a
grace period or provide any right to the Borrowers to make a payment other than on such payment’s scheduled due date.
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1.07.x.Effect of Benchmark Transition Event.
(I)
Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Credit Document, if a Benchmark Transition Event and its related
Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement
is determined in accordance with clause (1) of the definition of "Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will
replace such Benchmark for all purposes hereunder and under any Credit Document in respect of such Benchmark setting and subsequent Benchmark settings, without
any amendment or further action or consent of any other party hereto or to any other Credit Document, and (y) if a Benchmark Replacement is determined in accordance
with clause (2) of the definition of "Benchmark Replacement” for such Benchmark Replacement Date, the Administrative Agent may unilaterally amend the terms of this
Agreement to replace the then-current Benchmark with a Benchmark Replacement in accordance with the terms of this Agreement, with any such amendment to become
effective as soon as practicable for the Administrative Agent and upon notice to the Borrower, without any further action or consent of the Borrower. No replacement of
the Term SOFR Reference Rate (or the then-current Benchmark) with a Benchmark Replacement pursuant to clause (y) above will occur prior to the earlier of (i) the
applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 180th
day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 180
days after such statement or publication, the date of such statement or publication). Borrower shall pay reasonable out-of-pocket costs (including reasonable attorneys'
fees) incurred by the Administrative Agent in connection with any amendment and related actions, negotiation, documentation or enforcement of the terms hereof or any
related matters contemplated in this Section 2.07.10.
(II)
Benchmark Replacement Conforming Changes. In connection with the implementation or administration of a Benchmark Replacement, the Administrative
Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other
Credit Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any
other party to this Agreement. Administrative Agent shall not be liable to any party hereto for any Benchmark Replacement Conforming Changes it makes in good faith.
(III)
Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower Representative and the Lenders of (i) the
implementation of any Benchmark Replacement and (ii) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election
that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section, including any determination with respect to a
tenor, rate or adjustment, or of the occurrence or non-occurrence of an event, circumstance or date, and any decision to take or refrain from taking any action or any
selection, will be conclusive and binding on all parties hereto absent manifest error, and may be made in its or their sole discretion and without consent from any other party
to this Agreement or other Credit Document (except, in each case, as expressly required pursuant to this Section) and shall not be a basis of any claim of liability of any
kind or nature by any party hereto, all such claims being hereby waived individually by each party hereto.
(IV)
Unavailability of Tenor or Benchmark. Notwithstanding anything to the contrary herein or in any other Credit Document, at any time (including in connection
with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate and either (A) any tenor for such Benchmark is not displayed on a
screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory
supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will
be no longer representative, then the Administrative Agent may modify the definition of "Interest Period” (or any similar or analogous definition) for any Benchmark
settings at or after such time to remove such unavailable or nonrepresentative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is
subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an
announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent
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may modify the definition of "Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed
tenor.
(V)
Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period and until a Benchmark
Replacement is determined in accordance with this Section 2.07.10, the Borrower Representative may revoke any pending request for a SOFR Rate Loan, or conversion
to, or continuation of, SOFR Rate Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, (i) the Borrowers will be
deemed to have converted any such request into a request for a Borrowing of or conversion to Base Rate Loans and (ii) any outstanding affected SOFR Rate Loans will
be deemed to have been converted into Base Rate Loans immediately. During a Benchmark Unavailability Period, Period or at any time that a tenor for the then-current
Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable will not
be used in any determination of the Base Rate.
1.07.xi. Adjusted Term SOFR Conforming Changes. In connection with the use or administration of Term SOFR, the Administrative Agent will have
the right to make Term SOFR Conforming Changes from time to time and, notwithstanding anything to the contrary herein, any amendments implementing such Term
SOFR Conforming Changes will become effective without any further action or consent of the Borrowers or any other party hereto. The Administrative Agent will
promptly notify the Borrower Representative of the effectiveness of any Term SOFR Conforming Changes.
1.07.xii. Changed Circumstances. Subject Section 2.07.10, in connection with any SOFR Rate Loan, a request therefor, a conversion to or a continuation
thereof or otherwise, if for any reason (i) the Administrative Agent shall determine (which determination shall be conclusive and binding absent manifest error) that if Term
SOFR is utilized in any calculations hereunder or under any other Loan Document with respect to any Obligations, interest, fees, commissions or other amounts, reasonable
and adequate means do not exist for ascertaining Term SOFR and the applicable Interest Period with respect to a proposed SOFR Rate Loan on or prior to the first day of
such Interest Period, (ii) the Administrative Agent shall determine (which determination shall be conclusive and binding absent manifest error) that deposits are not being
offered to banks in the London or other applicable offshore interbank market for the applicable Interest Period, or (iii) the Required Lenders shall determine (which
determination shall be conclusive and binding absent manifest error) that if Term SOFR is utilized in any calculations hereunder or under any other Loan Document with
respect to any Obligations, interest, fees, commissions or other amounts, Term SOFR does not adequately and fairly reflect the cost to such Lenders of making or
maintaining such Loans during the applicable Interest Period and, in such case, the Required Lenders have provided notice of such determination to the Administrative
Agent, then, in each case, the Administrative Agent shall promptly give notice thereof to the Borrower Representative. Upon notice thereof by the Administrative Agent to
the Borrower Representative, any obligation of the Lenders to make SOFR Rate Loans, and any right of the Borrower Representative to convert any Loan or continue
any Loan as an SOFR Rate Loan, shall be suspended (to the extent of the affected Interest Periods) until the Administrative Agent (with respect to clause (iii), at the
instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, (A) the Borrower Representative may revoke any pending request for a borrowing
of, conversion to or continuation of SOFR Rate Loans (to the extent of the affected SOFR Rate Loans or affected Interest Periods) or, failing that, in the case of any
request for a borrowing of an affected SOFR Rate Loan, the Borrower Representative will be deemed to have converted any such request into a request for a borrowing
of or conversion to Base Rate Loans in the amount specified therein and (B) any outstanding affected SOFR Rate Loans will be deemed to have been converted into Base
Rate Loans at the end of the applicable Interest Period. Upon any such prepayment or conversion, the Borrower Representative shall also pay accrued interest on the
amount so prepaid or converted, together with any additional amounts required pursuant to Section 2.07.3.
Section 1.06.
Pro Rata Treatment And Payments.
1.08.i. Distribution Of Payments To Lenders. Except as otherwise expressly provided to the contrary by the terms of this Agreement, all payments (including
prepayments) to be made by the Borrowers in respect of a Class hereunder, whether on account of principal, interest, fees
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or otherwise shall be made without set-off or counterclaim and shall be made prior to 12:00 Noon on the due date thereof to the Administrative Agent for the
accounts of the Lenders in such Class at the Administrative Agent’s offices in Buffalo, New York in Dollars and in immediately available funds. The
Administrative Agent shall promptly distribute to each Lender in such Class by wire transfer such Lender’s pro rata share of each of such payments in like
funds as received for such Class. The Administrative Agent may assume that the Borrowers have made such payments on the applicable date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or to the Issuing Bank, as the case may be, the amount due. In such event, if the
Borrowers have not in fact made such payments, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Bank, in immediately available funds with interest thereon,
for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Rate or a rate determined by the Administrative Agent in accordance with banking industry customs and rules on interbank compensation.
1.08.ii. Funding Of Loans. The Lenders agree that the Administrative Agent may assume that each Lender will fund timely its pro rata portion of each
borrowing requested by the Borrowers in accordance with the terms of this Agreement and that the Administrative Agent may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable borrowing
available to the Administrative Agent, then the applicable Lender and the Borrowers severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the
Borrowers to but excluding the date of payment to the Administrative Agent, at (a) in the case of a payment to be made by such Lender, the greater of the
Federal Funds Rate or a rate determined by the Administrative Agent in accordance with banking industry customs and rules on interbank compensation, plus
any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (b) in the case of a
payment to be made by the Borrowers, the interest rate applicable to Adjusted Base Rate Borrowings. If the Borrowers and such Lender shall pay such
interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrowers the amount of such
interest paid by the Borrowers for such period. If such Lender pays its share of the applicable borrowing to the Administrative Agent, then the amount so paid
shall constitute such share included in the subject borrowing. Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have
against a Lender that shall have failed to make such payment to the Administrative Agent.
1.08.iii. Ratable Sharing. Except to the extent otherwise provided herein: (a) each Borrowing from the Revolving Credit Lenders under Section 2.03 shall be
made from the Revolving Credit Lenders, each payment of the fees under Section 2.03.5 shall be made for the account of the Revolving Credit Lenders, and
each termination or reduction of the amount of the Revolving Credit Commitments under Section 2.03.6 shall be applied to the respective Revolving Credit
Commitments of the Revolving Credit Lenders, pro rata according to the amounts of their respective Revolving Credit Commitments; (b) each payment or
prepayment of principal of Revolving Credit Loans shall be made for the account of the Revolving Credit Lenders pro rata in accordance with the respective
unpaid principal amounts of the Revolving Credit Loans held by them, provided that, subject to Section 2.14, if immediately prior to giving effect to any such
payment in respect of any Revolving Credit Loans the outstanding principal amount of the Revolving Credit Loans shall not be held by the Revolving Credit
Lenders pro rata in accordance with their respective Revolving Credit Commitments in effect at the time such Revolving Credit Loans were made, then such
payment shall be applied to the Revolving Credit Loans in such manner as shall result, as nearly as is practicable, in the outstanding principal amount of the
Revolving Credit Loans being held by the Revolving Credit Lenders pro rata in accordance with such respective Revolving Credit Commitments; (c) each
Borrowing from the Floor Plan Lenders under Sections 2.01 shall be made from the Floor Plan Lenders and each termination or reduction of the amount of the
Floor Plan
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Commitments shall be applied to the respective Floor Plan Commitments of the Floor Plan Lenders, pro rata according to the amounts of their respective Floor
Plan Commitments; (d) each payment or prepayment of principal of any Floor Plan Loans shall be made for the account of the Floor Plan Lenders, pro rata in
accordance with the respective unpaid principal amounts of Floor Plan Loans held by them; (e) each payment of interest on any Floor Plan Loans shall be
made for the account of the Floor Plan Lenders, pro rata in accordance with the amounts of interest on Floor Plan Loans, then due and payable to the
respective Floor Plan Lenders; (f) the conversion and continuation of Revolving Credit Loans (other than conversions provided for by Sections 2.07.4) shall be
made pro rata among the Revolving Credit Lenders, according to the amounts of their respective Revolving Credit Loans, and the then current Interest Period
for each Lender’s portion of each such Loan of such Type and Class shall be coterminous; (g) the Revolving Credit Lenders’ participation in, and payment
obligations in respect of, Swingline Loans under Section 2.04, shall be in accordance with their respective Applicable Percentages for Revolving Credit
Commitments; and (i) the Revolving Credit Lenders’ participation in, and payment obligations in respect of, Letters of Credit under Section 2.05, shall be in
accordance with their respective Applicable Percentages for Revolving Credit Commitments. All payments of principal, interest, fees and other amounts in
respect of the Swingline Loans shall be for the account of the Swingline Lender only (except to the extent any Lender shall have acquired a participating
interest in any such Swingline Loan pursuant to Section 2.04.1(d), in which case such payments shall be pro rata in accordance with such participating
interests).
1.08.iv. Setoffs, Counterclaims, Other Payments. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of the Loans made by it, or the participations in L/C Obligations or in Swingline Loans held by it resulting in such Lender
receiving payment greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the
Administrative Agent of such fact, and (b) purchase (for cash at face value in Dollars) participations in the Loans and participations in the L/C Obligations and
Swingline Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them,
provided that:
be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall
(ii) the provisions of this Section shall not be construed to apply to (A) any payment made by the Borrowers pursuant to and in
accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (B) any payment obtained
by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in L/C Obligations or Swingline Loans to any assignee or
participant, other than to the Borrowers or any Subsidiaries thereof (as to which the provisions of this Section shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to
the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a
direct creditor of such Loan Party in the amount of such participation.
SECTION 8. Application Of Payments. Except as expressly required to the contrary by the terms of this Agreement, all payments received upon the Loans
may be applied first to Credit Party Expenses, next to late payment charges, then to accrued interest and the unpaid principal balances of the Loans, or in such other order
as elected by the Required Lenders.
SECTION 10. Increased Costs.
1.10.i.Increased Costs Generally. If any Change In Law shall:
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impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against
assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Adjusted SOFR Rate)
or the Issuing Bank;
(a)
subject any Recipient to any Taxes (other than (i) Indemnified Taxes, (ii) Taxes described in clauses (b) through (d) of the
definition of Excluded Taxes and (iii) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves,
other liabilities or capital attributable thereto; or
(b)
Taxes) affecting this Agreement or any SOFR Borrowing made by such Lender or any Letter of Credit or participation therein;
(c)
impose on any Lender or the Issuing Bank or the London Interbank Market any other condition, cost or expense (other than
and the result of any of the foregoing shall be to increase the cost to such Lender, the Issuing Bank, or such other Recipient of making, converting to or continuing or
maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender, the Issuing Bank, or such other Recipient of
participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any
sum received or receivable by such Lender, the Issuing Bank, or such other Recipient hereunder (whether of principal, interest or any other amount) then, upon the request
of such Lender, the Issuing Bank, or such other Recipient, the Borrowers agree to pay to such Lender, the Issuing Bank, or such other Recipient, as the case may be, such
additional amount or amounts as will compensate such Lender, the Issuing Bank, or such other Recipient, as the case may be, for such additional costs incurred or
reduction suffered.
1.10.ii.Capital Requirements. If any Lender or the Issuing Bank determines that any Change in Law affecting such Lender or the Issuing Bank or any
lending office of such Lender or such Lender’s or the Issuing Bank’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of
reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or
the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company
could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing
Bank’s holding company with respect to capital adequacy), then from time to time the Borrowers agree to pay to such Lender or the Issuing Bank, as the case may be,
such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction
suffered.
1.10.iii.Certificate for Reimbursement. A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such
Lender or the Issuing Bank or its holding company, as the case may be, as specified in this Section 2.10 and delivered to the Borrowers shall be conclusive absent manifest
error. The Borrowers promise to pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) days after
receipt thereof.
1.10.iv.Delay in Requests. Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation, provided that the Borrowers shall not be required to compensate a Lender
or the Issuing Bank pursuant to this Section for any increased costs incurred or reductions suffered more than twelve (12) months prior to the date that such Lender or the
Issuing Bank, as the case may be, notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing
Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the twelve (12)
month period referred to above shall be extended to include the period of retroactive effect thereof).
SECTION 11. Taxes.
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1.11.i. Defined Terms. For purposes of this Section, the term "Lender” includes any Issuing Bank and the term "applicable Law” includes FATCA.
1.11.ii.Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Credit Document shall be made
without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good faith discretion of an applicable
Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be
entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with
applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or
withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an
amount equal to the sum it would have received had no such deduction or withholding been made.
applicable Laws, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
1.11.iii.Payment of Other Taxes by the Loan Parties. The Loan Parties shall timely pay to the relevant Governmental Authority in accordance with
1.11.iv.Indemnification. The Loan Parties shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified
Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be
withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes
were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the
Borrowers by a Recipient (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Recipient, shall be conclusive
absent manifest error.
1.11.v.Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for
(a) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such
Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (b) any Taxes attributable to such Lender’s failure to comply with the provisions of
Section 10.03 relating to the maintenance of a Participant Register and (c) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the
Administrative Agent in connection with any Credit Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the
Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any
time owing to such Lender under any Credit Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to
the Administrative Agent under this Section 2.11.5.
1.11.vi.Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this
Section, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
1.11.vii.
Status of Lenders.
(a) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Credit
Document shall deliver to the Borrowers and the Administrative Agent, at the time or times reasonably requested by the Borrowers or the Administrative Agent, such
properly completed and executed documentation reasonably requested by
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the Borrowers or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if
reasonably requested by the Borrowers or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the
Borrowers or the Administrative Agent as will enable the Borrowers or the Administrative Agent to determine whether or not such Lender is subject to backup
withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of
such documentation (other than such documentation set forth below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission
would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(b) Without limiting the generality of the foregoing, in the event that the Borrowers are U.S. Borrowers,
(i) any Lender that is a U.S. Person shall deliver to the Borrowers and the Administrative Agent on or prior to the date on which such
Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowers or the Administrative Agent), executed
copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(ii) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to
time thereafter upon the reasonable request of the Borrowers or the Administrative Agent), whichever of the following is applicable:
(A) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x)
with respect to payments of interest under any Credit Document, executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "interest” article of such tax treaty and (y) with respect to any other
applicable payments under any Credit Document, IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S.
federal withholding Tax pursuant to the "business profits” or "other income” article of such tax treaty;
(B) executed copies of IRS Form W-8ECI;
(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of
the Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that such Foreign Lender is not a "bank” within the meaning of Section
881(c)(3)(A) of the Code, a "10 percent shareholder” of the Borrowers within the meaning of Section 881(c)(3)(B) of the Code, or a "controlled foreign
corporation” described in Section 881(c)(3)(C) of the Code (a "U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-
8BEN-E, as applicable; or
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(D) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by
IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit
J-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership
and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S.
Tax Compliance Certificate substantially in the form of Exhibit J-4 on behalf of each such direct and indirect partner;
(iii) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent
(in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Borrowers or the Administrative Agent), executed copies of any other form prescribed by applicable Law as a
basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed
by applicable Law to permit the Borrowers or the Administrative Agent to determine the withholding or deduction required to be made; and
(iv) if a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding Tax imposed by
FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code,
as applicable), such Lender shall deliver to the Borrowers and the Administrative Agent at the time or times prescribed by Law and at such time or times reasonably
requested by the Borrowers or the Administrative Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the
Code) and such additional documentation reasonably requested by the Borrowers or the Administrative Agent as may be necessary for the Borrowers and the
Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to
determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (iv), "FATCA” shall include any amendments made to FATCA after
the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or
certification or promptly notify the Borrowers and the Administrative Agent in writing of its legal inability to do so.
1.11.viii.Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as
to which it has been indemnified pursuant to Section 2.11 of this Agreement (including by the payment of additional amounts pursuant to Section 2.11), it shall pay to the
indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such
refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over
pursuant to this Section 2.11.8 (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is
required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 2.11.8, in no event will the indemnified party be
required to pay any amount to an indemnifying party pursuant to this Section 2.11.8 the payment of which would place the indemnified party in a less
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favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted,
withheld or otherwise imposed and the indemnification payments or additional amount with respect to such Tax had never been paid. This Section shall not be construed to
require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any
other Person.
1.11.ix.Survival. Each party’s obligations under this Section 2.11 shall survive the resignation or replacement of the Administrative Agent or any
assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any
Credit Document.
SECTION 12. Mitigation Obligations; Replacement of Lenders.
1.12.i.Designation of a Different Lending Office. If any Lender requests compensation under Section 2.10, or requires the Borrowers to pay any
Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.11, then such Lender shall (at
the request of the Borrowers) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable
pursuant to Section 2.10 or 2.11, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or
assignment.
1.12.ii.Replacement of Lenders. If any Lender requests compensation under Section 2.10, or if the Borrowers are required to pay any Indemnified
Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.11 and, in each case, such Lender has
declined or is unable to designate a different lending office in accordance with Section 2.12.1, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then
the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.02), all of its interests, rights (other than its existing rights to
payments pursuant to Section 2.10 or Section 2.11) and obligations under this Agreement and the related Credit Documents to an Eligible Assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:
(a) the Borrowers shall have paid to the Administrative Agent the administrative fee (if any) specified in Section 10.02;
(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in
L/C Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Credit Documents (including any amounts
under Section 2.07.3) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);
pursuant to Section 2.11, such assignment will result in a reduction in such compensation or payments thereafter;
(c) in the case of any such assignment resulting from a claim for compensation under Section 2.10 or payments required to be made
(d) such assignment does not conflict with applicable Laws; and
consented to the applicable amendment, waiver or consent.
(e) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have
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SECTION 13. Certain Credit Support Events. Upon the request of the Administrative Agent or the Issuing Bank (a) if the Issuing Bank has honored any full or
partial drawing request under any Letter of Credit and such drawing has resulted in a Reimbursement Obligation, or (b) if, as of the L/C Expiration Date, any L/C
Obligation for any reason remains outstanding, the Borrowers shall, in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations.
SECTION 14. Defaulting Lenders.
Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable Laws:
1.14.i.Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting
respect to this Agreement shall be restricted as set forth in the definition of Required Lenders, Required Revolving Credit Lenders and Required Floor Plan Lenders.
( a ) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with
(b) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for
the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 8 or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 10.07 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of
any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such
Defaulting Lender to any Issuing Bank to M&T Bank as the provider of the M&T Advances hereunder or Swingline Lender hereunder; third, to Cash Collateralize the
Issuing Bank’s Fronting Exposure or M&T Bank’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.14; fourth, as the Borrowers
may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof
as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrowers, to be held in a deposit
account and released pro rata in order to (i) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (ii) Cash
Collateralize the Issuing Bank’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement and
future M&T Advances, in accordance with Section 2.13; sixth, to the payment of any amounts owing to M&T Bank as the provider of the M&T Advances hereunder, the
Lenders, the Issuing Banks or Swingline Lenders as a result of any judgment of a court of competent jurisdiction obtained by M&T Bank as the provider of the M&T
Advances hereunder, any Lender, the Issuing Banks or Swingline Lenders against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations
under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of a
court of competent jurisdiction obtained by the Borrowers against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this
Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the
principal amount of any Loans or L/C Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made
or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the
Loans of, and L/C Disbursements owed to, all Non-Defaulting Lenders on a pro rata
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basis prior to being applied to the payment of any Loans of, or L/C Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded
participations in M&T Advances, L/C Obligations and Swingline Loans are held by the Lenders pro rata in accordance with the Commitments under the Applicable
Credit Facility without giving effect to Section 2.14.1(d). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to
pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to Section 2.14.1(e) shall be deemed paid to and redirected by such Defaulting Lender, and
each Lender irrevocably consents hereto.
(c) Certain Fees.
Commitment Fee for any period during which that Lender is a Defaulting Lender.
(i) No Defaulting Lender shall be entitled to receive a Floor Plan Unused Commitment Fee or a Revolving Credit Unused
(ii) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a
Defaulting Lender only to the limited extent allocable to its Revolving Credit Commitment Percentage of the stated amount of Letters of Credit for which it has provided
Cash Collateral pursuant to Section 2.14.1(e).
(iii) With respect to any Floor Plan Unused Commitment Fee, Revolving Credit Unused Commitment Fee, or Letter of Credit
Fee not required to be paid to any Defaulting Lender pursuant to clauses (i) or (ii) above, the Borrowers shall (x) pay to each Non-Defaulting Lender that portion of any
such fee otherwise payable to such Defaulting Lender that has been reallocated to such Non-Defaulting Lender pursuant to clause (d) below, (y) pay to the Issuing Bank
and the Swingline Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Bank’s or
Swingline Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fees.
( d ) Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in (a)
M&T Advances shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Floor Plan Loan Commitment Percentages (calculated
without regard to such Defaulting Lender’s Floor Plan Loan Commitments) but only to the extent that such reallocation does not cause the aggregate Outstanding Amount
of the Floor Plan Loan of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Floor Plan Loan Commitment and (b) in the case of a Defaulting Lender
that is a Revolving Credit Lender, all or any part of such Defaulting Lender’s participation in L/C Obligations and Swingline Loans shall be reallocated among the Non-
Defaulting Lenders that are Revolving Credit Lenders in accordance with their respective Revolving Credit Commitment Percentages, determined without regard to such
Defaulting Lender’s Revolving Credit Commitment) but only to the extent that such reallocation does not cause the aggregate Revolving Credit Exposure of any such Non-
Defaulting Lender to exceed such Non-Defaulting Lender’s Revolving Credit Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of
any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result
of such Non-Defaulting Lender’s increased exposure following such reallocation. Operation of the allocations provided in Section 2.14 above shall not be deemed to result
in a default of any Borrower’s obligations to a Defaulting Lender under this Agreement or any other Credit Document.
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(e) Cash Collateral, Repayment of Swingline Loans and M&T Advances.
(i) If the reallocation described in the immediately preceding subsection (d) above cannot, or can only partially, be effected, the
Borrowers of the applicable Class shall, without prejudice to any right or remedy available to them hereunder or under law, (I) in respect of the Revolving Credit Facility,
(x) first, prepay Swingline Loans in an amount equal to the Swingline Lender’s Fronting Exposure and (y) second, Cash Collateralize the Issuing Bank’s Fronting Exposure
in accordance with the procedures set forth in this subsection and (II) in respect of the Floor Plan Facility, prepay the M&T Advances in an amount equal to M&T Bank’s
Fronting Exposure as the lender of M&T Advances.
(ii) At any time that there shall exist a Revolving Credit Lender that is a Defaulting Lender, within one (1) Business Day
following the written request of the Administrative Agent or the Issuing Bank (with a copy to the Administrative Agent), the Revolving Credit Borrowers shall Cash
Collateralize the Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to the immediately preceding subsection (d) and
any Cash Collateral provided by such Defaulting Lender) in an amount not less than the aggregate Fronting Exposure of the Issuing Bank with respect to Letters of Credit
issued and outstanding at such time.
(iii) All Cash Collateral (other than credit support not constituting funds subject to deposit) provided under Section 2.14 shall be
maintained in blocked, non-interest bearing deposit accounts maintained at M&T Bank. The Revolving Credit Borrowers, and to the extent provided by any Defaulting
Lender, such Defaulting Lender, hereby grant to the Administrative Agent, for the benefit of the Issuing Bank, and agree to maintain, a first priority security interest in all
such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of Letter of Credit Liabilities, to be applied pursuant to the
immediately following clause (iv). The Floor Plan Borrowers, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grant to the
Administrative Agent, for the benefit of the Administrative Agent and M&T Bank as the lender of M&T Advances, and agree to maintain, a first priority security interest
in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of M&T Advances, to be applied pursuant to the immediately
following clause (iv). If at any time the Administrative Agent determines that Cash Collateral in the Cash Collateral Account is subject to any right or claim of any Person
other than the Administrative Agent, M&T Bank as lender of M&T Advances and the Issuing Bank as herein provided, or that the total amount of such Cash Collateral is
less than the aggregate Fronting Exposure of the Issuing Bank with respect to Letters of Credit issued and outstanding at such time and of M&T Bank as lender of M&T
Advances, the Revolving Credit Borrowers and/or Floor Plan Borrowers, as applicable, will, promptly upon demand by the Administrative Agent, pay or provide to the
Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting
Lender).
(iv) Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.14 in
respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of Letter of Credit Liabilities (including,
as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other
application of such property as may otherwise be provided for herein. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided
under this Section 2.14 in respect of M&T Advances shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of M&T
Advances (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior
to any other application of such property as may otherwise be provided for herein.
(v) Cash Collateral (or the appropriate portion thereof) provided to reduce the Issuing Bank’s Fronting Exposure shall no longer
be required to be held as Cash Collateral pursuant to this subsection following (x) the elimination of the applicable Fronting Exposure (including by the termination of
Defaulting Lender status of the applicable Revolving Credit Lender), or (y) the determination by the Administrative Agent and the Issuing Bank that there exists excess
Cash Collateral; provided that, subject to the immediately preceding subsection (b), the Person providing Cash Collateral and the Issuing Bank may (but shall not be
obligated to) agree that Cash Collateral shall be held
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to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by a Revolving Credit
Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Credit Documents. Cash Collateral (or the appropriate portion thereof)
provided to reduce M&T Bank’s Fronting Exposure in respect of M&T Advances shall no longer be required to be held as Cash Collateral pursuant to this subsection
following (x) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Floor Plan Lender), or (y) the
determination by the Administrative Agent and M&T Bank as the lender of M&T Advances, that there exists excess Cash Collateral; provided that, subject to the
immediately preceding subsection (b), the Person providing Cash Collateral and M&T Bank as the lender of M&T Advances, may (but shall not be obligated to) agree that
Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was
provided by a Floor Plan Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Credit Documents.
1.14.ii.Defaulting Lender Cure. If the Borrower Representative, the Administrative Agent, Issuing Bank, Swingline Lender and M&T Advance Lender
as the provider of the M&T Advances each agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto,
whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash
Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the
Administrative Agent may determine to be necessary to cause, as applicable, (i) the M&T Advances and funded and unfunded participations in M&T Advances to be held
pro rata by the Floor Plan Lenders in accordance with their respective Floor Plan Commitment Percentages (determined without giving effect to Section 2.14.1(d)), (ii) the
funded and unfunded participations in Letters of Credit and Swingline Loans to be held pro rata by the Revolving Credit Lenders in accordance with their Revolving Credit
Commitment Percentages (determined without giving effect to the immediately preceding subsection Section 2.14.1(d)) and (iii) the Loans of each Class to be held by the
Lenders of such Class pro rata as if there had been no Defaulting Lenders of such Class, whereupon such Lender will cease to be a Defaulting Lender; provided that no
adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while that Lender was a Defaulting Lender; and
provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a
waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender.
1.14.iii.New Swingline Loans/Letters of Credit/M&T Advances. Without limiting the discretion of the M&T Advance Lender whether or not to make a
M&T Advance (as set forth in Section 2.02.1), so long as any Lender (other than M&T Advance Lender or any of its Affiliates) under the Floor Plan Facility is a
Defaulting Lender, M&T Advance Lender shall not be required to fund any M&T Advance. So long as any Lender is a Defaulting Lender, (a) the Swingline Lender shall
not be required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan and (b) the Issuing Bank
shall not be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.
SECTION 15. Fees. The Borrowers promise to pay to M&T Bank for M&T Bank’s own account such fees as are required by the terms of the Fee Letter.
SECTION 16. Payments. All payments received by the Credit Parties which are to be applied to reduce the Obligations shall be provisional and shall not be
considered final unless and until such payment is not subject to avoidance under any provision of the Bankruptcy Code, as amended, including Sections 547 and 550, or any
other Debtor Relief Law. If any payment is avoided or set aside under any provision of the Bankruptcy Code, including Sections 547 and 550 thereof, or any other Debtor
Relief Law, the payment shall be considered not to have been made for all purposes of this Agreement and the Credit Parties shall adjust their respective records to reflect
the fact that the avoided payment was not made and has not been credited against the Obligations.
SECTION 17. Advancements. If the Borrowers or any other Loan Party fail to perform any of their respective agreements or covenants contained in the Credit
Documents or if the Borrowers or any other Loan Party fails to protect or preserve the Collateral or any other security for the Obligations or the
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status and priority of the Liens of the Credit Parties in the Collateral or in any other security for the Obligations, the Administrative Agent for the account of the Lenders
may make advances to perform the same on behalf of the Borrowers or other Loan Party to protect or preserve the Collateral or any other security for the Obligations or
the status and priority of the Liens of the Credit Parties in the Collateral or in any other security for the Obligations, and all sums so advanced shall immediately upon such
advance become secured by the Liens granted in the Credit Documents and any other security for the Obligations, and shall become part of the principal amount owed to
the Lenders with interest to be assessed at the Default Rate. The Borrowers promise to repay on demand all sums so advanced on the Borrowers’ behalf, plus all
expenses or costs incurred by the Administrative Agent, on account of the Lenders, including reasonable legal fees, with interest thereon. The provisions of this Section
shall not be construed to prevent the institution of the rights and remedies of the Administrative Agent upon the occurrence of an Event of Default. The authorization
contained in this Section is not intended to impose any duty or obligation on the Administrative Agent or any other Credit Party to perform any action or make any
advancement on behalf of the Borrowers and is intended to be for the sole benefit and protection of the Credit Parties. Notwithstanding anything herein to the contrary, no
Lender shall be required to fund any advances under this Section if such advance would cause the aggregate outstanding exposure of such Lender to exceed such
Lender’s Commitment.
SECTION 18. Co-Borrower Provisions.
1.18.i.Borrower Representative. To facilitate administration of the Loans, the Borrower Representative (a) is designated and appointed by each of the
other Borrowers as its representative and agent on its behalf (the "Borrower Representative”) and (ii) accepts such appointment as the Borrower Representative, in each
case and with full power and authority to issue, execute, deliver and acknowledge as appropriate, Loan Requests, notices of election and make the interest rate elections
set forth therein, and certificates including Compliance Certificates, and to give instructions with respect to the disbursement of the proceeds of the Loans, give and receive
all other notices and consents hereunder or under any of the other Credit Documents and take all other actions (including in respect of compliance with covenants) on
behalf of any Borrower or Borrowers under the Credit Documents. The Administrative Agent and each Lender may regard any notice or other communication pursuant to
any Credit Document from the Borrower Representative as a notice or communication from all Borrowers. Each warranty, covenant, agreement and undertaking made on
behalf of any Borrower by the Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable
against such Borrower to the same extent as if the same had been made directly by such Borrower. This power-of-attorney is coupled with an interest and cannot be
revoked, modified or amended without the prior written consent of the Required Lenders. The Administrative Agent and each Lender may regard any notice or other
communication pursuant to any Credit Document from the Borrower Representative as a notice or communication from all Borrowers. Each warranty, covenant,
agreement and undertaking made on behalf of a Borrower by the Borrower Representative shall be deemed for all purposes to have been made by such Borrower and
shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.
1.18.ii.Subordination. Each Borrower hereby subordinates all Intercompany Indebtedness that it may have from or against any other Borrower or other
Loan Party, and any successor or assign of any other Borrower or other Loan Party, including, without limitation, any trustee, receiver or debtor-in-possession, howsoever
arising, due or owing and whether heretofore, now or hereafter existing, to all of the Obligations of the other Borrower or the other Loan Parties owed to the Credit
Parties.
1.18.iii.Postponement of Subrogation. Until all of the Obligations are paid in full, no Borrower shall have any right of subrogation, reimbursement or
indemnity whatsoever, nor any right of recourse to security for any of the Obligations, and nothing shall discharge or satisfy the liability of a Borrower hereunder, until the
full, final and absolute payment and performance of all of the Obligations at any time after all Commitments of the Lenders under this Agreement are terminated. All
present and future debts and obligations of each Borrower to any other Loan Party are hereby waived and postponed in favor of and subordinated to the full payment and
performance of all present and future Obligations.
bankruptcy, disability, dissolution,
1.18.iv.No Discharge. No Obligation of any Borrower or other Loan Party shall be affected, discharged or impaired by any of the following: (a)
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incompetence, death, insolvency, liquidation, or reorganization of any other Borrower or any Loan Party; (b) any defense of any other Borrower or Loan Party to payment
or performance of any or all of the Obligations or enforcement of any or all rights of the Administrative Agent and the Lenders in the Collateral; (c) discharge, modification
of the terms of, reduction in the amount of, or stay of enforcement of any or all liens and encumbrances in the Collateral or any or all Obligations in any bankruptcy,
insolvency, reorganization, or other legal proceeding or by application of any applicable Laws; (d) any claim or dispute by any other Borrower or other Loan Party
concerning the occurrence of an Event of Default, performance of any Obligations, or any other matter; (e) any waiver or modification of any provision of the Credit
Documents that affects any other Borrower or other Loan Party, whether or not such waiver or modification affects all Borrowers and/or all Loan Parties; (f) the
cessation of liability, release or discharge of any other Borrower or any other Loan Party or other obligor for any reason; (g) the perfection or failure to perfect, release or
discharge of any Collateral or other security; (h) the exercise or failure to exercise any rights or remedies pursuant to the Credit Documents by the Administrative Agent
or the Required Lenders or any election of remedies by the Administrative Agent or the Required Lenders; (i) any invalidity, irregularity or unenforceability in whole or in
part of any of the Credit Documents or any limitation of the liability of any Borrower or any other Loan Party under the Credit Documents, including any claim that the
Credit Documents were not duly authorized, executed, or delivered on behalf of any Borrower or any other Loan Party; (j) any other acts or omissions by the
Administrative Agent or any Lender that result in or could result in the release or discharge of any other Borrower or any other Loan Party; or (k) the occurrence of any
other event or the existence of any other condition that by operation of law or otherwise could result in the release or discharge of a surety, guarantor, or other persons
secondarily liable on an obligation.
1.18.v.Waivers. Each Borrower unconditionally waives: (a) any requirement that the Administrative Agent or the Required Lenders first make demand
upon, or seek to enforce or exhaust remedies against any (i) other Borrower or any other Loan Party; (ii) the Collateral or other property of any Borrower or any other
Loan Party; or (iii) other Person, before demanding payment from or seeking to enforce the Obligations against such Borrower; (b) any requirement of applicable Law that
might operate to limit any Borrower’s liability under, or the enforcement of, the Obligations; (c) diligence, presentment, protest, demand for performance, notice of
acceptance, notice of nonperformance, notice of intent to accelerate, notice of acceleration, notice of protest, notice of dishonor, notice of extension, renewal, alteration or
amendment, notice of acceptance of the Credit Documents, notice of default under any of the Credit Documents (except as provided in the Credit Documents), and all
other notices whatsoever, except for notices specifically required pursuant to other provisions of the Credit Documents; (d) any obligation of the Administrative Agent or
any Lender to provide any Borrower any information, including any information concerning any other Borrower or any other Loan Party or any Collateral; and (e) any
other claim or defense that otherwise would be available based on principles of suretyship or guarantee or otherwise governing secondary obligations.
1.18.vi.Cross-Guaranty; Joint and Several Liability of Co-Borrowers.
(1)
(2)
Floor Plan Borrowers. Each Floor Plan Borrower shall be jointly and severally liable as a primary obligor, and not merely as surety,
for any and all Floor Plan Loans and Obligations under and in connection with the Floor Plan Facility and now or hereafter owed to
the Administrative Agent, M&T Advance Lender, in its capacity as a lender of the M&T Advances, and the Floor Plan Lenders, in
each case, whether voluntary or involuntary and however arising, whether direct or acquired by any Floor Plan Lender by assignment
or succession, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined.
Revolving Credit Borrowers. Each Revolving Credit Borrower shall be jointly and severally liable as a primary obligor, and not
merely as surety, for any and all Revolving Credit Loans and Obligations under and in connection with the Revolving Credit Facility
and now or hereafter owed to the Administrative Agent, the Swingline Lender, the Issuing Bank, and the Revolving Credit Lenders, in
each case, whether voluntary or involuntary and however arising, whether
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direct or acquired by any Revolving Credit Lender by assignment or succession, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined.
(3)
Benefit to Each Borrower. Each Borrower represents and warrants to and covenants with the Lenders that (i) the Borrowers are
engaged in operations that require financing on a joint basis and, accordingly, each Borrower will materially benefit, directly or
indirectly, from the extension of the Loans by the Lenders; (ii) the Loans have been offered to the applicable Borrowers on the basis
set forth in this Agreement and would not be available to the Borrowers on an individual basis without the credit support of the other
Loan Parties on the terms and conditions stated herein; (iii) the benefits received by each Borrower are reasonably equivalent to the
obligations undertaken by such Borrower and (iv) the delivery of funds to any Borrower in connection with the Loans under this
Agreement shall constitute valuable consideration and reasonably equivalent value to all Borrowers.
( d ) Cross-Guaranty. Each Borrower guarantees to the Credit Parties the payment in full of all of the Obligations owned by each of the other
Borrowers and further guarantees the due performance by each of the other Borrowers of its respective duties and covenants made in favor of the Credit Parties in this
Agreement and in the other Credit Documents. Each Borrower agrees that neither this cross guaranty nor the joint and several liability of the Borrowers provided in this
Agreement nor the Credit Parties’ liens and rights in any of the Collateral shall be impaired or affected by any modification, supplement, extension or amendment of any
contract or agreement to which the parties hereto may hereafter agree, nor by any modification, release or other alteration of any of the rights of the Credit Parties with
respect to any of the Collateral, nor by any delay, extension of time, renewal, compromise or other indulgence granted by the Administrative Agent or the Lenders with
respect to any of the Obligations, nor by any other agreements or arrangements whatever with the other Borrowers or with any other Person, each Borrower hereby
waiving all notice of any such delay, extension, release, substitution, renewal, compromise or other indulgence, and hereby consenting to be bound thereby as fully and
effectively as if it had expressly agreed thereto in advance. Except as may be expressly stated in this Agreement to the contrary, the liability of each Borrower hereunder
is direct and unconditional as to all of the Obligations (except as may be expressly stated in this Agreement to the contrary), and may be enforced without requiring the
Credit Parties first to resort to any other right, remedy or security.
1.18.vii.Obligations Among Loan Parties. WITHOUT LIMITATION OF THE FOREGOING, EACH BORROWER SHALL BE JOINTLY AND
SEVERALLY LIABLE TO THE ADMINISTRATIVE AGENT, ISSUING BANK, SWINGLINE LENDER, M&T ADVANCE LENDER
LENDER PARTIES, IN EACH CASE, SOLELY TO THE EXTENT EXPRESSLY SET FORTH IN SECTION 2.18.6 AND, IN EACH SUCH CASE, WITHOUT
REGARD TO ANY ALLOCATION OF LOSSES AND LIABILITIES PURSUANT TO THIS SUBSECTION OR OTHERWISE AND, IN CONNECTION
THEREWITH, EACH BORROWER HAS EXPRESSLY ASSUMED THE RISK THAT SUCH BORROWER’S ACTUAL LIABILITY MAY EXCEED SUCH
BORROWER’S PRO RATA SHARE AND THAT OVERPAYMENTS MAY NOT ACTUALLY BE REIMBURSED OR INDEMNIFIED.
Subject to the foregoing,
the Borrowers agree that the provisions of this subsection are intended to provide for an allocation of the Obligations among Borrowers of each Class. Accordingly, as
among the Borrowers of each Class, if any Borrower under such Class (the "Overpaying Borrower”) pays (whether directly or by application of Collateral), or is
otherwise held liable for, Loans and related Obligations in connection with Loans under the Applicable Credit Facility, in each case, in excess of its pro rata share for the
Overpaying Borrower, the other Borrowers under such Applicable Credit Facility will pay the amount of such excess to the Overpaying Borrower and will indemnify the
Overpaying Borrower for, from and against any claims, damages, loss or liability arising from or related to such overpayment. The value to each Borrower of the rights
and claims against the other applicable Borrowers provided above under this Section 2.18.7 is intended, to the extent permitted under applicable Law, to prevent any
Borrower from being rendered "insolvent” solely by virtue of the joint and several liability it may be subject to under Section 2.18.7. The rights and obligations among
Borrowers pursuant to this subsection shall survive the payment and performance of the Obligations.
AND THE OTHER
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SECTION 19. Swap Obligations; Keepwell. Notwithstanding anything to the contrary contained in this Agreement or any of the other Credit Documents, Swap
Obligations of any Loan Party that is not an Eligible Contract Participant shall not include any Excluded Swap Liabilities; provided however, to the extent that a Loan
Party is an Eligible Contract Participant, such Loan Party (in addition to its other Obligations and agreements hereunder), hereby jointly and severally absolutely,
unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party in respect of the Swap
Obligations. The obligations of each Loan Party, to the extent that it is an Eligible Contract Participant, under this Section 2.19 shall remain in full force and effect until
indefeasible payment in full in cash of all of the Obligations and termination of this Agreement and the other Credit Documents. Each Loan Party , to the extent that such
Loan Party is an Eligible Contract Participant, intends that this Section 2.19 constitute, and this Section 2.19 shall be deemed to constitute, a "keepwell, support, or other
agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the CEA.
SECTION 20. Acknowledgment and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Credit Document
or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution
arising under any Credit Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution
Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-in Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will
be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Credit Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution
Authority.
SECTION 21. Reserves. The Administrative Agent may modify eligibility standards and establish and modify Reserves against the Borrowing Base, acting in its
Permitted Discretion and upon at least five (5) Business Days’ (or three (3) Business Days, if such modification or Reserve is imposed to address information reflected in
a Borrowing Base Certificate delivered in accordance with Section 4.02 in connection with a funding of Revolving Credit Loans, prior to the applicable Borrowing Date
applicable to such Loan) prior written notice to the Borrower Representative. In no event shall Reserves or adjustments to eligibility criteria duplicate Reserves or
adjustments already accounted for in determining eligibility criteria under the definitions of Eligible Accounts, Eligible Contracts In Transit, Eligible Equipment, and Eligible
Inventory. Notwithstanding anything herein to the contrary, any Reserve or eligibility criteria established or modified by the Administrative Agent shall have a reasonable
relationship to circumstances, conditions, events or contingencies which are the basis for such Reserve, as reasonably determined by the Administrative Agent in good faith
and in its Permitted Discretion; provided that circumstances, conditions, events or contingencies known to the Administrative Agent as of the Closing Date shall not be the
basis for any such establishment or modification after the Closing Date unless such Reserves or eligibility criteria are in categories or of the type set forth as a line item on
the Borrowing Base Certificate delivered on the Closing Date or relate to changes in law coming into force after the Closing Date.
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SECTION 22. Increase in Commitments.
1.22.i.Request for Increase. Upon notice to the Administrative Agent, the Borrower Representative, on behalf of the applicable Borrowers, may from
time to time, request (i) to increase the existing aggregate Floor Plan Loan Commitments by requesting new floor plan loan commitments to be added to the Floor Plan
Facility (each such increase a "Floor Plan Increase”) and (ii) to increase the existing aggregate Revolving Credit Commitments by requesting new revolving credit
commitments to be added to the Revolving Credit Facility (each such increase a "Revolving Credit Increase” and, together with a Floor Plan Increase and a Revolving
Credit Increase, each a "Facility Increase”); provided that (i) the aggregate principal amount of all such Facility Increases effected after the Closing Date shall not
exceed One Hundred Fifty Million Dollars ($150,000,000.00), (ii) any such request for a Facility Increase shall be in a minimum amount of Fifty Million Dollars
($50,000,000.00) or such lesser amount as the Administrative Agent may agree to in its sole discretion, (iii) such Facility Increase in respect of the Floor Plan Loan
Commitments and Revolving Credit Facility shall be on the same terms and pursuant to the same documentation applicable to the Floor Plan Loan Commitments and
Revolving Credit Facility, as applicable (except to the extent of any upfront, arranger or similar fees) and (iv) no Lender shall have any obligation to increase its
Commitments with respect to a Facility Increase or to provide a commitment with respect to a Facility Increase.
1.22.ii.Incremental Lenders. Facility Increases may be provided, by any existing Lender (but no existing Lender will have an obligation to make any
Facility Increase) or by any Additional Lender (each such existing Lender or Additional Lender providing such Facility Increase, in such capacity, an "Incremental
Lender”); provided that the Administrative Agent shall have consented to such Additional Lender’s providing such Facility Increase to the extent such consent, if any,
would be required under Section Error! Reference source not found.10.02 for an assignment of Loans or Commitments, as applicable, to such Additional Lender.
1.22.iii.Effective Date and Allocations.
(1) With respect to each Facility Increase, the Administrative Agent and the Borrower Representative shall determine the effective date (the "Increase
Effective Date”) and the final allocation of such Facility Increase. The Administrative Agent shall promptly notify (i) the Incremental Lenders of the
amount and Class of such Facility Increase and the Increase Effective Date, and (ii) the Incremental Lenders of the final allocation of such Facility
Increase.
(2) On any Increase Effective Date on which a Floor Plan Increase is effected, with respect to Floor Plan Loan Commitments of an Incremental Lender,
each of the existing Floor Plan Lenders shall automatically and without further act be deemed to have assigned to such Incremental Lender, and such
Incremental Lender shall automatically and without further act be deemed to have purchased and assumed at the principal amount thereof, such interests
in the Floor Plan Loans outstanding on such Increase Effective Date as shall be necessary in order that, after giving effect to all such assignments and
assumptions, the Floor Plan Loans will be held by existing Floor Plan Lenders and Incremental Lenders in respect of such Floor Plan Increase ratably in
accordance with their respective Floor Plan Loan Commitment Percentages after giving effect to such Floor Plan Increase. The Administrative Agent and
the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement
shall not apply to the transactions effected pursuant to this paragraph. Any increase in Floor Plan Loan Commitments under this Section 2.22 as a result of
a Floor Plan Increase shall increase the Floor Plan Line of Credit Dollar Cap on a dollar for dollar basis.
(3) On any Increase Effective Date on which a Revolving Credit Increase is effected, with respect to Revolving Credit Commitments of an Incremental
Lender, each of the existing Revolving Credit Lenders shall automatically and without further act be deemed to have assigned to such Incremental Lender,
and such Incremental Lender shall automatically and without further act be deemed to have purchased and assumed at the principal amount thereof, such
interests in the Revolving Credit Loans outstanding on such Increase Effective Date as shall be necessary in order that, after giving effect to all such
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assignments and assumptions, the Revolving Credit Loans will be held by existing Revolving Credit Lenders and Incremental Lenders in respect of such
Revolving Credit Increase ratably in accordance with their respective Revolving Credit Commitment Percentages after giving effect to such Revolving
Credit Increase. The Administrative Agent and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment
requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to this paragraph. Any increase in Revolving
Credit Commitments under this Section 2.22 as a result of a Revolving Credit Increase shall increase the Revolving Credit Dollar Cap on a dollar for dollar
basis.
1.22.iv.Conditions to Effectiveness of Facility Increase. As a condition precedent to the effectiveness of any Facility Increase, the Borrower
Representative shall deliver to the Administrative Agent one or more certificates dated as of the Increase Effective Date duly executed by an Authorized Officer of the
Borrower Representative or the applicable Loan Parties (a) certifying and attaching the resolutions adopted by each applicable Loan Party approving or consenting to such
Facility Increase, and (b) certifying that, after giving effect pro forma effect to such Facility Increase, the Borrowers are in compliance with financial covenants set forth
in Sections 6.12, 6.13 and 6.14 (assuming (x) that the entire amount of such Facility Increase is funded and (y) that the cash proceeds of such Facility Increase will be
excluded for netting purposes and for purposes of determining Consolidated Current Assets in such determination of pro forma compliance with the financial covenants
under Section 6.14) as of the most recently ended fiscal month for which financial statements have been or were required to be delivered pursuant to Section 5.09.2, (ii) no
Default or Event of Default shall have occurred and be continuing, and (iii) the representations and warranties contained in this Agreement and the other Credit
Documents shall be true and correct in all material respects (or in all respects to the extent that any representation or warranty is qualified by materiality). With respect to
any Facility Increase, all conditions precedent set forth in Error! Reference source not found.4.02 hereof shall have been satisfied. The proceeds of any Revolving
Credit Increases shall be used for the purposes set forth in Section Error! Reference source not found.46.10. The proceeds of Floor Plan Increases shall be used only
as set forth in Section 2.01.12.
1.22.v.Required Terms.
(1) Any Facility Increase in respect of any Class shall be on the same terms applicable to the Class of Commitments or Loans, as applicable, to which such
Facility Increase applies (other than with respect to upfront fees, arranger and similar fees).
(2) Any Facility Increase in respect of any Class shall constitute Obligations and will be secured and guaranteed with the other Obligations on a pari passu
basis.
1.22.vi.Conflicting Provisions. This Section 2.22 shall supersede any provisions in Error! Reference source not found.10.01 to the contrary.
1.22.vii.Incremental Amendment. Commitments and Loans in respect of Facility Increases of any Class shall become Commitments or Loans (and in the
case of a Facility Increase to be provided by an existing Lender, an increase in such Lender’s applicable Commitment) of such Class under this Agreement pursuant to an
amendment (an "Incremental Amendment”) to this Agreement and, as appropriate, the other Credit Documents, executed by the applicable Borrowers, each Incremental
Lender providing such Commitments, the Administrative Agent (and each such Incremental Lender shall be recorded in the Register by the Administrative Agent and, to
the extent such Person is not a Lender prior to such date, shall be subject to the requirements of Section 10.02 of this Agreement). The Incremental Amendment may,
without the consent of any other Loan Party or Lender, effect such amendments to this Agreement and the other Credit Documents as may be necessary or appropriate,
in the reasonable opinion of the Administrative Agent and the Borrower Representative, to effect the provisions of this Section 2.22. In connection with any Incremental
Amendment, the Borrowers shall, if reasonably requested by the Administrative Agent, deliver customary reaffirmation agreements, such amendments to the Security
Documents and/or legal opinions with respect thereto, in each case, as may be reasonably requested by such Agent in order to ensure that such Facility Increases are
provided with the benefit of the applicable Credit Documents.
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REPRESENTATIONS AND WARRANTIES
ARTICLE 3
The Borrowers make the following representations and warranties to the Credit Parties as of the Closing Date and, as of each date on which any Floor Plan
Loans, M&T Advance, Revolving Credit Loans, Swingline Loan or other Loan is requested or made or any Letter of Credit is requested or issued (for purposes hereof,
each extension or other amendment of a Letter of Credit shall constitute an issuance thereof), and as of each date on which any Loan or portion of a Loan is converted to
or continued as a SOFR Borrowing:
Section 1.01.
Organization and Qualification. Each Loan Party and each Subsidiary of each Loan Party (a) is a corporation or limited liability company duly
organized or formed, validly existing and, as applicable, in good standing under the Laws of the state of incorporation or organization of such Loan Party or
Subsidiary, (b) has the lawful power to own or lease its properties and to engage in the business it presently conducts or proposes to conduct, and (c) is duly
licensed or qualified and in good standing in all jurisdictions where the property owned or leased by it or the nature of the business transacted by it makes such
licensing or qualification necessary (except to the extent that the failure to be licensed, qualified or in good standing is not likely to cause a Material Adverse
Change).
Section 1.02.
Capitalization and Ownership. As of the Closing Date, the authorized Capital Stock and the issued and outstanding Capital Stock of the
respective Loan Parties consists of those shares of common stock or other interests described in the Collateral Information Certificate given as of the Closing
Date, having such par value as may be indicated therein, of which that number of shares or other interests indicated therein as issued and outstanding are in fact
issued and outstanding. All of the Capital Stock of the Loan Parties indicated as issued and outstanding has been validly issued and is fully paid and nonassessable.
As of the Closing Date, there are no options, warrants or other rights outstanding to purchase any Capital Stock of any Loan Party, except as disclosed by the
Collateral Information Certificate.
Section 1.03.
Subsidiaries. No Loan Party nor any Subsidiary of a Loan Party has any Subsidiaries as of the Closing Date, except as otherwise set forth in the
Collateral Information Certificate given as of the Closing Date. Each Loan Party has good and marketable title to all the Capital Stock of any Subsidiary which
such Loan Party owns, free and clear of any Lien other than Permitted Encumbrances. All of the issued and outstanding shares of Capital Stock of each
Subsidiary of the respective Loan Parties are fully paid and non-assessable. There are no options, warrants or other rights outstanding to purchase any shares of
Capital Stock of any Subsidiary of any Loan Party (except any Designated Real Estate Subsidiary) nor are any securities or Equity Interests of any Subsidiary
convertible into or exchangeable for their Capital Stock. Except for any investments in such assets permitted under the provisions of this Agreement, no Loan
Party owns directly or indirectly any Capital Stock of any other Person, no Subsidiary, is a partner (general or limited) of any partnership, and no Subsidiary is a
party to any joint venture and or otherwise owns (beneficially or of record) any Equity Interest or similar interest in any other Person.
Section 1.04.
Power and Authority. Each of the Loan Parties has the full power and authority to enter into, execute, deliver, carry out and perform this
Agreement and the Credit Documents to which it is a party, to incur the Indebtedness contemplated by the Credit Documents and to perform its respective
obligations under the Credit Documents to which it is a party and all of such actions have been duly authorized in each instance by all necessary corporate or
other organizational proceedings.
Section 1.05.
Validity and Binding Effect. This Agreement has been, and each Credit Document, when executed and delivered by the respective Loan Parties,
will have been, duly and validly executed and delivered by the Loan Parties which are signatories thereto. This Agreement and each of the other Credit
Documents executed and delivered by the respective Loan Parties will, upon such execution and delivery, constitute the legal, valid and binding obligations of such
Loan Parties, enforceable against the respective Loan Parties in accordance
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with their respective terms, subject to applicable bankruptcy, insolvency, reorganization moratorium or similar Laws affecting the rights of creditors generally and
to the effect of general principles of equity whether applied by a court of Law or equity.
Section 1.06.
No Conflict. Neither the execution and delivery by any Loan Party of any Credit Documents to which it is a party, nor the consummation of the
transactions herein or therein contemplated, nor compliance with the terms and provisions hereof or thereof by the Borrowers or the other Loan Parties will (a)
conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the Organization Documents of any Loan Party, including but not
limited to the Amended Charter and the Certificate of Designations or (ii) any Law or any agreement or instrument or order, writ, judgment, injunction or decree
to which any Loan Party is a party or by which it is bound or to which it is subject, which conflict, default or breach would cause a Material Adverse Change, or
(b) result in the creation or enforcement of any Lien upon any property (now or hereafter acquired) of any of the Loan Parties (other than Liens securing the
Obligations and the Permitted Encumbrances). For the avoidance of doubt, the Loan Parties have given all notices and obtained all consents required under the
Organization Documents of Pubco Guarantor in connection with this Agreement and the transactions contemplated hereby.
Section 1.07.
Litigation. There are no actions, suits, proceedings or investigations pending or, to the knowledge of the Borrowers, threatened against any Loan
Party or any Subsidiary, at law or in equity, before any Governmental Authority which individually or in the aggregate, could be reasonably expected to result in
any Material Adverse Change; and (b) no Loan Party or Subsidiary is in violation of any order, writ, injunction or decree of any Governmental Authority, the
violation of which could reasonably be expected to result in any Material Adverse Change.
Section 1.08.
Financial Statements; Financial Projections.
1.08.i. Financial Statements. The Historical Financial Statements and the financial statements delivered pursuant to Section 5.09.2, (a) were prepared in
accordance with GAAP (except as disclosed therein); and (b) fairly present in all material respects the results of operations and the changes in financial
positions of the Persons covered thereby for the periods covered thereby in accordance with GAAP, subject, in the case of clause (ii) of the definition of
Historical Financial Statements, to the exceptions set forth therein and the absence of footnotes and normal year-end adjustments.
1.08.ii. Books and Records. (a) The books of account and other financial records of the Borrowers and their Subsidiaries as in effect on the Closing Date are
correct and complete in all material respects, represent actual, bona fide transactions and have been maintained in accordance with sound business and
accounting practices; and (b) as of the Closing Date, the Borrowers and their Subsidiaries maintain an adequate system of internal accounting controls and
does not engage in or maintain any off-the-books accounts or transactions.
1.08.iii. Absence of Material Liability. As of the Closing Date, the Loan Parties and their Subsidiaries do not have any Indebtedness or material liabilities of any
kind, whether direct or indirect, fixed or contingent or otherwise which is not disclosed upon the most recent consolidated and consolidating financial
statements of the Parent Guarantor and its Subsidiaries which have been provided to the Administrative Agent for the benefit of the Credit Parties; other than
executory obligations under contracts, leases, or other agreements which GAAP would not require to be set forth in the consolidated and consolidating
financial statements of the Parent Guarantor and its Subsidiaries.
1.08.iv. Financial Projections. The Borrowers have delivered to the Credit Parties financial projections of the Loan Parties and their Subsidiaries for the period
commencing January 1, 2023 and ending December 31, 2025 (the "Projections”). Such projections set forth in the judgment of the Borrowers a reasonable
range of possible results in light of the history of the businesses of the Loan Parties and their Subsidiaries, and present reasonably foreseeable conditions and
the intentions of the management of the Loan Parties and their Subsidiaries.
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In the reasonable judgment of the Borrower, such projections accurately reflect the liabilities of the Loan Parties and their Subsidiaries on the Closing Date,
after giving effect to the transactions contemplated by that Agreement. No events have occurred since the preparation of the projections which would cause
the projections, taken as a whole, not to be reasonably attainable.
SECTION 23. Margin Stock. No Loan Parties and no Subsidiary of a Borrower engages or intends to engage principally, or as one of its important activities, in
the business of incurring Indebtedness or extending credit to others for the purpose, immediately, incidentally or ultimately, of purchasing or carrying "margin stock” (within
the meaning of Regulation U issued by the Federal Reserve Board). No part of the proceeds of any Loan or other extension of credit hereunder has been or will be used,
to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or to refund or retire Indebtedness originally
incurred for such purpose. As of the Closing Date no Loan Parties and no Subsidiary of a Loan Party intends to hold any margin stock.
SECTION 10. Full Disclosure. Neither this Agreement nor any Credit Document, nor any certificate, statement, agreement or other document furnished by the
Loan Parties to the Administrative Agent for the benefit of the Credit Parties, contains any misstatement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading. There is no fact known to the
Borrowers which materially adversely affects the business, property, assets, financial condition, results of operations or prospects of the Borrowers and their Subsidiaries
(except any Designated Real Estate Subsidiary), taken as a whole, which has not been set forth in this Agreement or the Credit Documents or in the certificates,
statements, agreements or other documents furnished in writing to the Administrative Agent for the benefit of the Credit Parties before or at the date hereof in connection
with the transactions contemplated hereby and thereby. As of the Closing Date, the information included in the Beneficial Ownership Certification is true and correct in all
respects.
SECTION 11. Tax Returns and Payments. All federal and state tax returns that are required by applicable Law to be filed by the Loan Parties and their
Subsidiaries have been filed or properly extended. All taxes, assessments and other governmental charges levied upon the Loan Parties and their Subsidiaries, or any of
their respective properties, assets, income or franchises which are due and payable have been paid in full other than (a) those presently payable without penalty or interest,
(b) those which are being contested in good faith by appropriate proceedings, and (c) those which, if not paid, would not, in the aggregate, constitute a Material Adverse
Change; and as to each of items (a), (b) and (c) the Loan Parties and their Subsidiaries have established reserves for such claims as have been determined to be adequate
by application of GAAP consistently applied. There are no agreements or waivers extending the statutory period of limitations applicable to any consolidated federal
income tax returns of the Loan Parties and their Subsidiaries for any period.
SECTION 12. Consents and Approvals. No consent, approval, exemption, order or authorization of, or a registration or filing with any Governmental Authority
or any other Person (including but not limited to Coliseum or any other Preferred Stockholder) is required by any Law or any agreement (other than the Credit Documents)
in connection with the execution, delivery and carrying out of this Agreement and the Credit Documents to which any Loan Party is a party.
SECTION 13. No Event of Default; Compliance with Instruments. No event has occurred and is continuing and no condition exists or will exist after giving
effect to the Loans which constitutes an Event of Default or a Default. No Loan Party or Subsidiary of a Loan Party is in violation of any term of its Organization
Documents.
SECTION 14. Compliance with Laws. Each of the Loan Parties and their respective Subsidiaries are in compliance in all material respects with all applicable
Laws in all jurisdictions in which any of the Loan Parties or their Subsidiaries are presently or will be doing business, the non-compliance with which would be likely to
cause a Material Adverse Change.
SECTION 15. ERISA Compliance.
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1.15.i.Plans and Contributions. Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal
or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such
a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Borrowers, nothing has occurred which would prevent, or cause the
loss of, such qualification. The Loan Parties and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.
1.15.ii.Pending Claims. There are no pending or, to the best knowledge of the Borrowers, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan that could reasonably be expected to result in a Material Adverse Change. There has been no Prohibited Transaction or
violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Change.
a transaction that could reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.
1.15.iii.ERISA Events. (a) No ERISA Event has occurred or is reasonably expected to occur and (b) no Borrower and no ERISA Affiliate has engaged in
SECTION 16. Title to Properties. Each Loan Party and each Subsidiary has (i) good, sufficient and legal title to, (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (iii) all of the respective properties and assets reflected in their respective Historical Financial Statements and in the
most recent financial statements delivered pursuant to Section 4.01, Section 5.01.1 or Section 5.08.2, in each case except for assets disposed of since the date of such
financial statements in the ordinary course of business if occurring prior to the Closing Date or as otherwise permitted under Section 6.04 or Section 6.05. All such
properties and assets are free and clear of Liens other than Permitted Encumbrances.
SECTION 17. Insurance. There are in full force and effect for the benefit of the Loan Parties and their Subsidiaries insurance policies and bonds providing
adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of the Loan Parties and their Subsidiaries in
accordance with prudent business practices in the respective industries of the Loan Parties and their Subsidiaries. As of the Closing Date, and, as of each subsequent
reaffirmation of this representation and warranty, except as otherwise previously disclosed in writing to the Administrative Agent, no notice has been given or claim made
and to the knowledge of the Loan Parties, no grounds exist, to cancel or void any of such policies or bonds or to reduce the coverage provided thereby.
SECTION 18. Employment Matters. Each Loan Party and each Subsidiary of a Loan Party is in material compliance with all employee benefit plans,
employment agreements, collective bargaining agreements and labor contracts and all Laws applicable thereto. There are no outstanding grievances, arbitration awards or
appeals relating to any of the foregoing plans, agreements or contracts, or, to the knowledge of the Borrowers, threatened strikes, picketing, handbilling or other work
stoppages or slowdowns at facilities of any Loan Party or any Subsidiary of a Loan Party which could reasonably be expected to result in any Material Adverse Change.
All payments due or to become due from any Loan Party or the Subsidiary of the Loan Party on account of obligations in respect of employee health and welfare
insurance which could reasonably be expected to result in any Material Adverse Change if not paid have been paid or, in the case of such amounts not yet due, have been
recorded as liabilities on the books of the Borrowers and their Subsidiaries.
SECTION 19. Solvency. As of the Closing Date, and as of the date of each advance of the proceeds of any Loan and each issuance or renewal of any Letter of
Credit, as the case may be, and after giving effect to such advances or issuances or renewals, each of the Loan Parties and each Subsidiary of a Loan Party, taken as a
whole is, and will remain, Solvent.
SECTION 20. Material Contracts; Burdensome Restrictions. Except as otherwise disclosed on Schedule 3.20 and, in each instance in which the
representations and warranties of this Section are given or deemed given on a date subsequent to the Closing Date, as theretofore otherwise disclosed in writing to the
Administrative Agent for the benefit of the Credit Parties, all material contracts relating to the
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business operations of the Loan Parties and their Subsidiaries, are valid, binding and enforceable upon the Loan Parties and their Subsidiaries, and to the knowledge of the
Borrowers, the other parties thereto, without any material defaults thereunder.
SECTION 21. Patents, Trademarks, Copyrights, Licenses, Etc. Each Loan Party and each Subsidiary of a Loan Party owns or possesses all the patents,
trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights, including but not limited to agreements with Manufacturers and
other suppliers of Floor Plan Units, and other vendors which are materially necessary to own and operate its assets and to carry on its business as presently conducted and
as planned to be conducted by such Loan Party (the "IP Rights”), without known possible, alleged or actual conflict with the rights of others. No Authorized Officer of the
Loan Parties has knowledge that the use of the IP Rights in connection with such businesses materially infringes or misappropriates the intellectual property rights of any
other Person. No slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by a
Loan Party or any of its Subsidiaries in the conduct of their respective businesses as currently conducted infringes upon any material intellectual property rights held by any
other Person.
SECTION 22. Liens. The Security Documents, together with such filings and other actions required to be taken hereby or by the applicable Security Documents,
are effective to create legal, valid and enforceable Liens (subject to Permitted Encumbrances) in the Collateral described therein in favor of the Administrative Agent for
the benefit of the Credit Parties and (i) when financing statements and other filings in appropriate form are filed in the offices required by the applicable provision of the
Security Documents and (ii) upon the taking of possession or control by the Administrative Agent of such Collateral with respect to which a security interest may be
perfected only by possession or control (which such possession or control shall be given to the Administrative Agent to the extent required by the Security Documents), the
Liens created by the Security Documents shall constitute fully perfected first-priority Liens on, and security interests in all right, title and interest of the grantors in such
Collateral to the extent perfection can be obtained by filing financing statements or taking possession or control, in each case subject to no other Liens and the Liens
created thereunder are entitled to all applicable rights and benefits provided by applicable Law.
SECTION 23. Environmental Compliance.
with all required Environmental Permits, other than non-compliances;
1.23.i.Each Loan Party and its Subsidiaries have been and are in compliance with all material Environmental Laws, including obtaining and complying
1.23.ii.no Loan Party nor any of its Subsidiaries nor any property currently, or, to the knowledge the Authorized Officers of the Loan Parties, previously
owned, operated or leased by or for each Loan Party or any of its Subsidiaries is subject to any pending or threatened, in writing, written claim, order, legally-binding
agreement with any Governmental Authority to conduct any remedial Action pursuant to Environmental Law, written notice of violation or written notice of potential
liability or, to the knowledge of any Authorized Officer of any Loan Party, is the subject of any pending governmental investigation of which a Loan Party or any of its
Subsidiaries have written notice, in each case under or pursuant to Environmental Laws;
1.23.iii.as of the Closing Date, no Loan Party nor any of its Subsidiaries operates their respective currently owned or leased real property as a treatment
or storage or disposal facility requiring a permit under the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq., the regulations thereunder or any state
analog;
1.23.iv.no Authorized Officer of any Loan Party has knowledge of any environmental conditions arising out of or relating to the operations or ownership
of a Loan Party or any of its Subsidiaries at the property currently owned, operated or leased by a Loan Party or any of its Subsidiaries that would be reasonably expected
to have resulted in any material Environmental Liabilities that are not specifically included in the financial information furnished to the Lenders, unless such liabilities are
reasonably expected to be (i) covered by environmental liability insurance or (ii) subject to an indemnity satisfactory to the Borrower Representative from, to the extent
that the board of directors of Pubco
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Guarantor has determined in good faith to be appropriately credit worthy in relation to the potential amount of such liabilities, any Person that is not an Affiliate of any Loan
Party;
any Authorized Officer of any Loan Party, no facts, circumstances or conditions exist that would result in such a Lien; and
1.23.v.as of the Closing Date, no material Environmental Lien has attached to any property of a Loan Party or its Subsidiaries and, to the knowledge of
1.23.vi.no Loan Party nor any of its Subsidiaries is undertaking, either individually or together with other potentially responsible parties, as of the Closing
Date, any investigation or assessment or remedial action relating to any actual or threatened release of Hazardous Materials at any location or disposal site, either
voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated,
handled or stored at, or transported to or from, any property currently or, during the period of ownership or operation by a Loan Party or any of its Subsidiaries, formerly
owned or operated by a Loan Party or any of its Subsidiaries have been disposed of by a Loan Party or any of its Subsidiaries.
SECTION 24. Anti-Corruption; Anti-Terrorism. No Loan Party nor any Subsidiary is a Sanctioned Person. No Loan Party nor any Subsidiary (a) has any of its
assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person, in either case, in violation of any Sanctions; (b) does business in or with, or
derives any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person, in either case, in violation of any Anti-Terrorism Law or
Sanctions; or (c) engages in any dealings or transactions prohibited by any Anti-Terrorism Law or Sanctions. No Loan Party nor any Subsidiary, nor, to the knowledge of
Borrowers, any Director, officer or employee thereof, is in violation in any material respect of (A) Sanctions or (B) the USA Patriot Act. Each Loan Party and each
Subsidiary has conducted its businesses in material compliance with the United States Foreign Corrupt Practices Act of 1977. No proceeds of any Loan made or Letter of
Credit issued hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person, in each case, in
violation of applicable Sanctions.
SECTION 25. Affected Financial Institution. Neither the Borrowers nor any other Loan Party is an Affected Financial Institution.
SECTION 26. Beneficial Ownership. As of the Closing Date, the information included in the Beneficial Ownership Certification (if any) is true and correct in
all respects.
SECTION 27. Covered Entities. No Loan Party is a Covered Entity.
ARTICLE 4
CONDITIONS PRECEDENT
Section 1.01.
Conditions to Closing. The obligations of each Lender to make any advances of proceeds of the Loans, the obligations of M&T to make M&T
Advances, and the obligations of the Issuing Bank to issue any Letters of Credit hereunder are subject to the satisfaction on or before the Closing Date of the
following conditions precedent:
1.01.i.Closing Submissions. The Administrative Agent’s receipt of the following, each properly executed by an Authorized Officer of the signing Loan
Party, each dated either the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance
reasonably satisfactory to the Administrative Agent and its counsel:
(a) executed counterparts of this Agreement, the Security Agreement, the Guaranty Agreement and the other Credit Documents;
(b) Notes executed by the Borrowers in favor of each Lender;
(c) one or more Guaranty Agreements executed by each of the Guarantors;
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(d) (i) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Authorized Officers of each Loan Party as the Administrative
Agent may require evidencing the identity, authority and capacity of each Authorized Officer thereof authorized to act as a Authorized Officer in connection with this
Agreement and the other Credit Documents to which such Loan Party is a party and (ii) a copy of the Organization Documents certified as of a recent date by the
appropriate governmental official, each certified as true and complete by an Authorized Officer of the applicable Loan Party;
(e) such documents and certifications (including certified copies of the Organization Documents of the Loan Parties) as the Administrative Agent may reasonably
require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in
each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification;
(f) a favorable opinion of counsel to the Loan Parties addressed to the Administrative Agent and the Lenders in form and substance satisfactory to the Administrative
Agent;
(g) a certificate of an Authorized Officer of each Loan Party stating that all notices, consents, licenses, approvals, and agreements required in connection with the
execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Credit Documents to which it is a party, including notices to, and
consents, and approvals required from Manufacturers, OEM and other vendors and suppliers of Floor Plan Vehicles and Units and a statement identifying all of such
Manufacturers, OEM, vendors and suppliers of Floor Plan Vehicles, and shall have been duly given or received, and that any such consents, licenses, approvals, and
agreements shall be in full force and effect upon giving effect to the Credit Documents and the transactions contemplated by this Agreement;
(h) a certificate signed by an Authorized Officer of the Loan Parties or the Borrower Representative certifying (i) the absence of any continuing Defaults or Events of
Default, (ii) satisfaction of all conditions precedent to Closing hereunder, (iii) solvency, and (iv) all shareholder and corporate consents and approvals (including any
consents required under the Amended Charter and compliance with all requirements with respect to the Loans and other credit accommodations set forth in the Certificate
of Designations), and all material governmental and third party consents and approvals required in connection with the Closing Date Transactions (all of which shall be final
with no waiting period to expire or ongoing governmental inquiry or investigation) shall have been received and there does not exist any action, suit, investigation, litigation
or proceeding pending or threatened in any court or before any arbitrator or governmental authority that challenges the credit facilities or any other transaction involving
any of the Loan Parties;
(i) a duly completed Compliance Certificate, including calculations of the financial covenants set forth therein in a manner reasonably satisfactory to the
Administrative Agent, signed by an Authorized Officer of the Loan Parties in form and substance satisfactory to the Administrative Agent evidencing, as of the as of the
last day of the most recently completed month ending at least 30 days prior to the Closing Date, (i) a Total Net Leverage Ratio not be greater than 3.00:1.00, (ii) a
Consolidated Fixed Charge Coverage Ratio not to be less than 1.25:1.00 and (iii) a Consolidated Current Ratio not less than 1.15:1.00, in each case after giving pro forma
effect to the Closing Date Transactions;
(j) the Historical Financial Statements and the Projections;
(k) (i) UCC search results with respect to the Loan Parties and the Subsidiaries showing no Liens except Permitted Encumbrances (or Liens with respect to
Indebtedness to be repaid on or prior to the Closing Date) and (ii) searches of ownership of intellectual property owned by the Loan Parties in the United States Patent and
Trademark Office and the United States Copyright Office and such patent/trademark/copyright filings as requested by the Administrative Agent in order to perfect the
Administrative Agent’s security interest in such intellectual property;
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(l) such deposit account control agreements as are required pursuant to the Security Documents;
(m) all documentation and other information required by any Lenders or the Issuing Bank to evidence or facilitate both the Borrowers’ and each Lender’s compliance
with all applicable Laws and regulations, including, all "know your customer” rules in effect from time to time pursuant to the Bank Secrecy Act, the USA Patriot Act and
other applicable Laws on or prior to the date which is five (5) Business Days prior to the Closing Date;
(n) at least five days prior to the Closing Date, any Borrower that qualifies as a "legal entity customer” under the Beneficial Ownership Regulation shall deliver a
Beneficial Ownership Certification in relation to such Borrower;
(o) certificates in form and substance satisfactory to the Administrative Agent evidencing insurance (including flood insurance to the extent applicable) which insurance
shall name the Administrative Agent as additional insured and include lender loss payee endorsements for property and casualty policies, as applicable;
(p) UCC-1 financing statements for filing in all places required by applicable Law to perfect the Liens of the Administrative Agent for the benefit of the Credit Parties
under the Security Documents as a perfected Lien as to items of Collateral in which a security interest may be perfected by the filing of a UCC-1 financing statement,
(q) an executed Collateral Information Certificate by Borrower Representative for itself and for each Loan Party completed giving pro forma effect to the Closing Date
Transactions, and
(r) such other assurances, certificates, documents, consents or opinions as the Administrative Agent, the Issuing Bank, or the Required Lenders reasonably may require.
1.01.ii.Fees. Any fees required to be paid on or before the Closing Date shall have been paid.
1.01.iii.Credit Party Expenses. The Borrowers shall have paid in full all Credit Party Expenses to the extent invoiced prior to or on the Closing Date.
1.01.iv.No Material Adverse Change. No material adverse change shall have occurred in the business, condition (financial or otherwise), prospects,
assets, operations, liabilities (contingent or otherwise) or properties of Pubco Guarantor, Parent Guarantor, or the Borrowers and their respective Subsidiaries, taken as a
whole since December 31, 2021.
Without limiting the generality of the provisions of Section 9.02.4 of this Agreement, for purposes of determining compliance with the conditions specified in this Section
4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved, accepted and to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such
Lender prior to the proposed Closing Date specifying its objections thereto.
Section 1.02.
Conditions To Advances Of Proceeds Of Loans And Issuances Of Letters Of Credit After Closing Date. The obligations of each Lender and
of the Issuing Bank to honor any request for the advance of any proceeds of the Loans or the issuance or reissuance of any Letters of Credit after the Closing
Date or request to renew or amend any Letter of Credit after the Closing Date, shall be subject to the satisfaction of the following conditions precedent:
1.02.i.Representations And Warranties. The representations and warranties of the Loan Parties contained in Article 3 of this Agreement or in any
other Credit Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material
respects (and, in the case of any representation or warranty that is qualified by
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materiality or Material Adverse Change, shall be true and correct in all respects) on and as of the date of any such advance of proceeds of the Loans or issuance of
Letters of Credit, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all
material respects (and, in the case of any representation or warranty that is qualified by materiality or Material Adverse Change, shall be true and correct in all respects)
as of such earlier date.
advance or issuance.
1.02.ii.Absence Of Defaults And Events Of Default. No continuing Default or Event of Default shall exist, or would result from such requested
1.02.iii.No Material Adverse Changes. No Material Adverse Changes shall have occurred since the Closing Date and be continuing.
1.02.iv.Loan Request. With respect to any borrowing of Loans (other than any borrowing of Floor Plan Loans or issuance of any Letter of Credit), the
Administrative Agent shall have received (x) a Loan Request as required by the terms of this Agreement and (y) a Borrowing Base Certificate calculated as of the last
day of the calendar month ended at least thirty (30) days (or such lesser number of days as the Borrower Representative may elect in its discretion) prior to the Borrowing
Date demonstrating Availability on the proposed date of such Borrowing and/or issuance, amendment, extension or renewal of a Letter of Credit sufficient to cover the
amount of such Borrowing and/or issuance, amendment, extension or renewal of such Letter of Credit.
Each request for the advance of proceeds of the Loans or for the issuance or reissuance of any Letters of Credit shall be deemed automatically to be a
representation and warranty of the Borrowers that the conditions specified in this Section 4.02 have been satisfied on and as of the date of the request.
ARTICLE 5
AFFIRMATIVE COVENANTS
Each Borrower agrees that until the payment and satisfaction in full of all of the Obligations, it will comply with and cause the other Loan Parties and each other
Subsidiary to comply with the covenants set forth in this Article 5.
Section 1.01.
Payment and Performance. Each Borrower promises that all Obligations shall be paid and performed in full when and as due.
Section 1.02.
Insurance. The Borrowers and each Loan Party shall obtain and maintain and shall cause their respective Subsidiaries to obtain and maintain such
insurance coverages as are reasonable, customary and prudent for businesses engaged in activities similar to the business activities in which it is engaged. Without
limitation to the foregoing, the Borrowers and the other Loan Parties shall each maintain fire and casualty insurance covering the Collateral and their respective
assets in amounts satisfactory to the Administrative Agent consistent with prudent practices and sufficient to prevent any co-insurance liability (which amount
shall be the full insurable value of the assets and properties insured unless the Administrative Agent in writing agrees to a lesser amount), naming the
Administrative Agent for the benefit of the Credit Parties as sole lender loss payee and/or additional insured with respect to the Collateral and such assets, with
insurance companies and upon policy forms which are acceptable to and approved by the Administrative Agent. The Loan Parties shall submit to the
Administrative Agent originals or certified copies of the casualty insurance policies and paid receipts evidencing payment of the premiums due on the same. The
casualty insurance policies shall be endorsed so as to make them non-cancellable unless thirty (30) days prior notice of cancellation is provided to the
Administrative Agent.
Section 1.03.
Collection Of Accounts; Sale Of Inventory. The Loan Parties shall collect their respective Accounts and sell their respective Inventory only in
the ordinary course of their respective businesses, subject to customary credit and collection policies.
Section 1.04.
Notice Of Litigation And Proceedings. The Borrowers and each other Loan Party shall give prompt notice to the Administrative Agent of any
action, suit, citation, violation,
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direction, notice or proceeding before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting
such Loan Party, or the assets or properties thereof, which, if determined adversely to such Loan Party (a) could require it to pay over more than $2,500,000 or
deliver assets the value of which exceeds that sum, or (b) could reasonably be expected to cause a Material Adverse Change.
Section 1.05.
Payment Of Liabilities To Third Persons. Each Borrower and each other Loan Party shall pay when and as due, or within applicable grace
periods, all liabilities due to third persons, except when the amount thereof is being contested in good faith by appropriate proceedings and with adequate reserves
therefor being set aside by it.
Section 1.06.
Notice Of Change Of Business Location Or Of Jurisdiction of Organization; Notice of Name Change. Each Borrower and each of the
other Loan Parties shall notify the Administrative Agent five (5) days in advance of, (a) any change in the location of its existing offices or places of business or
of the jurisdiction in which it is organized, (b) the establishment of any new, or the discontinuation of any existing, places of business, and (c) any change in or
addition to the locations at which any material portion of the Collateral (or other property securing the Obligations) is kept. Prior to moving any Collateral (or other
property securing the Obligations) to any location not owned by a Loan Party (other than deliveries to Account Debtors of sold or leased goods and premises
occupied temporarily by a Borrower in connection with participation at a trade show or similar temporary sales location), each Loan Party shall obtain and deliver
to the Administrative Agent an agreement, in form and substance acceptable to the Administrative Agent, pursuant to which the owner of such location shall: (i)
subordinate any rights which it may have, or thereafter may obtain, in any of the Collateral or other property to the rights and security interests of the Credit
Parties; and (ii) allow the Administrative Agent access to the Collateral or other property in order to remove the Collateral or other property from such location.
Each Borrower and each other Loan Party shall notify the Administrative Agent five (5) days in advance of any changes to its name.
Section 1.07.
Payment of Taxes. Each of the Borrowers and each of the other Loan Parties shall pay or cause to be paid when and as due all Taxes imposed
upon it or on any of its property or which it is required to withhold and pay over to the taxing authority or which it must pay on its income, except where contested
in good faith, by appropriate proceedings and at its own cost and expense; provided, however, that no Loan Party shall be deemed to be contesting in good faith by
appropriate proceedings unless, (a) such proceedings operate to prevent the taxing authority from attempting to collect the Taxes, (b) the Collateral is not subject
to sale, forfeiture or loss during such proceedings, (c) the applicable Loan Party’s contest does not subject the Credit Parties to any liabilities owed to or claims
from the taxing authority or any other person, (d) the applicable Loan Party establishes appropriate reserves for the payment of all Taxes, court costs and other
expenses for which such Loan Party would be liable if unsuccessful in the contest, (e) the applicable Loan Party prosecutes the contest continuously to its final
conclusion, and (f) at the conclusion of the proceedings, the applicable Loan Party promptly pays all amounts determined to be payable, including but not limited to
all taxes, legal fees and court costs.
Section 1.08.
Notice Of Events Affecting Collateral; Compromise Of Receivables; Returned Or Repossessed Goods. Each Borrower and each of the
other Loan Parties shall promptly report to the Administrative Agent (a) any reclamation, return or repossession of Goods, (b) all claims or disputes and (c) all
other matters materially affecting the value, enforceability or collectability of any of the Collateral.
Section 1.09.
Reporting Requirements. The Borrower Representative shall submit the following items to the Administrative Agent:
5.09.1. [Reserved].
last day of each fiscal month
1.01.i.
Monthly Liquidity and Capital Expenditures Certificate. As soon as available and in any event within ten (10) Business Days after the
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(commencing with the month ending March 31, 2024 and ending with the month ending immediately following the end of the Ratio Adjustment Period), the Borrower
Representative shall submit to the Administrative Agent a Liquidity Certificate certifying as to compliance or non-compliance with the minimum Liquidity covenant set
forth Section 6.19 and setting forth reasonably detailed calculations with respect to the calculation of Liquidity together with a reasonably detailed summary describing the
Capital Expenditures made or incurred in such prior period.
1.09.i.Monthly Financial Statements. As soon as available and in any event within thirty (30) calendar days after the end of each fiscal month
(commencing with the month ending December 31 2022), the Borrower Representative shall submit to the Administrative Agent a consolidated and consolidating balance
sheet of Pubco Guarantor and its Subsidiaries as of the end of such month and a consolidated and consolidating statement of income and retained earnings of Pubco
Guarantor and its Subsidiaries for such month, and a consolidated and consolidating statement of cash flow of Pubco Guarantor and its Subsidiaries for such month, all in
reasonable detail and stating in comparative form the respective consolidated and consolidating figures for the corresponding date and period in the previous Fiscal Year
and all prepared in accordance with GAAP and certified by an Authorized Officer of the Borrower Representative (subject to year-end adjustments), together with a
monthly Borrowing Base Certificate required to be delivered pursuant to Section 5.09.14.
1.09.ii.Annual Financial Statements. As soon as available and in any event within one hundred twenty (120) calendar days after the end of each Fiscal
Year (commencing with the Fiscal Year ending December 31, 2022), the Borrower Representative shall submit to the Administrative Agent a consolidated and
consolidating balance sheet of Pubco Guarantor and its Subsidiaries as of the end of such Fiscal Year and a consolidated and consolidating statement of income and
retained earnings of Pubco Guarantor and its Subsidiaries for such Fiscal Year, and a consolidated and consolidating statement of cash flow of Pubco Guarantor and its
Subsidiaries for such Fiscal Year, all in reasonable detail and stating in comparative form the respective consolidated and consolidating figures for the corresponding date
and period in the prior Fiscal Year and all prepared in accordance with GAAP and accompanied by an audited opinion thereon issued by independent certified public
accountants selected by Pubco Guarantor and reasonably acceptable to the Required Lenders (which shall not be subject to any "going concern” or like qualification or
exception or any qualification or exception as to the scope of the audit).
1.09.iii.Management Letters. Promptly upon receipt thereof, each Borrower shall submit to the Administrative Agent for the benefit of the Credit Parties
copies of any reports submitted to it or to any Loan Party by independent certified public accountants in connection with the examination of the financial statements of
Pubco and its Subsidiaries made by such accountants.
1.09.iv.Compliance Certificate. The Borrower Representative shall, concurrently with any delivery of annual financial statements under Sections 5.09.3
and financial statements to be delivered after the end of the first three (3) Fiscal Quarters of each Fiscal Year pursuant to Section 5.09.2 above, submit a Compliance
Certificate from the Chief Financial Officer, Chief Executive Officer or President of Pubco Guarantor or the Borrower Representative to the Administrative Agent (a)
certifying that no Default or Event of Default has occurred during such period or, if such a Default or an Event of Default has occurred during such period, specifying the
nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto, (b) setting forth the reasonably detailed calculations with respect to
the Consolidated Fixed Charge Coverage Ratio, Total Net Leverage Ratio and Consolidated Current Ratio, (c) if applicable, a list of any Excluded Subsidiary as of the date
of delivery of such certificate, (d) a description of any anticipated establishment of any new dealerships of which the Administrative Agent has not received notice, (e) a
description of any anticipated locations of which the Administrative Agent has not received notice where a material portion of Eligible Floor Plan Units or any material
portion of any other Collateral is located, except for any Eligible Floor Plan Unit which is at a Permitted Collateral Location and (f) including such additional information as
may from time to time be required under the Security Documents.
Credit Parties copies of any statement or report furnished to any other Person pursuant to the terms of any indenture, loan, or credit or
1.09.v.Reports To Other Creditors. Promptly after the furnishing thereof, the Borrowers shall submit to the Administrative Agent for the benefit of the
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similar agreement and not otherwise required to be furnished to the Administrative Agent pursuant to any other provisions of this Agreement.
the positions of Chairperson, President, Chief Executive Officer or Chief Financial Officer of any of the Loan Parties.
1.09.vi.Management Changes. The Borrower Representative shall notify the Administrative Agent immediately of any changes in the personnel holding
1.09.vii.Projections. The Borrower Representative shall deliver to the Administrative Agent within sixty (60) days prior to the end of each Fiscal Year, an
annual operating budget for the Loan Parties and their Subsidiaries for the next Fiscal Year. The operating budget shall include a balance sheet, income statement,
statement of cash flows, and assumptions relating to the budget.
1.09.viii.Notice of Defaults and Events of Default. The Borrower Representative shall promptly give written notice to the Administrative Agent of the
occurrence of any event, occurrence or condition (which is known to an executive officer of any Loan Party) which constitutes or is reasonably foreseeable to constitute
either an Event of Default or a Default or which could be reasonably expected to result in a Material Adverse Change.
benefit of the Credit Parties.
1.09.ix.ERISA Event. The Borrowers shall promptly give written notice of the occurrence of any ERISA Event to the Administrative Agent for the
1.09.x.SEC Filings. Promptly upon receipt or transmission thereof, (a) all letters of comment or material correspondence sent to Pubco Guarantor or any
of its Subsidiaries by any securities exchange or the Securities and Exchange Commission ("SEC”) in relation to the affairs of Pubco Guarantor or any of its Subsidiaries,
(b) all regular and periodic reports and all registration statements and prospectuses, if any, filed by Pubco Guarantor or any of its Subsidiaries with any securities exchange
or with the SEC or any governmental authority succeeding to any of its functions, (c) all financial statements, reports, notices and proxy statements sent or made available
generally by Pubco Guarantor or any of its Subsidiaries to other lenders to such Persons (if any) and their other respective bondholders or security holders (or any trustee
or other representative of any of the foregoing) and any non-routine notices or other non-routine correspondence from such lenders, bondholders or security holders (or
trustee or other representative of such Persons); and (d) all press releases and other statements made available by Pubco Guarantor or any of its Subsidiaries to the public
concerning material developments in their respective businesses. Any information or document described in clauses (a) through (d) of this Subsection 5.09.11 that is filed
with the SEC via the EDGAR filing system shall be deemed to be delivered upon the receipt by the Credit Parties of notice (including any notice received via e-mail) from
Borrower Representative that such information or document has been filed and is available on EDGAR provided, further, however, that no such notice need be delivered in
connection with the regularly filed Annual Reports of Pubco Guarantor on Form 10-K or Quarterly Reports of Pubco Guarantor on Form 10-Q.
the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification.
1.09.xi. Beneficial Ownership. The Borrower Representative shall promptly notify the Administrative Agent of any change in the information provided in
1.09.xii.General Information. In addition to the items set forth in subsections 5.09.1 through 5.09.12 above, the Borrowers agree to submit, and cause the
other Loan Parties to submit, to the Administrative Agent for the benefit of the Credit Parties such other information respecting the condition or operations, financial or
otherwise, of the Loan Parties as the Credit Parties may reasonably request from time to time.
1.09.xiii.Borrowing Base Certificates. Within thirty (30) days after the end of each calendar month (in conjunction with the delivery of the financial
statements pursuant to Section 5.09.2) (or on any other date if the Borrower Representative voluntarily elects to deliver a Borrowing Base Certificate (including in
connection with a Permitted Acquisition)), a certificate in the form of Exhibit L (or such other form as may be agreed to by the Administrative Agent and the Borrower
Representative in their reasonable discretion) (a "Borrowing Base Certificate”) calculating and/or demonstrating, in detail
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reasonably acceptable to the Administrative Agent, the Line Cap, the Borrowing Base, and Availability, in each case as of the close of business as of the last day of the
immediately preceding calendar month (or in respect of any Borrowing Base Certificate voluntarily delivered by the Borrower Representative, as of the close of business
on a more recent Borrowing Base Test Date as indicated in such Borrowing Base Certificate), each Borrowing Base Certificate to be certified as complete and correct in
all material respects by an Authorized Officer of the Borrower Representative. In connection with each Borrowing Base Certificate, the Borrowers shall provide (i) a
schedule of Accounts in form and manner reasonably acceptable to Administrative Agent (which shall include current addresses and telephone numbers of account
debtors and a detailed aging of the Accounts for such period); (ii) a monthly inventory report in form and manner reasonably acceptable to Administrative Agent, together
with supporting documentation requested by the Administrative Agent, which, during the Ratio Adjustment Period, shall include a summary inventory aging report; and (iii)
a schedule of Specified Inventory Parts in form and manner reasonably acceptable to the Administrative Agent, together with supporting documentation requested by the
Administrative Agent, in each case based on the balances as of the last day of the immediately preceding month.
1.01.ii.Notice and Consent Coliseum. The Borrower Representative shall notify the Administrative Agent immediately of any material written notices or
communications between any Loan Party or Subsidiary and Coliseum Holdings I, LLC, as Lender under that certain Loan Agreement dated as of December 29, 2023 (the
"Coliseum Agreement”), by and among Coliseum Holdings I, LLC, LD Real Estate, LLC, Lazydays RV of Ohio, LLC, Airstream of Knoxville at Lazydays RV, LLC,
Lone Star Acquisition, LLC, Lazydays Land of Phoenix, LLC and Lazydays Land of Chicagoland, LLC.
SECTION 10. Preservation of Existence, Etc. Each Borrower and each of the other Loan Parties shall each (a) preserve, renew and maintain in full force and
effect its legal existence and good standing under the Laws of the jurisdiction of its organization, (b) take all reasonable action to maintain all rights, privileges, permits,
licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to cause a
Material Adverse Change, (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably
be expected to cause a Material Adverse Change, and (d) preserve and maintain material approvals with Manufacturers, OEMs and other suppliers of Floor Plan Units,
material franchise or framework agreements, all Manufacturer statements of origin, certificates of origin, certificates of title or ownership and other customary vehicle title
documentation (which, for the avoidance of doubt, may be in electronic form) (collectively, the "Vehicle Title Documentation”), or in any case, a power of attorney with
respect thereto.
SECTION 11. Maintenance of Assets and Properties. Each of the Borrowers and each of the other Loan Parties shall maintain, preserve and protect all of its
material assets and properties necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted.
SECTION 12. Compliance with Laws. Each of the Borrowers and each of the other Loan Parties shall comply in all material respects with all Laws applicable
to it, and obtain or maintain all permits, franchises and other governmental authorizations and approvals necessary for the ownership, acquisition and disposition of its
properties and the conduct of its business. Without limiting the generality of the foregoing, the Loan Parties and each Subsidiary shall be in compliance in all material
respects with applicable legal requirements of the Anti-Corruption Laws, Anti-Terrorism Laws, the USA Patriot Act, and the Bank Secrecy Act. Each Loan Party and
each Subsidiary shall conduct its businesses in material compliance with the United States Foreign Corrupt Practices Act of 1977.
SECTION 13. Inspection Rights. Each of the Borrowers and each of the other Loan Parties and their Subsidiaries (other than any Designated Real Estate
Subsidiary) shall permit representatives and independent contractors of the Administrative Agent to visit and inspect any of its properties, to perform audits of the Floor
Plan Units, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with
its directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired (which
inventory and Collateral inspections are expected to be conducted not less than six (6) times per Fiscal Year), upon reasonable advance notice to the Loan
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Parties; provided, however, that when a continuing Default or Event of Default exists the Administrative Agent (or any of its representatives or independent contractors)
may do any of the foregoing at the expense of the Loan Parties at any time during normal business hours and without advance notice.
SECTION 14. Environmental Matters. Each of the Borrowers and each of the other Loan Parties shall comply, and shall cause its respective Subsidiaries to
comply with all Environmental Laws, the non-compliance with which could reasonably be expected to result in a Material Adverse Change. The Loan Parties shall
investigate any circumstances which give the Loan Parties reason to believe or suspect the Contamination of any of the Properties. The Loan Parties shall promptly
perform any remediation of such Contamination required under applicable Laws.
SECTION 15. Additional Subsidiaries
1.15.i. Subsidiaries. If (i) any Subsidiary (other than an Excluded Subsidiary) is formed or acquired after the Closing Date or (ii) any Subsidiary ceases
to be an Excluded Subsidiary pursuant to the definition thereof, within forty-five (45) calendar days after such Subsidiary is formed or acquired or ceases to be an
Excluded Subsidiary (or such longer period as the Administrative Agent may agree in its sole discretion), the Borrower Representative shall (a) unless such Subsidiary
becomes a Borrower pursuant to Section 5.15.3, cause such Subsidiary to duly execute and deliver a joinder agreement to become a guarantor of the Obligations under,
and subject to the terms and conditions of, the Security Agreement and Guaranty Agreement (or, in the case of a Person required to or that elects to become a Borrower,
a Joinder Agreement) together with all schedules and information thereto appropriately completed with respect to such Subsidiary, (b) cause such Subsidiary to deliver a
joinder agreement to the Security Agreement and Guaranty Agreement providing for the creation of Liens on the Collateral owned by such Subsidiary as security for the
Obligations, (together with all schedules and information thereto appropriately completed with respect to such Subsidiary), (c) cause such Subsidiary to deliver a joinder
agreement to the Security Agreement providing for the pledge of any Equity Interests held by such Subsidiary pursuant to the Security Agreement (except to the extent
that such Equity Interests constitute Excluded Property) (together with all schedules and information thereto appropriately completed with respect to such Subsidiary), (d)
deliver, or cause to delivered, any and all certificates representing Equity Interests held by such Subsidiary, and any Equity Interest in such Subsidiary that are held by other
Persons, that are (in each case) required to be delivered pursuant to the Security Documents (and accompanied, in each case, by undated stock powers or other
appropriate instrument of transfer executed in blank); provided, that in respect of any CFC or CFC Holdco, Borrower Representative shall, or shall cause the applicable
Loan Party to pledge 65% of the issued and outstanding voting Equity Interests and 100% of the issued and outstanding non-voting Equity Interests, or other evidence of
ownership, of such CFC or CFC Holdco, as applicable, (e) take such other actions such that all of the Equity Interests (except to the extent that such Equity Interests
constitute Excluded Property or are not otherwise required to be pledged or certificated pursuant to the terms of the Credit Documents) issued by any such Subsidiary shall
be pledged as security for the Obligations pursuant to such Credit Documents in form and substance reasonable satisfactory to the Administrative Agent, as may be
required under applicable Laws to effectuate a fully enforceable first priority pledge of such Equity Interests, (f) deliver or cause to be delivered to the Administrative
Agent UCC financing statements naming such Subsidiary as "Debtor” and naming the Administrative Agent for the benefit of the Credit Parties as "Secured Party,” in
form and substance sufficient in the reasonable opinion of the Administrative Agent and its counsel for filing in each applicable UCC filing office in which filing is
necessary to perfect the Administrative Agent’s Liens in the Collateral granted by such Subsidiary under the Security Documents, and (g) deliver, or cause to be delivered,
an opinion of counsel reasonably satisfactory to the Administrative Agent as to customary matters in connection with the joinder of such Subsidiary to the Credit
Documents.
1.15.ii.[Reserved].
1.15.iii.Joinder of Additional Borrowers. Any Subsidiary of Pubco Guarantor (a) owning or leasing any Eligible Floor Plan Units shall be required to be
a Borrower hereunder with respect to the applicable Class and (b) that is a Subsidiary and is not a Borrower in respect of any Class under this Agreement may, but shall
not be required to (except as provided in clause (a) above), in its sole discretion from time to time become a Borrower hereunder with respect to a particular Class, in the
case of each of clause (a) and (b), by executing and delivering to the Administrative Agent a Joinder Agreement (together
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with all schedules thereto); provided that such Joinder Agreement shall specify the applicable facility under which such Subsidiary shall join this Agreement as a Borrower.
Any Person that executes and delivers a Joinder Agreement shall deliver to the Administrative Agent such items as are required pursuant to Sections 4.01.1(d) and
4.01.1(k) (which such items shall be in form and substance reasonably acceptable to the Administrative Agent). Such Subsidiary shall thereafter have all of the rights,
benefits and obligations of a Borrower party to this Agreement with respect to such Class
SECTION 16. Deposit and Operating Accounts. The Borrowers shall establish and maintain their primary deposit and operating accounts at M&T Bank.
SECTION 17. Landlord Waivers. Each Loan Party will (a) except as required by clause (b) below, obtain and deliver to the Administrative Agent a customary
landlord or bailee access agreement with respect to each location in the United States not owned by a Loan Party where Collateral is located and (b) obtain and deliver to
the Administrative Agent a customary landlord or bailee access agreement with respect to each location in the United States leased to a Loan Party by (x) a Loan Party or
(y) any other Affiliate of a Loan Party under the Control of such Loan Party, in the case of clauses (a) and (b), within thirty (30) days (or such later date agreed to by the
Administrative Agent) of Collateral becoming located at such location, in form and substance reasonably acceptable to the Administrative Agent.
SECTION 18. Post-Closing Deliverables. Notwithstanding the conditions precedent set forth in Section 4.01, the Loan Parties have informed the Administrative
Agent and the Lenders that certain items required to be delivered as conditions precedent to the effectiveness of this Agreement will not be delivered as of the Closing
Date. As an accommodation to the Loan Parties, the Administrative Agent and the Lenders have agreed to make the Loans available under this Agreement
notwithstanding that such conditions have not been satisfied. In consideration of such accommodation, each applicable Loan Party hereby agrees to take each of the
actions described on Schedule 5.18 attached hereto, in each case, in the manner and by the dates set forth thereon, or such later dates as may be agreed to by
Administrative Agent.
SECTION 19. UCC and Floor Plan Units; Repurchase Agreements. Each Eligible Floor Plan Unit shall constitute Inventory under the applicable UCC. With
respect to each Eligible Floor Plan Unit, the related Floor Plan Borrower is and shall continue to be in the business of selling Floor Plan Units, and in each jurisdiction
where such Floor Plan Borrower maintains any Floor Plan Units or is "located” (for purposes of the UCC), the Lien of the Administrative Agent and the Lenders on such
Floor Plan Units is and shall continue to be perfected by filing a UCC financing statement in accordance with Section 9-311(a) and (d) of the applicable UCC. To the
extent requested by Administrative Agent, each Borrower agrees to use its commercially reasonable efforts to cause the Manufacturers or other suppliers of Floor Plan
Units to enter into Repurchase Agreements.
SECTION 20. Further Assurances. Each Loan Party shall execute, acknowledge, deliver, and record or file such further instruments, including, without
limitation, further security agreements, financing statements, and continuation statements, and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purposes of the Credit Documents, including, without limitation, (i) causing any additions, substitutions, replacements, or equipment related to the Floor
Plan Units financed under the Floor Plan Facility to be covered by and subject to the Liens created in the Credit Documents to which any Floor Plan Borrower is a party;
and (ii) with respect to any Floor Plan Units which are, or are required to be, subject to Liens under the Credit Documents, execute, acknowledge, endorse, deliver,
procure, and record or file any document or instrument, including, without limitation, any financing statement or, if an Event of Default has occurred and is continuing, any
Vehicle Title Documentation, deemed advisable by the Administrative Agent to protect the Liens granted in the Security Documents against the rights or interests of third
Persons.
SECTION 21. Delivery of Floor Plan Unit Titles and Vehicle Title Documentation.
1.21.i.In the event any Floor Plan Borrower maintains any Floor Plan Units in a jurisdiction that requires the notation of the Lien of the Administrative
Agent and the Lenders on the certificate of title of such Floor Plan Units in order to establish or maintain the perfection of such Lien or upon the written request of the
Administrative Agent during the continuance of a Default or Event of Default, for each Eligible Floor Plan Unit or other Floor Plan Unit which constitutes Collateral, the
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Borrowers and their Subsidiaries shall promptly, (A)(i) within thirty (30) days (or such longer period as the Administrative Agent may agree in its sole discretion) send to
the relevant Governmental Authority a completed title application for each such Floor Plan Unit listing the Administrative Agent as sole lienholder for the benefit of the
Lenders, and (ii) deliver to the Administrative Agent a copy of such title application and (B) deliver, or cause to be delivered, within thirty (30) days (or such longer period
as the Administrative Agent may agree in its sole discretion) all such original Manufacturer’s Certificates and Manufacturer’s and vendor’s invoices and Vehicle Title
Documentation being maintained by the Borrowers and their Subsidiaries at the time of such time.
1.21.ii.Each title application completed pursuant to Section 5.20.1 above shall indicate that the original certificate of title (or other evidence thereof) shall
be delivered by the relevant Governmental Authority directly to the Administrative Agent. During any period that the Borrowers and their Subsidiaries are required to take
action under Section 5.20.1(A)(i) and (ii), if any Borrower or Subsidiary receives a certificate of title (or other evidence thereof) to any Eligible Floor Plan Unit financed
under this Agreement or any other Floor Plan Unit which constitutes Collateral listing the Administrative Agent as lienholder for the benefit of the Lenders, such Borrower
or Subsidiary shall promptly deliver such certificate of title (or other evidence thereof) to the Administrative Agent.
SECTION 22. Designation of Subsidiaries. The Borrower Representative may at any time designate or re-designate (x) any Subsidiary a Designated Real
Estate Subsidiary (a "Real Estate Subsidiary Designation”) or (y) any Designated Real Estate Subsidiary as a Loan Party (a "Subsidiary Redesignation”); provided that (i)
immediately before and after such Real Estate Subsidiary Designation or Subsidiary Redesignation, no Default or Event of Default shall have occurred and be continuing,
(ii) immediately after giving pro forma effect to such Real Estate Subsidiary Designation or Subsidiary Redesignation, (x) the Borrower Representative is in pro forma
compliance with the financial covenants set forth in Sections 6.12, 6.13 and 6.14 and (y) the Line Cap exceeds the aggregate amount of Revolving Credit Exposure, (iii) no
Borrower or Guarantor may be designated as a Designated Real Estate Subsidiary and no Designated Real Estate Subsidiary may own any Floor Plan Unit at any location
where any Eligible Floor Plan Unit is located, (iv) no Subsidiary may be designated as a Designated Real Estate Subsidiary if it is a "Subsidiary” for any other
Indebtedness, (v) as of the most recent date of designation thereof, no Designated Real Estate Subsidiary shall own any Equity Interests in any Borrower or any Guarantor
or hold any Indebtedness of, or Lien on any property of any Borrower or any Guarantor, (vi) the holder of any Indebtedness of any Designated Real Estate Subsidiary shall
not have any recourse to any Borrower or any Guarantor with respect to such Indebtedness and (vii) no Subsidiary may be designated as a Designated Real Estate
Subsidiary if, as of the date of such designation (w) it holds any material franchise or framework agreement or other material agreement with any Manufacturer relating to
any Eligible Floor Plan Unit, (x) the Consolidated Total Assets of the Subsidiary being designated, together with the Consolidated Total Assets of all other Designated Real
Estate Subsidiaries of Pubco Guarantor, exceeds 25% of Consolidated Total Assets of Pubco Guarantor and its Subsidiaries (including its Designated Real Estate
Subsidiaries), in each case for the Test Period most recently ended for which financial statements have been delivered pursuant to Section 4.01 or Section 5.08 or (y) it
holds any Material Intellectual Property. The designation of any Subsidiary as a Designated Real Estate Subsidiary shall constitute an Investment by the applicable Loan
Parties therein at the date of such designation in an amount equal to the portion of the fair market value of the net assets of such Subsidiary (and such designation shall
only be permitted to the extent such Investment is permitted under Section 6.02). As of the date of any designation, the Borrower Representative shall have delivered to
the Administrative Agent an officer’s certificate executed by a Responsible Officer of the Borrower Representative certifying compliance with the requirements of this
Section 5.22, including the calculation to demonstrate compliance with the financial covenants set forth in Sections 6.12, 6.13 and 6.14. As of the Closing Date, the Persons
listed on Schedule 5.22 attached hereto are each a Designated Real Estate Subsidiary.
Parties and any Subsidiary to do, any of the following:
Each Borrower agrees that until the payment and performance in full of all of the Obligations, it will not do, and it will not permit any of the other Loan
ARTICLE 6
NEGATIVE COVENANTS
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Section 1.01.
Liens. No Loan Party and no other Subsidiary shall create, incur, assume or suffer to exist any Lien upon any of its properties (real or personal),
assets or revenues, whether now owned or hereafter acquired, other than Liens securing the Obligations and Permitted Encumbrances.
Section 1.02.
Investments And Loans. No Loan Party and no other Subsidiary shall make any Investments or extend any loans or credit facilities to any
Persons, except:
(1)
(2)
Investments in Cash Equivalents;
Investments by any Loan Party or any Subsidiary outstanding on the date hereof and set forth on Schedule 6.02(b);
(c) advances to its employees in the ordinary course of business for travel, entertainment, relocation and general ordinary course of business purposes;
(d) extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business;
(e) acquisitions of fixed assets, equipment and Inventory in the ordinary course of business to the extent not otherwise prohibited by the terms of this Agreement;
(f) (i) any Loan Party or any Subsidiary may make intercompany loans to, and guarantees on behalf of, and other Investments in Loan Parties so long as, solely in
the case of such intercompany loans by Subsidiaries that are not Loan Parties to Loan Parties, all payment obligations of the respective Loan Parties thereunder are
subordinated to the Obligations on terms reasonably satisfactory to the Administrative Agent, (ii) the Loan Parties may make intercompany loans to, guarantees on behalf
of, and other Investments in, Subsidiaries that are not Loan Parties so long as the aggregate amount of outstanding loans, guarantees and the aggregate amount of the other
outstanding Investments made pursuant to this subclause (ii) does not exceed $15,000,000.00 and (iii) any Subsidiary that is not a Loan Party may make intercompany
loans to, and other investments in, any other Subsidiary that is also not a Loan Party;
(g) Permitted Acquisitions; and
(h) (i) Investments by any Loan Party or any Subsidiary in any Designated Real Estate Subsidiary outstanding on the date hereof and set forth on Schedule 6.02(h)
and (ii) any Loan Party or any Subsidiary may make intercompany loans to, guarantees on behalf of, and other Investments in any Designated Real Estate Subsidiary to
finance real property owned or to be owned by any Designated Real Estate Subsidiary; provided that the aggregate amount of such Investments shall not exceed the
greater of (x) $150,000,000.00 and (y) 15% of Consolidated EBITDA for the most recently ended Measurement Period for which financial statements have been
delivered, minus, in each case, any amount that has been utilized under Section 6.03(m).
The entry of a Borrower or other Loan Party into a Swap Agreement shall not be deemed to be an Investment for purposes of this Section provided that such
Borrower or other Loan Party is (or was) an Eligible Contract Participant as of the Eligibility Date and such Swap Agreement is (or was) entered into in connection with
the Obligations or in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Loan Party, or changes in the value of securities issued by such Borrower or other Loan Party, and not for purposes of speculation or
taking a "market view.” Notwithstanding the foregoing, in no event shall any Loan Party make any Investment which results in any Material Intellectual Property owned
by such Loan Party being contributed or otherwise transferred by such Loan Party to any non-Loan Party. For purposes of determining the amount of any Investment
outstanding for purposes of this Section 6.02, such amount shall be deemed to be the amount of such Investment when made, purchased or acquired (without adjustment
for subsequent increases or decreases in the value of such Investment) less any amount realized in respect of such Investment upon the sale, collection or
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return of capital (not to exceed the original amount invested); provided, however, that the payment or return of rental payments under lease agreements shall be deemed
not to be a return of capital.
SECTION 23. Indebtedness. No Loan Party and no other Subsidiary shall create, incur, assume or suffer to exist any Indebtedness, except
(a) the Obligations;
(b) existing Indebtedness incurred prior to the Closing Date, outstanding on the Closing Date, and listed on Schedule 6.03 attached hereto, and any refinancings,
renewals or extensions thereof; provided, that: (i) the amount of such Indebtedness is not increased at the time of such refinancing, renewal or extension except by an
amount equal to fees and expenses reasonably incurred, in connection with such refinancing, (ii) the direct or any contingent obligor with respect thereto is not changed, as
a result of or in connection with such refinancing, renewal or extension, (iii) the terms relating to principal amount, amortization, maturity, collateral (if any) and
subordination, standstill and related terms (if any, it being understood that such Indebtedness shall be subordinated as to rights of payment and Liens on terms and
conditions satisfactory to the Administrative Agent), and other material terms taken as a whole, of any such refinancing, renewing or extending Indebtedness, and of any
agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than the
terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended, and (iv) the interest rate applicable to any such
refinancing, renewing or extending Indebtedness does not exceed the then applicable market interest rate;
(c) obligations (contingent or otherwise) of any Loan Party existing or arising under any Swap Agreements, provided that such Borrower or other Loan Party is
(or was) an Eligible Contract Participant as of the Eligibility Date and such obligations are (or were) entered into in connection with the Obligations or in the ordinary
course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by
such Loan Party, or changes in the value of securities issued by such Loan Party, and not for purposes of speculation or taking a "market view,”;
(d) foreign exchange hedging transactions entered into in the ordinary course of business to manage the foreign currency risks of the Loan Parties and their
Subsidiaries;
(e) the dividend, interest, and redemption obligations incurred by Pubco Guarantor to the Preferred Stockholders as provided by the terms of the Amended Charter,
the Securities Purchase Agreement, and the Certificate of Designations (regardless of whether the same constitutes debt in accordance with GAAP), provided, however,
that no payments thereof shall be made by any Loan Party in violation of the restrictions upon any such payment set forth in this Agreement or in any other Credit
Document;
(f) Indebtedness in respect of Capital Leases, Synthetic Lease Obligations and purchase money obligations for capital assets (within the limitations of Section 6.17
of this Agreement), and refinancings, renewals and extensions thereof; provided, that: (i) the total of all such Indebtedness taken together shall not exceed an aggregate
principal amount of $15,000,000.00 at any one time outstanding, (ii) such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed, and (iii)
no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing;
(g) loans and investments in the ordinary course of business between the Loan Parties to the extent permitted under Section 6.02;
(h) unsecured earnout obligations incurred in connection with any Permitted Acquisition to the extent constituting Indebtedness;
(i) Indebtedness which may be deemed to exist in connection with agreements providing for indemnification, purchase price adjustments or similar obligations in
connection with a Dispositions permitted under Section 6.05;
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(j) Guarantees by any Loan Party or any Subsidiary with respect to (i) recourse obligations resulting from endorsement of negotiable instruments for collection in
the ordinary course of business and (ii) workers’ compensation and similar obligations of the Loan Parties and their Subsidiaries incurred in the ordinary course of business;
(k) unsecured Indebtedness in an aggregate amount not to exceed Fifteen Million Dollars ($15,000,000.00) at any time outstanding;
(l) [reserved]; and
(m) Indebtedness incurred to finance real property owned or to be owned by any Designated Real Estate Subsidiary; provided that (i) any such Indebtedness shall
be secured only by the real property and fixtures and improvements located on the applicable real property financed in connection with the incurrence of such
Indebtedness and (ii) the aggregate principal amount of Indebtedness at any time outstanding under this clause (m) owing to any Person shall not exceed the greater of (x)
$150,000,000.00 and (y) 15% of Consolidated EBITDA for the most recently ended Measurement Period for which financial statements have been delivered minus, in
each case, any amount that has been utilized under Section 6.02(h)(ii).
SECTION 24. Fundamental Changes. No Borrower and no other Loan Party or Subsidiary of a Borrower or other Loan Party shall merge, dissolve, liquidate,
amalgamate, consolidate with or into another Person, or permit the Disposition (except as permitted under Section 6.05) of all or substantially all of its assets (whether in
one transaction or in a series of transactions), except that, so long as no continuing Default or Event of Default exists and no Material Adverse Change has occurred and
no Default, Event of Default or Material Adverse Change would be likely to result therefrom after giving effect thereto:
(a) any Subsidiary (or any other Person) may merge, amalgamate or consolidate with (i) any Borrower; provided that a Borrower shall be the continuing or
surviving Person or (ii) any one or more other Subsidiaries; provided that (A) when any Guarantor is merging with another Subsidiary that is not a Loan Party the
Guarantor shall be the continuing or surviving Person or the continuing or surviving Person shall become a Guarantor, (B) to the extent constituting an Investment, such
Investment must be a Permitted Investment and (C) to the extent constituting a Disposition, such Disposition must be permitted in accordance with Section 6.05;
(b) (i) any Subsidiary that is not a Loan Party may merge, amalgamate or consolidate with or into any other Subsidiary that is not a Loan Party, (ii) any
Subsidiary may dissolve, if the Borrower Representative determines in good faith that such action is in the best interest of Pubco Guarantor and its Subsidiaries taken as a
whole and is not disadvantageous to the Lenders in any material respect, it being understood that in the case of any liquidation or dissolution of a Subsidiary that is a
Borrower or a Guarantor, such Subsidiary shall at or before the time of such dissolution transfer its assets to another Subsidiary that is a Borrower or a Guarantor unless
such Disposition of assets is permitted hereunder and (iii) any Designated Real Estate Subsidiary may dispose of all or substantially all of its assets (whether in one
transaction or in a series of transactions);
(c) any Loan Party (other than Pubco Guarantor) or Subsidiary may permit the Disposition of all or substantially all of its assets (upon voluntary liquidation,
dissolution or otherwise) to any Loan Party or Subsidiary; provided that if the transferor in such a transaction is a Borrower or a Guarantor, then (i) the transferee must
either be a Borrower or a Guarantor (or the transferee shall become a Guarantor) or (ii) to the extent constituting an Investment, such Investment must be permitted by
Section 6.02; and
(d) any Loan Party (other than Pubco Guarantor) or any Subsidiary may merge, amalgamate, consolidate (and in the case of any Loan Party (other than Pubco
Guarantor) or any Subsidiary, dissolve or liquidate) with or into another Person or permit the Disposition of all or substantially all of its assets in order to effect a Disposition
permitted pursuant to Section 6.05; provided that a Borrower or Loan Party, as applicable shall be the continuing or surviving Person.
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SECTION 25. Dispositions. No Borrower and no other Loan Party and no Subsidiary of a Borrower or of another Loan Party (excluding, in each case, any
Designated Real Estate Subsidiary) shall make any Disposition or enter into any agreement to make any Disposition, except:
(a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business,
(b) Dispositions of equipment to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the
proceeds of such Disposition are applied to the purchase price of similar replacement property,
(c) the sale of residual ownership rights in vehicles and equipment upon the termination of operating leases,
(d) Dispositions not otherwise prohibited under this Section 6.05; provided that (i) no Default or Event of Default has occurred and is continuing at the time of such
Disposition, (ii) no Default, Event of Default or Material Adverse Change would result from such Disposition, and (iii) the aggregate book value of all property disposed of
in reliance of this subsection in any Fiscal Year shall not exceed Five Hundred Thousand Dollars ($500,000.00); and
(e) Sale and Leaseback Transactions; provided that (i) no Default or Event of Default has occurred and is continuing at the time of such Sale and Leaseback
Transaction and (ii) no Default, Event of Default or Material Adverse Change would result from such Sale and Leaseback Transaction.
Notwithstanding the foregoing, in no event shall any Loan Party make any Disposition which results in or facilitates in any manner any Material Intellectual Property
owned by such Loan Party being transferred by such Loan Party to any non-Loan Party.
SECTION 26. Restricted Payments. No Borrower and no Loan Party and no other Subsidiary of a Borrower or another Loan Party may declare or make,
directly or indirectly, any Restricted Payments, or incur any obligation (contingent or otherwise) to do so, except
(a) each Subsidiary of a Borrower may make Restricted Payments to such Borrower,
(b) LDRV may make Restricted Payments to Parent Guarantor,
(c) Parent Guarantor may make Restricted Payments to Pubco Guarantor,
(d) the Loan Parties may declare and make non-cash dividend payments or other non-cash distributions payable solely in their Capital Stock,
(e) Pubco Guarantor may incur the redemption and payment obligations to the Preferred Stockholders set forth in the Amended Charter, the Securities Purchase
Agreement, and the Certificate of Designations respect to the Pubco Guarantor’s Series A Preferred Stock described therein, provided that no redemption of such Series
A Preferred Stock, in whole or in part, or payments of the redemption price, in whole or in part, for any Capital Stock held by the Preferred Stockholders shall occur,
directly or indirectly, prior to the dates for redemption set forth in Sections 7(a)(i) and 7(b) of the Certificate of Designations as in effect on the date hereof and on a non-
accelerated basis, and no payment of any dividends and distributions shall be paid to the Preferred Stockholders, directly or indirectly, (i) at any time during which there is a
continuing Default or Event of Default, or (ii) if after giving effect to such payment, a Default or Event of Default would exist; provided further, that such redemptions and
payments shall not be paid more frequently than quarterly after the end of each Fiscal Quarter for which financial statements have been delivered and upon delivery of a
Compliance Certificate evidencing the ability of the Loan Parties to make such Restricted Payments in full compliance with all of the terms and conditions set forth in this
Agreement, including demonstrated compliance on a pro forma basis with the financial covenants set forth in Sections 6.12, 6.13 and 6.14 hereof as of the end of such
Fiscal Quarter, and
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(f) in the absence of any continuing Default or Events of Default and provided that after giving immediate effect thereto, no Default or Events of Default would
result therefrom, each Borrower and each other Loan Party may (i) repurchase Capital Stock owned by former employees of the Loan Parties or employees which are
leaving the employment of such Borrower or other Loan Parties; and (ii) make other Restricted Payments; provided however, such repurchases or payments shall not be
paid more frequently than quarterly after the end of each Fiscal Quarter for which financial statements have been delivered and upon delivery of a Compliance Certificate
evidencing the ability of the Loan Parties to make such Restricted Payments in full compliance with all of the terms and conditions set forth in this Agreement, including
demonstrated compliance on a pro forma basis with the financial covenants set forth in Sections 6.12, 6.13 and 6.14 hereof as the end of such Fiscal Quarter.
Notwithstanding anything to the contrary in this Agreement, in no event shall any Loan Party make any Restricted Payment consisting of any Material Intellectual
Property.
SECTION 27. Change in Nature Of Business. No Loan Party and no other Subsidiary shall engage in any material line of business substantially different from
(a) those lines of business conducted by it on the Closing Date or (b) any business substantially related or incidental to the lines of business conducted by it on the Closing
Date. No Designated Real Estate Subsidiary shall own any material assets other than real property, and buildings, fixtures and improvements located thereon, to be leased
to, or developed for the purpose of leasing to, Loan Parties, and cash incidental and assets incidental thereto.
SECTION 28. Transactions With Affiliates. No Loan Party and no other Subsidiary shall enter into any transaction of any kind with any Affiliate (other than
with its wholly-owned Subsidiaries), whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable as would be
obtainable at the time in a comparable arm’s length transaction with a Person other than an Affiliate.
SECTION 29. Burdensome Agreements; Negative Pledges. No Loan Party and no other Subsidiary (except any Designated Real Estate Subsidiary) shall enter
into or grant any negative pledges or agreements restricting its ability to pledge its assets or to grant Liens against its assets, except as otherwise expressly provided for in
the Credit Documents and except to the extent that any Capital Lease of any of the Loan Parties prohibits the granting of Liens against the equipment that is being leased
or financed, as applicable, pursuant to such Capital Lease. No Loan Party and no other Subsidiary (except any Designated Real Estate Subsidiary) shall enter into any
contractual obligation that limits the ability of such Subsidiary: (a) to make Restricted Payments to such Borrower or any other Loan Party or to otherwise transfer
property to such Borrower or Loan Party, or (b) to guarantee the Obligations.
SECTION 10. Use Of Proceeds. No Loan Party and no other Subsidiary shall use the proceeds of any Loan, whether directly or indirectly, and whether
immediately, incidentally or ultimately, to purchase or carry "margin stock” (within the meaning of Regulation U of the Federal Reserve Board) or to extend credit to others
for the purpose of purchasing or carrying margin stock or to refund Indebtedness originally incurred for such purpose, in each case, in violation of the regulations of the
Board of Governors of the Federal Reserve System of the United States including Regulation T, U or X.
SECTION 11. Tax Consolidation. No Borrower shall file or consent to or permit the filing of any consolidated income tax return on behalf of it with any Person
(other than a consolidated return of Pubco Guarantor and its Subsidiaries). No Borrower shall enter into any agreements with any Person which would cause such
Borrower to bear more than the amount of taxes to which it would have been subject had it separately filed (or filed as part of a consolidated return among Pubco
Guarantor and its Subsidiaries).
SECTION 12. Maximum Total Net Leverage Ratio. The Borrowers shall not permit, as of the end of each Measurement Period after the First Amendment
Effective Date beginning with the Fiscal Quarter ending September 30, 2024, the Total Net Leverage Ratio to exceed a ratio of 3.00 to 1.00, as measured on the last day
of each Measurement Period and calculated on a pro forma basis, beginning with the Measurement Period ending March 31, 2023.the Total Net Leverage Ratio set forth
below for the corresponding Fiscal Quarter:
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Fiscal Quarter Ending
September 30, 2024
December 31, 2024 and each Fiscal Quarter
thereafter
Total Net Leverage Ratio
4.75 to 1.00
3.00 to 1.00
SECTION 13. Minimum Consolidated Fixed Charge Coverage Ratio. The Borrowers shall not permit, measured as of the end of each Measurement Period
after the First Amendment Effective Date beginning with the Fiscal Quarter ending September 30, 2024, the Consolidated Fixed Charge Coverage Ratio to be less than a
ratio of 1.25 to 1.00 as measured on the last day of each Measurement Period and calculated on a pro forma basis, beginning with the Measurement Period ending March
31, 2023.the Consolidated Fixed Charge Coverage Ratio set forth below for the corresponding Fiscal Quarter:
Fiscal Quarter Ending
September 30, 2024
December 31, 2024 and each Fiscal Quarter
thereafter
Consolidated Fixed Charge Coverage Ratio
1.15 to 1.00
1.25 to 1.00
SECTION 14. Minimum Consolidated Current Ratio. The Borrowers shall not permit, measured as of the end of each of each Measurement Period, the
Consolidated Current Ratio to be less than 1.15 to 1.00 as measured on the last day of each Measurement Period, beginning with the Measurement Period ending March
31, 2023. the Consolidated Current Ratio set forth below for the corresponding Fiscal Quarter:
Fiscal Quarter Ending
March 31, 2024
June 30, 2024
September 30, 2024 and each Fiscal Quarter
thereafter
Consolidated Current Ratio
1.05 to 1.00
1.10 to 1.00
1.15 to 1.00
SECTION 15. Anti-Money Laundering/International Trade Law Compliance. N o Borrower will request any Loan, and no Borrower shall use, and shall
ensure that none of its Subsidiaries or its or their respective directors, officers, employees and agents shall use, the proceeds of any Loan, directly or knowingly indirectly,
(i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-
Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned
Country, in each case, in violation of applicable Sanctions, or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
SECTION 16. Amendments to Amended Charter, Securities Purchase Agreement, or Certificate of Designations. . There shall be no amendments to
Section 7 (Redemption) of the Certificate of Designations, nor shall there be any other amendments to the Amended Charter, the Securities Purchase Agreement or the
Certificate of Designations, the effect of which would (a) accelerate the period during which the redemption options in respect of Series A Preferred Stock may be
exercised (which period shall commence no earlier than the respective dates for redemption set forth in Sections 7(a)(i) and 7(b) of the Certificate of Designations as in
effect on the date hereof and on a non-accelerated basis, or permit the cash payment of any portion of a redemption prior to such dates, (b) change the amount or method
of calculation of the redemption price or any other payment on account of any redemption of the Series A Preferred Stock, (c) change the terms and amounts of payments
of dividends and distributions to Preferred
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Stockholders thereunder, or (d) expand the consent rights of any or all of the Preferred Stockholders to amendments or refinancing of the Credit Documents or
Obligations. There shall be no amendments, modifications, consents or waivers to the Coliseum Agreement without the prior written consent of the Administrative Agent,
such consent not to be unreasonably withheld.
SECTION 17. Capital Expenditures. No Loan Party and no other Subsidiary (except any Designated Real Estate Subsidiary) shall make or become legally
obligated to make any expenditure in respect of the purchase or other acquisition of any fixed or capital asset (excluding normal replacements and maintenance which are
properly charged to current operations), except for Capital Expenditures in the ordinary course of business not exceeding, in the aggregate for the Loan Parties and their
Subsidiaries during a given Fiscal Year, an amount equal to twenty-five percent (25%) of Consolidated EBITDA for such Fiscal Year.
SECTION 18. Minimum Consolidated EBITDA. The Borrowers shall not permit, measured as of the end of each of each Measurement Period, Consolidated
EBITDA to be less than Consolidated EBITDA set forth below for the corresponding Fiscal Quarter:
Fiscal Quarter Ending
March 31, 2024
June 30, 2024
September 30, 2024
Consolidated EBITDA
$5,000,000
$10,000,000
$23,500,000
SECTION 19. Minimum Liquidity . The Borrowers shall not permit, as of the end of each of each calendar month, Liquidity to be less than Liquidity set forth
below for the corresponding month:
Month Ending
March 31, 2024
April 30, 2024
May 31, 2024
June 30, 2024
July 31, 2024
August 31, 2024
September 30, 2024
October 31, 2024
November 30, 2024
Liquidity
$30,000,000
$33,333,333
$36,666,666
$40,000,000
$43,333,333
$46,666,666
$50,000,000
$50,000,000
$50,000,000
SECTION 20. Ratio Adjustment Period . Notwithstanding anything to the contrary set forth herein, prior to the end of the Ratio Adjustment Period no Loan
Party and no other Subsidiary shall:
(a) Make any (i) Investments or extend any loans or extend any loans or credit facilities except those permitted pursuant to Section 6.02(a)-(f)(i) or (ii) make or
become legally obligated to make any expenditure in respect of the purchase or other acquisition of any fixed or capital asset; provided, however, that (x) to the
extent that at least $15,000,000 of Net Available Proceeds are received by the Loan Parties during the Ratio Adjustment Period related to Sale and Leaseback
Transactions, then up to $10,000,000 for Investments in acquisitions shall be permitted and (y) from the First Amendment Effective Date and during the Ratio
Adjustment Period, up to $2,000,000 for Capital Expenditures in the ordinary course of business (or such higher amount as permitted by the Required Lenders)
shall be permitted.
(b) Make any Dispositions except those permitted pursuant to Section 6.05(a) and (c) or if the Net Available Proceeds for such Disposition are reinvested in the Loan
Parties (except to the extent otherwise permitted by the proviso set forth in Section 6.20(a)(ii) regarding Capital Expenditures).
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(c) Make any Restricted Payment except those permitted pursuant to Sections 6.06(a)-(d).
The occurrence of any of the following events or conditions shall constitute an Event of Default.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 1. Failure To Pay. The failure or refusal of any Loan Party to pay (a) all or any amount or installment of principal due upon the Loans or upon any
L/C Obligation (whether scheduled, by acceleration, or as otherwise required by the terms of the Credit Documents), or (b) any interest or fees upon any Loan or L/C
Obligation within three (3) Business Days after the due date thereof, or (c) any other amount payable hereunder or under any Credit Document within five (5) Business
Days after the due date thereof.
SECTION 2. Violation Of Covenants. The failure or refusal of any Loan Party to (a) perform, observe, and comply with any covenant, agreement, or condition
contained in Sections 5.04, 5.06, 5.08, 5.09.9, 5.09.11, 5.09.12, 5.09.13 (or any other Sections requiring the giving of notice by any Loan Party to the Administrative Agent
for the benefit of any Credit Party), 5.10, 5.13 and 5.14 or in Article 6 (Negative Covenants) of this Agreement, (b) perform, observe, and comply with any covenant,
agreement, or condition contained in Sections 5.09.2, 5.09.3, 5.09.5 or 5.09.14, and such failure or refusal continues for a period of five (5) consecutive calendar days, (c)
timely perform, observe and comply with any other covenant, agreement, or condition contained in this Agreement (not specified above in Section 7.01, 7.02(a) or 7.02(b)),
and such failure or refusal continues for a period of thirty (30) consecutive calendar days, or (d) timely perform, observe, or comply with any covenant, agreement or
condition contained in any other Credit Document, after expiration of any cure period set forth therein.
SECTION 3. Representation Or Warranty. Any representation or warranty made by the Borrowers or by any other Loan Party herein or in any Credit
Document, any Collateral Information Certificate, or in any Compliance Certificate or other document or instrument delivered from time to time to the Administrative
Agent for the benefit of any of the Credit Parties shall be false, incorrect, or misleading in any material respect when made or deemed made (or in the case of any
representation or warranty that is qualified by materiality or Material Adverse Change, shall be false, incorrect or misleading in any respect when made or deemed made).
SECTION 4. Cross-Default. (a) Any Borrower or any other Loan Party or any of their Subsidiaries (i) fails to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or guarantee (other than Indebtedness hereunder) having an
aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than the Threshold Amount, (ii) fails to observe or perform any other agreement or condition relating to any such Indebtedness or guarantee or
contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to
permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause (without regard to any existing intercreditor arrangements), with the giving of notice if required, such Indebtedness to be demanded
or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such guarantee to become payable or cash collateral in respect thereof to be demanded, (iii) fails to observe or
perform any covenant or agreement set forth in the Securities Purchase Agreement (including under Section 4.15 of the Securities Purchase Agreement) or the Certificate
of Designations (including under Sections 5.b(vii), 5.b(viii), or 5.b(xi) thereof), or (c) there occurs a default or event of default under any Swap Agreement.
SECTION 5. Judgments. The Loan Parties or any of their Subsidiaries shall suffer final judgments for the payment of money aggregating for all Loan Parties in
excess of the Threshold Amount in excess of available insurance proceeds and shall not discharge the same within a period of thirty (30)
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days unless, pending further proceedings, execution has not been commenced or if commenced has been effectively stayed.
SECTION 6. Levy By Judgment Creditor. Any judgment creditor of any of the Loan Parties or any of their Subsidiaries shall obtain possession of any of the
Collateral with a value in excess of the Threshold Amount by any means, including but not limited to levy, distraint, replevin or self-help, and the applicable Loan Party or
Subsidiary shall not remedy same within thirty (30) days thereof; or a writ of garnishment is served on the Administrative Agent or any other Credit Party or Subsidiary
relating to any of the accounts of the Borrowers or of any of the other Loan Parties or Subsidiaries maintained with the Administrative Agent or with any other Credit
Party.
SECTION 7. Involuntary Insolvency Proceedings. The institution of involuntary Insolvency Proceedings against any Borrower, any other Loan Party or any
of their Material Subsidiaries and the failure of any such Insolvency Proceedings to be dismissed before the earliest to occur of (a) the date which is sixty (60) days after
the institution of such Insolvency Proceedings, (b) the entry of any order for relief in the Insolvency Proceeding or any order adjudicating any Borrower, any other Loan
Party or Material Subsidiary as insolvent, or (c) the impairment (as to validity, priority or otherwise) of any Lien of the Credit Parties in any of the Collateral.
SECTION 8. Voluntary Insolvency Proceedings. The commencement by any Borrower, by any other Loan Party or any of their Material Subsidiaries of
Insolvency Proceedings.
SECTION 9. Attempt To Terminate Or Limit Guaranties. The receipt by a Credit Party of notice from a Guarantor that such Guarantor is attempting to
terminate or limit any portion of its obligations under a Guaranty Agreement or the Security Agreement.
SECTION 10. ERISA. An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or any Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount.
SECTION 11. Injunction. The issuance of any injunction against any Borrower or against any other Loan Party which enjoins or restrains any Borrower or any
other Loan Party from continuing to conduct any material part of its business affairs which continues for more than ten (10) days.
SECTION 12. Invalidity of Credit Documents. Any provision of any Credit Document, or any document containing a subordination or intercreditor undertaking
pertaining to any Obligation, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full
of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in any manner the validity or enforceability of any provision of any Credit Document
or such other document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Credit Document or such other document, or
purports to revoke, terminate or rescind any provision of any Credit Document.
SECTION 13. Invalidity of Security Documents. Any Security Document after delivery thereof pursuant to Sections 4.01 or 5.15 shall for any reason (other
than pursuant to the terms thereof) cease to create a valid and perfected first priority Lien (subject to Permitted Encumbrances) on the Collateral purported to be covered
thereby.
SECTION 14. Licenses and Agreements. Any agreement between any Manufacturer and a Loan Party is revoked, terminated or suspended and, a replacement
for same is not entered into within 30 days of such termination, revocation or suspension, or any license, consent, or approval which is material to the conduct of the
business of any Loan Party is revoked, terminated or suspended.
SECTION 15. Change In Control. The occurrence of any Change in Control.
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RIGHTS AND REMEDIES OF CREDIT PARTIES
ON THE OCCURRENCE OF AN EVENT OF DEFAULT
ARTICLE 8
Upon the occurrence of an Event of Default and during the continuance thereof:
Section 1.01.
Credit Parties’ Specific Rights And Remedies. In addition to all other rights and remedies provided by applicable Laws and the terms of the
Credit Documents, upon the occurrence and during the continuance of any Event of Default, the Administrative Agent may, on behalf of the Lenders and shall, at
the direction of the Required Lenders (a) declare the Commitments of each Lender to advance proceeds of the Loans and any obligation of the Issuing Bank to
issue any Letters of Credit to be terminated, (b) accelerate and call immediately due and payable all or any part of the Obligations, (c) require the Loan Parties to
Cash Collateralize the L/C Obligations and the M&T Advances, (d) seek specific performance or injunctive relief to enforce performance of the undertakings,
duties, and agreements provided in the Credit Documents, whether or not a remedy at Law exists or is adequate, (e) exercise any rights of a secured creditor
under applicable Laws against the Collateral, including (i) the right to take possession of the Collateral without the use of judicial process or hearing of any kind,
(ii) the right to require the Loan Parties to assemble the Collateral at such place as the Administrative Agent may specify, and (iii) the right to sell the Collateral, in
whole or in part, at either private or public sale, and (f) seek the appointment of a receiver for any or all of the Loan Parties and/or the assets of any or all of the
Loan Parties. For the avoidance of doubt, the availability and exercise of default remedies and rights under any Swap Agreements shall be governed by the
default provisions of such Swap Agreement.
Section 1.02.
Automatic Acceleration. Upon the occurrence and during the continuance of an Event of Default as described in Sections 7.07 or 7.08 of this
Agreement, the Commitments shall automatically terminate, the Obligations shall be automatically accelerated and due and payable without any notice, demand or
action of any type on the part of the Credit Parties, the obligations of the Issuing Bank to issue Letters of Credit shall be automatically terminated, and the Loan
Parties shall be automatically required to Cash Collateralize the L/C Obligations and M&T Advances.
Section 1.03.
Consent To Appointment Of Receiver. Each Borrower irrevocably consents to the appointment of a receiver upon the request of the
Administrative Agent during any continuing Event of Default for it and for any or all of its business affairs, business operations, and assets, which receiver shall be
authorized and deemed empowered to have and exercise the broadest powers permitted or available under applicable Laws to operate, manage, conserve,
liquidate and sell any or all of its assets; provided, however, that such receiver shall have no authority without the prior written consent of the Required Lenders to
release, discharge or otherwise negate any Liens securing the Obligations or to sell any assets of the Borrowers free and clear of any Liens securing the
Obligations.
Section 1.04.
Remedies Cumulative. The rights and remedies provided in this Agreement and in the other Credit Documents or otherwise under applicable
Laws shall be cumulative and the exercise of any particular right or remedy shall not preclude the exercise of any other rights or remedies in addition to, or as an
alternative of, such right or remedy.
Section 1.05.
Application Of Funds. After the exercise of remedies (or after the Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized), any amounts received on account of the Obligations shall be applied by the Administrative
Agent in the following order:
1.05.i.First, to the payment of that portion of the Obligations constituting fees, indemnities, expenses, reimbursements, and other amounts (including
Credit Party Expenses) payable to the Administrative Agent and to that part of the Obligations owed to any of the Credit Parties or to Affiliates of any of the Credit
Parties for Bank Products, as described in item (d) in the definition of Obligations.
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of Credit Fees) payable to the Lenders and the Issuing Bank (including Credit Party Expenses), ratably among the Lenders and the Issuing Bank.
1.05.ii.Second, to the payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter
1.05.iii.Third, to the payment of that portion of the Obligations constituting Letter of Credit Fees, accrued and unpaid interest on the Loans and
Reimbursement Obligations and on other Obligations, ratably among the Lenders and the Issuing Bank in proportion to the respective amounts described in this clause
Third payable to them.
1.05.iv.Fourth, to the payment of that portion of the Obligations constituting unpaid principal of the Loans and Reimbursement Obligations and payment or
Cash Collateralization of any obligations under any Swap Agreements, ratably among the Lenders and the Issuing Bank and the respective Swap Providers in proportion to
the respective amounts described in this clause Fourth held by them.
aggregate undrawn amount of Letters of Credit.
1.05.v.Fifth, to the Administrative Agent for the account of the Issuing Bank, to Cash Collateralize that portion of the L/C Obligations comprised of the
Laws.
1.05.vi.Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrowers or as otherwise required by applicable
Amounts used to Cash Collateralize either the Swap Agreements pursuant to clause Fourth above, or the aggregate undrawn amount of Letters of Credit pursuant to
clause Fifth above shall be applied to satisfy drawings under such Letters of Credit and payment obligations under the Swap Agreements as they occur. If any amounts
remain on deposit as Cash Collateral after all Letters of Credit have been fully drawn or have expired and all Swap Agreements have been terminated, such remaining
amount shall be applied to other Obligations, if any, in the order set forth above.
Section 1.06.
Cash Collateral Account.
1.06.i.As collateral security for the prompt payment in full when due of all M&T Advances and the other Obligations, the Borrowers hereby pledge and
grant to the Administrative Agent, for the ratable benefit of the Administrative Agent, the Issuing Bank and the Lenders as provided herein, a security interest in all of its
right, title and interest in and to the Cash Collateral Account and the balances from time to time in the Cash Collateral Account (including the investments and
reinvestments therein provided for below). The balances from time to time in the Cash Collateral Account shall not constitute payment of any M&T Advances until applied
by the Administrative Agent as provided herein or the L/C Obligations until applied by the Issuing Bank as provided herein. Anything in this Agreement to the contrary
notwithstanding, funds held in the Cash Collateral Account shall be subject to withdrawal only as provided in this Section.
1.06.ii.Amounts on deposit in the Cash Collateral Account shall be invested and reinvested by the Administrative Agent in such Cash Equivalents as the
Administrative Agent shall determine in its sole discretion. All such investments and reinvestments shall be held in the name of and be under the sole dominion and control
of the Administrative Agent for the ratable benefit of the Administrative Agent, the Issuing Bank and the Lenders; provided, that all earnings on such investments will be
credited to and retained in the Cash Collateral Account. The Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in the
Cash Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Administrative
Agent accords other funds deposited with the Administrative Agent, it being understood that the Administrative Agent shall not have any responsibility for taking any
necessary steps to preserve rights against any parties with respect to any funds held in the Cash Collateral Account.
Credit, the Borrowers and the Lenders authorize the Administrative Agent to use the monies deposited in the Cash Collateral Account for the
1.06.iii.If an Event of Default exists at the time that a drawing pursuant to any Letter of Credit occurs on or prior to the expiration date of such Letter of
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purposes of Cash Collateralizing Letters of Credit to reimburse the Issuing Bank for the payment made by the Issuing Bank to the beneficiary with respect to such
drawing.
1.06.iv.If an Event of Default exists, the Administrative Agent may (and, if instructed by the Required Lenders, shall) in its (or their) discretion at any time
and from time to time elect to liquidate any such investments and reinvestments and apply the proceeds thereof to the Obligations in accordance with Section 8.05.
Notwithstanding the foregoing, the Administrative Agent shall not be required to liquidate and release any such amounts if such liquidation or release would result in the
amount available in the Cash Collateral Account to be less than the Stated Amount of all Letters of Credit and M&T Advances that remain outstanding.
services in connection with the Administrative Agent’s administration of the Cash Collateral Account and investments and reinvestments of funds therein.
1.06.v.The Borrowers shall pay to the Administrative Agent from time to time such fees as the Administrative Agent normally charges for similar
1.06.vi.The rights and remedies provided in this Agreement and in the other Credit Documents or otherwise under applicable Laws shall be cumulative
and the exercise of any particular right or remedy shall not preclude the exercise of any other rights or remedies in addition to, or as an alternative of, such right or remedy.
ARTICLE 9
THE ADMINISTRATIVE AGENT
Section 1.01.
Appointment. Each of the Lenders and the Issuing Bank hereby irrevocably designates and appoints M&T Bank as Administrative Agent under
this Agreement and the other Credit Documents and each Lender and the Issuing Bank authorizes M&T Bank as its respective Administrative Agent to take
such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are
expressly delegated to the Administrative Agent by the terms of this Agreement and such other Credit Documents, together with such other powers as are
reasonably incidental thereto. The provisions of this Article 9 are solely for the benefit of the Credit Parties and no Loan Party shall have any rights as a third
party beneficiary of any of such provisions. It is understood and agreed that the use of the term "agent” herein or in any other Credit Document (or any other
similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable Laws. Instead, such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship
between contracting parties.
Section 1.02.
Exculpatory Provisions.
1.02.i.No Fiduciary, Discretionary or Implied Duties. The Administrative Agent shall not have any duties or obligations except those expressly set
forth herein and in the other Credit Documents and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative
Agent:
continuing;
(a) Shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is
(b) Shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Credit Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or
such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Credit Documents), provided that the Administrative Agent shall
not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Credit
Document or applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor
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Relief Law, or that may cause a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and
(c) Shall not, except as expressly set forth herein and in the other Credit Documents, have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to any Loan Party or any of their Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.
1.02.ii.No Liability for Certain Actions. The Administrative Agent shall not be liable for any action taken or not taken by it (a) with the consent or at the
request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall
be necessary, under the circumstances as provided in Sections 8.01 and 10.01 or (b) in the absence of its own gross negligence or willful misconduct, as determined by a
court of competent jurisdiction by final and non-appealable judgment.
1.02.iii.Knowledge. The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default or Material Adverse Change
unless and until written notice describing such Default, Event of Default or Material Adverse Change is given to the Administrative Agent in writing by a Credit Party or
by a Loan Party.
1.02.iv.No Duty to Inquire. The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (a) any statement,
warranty or representation made in or in connection with this Agreement or any other Credit Document, (b) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith, (c) the performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or therein or the occurrence of any Default or Event of Default, (d) the validity, enforceability, effectiveness or genuineness of this Agreement,
any other Credit Document or any other agreement, instrument or document or (e) the satisfaction of any condition set forth in Article 4 or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the Administrative Agent.
SECTION 16. Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to
the satisfaction of a Lender or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless the
Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of
Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
SECTION 17. Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any
other Credit Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of
any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross
negligence or willful misconduct in the selection of such sub-agents.
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SECTION 18. Resignation of Administrative Agent. The Administrative Agent may at any time give notice of its resignation to the Credit Parties and to the
Borrowers. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrowers, to appoint a successor, which
shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation (or such
earlier day as shall be agreed by the Required Lenders (the "Resignation Effective Date”)), then the retiring Administrative Agent may (but shall not be obligated to) on
behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that in no event shall any
successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such
notice on the Resignation Effective Date. With effect from the Resignation Effective Date, (a) the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Credit Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders
or the Issuing Bank under any of the Credit Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (b) except for any indemnity payments owed to the retiring Administrative Agent, all payments, communications and determinations
provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Bank directly, until such time, if any, as the
Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent
hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Administrative Agent (other than any
rights to indemnity payments owed to the retiring Administrative Agent), and the retiring Administrative Agent shall be discharged from all of its duties and obligations
hereunder or under the other Credit Documents. The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrowers and such successor. After the retiring Administrative Agent’s resignation or removal hereunder and under
the other Credit Documents, the provisions of this Article and the provisions of Section 10.08 of this Agreement shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring
Administrative Agent was acting as Administrative Agent.
SECTION 19. Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the Issuing Bank acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Bank acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Credit Document or any related
agreement or any document furnished hereunder or thereunder.
SECTION 20. Administrative Agent May Hold Collateral For Lenders and Others. The Lenders and the Loan Parties acknowledge that any Security
Documents relating to the Loans, the Obligations, or the Collateral, including all of such documents filed in the public records in order to evidence or perfect the Liens
granted in the Credit Documents, may name only the Administrative Agent, as agent for the Lenders as the secured party, mortgagee, beneficiary, or as lienholder. The
Lenders and the Loan Parties authorize the Administrative Agent to hold any or all of the Liens in and to the Collateral as the agent for the benefit of the Credit Parties,
M&T Bank, the Swap Providers, or any of their respective Affiliates, as applicable under this Agreement. Such Swap Providers and Affiliates which are party hereto, by
their acceptance of the benefits of this Agreement and/or any other Security Documents or Credit Documents, also hereby authorize the Administrative Agent to hold the
Liens in and to the Collateral as their administrative agent.
SECTION 21. The Administrative Agent In Its Individual Capacity. The Person serving as the Administrative Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term "Lender” or "Lenders”
shall, unless otherwise expressly indicated or unless the context otherwise
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requires, including the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend
money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Loan Party or any
Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders. The Issuing
Bank and the Lenders acknowledge that, pursuant to such activities, the Lender acting as Administrative Agent or its Affiliates may receive information regarding the
Borrowers, other Loan Parties, other Subsidiaries and other Affiliates (including information that may be subject to confidentiality obligations in favor of such Person) and
acknowledge that the Administrative Agent shall be under no obligation to provide such information to them.
SECTION 22. Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as
herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of
the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the
claims of the Lenders, the Issuing Bank and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the
Lenders, the Issuing Bank and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Bank and the
Administrative Agent under Sections 2.01.15, 2.03.5, 2.05.9, 2.15 and 10.08) allowed in such judicial proceeding; and (b) to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender and the Issuing Bank to make such payments to the Administrative Agent and, in the event that the
Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Bank, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.01.15, 2.03.5, 2.05.9, 2.15 and 10.08. Nothing contained herein shall be deemed to (a) permit the Administrative Agent to authorize
or consent to or accept or adopt on behalf of any Lender or the Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or the Issuing Bank, (b) authorize the Administrative Agent to vote in respect of the claim of any Lender or the Issuing Bank in any such
proceeding, or (c) credit bid any Obligation held by any Lender or the Issuing Bank in any such proceeding, without the prior consent of such Lender or the Issuing Bank,
as applicable.
SECTION 10. Collateral and Guaranty Matters. The Lenders and the Issuing Bank irrevocably authorize the Administrative Agent, at its option and in its
discretion, (a) to release any Lien on any property granted to or held by the Administrative Agent under any Credit Document (i) upon the final termination of all of the
Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit (other than
Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the Issuing Bank shall have been made), (ii) that is sold or to be sold as part
of or in connection with any sale permitted hereunder or under any other Credit Document, (iii) subject to Section 10.01, if approved, authorized or ratified in writing by the
Required Lenders or (iv) that becomes Excluded Property or becomes the property of any Designated Real Estate Subsidiary; (b) to subordinate any Lien on any property
granted to or held by the Administrative Agent under any Credit Document to the holder of any Lien on such property that is permitted under clause (h) of the definition of
Permitted Encumbrance; and (c) to release any Guarantor from its obligations under the Guaranty Agreement if such Person becomes an Excluded Subsidiary or ceases to
be a Subsidiary as a result of a transaction permitted hereunder. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the
Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the
Guaranty Agreement pursuant to this Section 9.10. The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or
warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate
prepared by any Loan
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Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.
SECTION 11. No Reliance on Administrative Agent’s Customer Identification Program. Each Lender acknowledges and agrees that neither such Lender,
nor any of its Affiliates, participants or assignees, may rely on the Administrative Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer
identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended or replaced, the "CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following
items relating to or in connection with any Loan Party, its Affiliates or its agents, this Agreement, any other Credit Documents or the transactions hereunder or
contemplated hereby: (a) any identity verification procedures, (b) any record-keeping, (c) comparisons with government lists, (d) customer notices or (e) other procedures
required under the CIP Regulations or such other laws.
SECTION 12. No Other Duties, Etc. Notwithstanding anything to the contrary herein, none of the Bookrunners, Arrangers listed on the cover page of this
Agreement shall have any powers, duties or responsibilities under this Agreement or any of the other Credit Documents, except in the capacity, as applicable, as the
Administrative Agent, a Lender, the Issuing Bank or the Swingline Lender.
SECTION 13. Erroneous Payments.
(a) If the Administrative Agent notifies a Lender, Issuing Bank or Credit Party, or any Person who has received funds on behalf of a Lender,
Issuing Bank or Credit Party such Lender or Issuing Bank (any such Lender, Issuing Bank, Credit Party or other recipient, a "Payment Recipient”) that the Administrative
Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment
Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment
Recipient (whether or not known to such Lender, Issuing Bank, Credit Party or other Payment Recipient on its behalf) (any such funds, whether received as a payment,
prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an "Erroneous Payment”) and demands the return of such
Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent, and such Lender, Issuing Bank or
Credit Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later
than three (3) Business Day thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand
was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or
portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal
Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice
of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(1) Without limiting immediately preceding clause (a), each Payment Recipient hereby further agrees that if it receives a payment, prepayment or repayment
(whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of
its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the
Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment (a "Payment Notice”), (y) that was not preceded
or accompanied by a Payment Notice, or (z) that such Payment Recipient otherwise becomes aware was transmitted, or received, in error or by mistake
(in whole or in part) in each case:
(1)
an error may have been made (in the case of immediately preceding clauses (x) or (y)) or an error has been made (in the case of immediately
preceding clause (z)) with respect to such payment, prepayment or repayment; and
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(2)
such Payment Recipient shall promptly (and, in all events, within one (1) Business Day of its knowledge of such error) notify the Administrative
Agent of its receipt of such payment, prepayment or repayment, the details thereof and that it is so notifying the Administrative pursuant to this
Section 9.13(b).
(c) Each Lender, Issuing Bank or Credit Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any
time owing to such Lender, Issuing Bank or Credit Party under any Credit Document, or otherwise payable or distributable by the Administrative Agent to such Lender,
Issuing Bank or Credit Party from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification
provisions of this Agreement.
(2) In the event an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the
Administrative Agent in accordance with the immediately preceding clause (a), from any Lender or Issuing Bank that has received such Erroneous
Payment (or portion thereof) (or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such
unrecovered amount, an "Erroneous Payment Return Deficiency”), upon the Administrative Agent’s request to such Lender or Issuing Lender at any time,
(i) such Lender or Issuing Bank shall be deemed to have assigned its Loans (but not its Commitments) of the relevant Class with respect to which such
Erroneous Payment was made (the "Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (such
assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the "Erroneous Payment Deficiency Assignment”) at par plus
any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the
Borrowers) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and
Assumption by reference pursuant to the Platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous
Payment Deficiency Assignment, and such Lender or Issuing Bank shall deliver any Notes evidencing such Loans to the Borrowers or the Administrative
Agent, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment and (iii) upon such
deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender or Issuing Bank, as applicable, hereunder with respect to
such Erroneous Payment Deficiency Assignment and the assigning Lender or assigning Issuing Bank shall cease to be a Lender or Issuing Bank, as
applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the
indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender or assigning Issuing Bank.
For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender or Issuing Bank and such
Commitments shall remain available in accordance with the terms of this Agreement.
(3) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrowers
or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment
that is, comprised of funds received (or debited from the Cash Collateral Account) by the Administrative Agent from the Borrowers or any other Loan
Party for the purpose of making such Erroneous Payment.
(4) To the extent permitted by applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is
deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the
Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on "discharge for value”
or any similar doctrine.
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(5) Each party’s obligations, agreements and waivers under this Section 9.13 shall survive the resignation or replacement of the Administrative Agent, any
transfer of rights or obligations by, or the replacement of, a Lender or Issuing Bank, the termination of the Commitments and/or the repayment, satisfaction
or discharge of all Obligations (or any portion thereof) under any Credit Document.
SECTION 14. Indemnification of Administrative Agent. Each Lender agrees to indemnify each of the Administrative Agent (to the extent not reimbursed by
the Borrowers and without limiting the obligation of the Borrowers to do so) pro rata in accordance with such Lender’s respective Pro Rata Share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought), from and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits and reasonable out-of-pocket costs and expenses of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against
the Administrative Agent in any way relating to or arising out of the Credit Documents, any transaction contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent under the Credit Documents (collectively, "Indemnifiable Amounts”); provided, however, that no Lender shall be liable for any portion of such
Indemnifiable Amounts to the extent resulting from the Administrative Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in
a final, non-appealable judgment; provided, further, that no action taken in accordance with the directions of the Required Lenders (or all of the Lenders, if expressly
required hereunder) shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limiting the generality of the foregoing, each
Lender agrees to reimburse the Administrative Agent (to the extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do so)
promptly upon demand for its Pro Rata Share (determined as of the time that the applicable reimbursement is sought) of any out-of-pocket expenses (including the
reasonable fees and expenses of the counsel to the Administrative Agent) incurred by the Administrative Agent in connection with the preparation, negotiation, execution,
administration, or enforcement (whether through negotiations, legal proceedings, or otherwise) of, or legal advice with respect to the rights or responsibilities of the parties
under, the Credit Documents, any suit or action brought by the Administrative Agent to enforce the terms of the Credit Documents and/or collect any Obligations, any
"lender liability” suit or claim brought against either Agent and/or the Lenders, and any claim or suit brought against either Agent and/or the Lenders arising under any
Environmental Laws. Such out-of-pocket expenses (including counsel fees) shall be advanced by the Lenders on the request of the Administrative Agent notwithstanding
any claim or assertion that the Administrative Agent is not entitled to indemnification hereunder upon receipt of an undertaking by the Administrative Agent that the
Administrative Agent will reimburse the Lenders if it is actually and finally determined by a court of competent jurisdiction that such Agent is not so entitled to
indemnification. The agreements in this Section shall survive the payment of the Loans and all other Obligations and the termination of this Agreement. If the Borrowers
shall reimburse the Administrative Agent for any Indemnifiable Amount following payment by any Lender to the Administrative Agent in respect of such Indemnifiable
Amount pursuant to this Section, the Administrative Agent shall share such reimbursement on a ratable basis with each Lender making any such payment.
ARTICLE 10
MISCELLANEOUS
Section 1.01.
Waivers and Amendments. No amendment or waiver of any provision of this Agreement or any other Credit Document, and no consent to any
departure by the Borrowers or by any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrowers or the
applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01.1 without the written consent of each Lender;
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(b) extend or increase any Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.01(a)) without the written consent of such
Lender;
(c) postpone any date fixed by this Agreement or any other Credit Document for any scheduled payment of principal, interest, fees or other amounts due to the
Lenders (or any of them) hereunder or under any other Credit Document, extend the final Maturity Date of any Loans, or extend the date of payment for reimbursement
obligations in respect of Letters of Credit, without the written consent of each Lender directly affected thereby;
(d) reduce the principal of, or the rate of interest specified herein on, any Loan or Reimbursement Obligation, or (subject to clause (v) of the second proviso to this
Section 10.01) any fees (including fees related to Letters of Credit) or other amounts payable hereunder or under any other Credit Document, without the written consent
of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of "Default Rate” or
to waive any obligation of the Borrowers to pay interest or Letter of Credit Fees at the Default Rate;
(e) change Section 8.05 or any other provision of this Agreement in a manner that would alter the pro rata sharing of payments required thereby without the
written consent of each Lender or add any provision to this Agreement in a manner that would alter the pro rata sharing of payments required hereunder as of the date
hereof without the prior written consent of each Lender;
(f) (A) reduce the amount of Commitments or Loans specified in the definition of "Required Floor Plan Lenders” without the written consent of each Floor Plan
Lender, (B) reduce the amount of Commitments or Loans specified in the definition of "Required Revolving Credit Lenders” or "Supermajority Lenders” without the
written consent of each Revolving Credit Lender and (C) change any provision of this Section or reduce the aggregate commitment amount specified in the definition of
"Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written consent of each Lender;
(g) amend, modify or waive Section 4.02 or any other provision of this Agreement, in each case without the written consent of each Floor Plan Lender or
Revolving Credit Lenders, as applicable, if the effect of such amendment, modification or waiver is to require the Floor Plan Lenders or Revolving Credit Lenders to make
Floor Plan Loans or Revolving Credit Loans, as applicable, when such Lenders would not otherwise be required to do so;
(h) release all or substantially all Collateral (other than as specifically authorized by the terms of this Agreement or any other Credit Document) without the prior
written consent of each Lender;
(i) amend or otherwise modify the definition of "Pro Rata Share” or amend or otherwise modify the provisions of Section 2.08.3 or Section 9.14 or any other
provision of this Agreement without the written consent of each Lender or add any provision to this Agreement in a manner that would alter the pro rata treatment
required hereunder as of the date hereof without the prior written consent of each Lender;
(j) modify the definition of the term "Borrowing Base” (or any component definition thereof as used therein to determine eligibility under the Borrowing Base),
including any advance rates set forth therein, in the case of each of the foregoing, if such modification would increase the amount available to be borrowed (or the amount
available for Letters of Credit) under the Credit Documents without the written consent of the Supermajority Lenders; provided that the foregoing shall not limit the
discretion of the Administrative Agent to change, establish or eliminate any Reserves, to modify any eligibility standards pursuant to Section 2.21 or to exercise its
Permitted Discretion without the consent of any other Credit Party; or
(k) subordinate the Liens on the Collateral securing any of the Obligations or subordinate the right of payment of the Obligations (in each case, as such definitions
were in effect on the Closing Date) in each case without the written consent of each Lender;
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provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank in addition to the Lenders required above, affect the
rights or duties of the Issuing Bank under this Agreement or any L/C Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or
consent shall, unless in writing and signed by the Swingline Lender in addition to the Lenders required above, affect the rights or duties of the Swingline Lender under this
Agreement; (iii) no amendment, waiver or consent shall amend or modify any Swap Agreements or otherwise affect the rights or duties of any Swap Providers (and no
Lender or Required Lender consent or approval shall be required or permitted with respect to any such amendments or modifications to any Swap Agreements) or release
any Collateral securing any obligations under any Swap Agreement without the consent of the respective Swap Provider; (iv) no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this
Agreement or any other Credit Document; (v) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto;
(vi) no amendment, waiver or consent shall, unless in writing and signed by M&T Bank as M&T Advance Lender in addition to the applicable Lenders required above,
affect the rights or duties of M&T Advance Lender pursuant to this Agreement and (vii) notwithstanding anything to the contrary in this Agreement or any other Credit
Document, but except for the consents required pursuant to clause (f) above, any waiver, amendment or modification of this Agreement or any other Credit Document that
by its terms affects the rights or duties under this Agreement or such Credit Document of Lenders solely in their capacities as Lenders holding Loans or Commitments of a
particular Class (but not in their capacities as Lenders holding Loans or Commitments of any other Class) may be effected by an agreement or agreements in writing
entered into solely by the Borrowers in respect of such particular Class, on the one hand, and the Required Floor Plan Lenders or the Required Revolving Credit Lenders,
on the other hand, as applicable. Notwithstanding anything to the contrary herein, (i) no Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with
the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitments of any Defaulting Lender may not be increased or extended
without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects
any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender and (ii) if the Administrative Agent and the
Borrowers have jointly identified an ambiguity, omission, mistake or defect in any provision of this Agreement or an inconsistency between provisions of this Agreement,
the Administrative Agent and the Borrowers shall be permitted to amend such provision or provisions to cure such ambiguity, omission, mistake, defect or inconsistency so
long as (x) to do so would not adversely affect the interests of the Lenders and (y) such amendment is not objected to in writing by the Required Lenders to the
Administrative Agent within five (5) Business Days following receipt of notice thereof, and any such amendment shall become effective without any further action or
consent of any of other party to this Agreement.
Section 1.02.
Successors and Assigns.
1.02.i.Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior
written consents of the Administrative Agent and of each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (a) to
an Eligible Assignee in accordance with the provisions of Section 10.2.2; (b) by way of participation in accordance with the provisions of Section 10.03, or (c) by way of
pledge or assignment of a security interest authorized by Section 10.04 (and any other attempted assignment, transfer or pledge by any party hereto shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in Section 10.03 of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
obligations set forth in this Agreement or the other Credit Documents, including all or a portion of its Commitments and the Loans (including for
1.02.ii.Assignments By Lenders. Each Lender may assign to one or more Eligible Assignees all or any portion of such Lender’s interests, rights and
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purposes hereof, its participations in L/C Obligations and Swingline Loans) provided that (a) an administrative fee in the amount of Five Thousand ($5,000.00) is paid to the
Administrative Agent by either the assigning Lender or the Eligible Assignee in connection with the assignment, (b) if less than all of the assigning Lender’s Commitments
and Loans is to be assigned, the amount of the Commitments and Loans so assigned shall be for an aggregate principal amount of not less than Five Million Dollars
($5,000,000.00), (c) each partial assignment shall be made as an assignment of a proportionate amount of all of the assigning Lender’s rights and obligations under this
Agreement with respect to the Loans and Commitments assigned (except this clause (c) shall not apply to the Swingline Lender’s rights and obligations in the Swingline
Loans), (d) the parties to each such assignment shall execute and deliver an Assignment And Assumption to the Administrative Agent, for its acceptance, and (e) such
Assignment And Assumption does not require the filing of a registration statement with the Securities And Exchange Commission or require the Loans or the Notes to be
qualified in conformance with the requirements imposed by any blue sky Laws or other Laws of any state. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment And Assumption, which effective date is at least five (5) Business Days after the execution thereof, (a) the
Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment And Assumption, have the rights, duties, and obligations of a Lender hereunder,
and (b) the assigning Lender thereunder shall, to the extent provided in such Assignment And Assumption, be released from its duties and obligations under this Agreement
but shall continue to be entitled to all indemnification and reimbursement rights provided to the Lenders by the Borrowers pursuant to any of the Credit Documents with
respect to facts, events, and circumstances occurring prior to the effective date of such assignment. By executing and delivering an Assignment And Assumption, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties to this Agreement the facts and matters as set forth
in such Assignment and Assumption. Lenders may only assign their interests in the Commitments, the Loans, and Credit Documents to Eligible Assignees. Any assignment
or transfer by a Lender of rights or obligations under the Credit Documents that does not comply with this Section shall be treated for purposes of the Credit Documents as
a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.03 of this Agreement. Except to the extent otherwise expressly agreed
in writing by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or a release of any claim of any party hereunder arising from that Lender
having been a Defaulting Lender.
1.02.iii.Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender pursuant to Section 10.02.2,
no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional
payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the
assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrowers and the Administrative Agent, the
applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (a) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the Issuing Bank, the Swingline
Lender and each other Lender hereunder (and interest accrued thereon), and (b) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in
Letters of Credit and Swingline Loans in accordance with its respective Commitment Percentages. Notwithstanding the foregoing, in the event that any assignment of
rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Laws without compliance with the provisions of this Section, then the
assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
1.02.iv.Register. The Administrative Agent, acting solely for this purpose as a limited fiduciary agent of the Borrowers, shall maintain a copy of each
Assignment And Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders and the amount of the Loans with respect to
each Lender from time to time (the "Register”). The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrowers, the Administrative
Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers or the Lenders at any reasonable time and from time to time upon reasonable prior notice.
assigning Lender and an Eligible
1.02.v.Procedures for Implementing Lender Assignments. Upon the Administrative Agent’s receipt of an Assignment And Assumption executed by an
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Assignee together with any Note or Notes subject to such Assignment and Assumption and any necessary consents to such Assignment and Assumption, the
Administrative Agent shall, if such Assignment and Assumption has been completed and is substantially in the form of Exhibit A (a) accept such Assignment And
Assumption, (b) record the information contained therein in the Register, (c) give prompt notice thereof to the Borrowers, and (d) promptly deliver a copy of such
Assignment And Assumption to the Borrowers. Within three (3) Business Days after receipt of notice, the Borrowers shall execute and deliver to the Administrative
Agent, in exchange for the surrendered Notes, new Notes to the order of such Eligible Assignee in amounts equal to the Commitments and Commitment Percentages
assumed by it pursuant to such Assignment And Assumption and new Notes to the order of the assigning Lender in an amount equal to the Commitments and Commitment
Percentages retained by the assigning Lender. Such Notes shall be in the aggregate stated principal amount equal to the aggregate principal amount of such surrendered
Notes, shall be dated the effective date of such Assignment And Assumption and shall otherwise be in substantially the form of the assigned Notes delivered to the
assigning Lender. The surrendered Notes shall be canceled and returned to the Borrowers. The Borrowers expressly acknowledge that the cancellation of any Note or
Notes and the replacement of any Note or Notes in accordance with this provision shall not constitute or be deemed to be a refinancing or a novation of any of the
Obligations.
1.02.vi.Cashless Settlements. Notwithstanding anything to the contrary contained in this Agreement, any Lender may exchange, continue or rollover all or
a portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a
cashless settlement mechanism approved by the Borrowers, the Administrative Agent and such Lender.
Section 1.03.
Participations. Any Lender may at any time, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to
any Person (other than to a Defaulting Lender, a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary
benefit of a natural Person), or the Borrowers or any of the Borrowers’ Affiliates or Subsidiaries) (each, a "Participant”) in all or a portion of such Lender’s rights
and/or obligations under this Agreement (including all or a portion of its Commitments and/or the Loans owing to it); provided that (a) such Lender’s obligations
under this Agreement shall remain unchanged, (b) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations,
and (c) the Borrowers, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection
with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section
2.11.5. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Section 10.01 that affects such
Participant. The Borrowers agree that each Participant shall be entitled to the benefits of Sections 2.07.3, 2.10 and 2.11 (subject to the requirements and
limitations therein, including the requirements under Section 2.11.7 (it being understood that the documentation required under Section 2.11.7 shall be delivered to
the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.02 of this Agreement;
provided that such Participant (i) agrees to be subject to the provisions of Section 2.12 as if it were an assignee under Section 10.02 of this Agreement; and (ii)
shall not be entitled to receive any greater payment under Sections 2.10 or 2.11, with respect to any participation, than its participating Lender would have been
entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the
applicable participation. Each Lender that sells a participation agrees, at the Borrowers' request and expense, to use reasonable efforts to cooperate with the
Borrowers to effectuate the provisions of Section 2.12.2 with respect to any Participant. To the extent permitted by Law, each Participant also shall be entitled to
the benefits of Section 10.07 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.08 as though it were a Lender. Each
Lender that sells a participation shall, acting solely for this purpose as a limited non-fiduciary agent of the Borrowers, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated interest) of each
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Participant’s interest in the Loans or other obligations under the Credit Documents (the "Participant Register”); provided that no Lender shall have any obligation
to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any
commitments, loans, letters of credit or its other obligations under any Credit Document) to any Person except to the extent that such disclosure is necessary to
establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.
The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt,
the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
Section 1.04.
Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall
release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
Section 1.05.
Resignations Of Issuing Bank And Swingline Lender. Notwithstanding anything to the contrary the Issuing Bank may upon thirty (30) days’
notice to the Administrative Agent, the Borrowers and the Lenders, resign as Issuing Bank, and/or the Swingline Lender may upon thirty (30) days’ notice to the
Administrative Agent, the Borrowers and the Lenders, resign as Swingline Lender. After the resignation of the Issuing Bank hereunder, the retiring Issuing Bank
shall remain a party hereto and shall continue to have all the rights and obligations of the Issuing Bank under this Agreement and the other Credit Documents with
respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit or to extend, renew or increase any
existing Letter of Credit. After the resignation of the Swingline Lender hereunder, the retiring Swingline Lender shall remain a party hereto and shall continue to
have all the rights and obligations of a Swingline Lender under this Agreement and the other Credit Documents with respect to Swingline Loans made by it prior
to such resignation, but shall not be required to make any additional Swingline Loans.
Section 1.06.
No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Credit Document), each of the Borrowers acknowledges and agrees that: (a)(i) the arranging
and other services regarding this Agreement provided by the Administrative Agent and the Arranger, are arm’s-length commercial transactions between the
Borrowers and their Affiliates, on the one hand, and the Administrative Agent and the Arranger, on the other hand, (ii) the Borrowers have consulted their own
legal, accounting, regulatory and tax advisors to the extent the Borrowers have deemed appropriate, and (iii) the Borrowers are capable of evaluating, and
understand and accept, the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents; (b) (i) the Administrative
Agent and the Arranger each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not,
and will not be acting as an advisor, agent or fiduciary for any of the Borrowers or any of their Affiliates, or any other Person and (ii) neither the Administrative
Agent nor the Arranger has any obligation to any of the Borrowers or any of their Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Credit Documents; and (c) the Administrative Agent and the Arranger and their respective Affiliates may be
engaged in a broad range of transactions that involve interests that differ from those of the Borrowers and their Affiliates, and neither the Administrative Agent
nor the Arranger has any obligation to disclose any of such interests to the Borrowers or their Affiliates. To the fullest extent permitted by Law, each Borrower
hereby waives and releases any claims that it may have against the Administrative Agent and the Arranger with respect to any breach or alleged breach of
agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Section 1.07.
Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Bank, and each of their respective
Affiliates is hereby authorized at any
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time and from time to time, to the fullest extent permitted by applicable Laws, to set off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency) at any time owing, by such Lender, the Issuing Bank or
any such Affiliate, to or for the credit or the account of any Borrower or any other Loan Party against any and all of the Obligations of the Borrowers or any
Loan Party now or hereafter existing under this Agreement or any other Credit Document to such Lender or the Issuing Bank or their respective Affiliates,
irrespective of whether or not such Lender, the Issuing Bank or any of their Affiliates shall have made any demand under this Agreement or any other Credit
Document and although such Obligations of the Borrowers or any Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such
Lender or the Issuing Bank different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any
Defaulting Lender shall exercise any such right of setoff, (a) all amounts so set off shall be paid over immediately to the Administrative Agent for further
application in accordance with the provisions of Section 2.13 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and
deemed held in trust for the benefit of the Administrative Agent, the Issuing Banks, and the Lenders, and (b) the Defaulting Lender shall provide promptly to the
Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.
The rights of each Lender, each Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights
of setoff) that such Lender, such Issuing Bank or their respective Affiliates may otherwise have under applicable Laws. The Lender and the Issuing Bank each
agree to notify the Borrowers and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not
affect the validity of such setoff and application.
Section 1.08.
Expenses; Indemnity; Damage Waiver.
1.08.i.
Costs and Expenses. The Borrowers jointly and severally promise to pay (a) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), related to due diligence performed in
connection with the Closing Date Transactions, the syndication of the credit facilities hereunder, the preparation, negotiation, execution, delivery and
administration of this Agreement and the other Credit Documents, or any amendments, or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (b) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with
the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (c) all out-of-pocket expenses incurred by the
Administrative Agent, any Lender or the Issuing Bank (including the fees, charges and disbursements of one firm of counsel for the Administrative Agent, any
Lender or any Issuing Bank taken as a whole and, if necessary, one firm of local counsel in each appropriate jurisdiction, in each case for all such parties
taken as a whole (and in the case of an actual or perceived conflict of interest, of another firm or counsel for such affected party taken as a whole), but in any
event excluding allocated costs of internal counsel) in connection with the enforcement or protection of its rights (i) in connection with this Agreement and the
other Credit Documents, including its rights under this Section, or (ii) in connection with the Loans made or Letters of Credit issued hereunder, including all
such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, and (d) all other Credit
Party Expenses. The agreements of the Borrowers set forth in this Section 10.08.1 shall not merge into any judgment entered in connection with this
Agreement or any other Credit Documents but shall survive as separate independent contractual agreements of the Borrowers.
1.08.ii. Indemnification by the Borrowers. The Borrowers jointly and severally agree to indemnify the Administrative Agent (and any sub-agent thereof), each
Lender and the Issuing Bank, and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of one firm of
counsel for the Indemnitees taken as a whole and, if necessary,
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one firm of local counsel in each appropriate jurisdiction, in each case for all such parties taken as a whole (and in the case of an actual or perceived conflict
of interest, of another firm or counsel for such affected party taken as a whole), but in any event excluding allocated costs of internal counsel), and to
indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee,
incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrowers or any other Loan Party) other than such Indemnitee
and its Related Parties arising out of, in connection with, or as a result of (a) the execution or delivery of this Agreement, any other Credit Document or any
agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (b) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such
demand do not strictly comply with the terms of such Letter of Credit), (c) any actual or alleged presence or release of Hazardous Materials on or from any
property owned or operated by any Loan Party or any of its Subsidiaries, or any Environmental Liability related in any way to any Loan Party or any of its
Subsidiaries, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any
other theory, whether brought by a third party or by any Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such
Indemnitee, or (y) result from a claim brought by a Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee's
obligations hereunder or under any other Credit Document, if a Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on
such claim as determined by a court of competent jurisdiction. This Section 10.08.2 shall not apply with respect to Taxes other than any Taxes that represent
losses, claims, damages, etc. arising from any non-Tax claim.
1.08.iii. Reimbursement by Lenders. To the extent that the Borrowers for any reason fail to indefeasibly pay any amount required under Section 10.08.1 or
10.08.2 to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Bank, any Swingline Lender or any Related Party of any of the
foregoing, each Lender severally promises to pay to the Administrative Agent (or any such sub-agent), the Issuing Bank, the Swingline Lender or such Related
Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought
based on each Lender’s share of the aggregate Total Credit Exposure for all Lenders at such time) of such unpaid amount (including any such unpaid amount
in respect of a claim asserted by such Lender); provided that with respect to such unpaid amounts owed to the Issuing Bank or the Swingline Lender solely in
its capacity as such, only the holders of Revolving Credit Loans shall be required to pay such unpaid amounts, such payment to be made severally among them
based on each of such Lenders’ respective Revolving Credit Commitment Percentage (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) provided, further, that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), such Issuing Bank or the Swingline Lender in its capacity as such,
or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the Issuing Bank or any the Swingline
Lender in connection with such capacity.
1.08.iv. Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Laws, each Borrower agrees that it will not assert, and hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit, or the use of the proceeds thereof. No Indemnitee referred to in
Section 10.08.2 above shall be
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liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby
or thereby.
1.08.v. Payments. All amounts due under this Section shall be payable not later than ten (10) Business Days after demand therefor.
1.08.vi. Survival. Each party’s obligations under this Section 10.08 shall survive the termination of the Credit Documents and the payment of the Obligations
hereunder.
SECTION 15. Course of Conduct. No failure or delay by any Credit Party in exercising any right or power under any Credit Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Credit Parties under the Credit Documents are
cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Credit Document or consent to any
departure by any Loan Party therefrom shall in any event be effective unless such waiver is made in accordance with Section 10.01 of this Agreement, and then such
waiver or consent shall be effective only in the specific instance and for the purpose for which given. No waiver or indulgence by any of the Credit Parties shall constitute
a future waiver of performance or exact performance by any of the Loan Parties. No amendment or waiver shall be effective unless in writing. Without limiting the
generality of the foregoing, the advance of proceeds of a Loan or the issuance of a Letter of Credit shall not be construed as a waiver of any Default or an Event of
Default, regardless of whether any Credit Party may have had notice or knowledge of such Default or Event of Default at the time of such advance or issuance.
SECTION 10. Notices; Effectiveness; Electronic Communication.
1.10.i.Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided
in Section 10.10.2 below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by facsimile as follows:
(a) if to any of the Borrowers or to any other Loan Party, to it at 6130 Lazydays Blvd., Seffner, FL 33584, Attention of Kelly Porter,
Chief Financial Officer (kporter@lazydays.com; Telephone No. (813) 204-4374) with a copy, which shall not constitute notice, to King & Spalding LLP, 300 S Tryon
Street, Suite 1700, Attention of Aleksandra Kopec (akopec@kslaw.com; Telephone No. (704) 503-2587);
(b) if to the Administrative Agent, to Manufacturers and Traders Trust Company at One Fountain Plaza – 12 Floor, Buffalo, NY
th
14203, Attention of Brendan Kelly, Vice President (bkelly@mtb.com; Telephone No. (716) 848-2778; and to M&T Debt Capital Markets Group, 25 S. Charles Street, 12
Floor, Baltimore, Maryland 21201, Attention of Chad Durakis, Vice President (Telephone No. (410) 244-4580);
th
(c) if to Manufacturers and Traders Trust Company in its capacity as provider of the M&T Advances, to it at M&T Bank Dealer Commercial Services, One
Fountain Plaza – 12 Floor, Buffalo, NY 14203, Attention of Brendan Kelly, Vice President (bkelly@mtb.com); Telephone No. (716) 858-2778;
th
(d) if to Manufacturers and Traders Trust Company in its capacity as Issuing Bank, to it at One Fountain Plaza – 12 Floor, Buffalo,
NY 14203, Attention of Brendan Kelly, Vice President (bkelly@mtb.com; Telephone No. (716) 858-2778; and if to any other Issuing Bank, to it at the address provided in
writing to the Administrative Agent and the Borrowers at the time of its appointment as an Issuing Bank hereunder;
th
Assumption.
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Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile
shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening
of business on the next business day for the recipient). Notices delivered through electronic communications, to the extent provided in Section 10.10.2 below, shall be
effective as provided in said Section 10.10.2.
1.10.ii.Electronic Communications. Notices and other communications to the Lenders and the Issuing Bank hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent. The Administrative Agent or
any of the Borrowers may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures
approved by it; provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes,
(a) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient
(such as by the "return receipt requested” function, as available, return e-mail or other written acknowledgement), and (b) notices or communications posted to an Internet
or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (a), of notification
that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (a) and (b) above, if such notice, email or other
communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient.
to the other parties hereto.
1.10.iii.Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice
1.10.iv.Platform. (a) Each of the Borrowers and each other Loan Party agrees that the Administrative Agent may, but shall not be obligated to, make the
Communications (as defined below) available to the Issuing Bank and the other Lenders by posting the Communications on the Platform; and (b) the Platform is provided
"as is” and "as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the
Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-
infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no
event shall the Administrative Agent or any of its Related Parties (collectively, the "Agent Parties”) have any liability to the Borrowers or to any other Loan Parties, any
Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or
expenses (whether in tort, contract or otherwise) arising out of the Borrowers’, any Loan Party’s or the Administrative Agent’s transmission of Communications through
the Platform. "Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan
Party pursuant to any Credit Document or the transactions contemplated therein which is distributed to the Administrative Agent, any Lender or the Issuing Bank by
means of electronic communications pursuant to this Section, including through the Platform.
SECTION 11. Treatment of Certain Information; Confidentiality. Each of the Administrative Agent, the Lenders and the Issuing Bank agree to maintain the
confidentiality of the "Information” (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the
extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such
as the National Association of Insurance Commissioners); (c) to the extent required by applicable Laws or by any subpoena or similar legal process; (d) to any other party
hereto; (e) in connection with the exercise of any remedies hereunder or under any other Credit Document or any action or proceeding relating to this Agreement or any
other Credit Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or Participant
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in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, (ii) to federal and state bank examiners, and other regulatory
officials and organizations having jurisdiction over the Administrative Agent, the Lenders, Issuing Bank and their Affiliates and Related Parties or its affiliates or (iii) any
actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrowers and
their obligations, this Agreement or payments hereunder; (g) on a confidential basis to (i) any rating agency in connection with rating the Borrowers or their Subsidiaries or
the credit facilities hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to
the credit facilities hereunder; (h) with the consent of the Borrowers; or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach
of this Section, or (y) becomes available to the Administrative Agent, any Lender, any Issuing Bank or any of their respective Affiliates on a nonconfidential basis from a
source other than the Borrowers. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this
Agreement to market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent and the Lenders in connection with
the administration of this Agreement, the other Credit Documents, and the Commitments. For purposes of this Section, "Information” means all information received from
the Borrowers or any of their Subsidiaries relating to the Borrowers or any of their Subsidiaries or any of their respective businesses, other than any such information that
is available to the Administrative Agent, any Lender or any Issuing Bank on a nonconfidential basis prior to disclosure by the Borrowers or any of their Subsidiaries;
provided that, in the case of information received from the Borrowers or any of their Subsidiaries after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 12. Counterparts And Integration. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Credit Documents constitute the
entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an
executed counterpart of a signature page of this Agreement or a Lender Addendum by facsimile or in electronic (i.e., "pdf” or "tif”) format shall be just as effective as the
delivery of a manually executed counterpart of this Agreement.
SECTION 13. Electronic Execution. The words "execution”, "signed,” "signature,” and words of like import in any Credit Document shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state Laws based on the Uniform
Electronic Transactions Act. Without limitation to the foregoing, signature pages to the Credit Documents delivered by electronic communication (including facsimile, e-
mail and internet or intranet websites) shall be as effective, valid and enforceable and binding upon the indicated signatories as manually delivered signatures.
SECTION 14. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible
to that of the invalid, illegal or unenforceable provisions.
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SECTION 15. Survival. All covenants, agreements, representations and warranties made by the Borrowers herein and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement or any other Credit Document shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of any Credit Document and the making of any Loans, regardless of any investigation made by any such other party or
on its behalf and notwithstanding that any Credit Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable
under the Credit Documents is outstanding and unpaid and so long as the Revolving Credit Commitments have not expired or terminated. The provisions of Sections 2.07.3,
2.09, 2.10.4, 2.10.5, Article 9 and Section 10.08 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans and the termination of the Commitments or the termination of this Agreement or any provision hereof.
SECTION 16. Time. Time is of the essence to this Agreement.
SECTION 17. Advertisement. The Borrowers authorize the Administrative Agent to publish the names of the Borrowers and the amount of the financing
provided in accordance with this Agreement in any "tombstone” or comparable advertisement which the Administrative Agent elects to publish. The Borrowers further
agree that the Administrative Agent may provide lending industry trade organizations with information necessary and customary (including, without limitation, the amount
and type of facilities, the rates and counsel’s name) for inclusion in league table measurements after the Closing Date. Without limiting the generality of the foregoing, the
Borrowers consent to the disclosure by the Administrative Agent after the Closing Date of information relating to the Loans to Gold Sheets and other similar bank trade
publications, with such information to consist of deal terms consisting of (a) the Borrowers’ names, (b) principal loan amounts, (c) interest rates, (d) term lengths, (e)
commitment fees and other fees to the Lenders in the syndicate, and (f) the identity of their attorneys and other information customarily found in such publications.
SECTION 18. Acknowledgments. Each Borrower hereby acknowledges that (a) it and each of the other Loan Parties has been advised and represented by
counsel in the negotiation, execution and delivery of each Credit Document, (b) no Credit Party has any fiduciary relationship with or duty to it or any other Loan Party
arising out of or in connection with this Agreement and the relationship between the Credit Parties, on one hand, and the Borrowers and the other Loan Parties, on the
other hand, in connection herewith is solely that of creditors and debtors, and (c) no joint venture exists among any of the Credit Parties and the Borrowers or any of the
other Loan Parties.
SECTION 19. Governing Law. This Agreement and the other Credit Documents and any claims, disputes or causes of action (whether in contract or tort)
arising out of or related to this Agreement or any other Credit Document (except as to any other Credit Document, as expressly set forth therein) and the transaction
contemplated hereby and thereby shall be governed by, and construed in accordance with, the Laws of the Governing State.
SECTION 20. Jurisdiction. Each Borrower irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or
description, whether in Law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, any Issuing Bank, or any Related Party of
the foregoing in any way relating to this Agreement or any other Credit Document or the transactions relating hereto or thereto, in any forum other than the courts of the
State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof,
and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or
proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable Law, in such federal court. Each of the parties
hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by Law. Nothing in this Agreement or in any other Credit Document shall affect any right that the Administrative Agent, any Lender or any
Issuing Bank may otherwise have to bring any action or proceeding relating to this Agreement or any other Credit Document against the Borrowers or any other Loan
Party or its properties in the courts of any jurisdiction.
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SECTION 21. Venue. Each Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Credit Documents in any court
referred to in Section 10.20. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Law, the defense of an inconvenient forum
to the maintenance of such action or proceeding in any such court.
SECTION 22. Service Of Process. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.10.
Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law.
SECTION 23. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OBLIGATIONS.
ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND
THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
SECTION 24. USA Patriot Act Notice. Each Credit Party that is subject to the USA Patriot Act hereby notifies the Borrowers that pursuant to the requirements
of the USA Patriot Act it is required to obtain, verify and record information that identifies the Borrowers, which information includes the names and address of the
Borrowers and other information that will allow such Credit Party to identify the Borrowers in accordance with the USA Patriot Act.
SECTION 25. Acknowledgement Regarding Any Supported QFCs. To the extent that the Credit Documents provide support, through a guarantee or
otherwise, for Hedging Obligations or any other agreement or instrument that is a QFC (such support, "QFC Credit Support” and each such QFC a "Supported QFC”),
the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act
and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the "U.S. Special Resolution
Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Credit Documents and any Supported
QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(1)
In the event a Covered Entity that is party to a Supported QFC (each, a "Covered Party”) becomes subject to a proceeding under a U.S.
Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and
obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such
QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S.
Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property)
were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a
Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Credit Documents that
might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted
to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported
QFC and the Credit Documents were governed by the laws of the United States or a state of the
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United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a
Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(2)
As used in this Section 10.25, the following terms have the following meanings:
"BHC Act Affiliate” of a party means an "affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of
such party.
"Covered Entity” means any of the following: (i) a "covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R.
§252.82(b); (ii) a "covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §47.3(b); or (iii) a "covered FSI” as that
term is defined in, and interpreted in accordance with, 12 C.F.R. §382.2(b).
"Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§252.81, 47.2 or 382.1, as
applicable.
"QFC” has the meaning assigned to the term "qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)
(D).
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Second Amended and Restated Credit Agreement to be
executed by their respective duly Authorized Officers as of the date first written above.
BORROWERS:
LDRV HOLDINGS CORP.
By:
LAZYDAYS RV AMERICA, LLC
LAZYDAYS RV DISCOUNT, LLC
LAZYDAYS MILE HI RV, LLC
LAZYDAYS OF MINNEAPOLIS LLC
LDRV OF TENNESSEE LLC
LDRV OF NASHVILLE, LLC
LAZYDAYS RV OF CHICAGOLAND, LLC
LAZYDAYS OF CENTRAL FLORIDA, LLC
LONE STAR DIVERSIFIED, LLC
LAZYDAYS RV OF PHOENIX, LLC
LAZYDAYS RV OF ELKHART, LLC
LAZYDAYS RV OF OREGON, LLC
LAZYDAYS RV OF WISCONSIN, LLC
LD OF LAS VEGAS, LLC
LAZYDAYS RV OF IOWA, LLC
LAZYDAYS RV OF OKLAHOMA, LLC
By: LDRV Holdings Corp.,
its Manager
By:
Name:
Title:
LEGAL02/44139400v8
[Second Amended and Restated Credit Agreement]
GUARANTORS:
LAZYDAYS HOLDINGS, INC.
LAZYDAYS’ R.V. CENTER, INC.
LDL OF FORT PIERCE, LLC
LAZYDAYS RV OF MARYVILLE, LLC
LAZYDAYS SUPPORT SERVICES, LLC
LAZYDAYS RV OF RENO, LLC
By:
Name:
Title:
LEGAL02/44139400v8
[Second Amended and Restated Credit Agreement]
ADMINISTRATIVE AGENT:
MANUFACTURERS AND TRADERS TRUST COMPANY,
in its capacity as Administrative Agent
By: ____________________________________
________________________________
________________________________
LEGAL02/44139400v8
[Second Amended and Restated Credit Agreement]
LENDER:
MANUFACTURERS AND TRADERS TRUST COMPANY,
in its capacity as a Lender, Swingline Lender and Issuing Bank
By: ____________________________________
________________________________
________________________________
LEGAL02/44139400v8
[Second Amended and Restated Credit Agreement]
LENDER:
NYCB SPECIALTY FINANCE COMPANY, LLC,
in its capacity as a Lender
By: ____________________________________
________________________________
________________________________
LEGAL02/44139400v8
[Second Amended and Restated Credit Agreement]
LENDER:
HUNTINGTON NATIONAL BANK,
in its capacity as a Lender
By: ____________________________________
________________________________
________________________________
LEGAL02/44139400v8
[Second Amended and Restated Credit Agreement]
LENDER:
BMO HARRIS BANK N.A., successor in interest to Bank of the West, in its capacity as a Lender
By: ____________________________________
________________________________
________________________________
LEGAL02/44139400v8
[Second Amended and Restated Credit Agreement]
LENDER:
WELLS FARGO COMMERCIAL DISTRIBUTION FINANCE, LLC, in its capacity as a Lender
By: ____________________________________
________________________________
________________________________
LEGAL02/44139400v8
[Second Amended and Restated Credit Agreement]
LENDER:
ROCKLAND TRUST COMPANY,
in its capacity as a Lender
By: ____________________________________
________________________________
________________________________
LEGAL02/44139400v8
[Second Amended and Restated Credit Agreement]
Schedule 1.01
Lenders and Commitments
Lender
Floor Plan Loan Commitment Floor Plan Loan Commitment
Percentage
Manufacturers and Traders
Trust Company
NYCB Specialty Finance
Company, LLC
BMO Harris Bank, N.A.,
successor in interest to
Bank of the West
Huntington National Bank
Wells Fargo Commercial
Distribution Finance, LLC
Rockland Trust Company
Total:
$229,346,650.99
$91,304,347.83
$74,696,827.26
$54,326,086.96
$52,500,000.00
$22,826,086.96
$525,000,000.00
43.685076379%
17.391304349%
14.227967097%
10.347826088%
10.000000000%
4.347826088%
100.000000000%
Revolving Credit
Commitment
$21,842,538.20
$8,695,652.17
$7,113,983.55
$5,173,913.04
$5,000,000.00
$2,173,913.04
$50,000,000.00
Revolving Credit Commitment
Percentage
43.685076400%
17.391304340%
14.227967100%
10.347826080%
10.000000000%
4.347826080%
100.000000000%
LEGAL02/44139400v8
Annex B
Exhibit G to Credit Agreement
[attached]
LDRV – First Amendment and Incremental Agreement
43661692
LIQUIDITY CERTIFICATE
Exhibit G to Credit Agreement
Form of Compliance Certificate
To: Manufacturers and Traders Trust Company, Administrative Agent
One Fountain Plaza, 12 Floor
Buffalo, New York 14203
Attn: Michael Gollnitz, Senior Vice President
th
This Liquidity Certificate (the "Certificate”) is being provided in accordance with Section 5.09.1 of the Second Amended and Restated Credit Agreement, dated as
of February 21, 2023 (as amended, the "Agreement”) by and among LDRV HOLDINGS CORP., a Delaware corporation, LAZYDAYS RV AMERICA, LLC,
LAZYDAYS RV DISCOUNT, LLC and LAZYDAYS MILE RV, LLC, each a Delaware limited liability company (collectively, the "Borrowers”) and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as the Administrative Agent, and the "Lenders” which are parties thereto for the month ending
[_____________] (the "Test Date”). Hereafter, all terms defined in the Agreement shall have the same meanings in this Certificate. The undersigned is executing and
delivering this Certificate as the Borrower Representative for all of the Borrowers.
The undersigned hereby certifies the following:
1. The Borrowers and their Subsidiaries are [in compliance] [not in compliance] with the financial covenant set forth in Section 6.19 (Minimum Liquidity) of the
Agreement as of the Test Date, and the computations required to demonstrate such compliance are set forth in Schedule A attached hereto.
2. Schedule B attached hereto sets forth the amounts and descriptions of the Capital Expenditures made in the calendar month ending on the Test Date.
LDRV – First Amendment and Incremental Agreement
43661692
LDRV HOLDINGS CORP., as a Borrower and as the Borrower Representative
By:
Name:
Title:
Schedule A
Financial Covenant Calculation
[Insert calculations for Section 6.19 (Minimum Liquidity)]
Schedule B
Summary of Capital Expenditures
[Insert amounts and descriptions]
Annex C
Exhibit B to Credit Agreement
[attached]
COMPLIANCE CERTIFICATE
Exhibit B to Credit Agreement
Form of Compliance Certificate
To: Manufacturers and Traders Trust Company, Administrative Agent
One Fountain Plaza, 12 Floor
Buffalo, New York 14203
Attn: Michael Gollnitz, Senior Vice President
th
This Compliance Certificate (the "Certificate”) is being provided in accordance with Section 5.09.5 of the Second Amended and Restated Credit Agreement,
dated as of February 21, 2023 (the "Agreement”) by and among LDRV HOLDINGS CORP., a Delaware corporation, LAZYDAYS RV AMERICA, LLC,
LAZYDAYS RV DISCOUNT, LLC and LAZYDAYS MILE RV, LLC, each a Delaware limited liability company (collectively, the "Borrowers”) and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as the Administrative Agent, and the "Lenders” which are parties thereto for the period from
_________________ to ________________ (the "Relevant Period”). Hereafter, all terms defined in the Agreement shall have the same meanings in this Certificate.
The undersigned is executing and delivering this Certificate as the Borrower Representative for all of the Borrowers.
The undersigned hereby certifies the following:
1. The Borrowers and their Subsidiaries are in compliance with each of the financial covenants set forth in Sections 6.12 (Maximum Total Net Leverage
Ratio), 6.13 (Minimum Consolidated Fixed Charge Coverage Ratio), 6.14 (Minimum Consolidated Current Ratio) and 6.18 (Minimum Consolidated EBITDA) of the
Agreement, and the computations required to demonstrate such compliance are set forth in Schedule A attached hereto;
2. No Default or Event of Default occurred during the Relevant Period, or if any Default or Event of Default has occurred it is described in detail on Schedule
B attached hereto together with any corrective action taken or proposed to be taken with respect thereto;
3. If applicable, attached hereto on Schedule C is a list of any Excluded Subsidiaries as of the date of delivery of this Certificate
4. Attached hereto on Schedule D is a description of any anticipated establishment of any new dealerships of which the Administrative Agent has not received
notice;
5. Attached hereto on Schedule E is a description of any anticipated locations of which the Administrative Agent has not received notice where a material
portion of Eligible Floor Plan Units or any material portion of any other Collateral is located, except for any Eligible Floor Plan Unit which is at a Permitted Collateral
Location; and
6. Attached hereto on Schedule F is any additional information that is required under the Security Documents.
1
LDRV HOLDINGS CORP., as a Borrower and as the Borrower Representative
By:
Name:
Title:
2
[Insert calculations for Sections 6.12 (Maximum Total Net Leverage Ratio), 6.13 (Minimum Consolidated Fixed Charge Coverage Ratio), 6.14 (Minimum Consolidated
Current Ratio) and 6.18 (Minimum Consolidated EBITDA)]
Schedule A
Financial Covenant Calculations
3
Schedule B
List of Default or Events of Default
[Insert description (specifying the details of any such Default and any action taken or proposed to be taken with respect thereto)]
4
Schedule C
List of Excluded Subsidiaries
[Insert any Excluded Subsidiaries]
5
Schedule D
List of New Dealerships
[Insert description of any new dealerships of which the Administrative Agent has not received notice]
6
List of Anticipated Locations of Material Portion of Eligible Floor Plan Units or any Material Portion of any other Collateral
[Insert description of any anticipated locations of which the Administrative Agent has not received notice where a material portion of Eligible Floor Plan Units or any
material portion of any other Collateral is located, except for any Eligible Floor Plan Unit which is at a Permitted Collateral Location]
Schedule E
7
Schedule F
Updates to Security Documents
[Insert applicable updates to the relevant Schedules in the applicable Security Document]
LDRV – First Amendment and Incremental Agreement
43661692
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statements on Form S-1 (No. 333-261315), Forms S-8 (No. 333-227155, 333-231973, 333-231974, 333-266520, 333-267298 and
333-268072) and Forms S-4 (No. 333-221723 and 333-227156) of Lazydays Holdings, Inc. of our reports dated March 12, 2024, relating to the consolidated financial statements and the
effectiveness of internal control over financial reporting (on which our report expresses an adverse opinion on the effectiveness of the Company’s internal control over financial reporting
because of material weaknesses) of Lazydays Holdings, Inc., appearing in this Annual Report on Form 10-K of Lazydays Holdings, Inc. for the year ended December 31, 2023.
/s/ RSM US LLP
Tampa, Florida
March 12, 2024
CERTIFICATION
PURSUANT TO RULE 13a-14 and 15d-15
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Exhibit 31.1
I, John North, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Lazydays Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-
15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 12, 2024
/s/ John North
John North
Chief Executive Officer
CERTIFICATION
PURSUANT TO RULE 13a-14 and 15d-15
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
CERTIFICATION OF CHIEF FINANCIAL OFFICER
Exhibit 31.2
I, Kelly Porter, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Lazydays Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-
15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 12, 2024
/s/ Kelly Porter
Kelly Porter
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report on Form 10-K of Lazydays Holdings, Inc. (the "Company”) for the period ended December 31, 2023 as filed with the Securities and Exchange
Commission on the date hereof (the "Report”), I, John North, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: March 12, 2024
/s/ John North
John North
Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report on Form 10-K of Lazydays Holdings, Inc. (the "Company”) for the period ended December 31, 2023 as filed with the Securities and Exchange
Commission on the date hereof (the "Report”), I, Kelly Porter, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: March 12, 2024
/s/ Kelly Porter
Kelly Porter
Chief Financial Officer
LAZYDAYS HOLDINGS, INC.
CLAWBACK POLICY
EXHIBIT 97.0
Effective February 21, 2023
1. Purpose. The purpose of this Lazydays Holdings, Inc. (the "Company”) Clawback Policy (the "Policy”) is to provide for the recovery of certain incentive-
based compensation in the event that the Company is required to prepare an Accounting Restatement (as defined below). This Policy is designed to comply
with, and shall be interpreted to be consistent with, Section 10D of the Securities Exchange Act of 1934, as amended (the "Exchange Act”), Rule 10D-1
promulgated under the Exchange Act ("Rule 10D-1”) and Nasdaq Listing Rule 5608 (the "Listing Rule”).
2. Policy Administration. This Policy shall be administered by the Board or a committee of the Board if the Board, in its discretion, delegates such
administration oversight (collectively, the "Board”). Any determinations made by the Board shall be final and binding on all affected individuals.
3. Definitions. As used in this Policy, the following capitalized terms shall have the meanings set forth below.
a. "Accounting Restatement” means an accounting restatement of the Company’s financial statements due to material noncompliance of the Company with
any financial reporting requirement under the securities laws, including: (a) any required accounting restatement to correct an error in previously issued
financial statements that is material to the previously issued financial statements (commonly, a "Big R” restatement), or (b) that would result in a material
misstatement if the error were corrected in the current period or left uncorrected in the current period (commonly, a "little r” restatement).
b. "Accounting Restatement Date” means the earlier to occur of: (a) the date the Board, a committee of the Board, or the officer or officers of the
Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is
required to prepare an Accounting Restatement; and (b) the date a court, regulator or other legally authorized body directs the Company to prepare an
Accounting Restatement.
c. "Applicable Period” means the three completed fiscal years immediately preceding the Accounting Restatement Date, as well as any transition period
(that results from a change in the Company’s fiscal year) within or immediately following those three completed fiscal years (except that a transition
period that comprises a period of at least nine months shall count as a completed fiscal year).
d. "Board” means the board of directors of the Company.
e. "Code” means the U.S. Internal Revenue Code of 1986, as amended. Any reference to a section of the Code or regulation thereunder includes such
section or regulation, any valid regulation or other official guidance promulgated under such section and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or regulation.
"Commission” means the U.S. Securities and Exchange Commission.
f.
g. "Erroneously Awarded Compensation” means, in the event of an Accounting Restatement, the amount of Incentive-Based Compensation received that
exceeds
the amount of Incentive-Based Compensation that otherwise would have been received had such Incentive-Based Compensation been determined
according to the Accounting Restatement and must be computed without regard to any taxes paid by the relevant Executive Officer. For Incentive-
Based Compensation based on stock price or total stockholder return, where the amount of Erroneously Awarded Compensation is not subject to
mathematical recalculation directly from the information in an Accounting Restatement: (i) the amount of Erroneously Awarded Compensation must be
based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total stockholder return upon which the Incentive-
Based Compensation was received; and (ii) the Company must maintain documentation of the determination of that reasonable estimate and provide
such documentation to the Stock Exchange.
i.
h. "Executive Officers” means the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the
controller), any vice-president of the Company in charge of a principal business unit, division or function (such as sales, administration or finance), any
other officer who performs a significant policy-making function or any other person who performs similar significant policy-making functions for the
Company. An executive officer of the Company’s parent or subsidiary is deemed an Executive Officer if they perform significant policy-making
functions for the Company. Notwithstanding the foregoing, the Board may determine, from time to time and in its sole discretion, that any other officer,
director or employee of the Company, or any other person who receives Incentive-Based Compensation from the Company, is subject to this Policy.
"Financial Reporting Measure” means measures that are determined and presented in accordance with the accounting principles used in preparing the
Company’s financial statements and any measures that are derived wholly or in part from such measures. For the avoidance of doubt, stock price and
total shareholder return are Financial Reporting Measures, and a Financial Reporting Measure need not be presented within the financial statements or
included in a filing with the Commission.
"Incentive-Based Compensation” means any compensation that is granted, earned or vested based wholly or in part upon the attainment of a Financial
Reporting Measure. Incentive-Based Compensation is received for purposes of this Policy in the Company’s fiscal period during which the Financial
Reporting Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of such Incentive-Based
Compensation occurs after the end of that period.
j.
k. "Listing Rule” has the meaning set forth in Section 1 of this Policy.
"Stock Exchange” means The Nasdaq Stock Market LLC.
l.
4. Policy Application. This Policy applies to Incentive-Based Compensation received by a person: (a) after beginning services as an Executive Officer, (b) who
served as an Executive Officer at any time during the performance period for such Incentive-Based Compensation, (c) while the Company had a class of
securities listed on a national securities exchange or a national securities association and (d) during the Applicable Period.
5. Required Recoupment; Accounting Restatement. In the event of an Accounting Restatement, the Company shall reasonably promptly recover the amount
of any
Erroneously Awarded Compensation as determined in accordance with this Policy. Recovery of Erroneously Awarded Compensation under this Policy is
required without regard to whether any misconduct occurred or an Executive Officer’s responsibility (or lack thereof) for the erroneous financial statements
leading to an Accounting Restatement.
6. Erroneously Awarded Compensation: Amount Subject to Recovery. The amount of Erroneously Awarded Compensation subject to recovery under this
Policy, as determined by the Board, is the amount of Incentive-Based Compensation received by an Executive Officer that exceeds the amount the Executive
Officer would have received had the Incentive-Based Compensation been determined based on the Accounting Restatement. For Incentive-Based
Compensation based on stock price or total shareholder return, the Company shall use a reasonable estimate of the effect of the Accounting Restatement on
the applicable measure to determine the amount of Erroneously Awarded Compensation to be recovered.
The Board shall determine, in its sole discretion, the appropriate means of recovery of Erroneously Awarded Compensation, taking into account all applicable
facts and circumstances, including the time value of money and the cost to shareholders of delaying recovery. To the extent that an Executive Officer fails to repay to
the Company when due any amount of Erroneously Awarded Compensation subject to recovery under this Policy, the Company shall take all actions reasonable and
appropriate to recover such Erroneously Awarded Compensation from such Executive Officer.
Notwithstanding anything herein to the contrary, the Company shall not be required to recoup Erroneously Awarded Compensation to the extent that pursuit of
recovery of such Erroneously Awarded Compensation would be impracticable because:
i.
ii.
iii.
The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered. Before concluding that it would be
impracticable to recover any amount of Erroneously Awarded Compensation based on expense of enforcement, the Company must make a
reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover and provide that
documentation to the Stock Exchange;
Recovery would violate home country law where that law was adopted prior to November 28, 2022. Before concluding that it would be impracticable
to recover any amount of Erroneously Awarded Compensation based on violation of home country law, the Company must obtain an opinion of home
country counsel, acceptable to the Stock Exchange, that satisfies the applicable opinion and disclosure requirements of Rule 10D-1 and the Listing
Rule and provide such opinion to the Stock Exchange; or
Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to
fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Code.
1. No Indemnification of Executive Officers. The Company is prohibited from indemnifying any Executive Officer or former Executive Officer against the loss
of Erroneously Awarded Compensation, including any payment or reimbursement for the cost of third-party insurance purchased by any Executive Officers to
fund potential obligations under this Policy.
2. Required Reporting and Disclosure. The Company shall file all disclosures with respect to this Policy in accordance with the requirements of the federal
securities laws, including disclosures required by Commission filings.
3. Effective Date; Retroactive Application. This Policy shall be effective as of February 21, 2023 (the "Effective Date”). The terms of this Policy shall apply
to any Incentive-Based Compensation that is received by Executive Officers on or after the Effective Date, and this Policy shall supersede any agreement
(whether entered into before, on or after the Effective Date) that exempts any Incentive-based Compensation from the application of this Policy or that waives
the Company’s right to recovery of any Erroneously Awarded Compensation.
4. Amendment; Termination. The Board may amend, modify, supplement, rescind or replace all or any portion of this Policy from time to time in its sole
discretion and shall amend this Policy as it deems necessary to comply with applicable law or any rules or standards adopted by a national securities exchange
on which the Company’s securities are listed. Notwithstanding anything in this Section 10 to the contrary, no amendment or termination of this Policy shall be
effective if such amendment or termination would (after taking into account any actions taken by the Company contemporaneously with such amendment or
termination) cause the Company to violate any federal securities laws, Commission rules, or Stock Exchange rules.
5. Other Recoupment Rights. The Board intends that this Policy shall be applied to the fullest extent of the law. Any right of recoupment under this Policy is in
addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company under applicable law or pursuant to the terms
of any similar policy in any employment agreement, equity award agreement or similar agreement and any other legal remedies available to the Company.
6. Successors. This Policy shall be binding and enforceable against all Executive Officers and their beneficiaries, heirs, executors, administrators or other legal
representatives.
LAZYDAYS HOLDINGS, INC.
CLAWBACK POLICY
I, the undersigned, agree and acknowledge that I am fully bound by and subject to all of the terms and conditions of Lazydays Holdings, Inc.’s (the
"Company”) Clawback Policy (as may be amended, restated, supplemented or otherwise modified from time to time, the "Policy”). In the event of any inconsistency
between the Policy and the terms of any employment agreement to which I am a party, including any employment agreement no longer in effect that is covered by the
lookback period described in the Policy, or the terms of any compensation plan, program or agreement under which any compensation has been granted, awarded,
earned or paid, the terms of the Policy shall govern. Further, by signing below, I agree to abide by the terms of the Policy, including, without limitation, by returning any
Erroneously Awarded Compensation (as defined in the Policy) to the Company to the extent required by and in a manner consistent with the Policy.
Acknowledgement Form
AGREED and ACKNOWLEDGED:
EXECUTIVE OFFICER
____________________________
Signature
____________________________
Print Name
____________________________
Date