AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
FIRSTCITY FINANCIAL CORPORATION
AS BORROWER,
THE LENDERS NAMED HEREIN,
AS LENDERS
AND
BANK OF SCOTLAND,
AS AGENT
DATED FOR REFERENCE PURPOSES ONLY
AS OF
DECEMBER 20, 1999
54892.0004
TABLE OF CONTENTS
-----------------
PAGE
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1. DEFINITIONS AND TERMS....................................................2
1.1. DEFINITIONS...................................................2
1.2. GAAP ........................................................21
1.3. BORROWER ....................................................21
1.4. RULES OF CONSTRUCTION........................................21
2. LOANS - GENERAL TERMS...................................................22
2.1. CREDIT FACILITIES............................................22
2.2. MAXIMUM PRINCIPAL AMOUNT.....................................23
2.3. LENDER'S COMMITMENTS.........................................24
2.4. MATURITY DATE; TERMINATION OF LOANS..........................25
2.5. AUTHORIZED DISBURSEMENT OF PROCEEDS..........................25
2.6. USE OF PROCEEDS AND BORROWING PROCEDURE......................26
2.7. INTEREST RATE................................................27
2.8. CHANGE OF LAWS...............................................27
2.9. REGULATORY CHANGES...........................................28
2.10. ADVANCES PRIOR TO LIBOR RATE DETERMINATION...................28
2.11. EURODOLLAR ADVANCES AND CONVERSION...........................28
2.12. INTEREST PERIOD ELECTION.....................................29
2.13. FEES ........................................................29
2.14. USURY .......................................................30
3. PAYMENT TERMS...........................................................31
3.1. LOAN ACCOUNT; METHOD OF MAKING PAYMENTS......................31
3.2. INTEREST PAYMENTS............................................31
3.3. PRINCIPAL PAYMENTS...........................................32
3.4. PLACE OF PAYMENT.............................................32
3.5. PAYMENT ON MATURITY AND PREPAYMENT...........................33
3.6. APPLICATION OF PAYMENTS......................................33
3.7. ADVANCES TO CONSTITUTE ONE LOAN..............................34
3.8. REAPPLICATION OF PAYMENTS....................................34
3.9. MONTHLY STATEMENTS...........................................35
3.10. TIME OF PAYMENT OF EXTRAORDINARY TRANSACTION PROCEEDS........35
4. ANCILLARY AGREEMENTS....................................................35
4.1. GUARANTIES ..................................................35
4.2. NOTE PLEDGE AGREEMENTS.......................................36
4.3. STOCK PLEDGE AGREEMENTS......................................36
4.4. SECURITY AGREEMENTS..........................................37
5. GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS.......................37
5.1. GENERAL REPRESENTATIONS AND WARRANTIES.......................37
5.2. REPRESENTATIONS RELATING TO SENIOR SUBORDINATED DEBT.........47
5.3. REAFFIRMATION OF WARRANTIES AND REPRESENTATIONS..............48
5.4. SURVIVAL OF WARRANTIES AND REPRESENTATIONS...................48
6. COVENANTS AND CONTINUING AGREEMENTS.....................................48
6.1. FINANCIAL COVENANTS..........................................49
6.2. AFFIRMATIVE COVENANTS........................................49
6.3. NEGATIVE COVENANTS...........................................58
6.4. REQUIRED NOTICES.............................................65
6.5. PAYMENT OF CLAIMS............................................68
6.6. YEAR 2000 COMPLIANCE.........................................68
ii
7. DEFAULT.................................................................68
7.1. EVENTS OF DEFAULT............................................68
7.2. REMEDIES CUMULATIVE..........................................74
7.3. ACCELERATION.................................................74
7.4. REMEDIES ....................................................74
7.5. INJUNCTIVE RELIEF............................................74
7.6. ADVANCES DURING UNMATURED DEFAULT............................75
8. CONDITIONS PRECEDENT TO DISBURSEMENT....................................75
8.1. CHECKLIST ITEMS..............................................75
8.2. NECESSARY ACTIONS............................................75
8.3. CONDITIONS PRECEDENT.........................................75
9. GENERAL.................................................................76
9.1. COMPLIANCE WITH ERISA........................................76
9.2. COSTS .......................................................83
9.3. STATEMENT ...................................................83
9.4. NOTICES .....................................................83
9.5. AMENDMENTS AND WAIVERS.......................................85
9.6. NO IMPLIED WAIVER; REMEDIES CUMULATIVE.......................86
9.7. SEVERABILITY.................................................86
9.8. INCORPORATION OF OTHER AGREEMENTS............................87
9.9. ACCEPTANCE ..................................................87
9.10. KNOWLEDGE ...................................................87
9.11. WAIVER BY BORROWER...........................................88
9.12. GOVERNING LAW................................................88
9.13. WAIVER OF MARSHALING.........................................88
9.14. LIMITATION BY LAW............................................89
9.15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................89
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9.16. SERVICE OF PROCESS...........................................89
9.17. REPRESENTATION BY COUNSEL....................................89
9.18. RELEASE OF LENDERS AND AGENT.................................89
9.19. INVALIDATED PAYMENTS.........................................90
9.20. HEADINGS ....................................................90
9.21. COUNTERPARTS.................................................90
9.22. FAX EXECUTION................................................90
9.23. NO THIRD PARTY BENEFICIARIES.................................90
9.24. DOMICILE OF LOANS............................................91
9.25. ENTIRE AGREEMENT.............................................91
9.26. CONSTRUCTION.................................................91
9.27. SUCCESSORS AND ASSIGNS; PARTICIPATION; ASSIGNMENTS...........91
9.28. TEXAS LANGUAGE...............................................96
9.29. WAIVER OF TRIAL BY JURY......................................96
9.30. WAIVER OF CLAIMS.............................................96
9.31. MISCELLANEOUS................................................96
10. AGENCY AND INTER-LENDER PROVISIONS......................................97
10.1. APPOINTMENT..................................................97
10.2. GENERAL NATURE OF AGENT'S DUTIES.............................98
10.3. EXERCISE OF POWERS...........................................98
10.4. GENERAL EXCULPATORY PROVISIONS..............................102
10.5. ADMINISTRATION BY AGENT.....................................103
10.6. LENDER NOT RELYING ON AGENT OR OTHER LENDERS................105
10.7. INDEMNIFICATION.............................................105
10.8. AGENT IN ITS INDIVIDUAL CAPACITY............................107
10.9. HOLDERS OF NOTES............................................107
10.10. SUCCESSOR AGENT.............................................107
10.11. ADDITIONAL AGENTS...........................................108
10.12. CALCULATIONS................................................108
10.13. FUNDING BY AGENT; DEFAULTING LENDERS........................109
10.14. SHARING OF COLLECTIONS......................................110
10.15. SET-OFF ....................................................111
iv
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "AGREEMENT"), dated
for reference purposes only as of December 20, 1999 by and among lenders party
hereto from time to time ("LENDERS"), FirstCity Financial Corporation, a
Delaware corporation ("BORROWER"), with its principal place of business at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and Bank of Scotland
("AGENT"), acting through its branch in New York, New York, a foreign banking
corporation incorporated under the laws of Scotland with its principal place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as administrative agent,
managing agent and collateral agent on behalf of Lenders.
RECITALS:
---------
A. Borrower and Bank of Scotland, acting through its branch in New
York, New York, ("BOS-NY") have entered into that certain Loan Agreement dated
as of April 8, 1998, as amended by First Amendment to Loan Agreement dated as of
July 20, 1998 by and between Borrower and BOS-NY, as amended by Second Amendment
to Loan Agreement dated as of August 12, 1998 by and among Borrower, BOS-NY,
Bank of America (as defined herein) and Agent, as amended by Third Amendment to
Loan Agreement dated as of September 29, 1998 by and among Borrower, BOS-NY,
Bank of America and Agent, as amended by Fourth Amendment to Loan Agreement
dated as of November 17, 1998 by and among Borrower, BOS-NY, Bank of America and
Agent, as amended by Fifth Amendment to Loan Agreement dated as of February 17,
1999 by and among Borrower, BOS-NY, Bank of America and Agent, as amended by
Sixth Amendment to Loan Agreement dated as of April 30, 1999 by and among
Borrower, BOS-NY, Bank of America and Agent, as amended by Seventh Amendment to
Loan Agreement dated as of June 30, 1999, by and among Borrower, BOS-NY, Bank of
America and Agent, as amended by Eighth Amendment to Loan Agreement dated as of
July 30, 1999, by and among Borrower, BOS-NY, Bank of America and Agent, as
amended by Ninth Amendment to Loan Agreement dated as of August 6, 1999 by and
among Borrower, BOS-NY, Bank of America and Agent, as amended by Tenth Amendment
to Loan Agreement dated as of August 11, 1999 by and among Borrower, BOS-NY,
Bank of America and Agent, as amended by Eleventh Amendment dated as of August
23, 1999 by and among Borrower, BOS-NY, Bank of America and Agent and as amended
by Twelfth Amendment dated as of December 8, 1999 by and among Borrower, BOS-NY,
Bank of America and Agent (collectively, the "EXISTING LOAN AGREEMENT") pursuant
to which BOS-NY, Bank of America have agreed to provide Borrower with a
revolving credit facility.
▇. ▇▇▇-NY wishes to assign all of its rights and obligations under
the Existing Loan Agreement and Other Agreements to BOS-Edinburgh (as defined
herein) and BOS-Edinburgh wishes to assume all of BOS-NY's rights and
obligations under the Existing Loan Agreement and Other Agreements.
C. The parties have agreed to amend and restate the Existing Loan
Agreement in its entirety to amend the commitments of and agreements among the
parties and to set forth their mutual agreements herein.
NOW THEREFORE, in consideration of any loan, advance, extension of
credit and/or other financial accommodation at any time made by the Agent and/or
the Lenders to or for the benefit of Borrower, and of the promises set forth
herein, the parties hereto amend and restate the Existing Loan Agreement in its
entirety and agree as follows:
1 DEFINITIONS AND TERMS.
1.1 Definitions. The following words, terms and/or phrases shall have
the meanings set forth thereafter and such meanings shall be applicable to the
singular and plural form thereof, giving effect to the numerical difference.
(a) "ADVANCE": any loan of monies made by Lenders to Borrower
pursuant to the terms of Section 2.1.
(b) "AFFILIATE": any Person (i) in which Borrower and/or any
Parent, individually, jointly and/or severally, now or at any time or
times hereafter, has or have an equity or other ownership interest
equal to or in excess of twenty-five percent (25%) of the total equity
of or other ownership interest in such Person; and/or (ii) which
directly or indirectly through one or more intermediaries controls or
is controlled by, or is under common control with Borrower; and/or
(iii) any officer or director of Borrower or any Primary Obligor. For
purposes of this definition, "CONTROL" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of Stock, by contract or otherwise, and in any case shall
include direct or indirect ownership (beneficially or of record) of, or
direct or indirect power to vote, 25% or more of the outstanding shares
of any class of capital stock of such Person (or in the case of a
Person that is not a corporation, 25% or more of any class of equity
interest). Notwithstanding the foregoing, none of the Harbor Debtors
shall be deemed to be an Affiliate for the purposes of this Agreement.
(c) "AGENT": Bank of Scotland, acting through its branch in
New York, New York, a foreign banking corporation incorporated under
the laws of Scotland with its principal place of business at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as managing agent, administrative
agent and collateral agent on behalf of Lenders.
(d) "AGREEMENT": this Amended and Restated Loan Agreement,
together with all Modifications hereto or hereof.
2
(e) "AND/OR": one or the other or both, or any one or more or
all, of the things or Persons in connection with which the conjunction
is used.
(f) "ASSETS": any and all real, personal and intangible
property of a Person, including, without limitation, accounts, chattel
paper, contract rights, letters of credit, instruments and documents,
equipment, general intangibles, inventory, leases, options, licenses,
and real property, whether now existing or hereafter acquired or
arising.
(g) "BANK OF AMERICA": Bank of America, N.A., a national
banking association.
(h) "BORROWER": FirstCity Financial Corporation, together with
its permitted successors and assigns.
(i) "BORROWER'S LIABILITIES": all obligations and liabilities
of Borrower to Lenders and/or Agent under the terms of this Agreement,
the Security Agreement, the Note Pledge Agreements, the Stock Pledge
Agreements and the other Loan Documents, and all extensions and
renewals or refinancing thereof, whether such obligation or liability
is direct or indirect, secured or unsecured, joint or several, absolute
or contingent, due or to become due, whether for payment or
performance, whether heretofore arising, now existing or hereafter
arising, however evidenced, created, incurred, acquired or owing and
whether now contemplated or hereafter arising. Without limitation of
the foregoing, such liability and obligations include the principal
amount of Loans, interest, fees, indemnities or expenses under this
Agreement and all other Loan Documents, and all extensions, renewals
and refinancing thereof, whether or not such Loans were made in
compliance with the terms and conditions of this Agreement or in excess
of the obligation of Lenders to lend. Borrower's Liabilities shall
remain Borrower's Liabilities, notwithstanding any assignment or
transfer or any subsequent assignment or transfer of any of the
Borrower's Liabilities or any interest therein.
(j) "BORROWER'S OBLIGATIONS": all terms, conditions,
warranties, representations, agreements, undertakings, covenants and
provisions (other than Borrower's Liabilities) to be performed,
discharged, kept, observed or complied with by Borrower to or for the
benefit of Lenders and/or Agent, under the terms of this Agreement and
all other Loan Documents, and all extensions and renewals or
refinancing thereof, whether such obligation is direct or indirect,
secured or unsecured, joint or several, absolute or contingent, due or
to become due, whether heretofore arising, now existing or hereafter
arising, however evidenced, created, incurred, acquired or owing and
whether now contemplated or hereafter arising. Borrower's Obligations
shall remain Borrower's Obligations, notwithstanding any assignment or
transfer or any subsequent assignment or transfer of any of the
Borrower's Obligations or any interest therein.
3
(k) "BORROWING REQUEST": a request for an Advance setting
forth the information required pursuant to Section 2.6.
(l) "BOS-EDINBURGH": The Governor and Company of the Bank of
Scotland, a bank organized under the laws of Scotland by an Act of the
Scots Parliament in 1695, having its principal office at the Mound, in
Edinburgh, Scotland.
(m) "BUSINESS DAY": (i) For all purposes other than as covered
by clause (ii) hereof, any day, other than a Saturday, Sunday, a day
that is a legal holiday under the laws of the country of Scotland,
State of Illinois, and the State of Texas or any other day on which
banking institutions located in the country of Scotland, State of
Illinois, the State of New York or the State of Texas are authorized or
required by law or other governmental action to close; and (ii) with
respect to determinations in connection with, and payments of principal
and interest in Eurodollar Advances, any day which is a Business Day
described in clause (i) or which is also a day for trading by and
between banks in U.S. dollar deposits in the London Interbank
Eurodollar Market.
(n) "CAPITALIZED LEASE" at any time any lease which is, or is
required under GAAP to be, capitalized on the balance sheet of the
lessee at such time, and "CAPITALIZED LEASE OBLIGATION" of any Person
at any time shall mean the aggregate amount which is, or is required
under GAAP to be, reported as a liability on the balance sheet of such
Person at such time as lessee under a Capitalized Lease.
(o) "CHARGES": all national, Federal, state, county, city,
municipal and/or other governmental (or any instrumentality, division,
agency, body or department thereof, including without limitation the
Pension Benefit Guaranty Corporation) taxes, levies, assessments,
charges, liens, claims or encumbrances upon and/or relating to
Borrower's Assets, the Secured Obligations, Borrower's business,
Borrower's ownership and/or use of any of its Assets, Borrower's income
and/or gross receipts and/or Borrower's ownership and/or use of any of
its material Assets.
(p) "CLOSING DATE". December 20, 1999, the date of delivery
and execution of this Agreement by Lenders, Agent and Borrower.
(q) "COMMITMENT": the commitment of each Lender to make Loans
to Borrower in accordance with the terms of Section 2.1 and the other
provisions hereof.
(r) "COMMITMENT PERCENTAGE": the meaning set forth in Section
2.3.
(s) "CONSOLIDATED GROUP": Borrower and those Affiliates of
Borrower required to file consolidated tax returns pursuant to Section
1502 of the Code, other than the Harbor Debtors.
4
(t) "COSTS": any and all reasonable costs, expenses
(including, without limitation, the reasonable fees and expenses of any
counsel, accountants, appraisers or other professionals) incurred by
Agent and/or Lenders at any time, in connection with: (i) the
preparation, negotiation, execution and administration of this
Agreement, and all other Loan Documents; (ii) the preparation,
negotiation and execution of any amendment or modification of this
Agreement or the other Loan Documents; (iii) the custody, preservation,
use or operation of, or the sale of, collection from or other
realization upon the Pledged Property; (iv) the exercise or enforcement
of any of the rights of Agent and/or Lenders hereunder; (v) any failure
by Borrower to perform or observe any of the provisions hereunder; (vi)
any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent and/or Lenders, Borrower or any other Person) in
any way relating to this Agreement, the other Loan Documents, the
Secured Obligations, the Pledged Property, or, to the extent instituted
by any third party, Borrower's affairs or any Affiliate's affairs;
(vii) any attempt to enforce any rights of Agent and/or Lenders against
Borrower or any other Person which may be obligated to Agent and/or
Lenders by virtue of this Agreement or any other Loan Document; and
(viii) performing any of the obligations relating to or payment of any
of Borrower's Obligations hereunder in accordance with the terms
hereof. Notwithstanding anything to the contrary contained herein,
Costs shall not include any fees, cost, loss, expense, or damage
arising from any dispute, proceeding or claim by and between Agent and
any one or more of the Lenders, relating to the rights, duties,
liabilities and/or obligations of Agent hereunder or under any other
Loan Document.
(u) "DEFAULT RATE": interest at the rate of five percent (5%)
plus seven (7) day Libor Rate, or such Interest Period as Agent may
select.
(v) "DESIGNATED PERSON": any Person identified as a
"DESIGNATED PERSON" on a Borrower's Secretary's Certificate dated of
even date herewith, as amended or superseded from time to time.
(w) "DOLLARS": the lawful currency of the United States of
America.
(x) "EBITDA": for any period, net income (excluding
extraordinary and non-recurring items, including those which are
non-cash in nature) for such period plus (i) all interest expense, plus
(ii) income tax expenses, plus (iii) depreciation and amortization
(including amortization of any goodwill or other intangibles), minus or
plus (iv) without duplication, gains and losses attributable to any
sale of assets not in the ordinary course of business, plus or minus
(v) any other non-cash charges or gains which have been subtracted or
added in calculating such net income other than gains on
asset-securitizations and loan loss provision charges.
(y) "ENVIRONMENTAL LAWS": any Federal, state or local law,
rule, regulation, ordinance, order, code or statute applicable to
Borrower or its property,
5
in each case as amended (whether now existing or hereafter enacted or
promulgated), controlling, governing or relating to the pollution or
contamination of the air, water or land or concerning hazardous,
special or toxic materials, wastes or substances, or any judicial or
administrative interpretation of such laws, rules or regulations,
including, without limitation, the Water Pollution Control Act (33
▇.▇.▇.▇▇. 1251 et seq.), Resource Conservation and Recovery Act (42
▇.▇.▇.▇▇. 6901 et seq.), Safe Drinking Water Act (42 ▇.▇.▇.▇▇.
3000(f) et seq.), Toxic Substances Control Act (15 ▇.▇.▇.▇▇. 2601 et
seq.), Clean Air Act (42 ▇.▇.▇.▇▇. 7401 et seq.), and Comprehensive
Environmental Response, Compensation and Liability Act (42
U.S.C.ss.9601 et seq.).
(z) "EQUIPMENT LEASES": all leases or similar agreements
pursuant to which Borrower leases equipment.
(aa) "EURODOLLAR ADVANCE": any portion of the Loan for which
the interest rate is based on the Eurodollar Rate, whether or not any
Lender obtains Eurodollars equal to all or any portion of such
Eurodollar Advance.
(bb) "EURODOLLAR RATE": the variable rate equal to four
percent (4%) per annum plus the LIBOR Rate.
(cc) "EVENT OF DEFAULT": the definition ascribed to this term
in Section 7.1.
(dd) "EXCLUDED ENTITIES": the definition ascribed to this term
in Section 4.3.
(ee) "EXCLUDED NOTES": the definition ascribed to this term in
Section 4.2.
(ff) "EXTRAORDINARY TRANSACTION": (i) a sale, conveyance,
lease, or other transfer by Borrower, any Primary Obligor, or any
Secondary Obligor of all or substantially all of its assets, not in the
ordinary course of its business; (ii) a sale, conveyance, or other
transfer of any equity interests (including stock, partnership
interests, membership interests, trust interests, warrants, options or
debentures) in any Affiliate by Borrower, any Primary Obligor or any
Secondary Obligor; (iii) any sale, conveyance or other transfer of any
Indebtedness due to Borrower, any Primary Obligor or any Secondary
Obligor from any Affiliate, including but not limited to bonds, notes,
note purchase agreements or any other Indebtedness, howsoever
evidenced; (iv) the issuance of any securities of Borrower, any Primary
Obligor or any Secondary Obligor; (v) any transaction identified on
Schedule 1.1(ff), (vi) the dissolution of FC Capital or the liquidation
of its Assets; or (vii) any Indebtedness permitted by Agent and Lenders
(in their sole and exclusive discretion) to be incurred by Borrower,
any Primary Obligor or any Secondary Obligor, except for:
(A) indebtedness to be incurred by any Subsidiary
of FC Commercial (which shall only have
recourse to the purchasing entity) in
6
connection with purchase money financing
(whether secured or unsecured) to parties
(other than Affiliates),
(B) Indebtedness incurred under existing facilities
identified on Schedule 5.1(t), incurred in the
ordinary course of business;
(C) The FC Holdings Line of Credit;
(D) The FC Consumer Lending Line of Credit;
(E) The Senior Subordinated Debt or any refinancing
thereof permitted pursuant to the terms hereof.
(gg) "EXTRAORDINARY TRANSACTION PROCEEDS": the consideration
paid with respect to any Extraordinary Transaction or the proceeds of
any loan received from any Extraordinary Transaction, minus only
amounts for necessary and commercially reasonable expenses incurred
with respect to such Extraordinary Transaction and approved by Lenders,
which approval shall not be unreasonably withheld, which may include
attorney's fees and payment of any indebtedness secured to by assets
being conveyed payable to any independent third party lender to secure
a release of a lien or security interest on such assets being conveyed.
(hh) "FEDERAL FUNDS EFFECTIVE RATE": for any day shall mean
the rate per annum (rounded upward to the nearest 1/100 of 1%)
determined by Agent (which determination shall be conclusive) to be the
rate per annum announced by the Federal Reserve Bank of New York (or
any successor) on such day as being the weighted average of the rates
on overnight Federal funds transactions arranged by Federal funds
brokers on the previous trading day, as computed and announced by such
Federal Reserve Bank (or any successor) in substantially the same
manner as such Federal Reserve Bank computes and announces the weighted
average it refers to as the "Federal Funds Effective Rate" as of the
date of this Agreement; provided that if ------------- such Federal
Reserve Bank (or its successor) does not announce such rate on any day,
the "Federal Funds Effective Rate" for such day shall be the Federal
Funds Effective Rate for the last day on which such rate was announced.
(ii) "FC CAPITAL": FC Capital Corp., a New York corporation.
(jj) "FC COMMERCIAL": FirstCity Commercial Corporation, a
Texas corporation.
(kk) "FC CONSUMER LENDING": FirstCity Consumer Lending
Corporation, a Texas corporation.
(LL) "FC CONSUMER LENDING LINE OF CREDIT": means a line of
credit or loan facility, to be approved in writing by Lenders which
approval shall not be unreasonably withheld, to be made available by a
Person to FC Consumer Lending
7
and/or its Subsidiaries in an amount not to exceed the lesser of (a)
30% of the book value of auto residuals, or (b) $25,000,000 which
will be secured by the Assets of FC Consumer Lending, except for
equity interests in FirstCity Funding L.P. or FirstCity Consumer
Finance Corporation.
(MM) "FC FINANCIAL": FirstCity Financial Corporation, a
Delaware corporation.
(NN) "FC HOLDINGS": FirstCity Holdings Corporation, a Texas
corporation.
(OO) "FC HOLDINGS LINE OF CREDIT": means a line of credit or
loan facility, to be approved in writing by Lenders which approval
shall not be unreasonably withheld, to be made available by a Person to
FC Commercial, FC International and/or FC Holdings in an amount not to
exceed $17,000,000 in the aggregate, to be used for the purpose of
funding investments in entities formed to acquire asset portfolios or
to service asset portfolios and which line of credit or loan facility
will be secured by first priority security interests in the assets of
FC International and in the equity interests or assets acquired with
proceeds of the line of credit or loan facility.
(pp) "FC INTERNATIONAL": FirstCity International Corporation,
a Texas corporation.
(qq) "FC SERVICING": FirstCity Servicing Corporation, a Texas
corporation.
(rr) "FEE AGREEMENTS": any partnership agreement, management
agreement, consulting agreement, or other agreement pursuant to which
Borrower, any Primary Obligor or any Secondary Obligor is to be paid
fees, distributions, allocations, expense reimbursements,
consideration, salary or other compensation in consideration for
providing management, personnel or services, in any form whatsoever,
from any Affiliate or from any other Person. Services to be rendered
under Fee Agreements may include, but not be limited to consulting,
collecting revenues, paying operating expenses not paid directly by
others, and providing clerical and bookkeeping services.
(ss) "FINANCIALS": those financial statements of Borrower
and/or any other Loan Party, heretofore, concurrently herewith or
hereafter delivered by or on behalf of Borrower and/or any other Loan
Party to Agent for the benefit of Lenders, including but not limited to
those financial statements and reports delivered by Borrower to Agent
pursuant to Section 6.2(c).
(tt) "GAAP": generally accepted accounting principles applied
in the preparation of the financial statements of a Person with such
changes thereto as: (i) shall be consistent with the then-effective
principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors and successors, and (ii) shall be concurred
in by the independent certified public accountants of recognized
8
standing acceptable to Agent reviewing such financial statements of
such Person; provided that KPMG LLP shall be deemed to be acceptable to
Agent and Lenders as independent certified public accountants of
recognized standing for the purposes of applying GAAP.
(uu) "GOVERNMENTAL AUTHORITY": any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand
jury or arbitrator, in each case whether foreign or domestic.
(vv) "GUARANTIES": the meaning set forth in Section 4.1.
(ww) "GUARANTORS": collectively, (i) FC Commercial, (ii) FC
Consumer Lending, (iii) FC International, (iv) FC Servicing, (v) FC
Capital, and (vi) FC Holdings, and each other Person who has guaranteed
all or any portion of the Secured Obligations.
(xx) "GUARANTY EQUIVALENT": any agreement, document or
instrument pursuant to which a Person directly or indirectly
guarantees, becomes surety for, endorses, assumes, agrees to indemnify
the obligee of any other Person against, or otherwise agrees, becomes
or remains liable (contingently or otherwise) for, such obligation,
other than by endorsements of instruments in the ordinary course of
business. Without limitation, a Guaranty Equivalent shall be deemed to
exist if a Person agrees, becomes or remains liable (contingently or
otherwise), directly or indirectly: (i) to purchase or assume, or to
supply funds for the payment, purchase or satisfaction of, an
obligation; (ii) to make any loan, advance, capital contribution or
other investment in, or a purchase or lease of any property or services
from, a Person; (iii) to maintain the solvency of such Person; (iv) to
enable such Person to meet any other financial condition; (v) to enable
such Person to satisfy any obligation or to make any payment; (vi) to
assure the holder of an obligation against loss; (vii) to purchase or
lease property or services from such Person regardless of the
non-delivery of or failure to furnish of such property or services; or
(viii) in respect of any other transaction the effect of which is to
assure the payment or performance (or payment of damages or other
remedy in the event of nonpayment or nonperformance) of any obligation.
(yy) "HARBOR DEBTORS": collectively, (i) Harbor Financial
Mortgage Corp., (ii) NAF, Inc. (f/k/a New America Financial, Inc.),
(iii) ▇▇▇▇▇▇▇▇ Financial Services Corp., (iv) Community National
Mortgage Corp., (v) CalCap, Inc. and (vi) Harbor Financial Group, Inc.
(zz) "HARBOR PROCEEDINGS": The jointly administered Chapter 11
bankruptcy cases, bearing Case No. 99-37255-SAF-11, styled as In Re
Harbor Financial Group, Inc., et al., pending in the United States
Bankruptcy Court for the Northern District of Texas, Dallas Division,
as converted to a Chapter 7 proceeding
9
on December 14, 1999, under which the Harbor Debtors are operating as
debtors-in-possession.
(aaa) "INDEBTEDNESS": with respect to any Person, at a
particular time (without duplication): (i) all obligations on account
of money borrowed by, or credit extended to or on behalf of, or for or
on account of deposits with or advances to, such Person, except for
inter-affiliate transactions entered into in the ordinary course of
business on arms-length terms by and among Borrower and any Affiliate
or by and among the Affiliates which are accounted for in book entries
in the books and records of the applicable Persons and which is not
evidenced by a note or other instrument; (ii) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments;
(iii) all obligations of such Person for the deferred purchase price of
property or services other than trade payables incurred in the ordinary
course of business and on terms customary in the trade and not more
than sixty (60) days past due; (iv) all obligations secured by a Lien
on property owned by such Person (whether or not assumed); and all
obligations of such Person under Capitalized Leases (without regard to
any limitation of the rights and remedies of the holder of such Lien or
the lessor under such Capitalized Lease to repossession or sale of such
property); (v) the face amount of all letters of credit issued for the
account of such Person and, without duplication, the unreimbursed
amount of all drafts drawn thereunder, and all other obligations of
such Person associated with such letters of credit or draws thereon;
(vi) all obligations of such Person in respect of acceptances or
similar obligations issued for the account of such Person; (vii) all
obligations of such Person under a product financing or similar
arrangement; (viii) all obligations of such Person under any interest
rate or currency protection agreement, interest rate or currency
future, interest rate or currency option, interest rate or currency
swap or cap or other interest rate or currency hedge agreement; and
(ix) all obligations and liabilities with respect to unfunded vested
benefits under any "EMPLOYEE BENEFIT PLAN" or with respect to
withdrawal liabilities incurred under ERISA by Borrower or any ERISA
Affiliate to a "MULTIEMPLOYER PLAN", as such terms are defined under
the Employee Retirement Income Security Act of 1974.
(bbb) "INDEBTEDNESS INSTRUMENT": any note, mortgage,
indenture, chattel mortgage, deed of trust, loan agreement,
hypothecation agreement, pledge agreement, security agreement,
financing statement or other document, instrument or agreement
evidencing or securing the payment of or otherwise relating to the
borrowing of monies. Indebtedness Instruments shall include, but not be
limited to the Loan Documents.
(ccc) "INTEREST PERIOD": with respect to any Eurodollar
Advance, the period commencing on the date such Eurodollar Advance is
made or continued as a Eurodollar Advance, as the case may be, or the
date on which a Prime Rate Advance is converted into such Eurodollar
Advance as applicable, and ending one (1) week or one (1) month
thereafter, as Borrower may elect in the applicable Borrowing Request
(or as Borrower shall be deemed to have elected, as applicable);
10
provided that any Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding
Business Day. No Interest Period shall terminate after the end of the
Maturity Date.
(ddd) "INTEREST RATE": the Prime Interest Rate or the
Eurodollar Rate, as determined in accordance with the provisions of
Article 2.
(eee) "LENDERS" and "LENDER": collectively those lender
parties hereto from time to time, and individually any of the Lenders
listed on the signature pages hereof, subject to the provisions of
Section 9.27 pertaining to Persons becoming or ceasing to be Lenders.
Any reference to "Lenders" shall be deemed to mean all, or any one or
more Lenders, unless context clearly provides otherwise. As of the date
hereof, the Lenders are BOS-Edinburgh and Bank of America.
(fff) "LIBOR BREAKAGE FEE": a fee equal to all losses
(excluding loss of anticipated profits) costs, or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain the requested Eurodollar
Advance, when, as a result of such failure on the part of Borrower or
prepayment by Borrower (including, without limitation, any mandatory
prepayment of principal and any prepayment resulting from the
liabilities being declared due and payable in accordance with their
terms hereof), interest on such Eurodollar Advance is not based on the
applicable Eurodollar Rate for the requested Interest Period
(ggg) "LIBOR RATE": for each Interest Period, a rate of
interest, per annum, equal to: (i) the rate of interest determined by
Agent at which deposits in U.S. Dollars for the relevant Interest
Period are offered based on information presented on the Telerate
Screen as of 11:00 A.M. (London time) on the applicable Interest Rate
Determination Date; provided that if more than one (1) offered rate
appears on the Telerate Screen in respect of such Interest Period, the
arithmetic mean of all such rates (as determined by Agent) will be the
rate used; provided further that if Telerate ceases to provide LIBOR
quotations, such rate shall be the average rate of interest determined
by Agent at which deposits in U.S. Dollars are offered for the relevant
Interest Period by banks or other financial institutions selected by
Agent to banks in London interbank markets as of 11:00 A.M. (London
time) on the applicable Interest Rate Determination Date, multiplied by
(ii) the Libor Rate Reserve Percentage. The LIBOR Rate shall be
adjusted automatically as of the effective date of each change in the
LIBOR Rate Reserve Percentage. The LIBOR Rate shall be calculated in
accordance with the foregoing whether or not Agent is actually required
to hold reserves in connection with its eurocurrency funding or, if
required to hold such reserves, is required to hold reserves at the
LIBOR Rate Reserve Percentage.
11
(hhh) "LIBOR RATE RESERVE PERCENTAGE": for any day shall mean
the percentage (expressed as a decimal, rounded upward to the nearest
1/100 of 1%), as determined in good faith by Agent (which determination
shall be conclusive), which is in effect on such day as prescribed by
the Board of Governors of the Federal Reserve System (or any successor)
representing the maximum reserve requirement (including, without
limitation, supplemental, marginal and emergency reserve requirements)
with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities") of a member bank in such system
(iii) "LIEN": any mortgage, deed of trust, pledge, lien,
hypothecation, security interest, charge or other encumbrance or
security arrangement of any nature whatsoever, 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.
(jjj) "LOAN": any and all loans, advances, extensions of
credit and/or other financial accommodations of any kind or nature made
by Lenders at any time to, for the benefit or at the request of
Borrower pursuant to this Agreement and/or any of the other Loan
Documents.
(kkk) "LOAN DOCUMENTS": this Agreement and the Other
Agreements.
(lll) "LOAN PARTY": Borrower and every other Person who is a
party to any one or more of the Loan Documents other than Agent and
Lenders. Notwithstanding the foregoing, the Harbor Debtors shall not be
deemed to be Loan Parties for the purposes of this Agreement.
(mmm) "MAJORITY LENDERS": means Lenders which have made Loans
constituting 51% in principal amount of Loans outstanding on such date,
or if no Loans are outstanding, Lenders who have Commitments to make
Loans constituting, in the aggregate, at least 51% of the total
Commitments hereunder. So long as there are only two unaffiliated
Lenders, the term "MAJORITY LENDERS" shall mean both Lenders.
(nnn) "MATERIAL ADVERSE EFFECT": any effect that (i) is
material and adverse to the financial condition, results of operations,
business or prospects of Borrower and/or any of its Subsidiaries, any
Primary Obligor or Secondary Obligor or (ii) materially impairs the
ability of Borrower and/or any of its Subsidiaries, any Primary or
Secondary Obligor to perform its/their respective obligations under any
Loan Document.
(ooo) "MATURITY DATE": June 30, 2001, or such earlier date as
all of Borrower's Obligations and Borrower's Liabilities shall be due
and payable by acceleration or otherwise.
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(ppp) "MAXIMUM PRINCIPAL AMOUNT": the meaning set forth in
Section 2.2(a).
(qqq) "MODIFICATIONS": any extension, renewal, substitution,
replacement, restatement, reaffirmation, substitute, supplement,
amendment or modification of any agreement, certificate, document,
instrument or other writing, whether or not contemplated in the
original agreement, document or instrument.
(rrr) "MONTHLY REPORT": those reports delivered to Agent in
accordance with Section 6.2(c)(iii).
(sss) "NOTE" or "NOTES": those certain revolving promissory
notes of Borrower executed and delivered under this Agreement and all
Modifications thereto or thereof. As of the date hereof, the Notes
include the Tranche A Notes and the Tranche B Note.
(ttt) "NOTE PLEDGE AGREEMENT": any one or more of those
certain note pledge agreements or amended and restated note pledge
agreements dated even date herewith granted by Borrower, FC Commercial
and FC Consumer Lending to secure the Secured Obligations, pursuant to
which such Loan Party has pledged to Agent (as secured party for the
benefit of Lenders) certain promissory notes, together with all
Modifications thereto and thereof.
(uuu) "ORGANIC DOCUMENTS": with respect to any Person, its
articles or certificate of incorporation, by-laws, shareholder's
agreement, certificate of partnership, certificate of limited
partnership, partnership agreement, articles of organization, operating
agreement, or similar documents or agreements governing its management
and the rights and privileges of its equity owners, and all
Modifications thereto or thereof.
(vvv) "OTHER AGREEMENTS": the Notes, the Note Pledge
Agreements, the Stock Pledge Agreements, together with all other
agreements, instruments and documents evidencing or securing the Loans
or the transactions contemplated herein, including, without limitation,
bond agreements, loan agreements, security agreements, guaranties,
mortgages, deeds of trust, notes, applications and agreements for
letters of credit, letters of credit, advances of credit, bankers
acceptances, pledges, powers of attorney, consents, assignments,
collateral assignments, contracts, notices, leases, financing
statements and all other written matter heretofore, now and/or from
time to time hereafter executed by and/or on behalf of Borrower and/or
any other Loan Party and delivered to Lenders, Agent, or any one or
more of them, or issued by Lenders or Agent, or any one or more of
them, upon the application and/or other request of, and on behalf of,
Borrower.
(www) "PARENT": any Person, now or at any time or times
hereafter, owning or controlling (alone or with Borrower, any
Subsidiary and/or any other Person) at least a majority of the issued
and outstanding Stock or other ownership interest of
13
Borrower or any Subsidiary (hereinafter defined). For purposes of
this definition, "CONTROL" shall have the same meaning ascribed to
this term in Section 1.1(b). Notwithstanding the forgoing, no Person
shall be a Parent which is not a Parent of Borrower or a 51% or more
owned subsidiary, directly or indirectly, of Borrower.
(xxx) "PARTICIPANT": the definition ascribed to this term in
Section 9.27(b).
(yyy) "PERMITTED LIENS": (i) any liens created pursuant to the
Loan Documents in favor of Agent for the benefit of Lenders and Agent
to secure the Secured Obligations; (ii) liens pursuant to the Senior
Subordinated Debt Documents (as in effect on the Closing Date) in favor
of Senior Subordinated Debt Lender to secure the Senior Subordinated
Debt, subject to the Subordination Agreement; (iii) liens for Charges
which are not yet due and payable or which are expressly permitted
pursuant to the terms hereof, or claims and unfunded liabilities under
ERISA not yet due and payable or which are being contested in good
faith; (iv) liens arising in connection with worker's compensation,
unemployment insurance, old age pensions and social security benefits
which are not overdue or are being contested in good faith by
appropriate proceedings diligently pursued, provided that in the case
of any such contest any proceedings commenced for the enforcement of
such lien shall have been duly suspended and such provision for the
payment of such lien has been made on the books of the applicable
Borrower (or the applicable Affiliate) as may be required by GAAP; (v)
liens incurred in the ordinary course of business to secure the
performance of statutory obligations arising in connection with
progress payments or advance payments due under contracts with the
United States Government or any agency thereof entered into in the
ordinary course of business; (vi) any liens securing Indebtedness of
Borrower (or any Affiliate) to any Persons in an aggregate amount less
than $200,000; (vii) Charges relating to Assets of First B and First X
(as defined on Schedule 1.1(oooo)); (viii) as to any Affiliate, other
than Borrower or a Primary Obligor, purchase money liens in connection
with the acquisition of Assets so long as such liens encumber only the
Assets acquired, (ix) as to any Affiliate, other than Borrower or a
Primary Obligor, liens relating to Indebtedness incurred in connection
with warehousing assets or the securitization of Assets, so long as
such liens encumber only the Assets warehoused or securitized; and (x)
those liens disclosed on Schedule 5.1(g), (xi) those liens granted
pursuant to the FC Holdings Line of Credit and the FC Consumer Lending
Line of Credit.
(zzz) "PERSON": any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust,
unincorporated organization, association, corporation, institution,
entity, party or government (whether national, Federal, state, county,
city, municipal or otherwise, including without limitation any
instrumentality, division, agency, body or department thereof).
14
(aaaa) "PLEDGED ENTITIES": those entities whose shareholders,
partners, members or other equity owners have pledged an equity
interest in such entity to secure the Secured Obligations.
(bbbb) "PLEDGED NOTES": those certain promissory notes
identified on Schedule 4.2(b), which have been pledged to Agent
pursuant to a Note Pledge Agreement.
(cccc) "PLEDGED PROPERTY": any and all other property (real,
personal or intangible) pledged by Borrower or any other Loan Party to
secure payment and performance of the Secured Obligations, including
but not limited to: (i) any and all Collateral, as defined in the
Security Agreements; (ii) any and all interests pledged pursuant to the
Note Pledge Agreements; and (iii) any and all interests pledged
pursuant to the Stock Pledge Agreements.
(dddd) "PRIMARY OBLIGORS": collectively, (i) FC Consumer
Lending, (ii) FC Capital, (iii) FC Commercial and (iv) FC Servicing.
(eeee) "PRIME INTEREST RATE": an interest rate equal to the
higher of: (i) the Federal Funds Effective Rate plus one and one-half
of one percent (1.5%) per annum, or (ii) the Prime Rate plus one
percent (1%) per annum.
(ffff) "PRIME RATE": the prime rate of interest quoted from
time to time by Agent as its base rate on corporate loans at large U.S.
money center commercial banks on such day; provided that in the event
the Agent ceases quoting a prime rate, Prime Rate shall mean the per
annum rate of interest quoted as the Bank Prime Loan Rate for the most
recent weekday for which such rate is quoted in Statistical Release
H.15 (519) published from time to time by the Board of Governors of the
Federal Reserve System; provided further that in the event that both of
the aforesaid indices cease to be published or to quote rates of the
aforesaid types, the Prime Rate shall be determined from a comparable
index chosen by Agent in good faith. The Prime Rate shall change
effective on the date of the publication of any change in the
applicable index by which the Prime Rate is determined. The Prime Rate
is a designated rate and is used herein for ease of determination
notwithstanding that Agent is not a Lender hereunder.
(gggg) "PRIME RATE ADVANCE": all or any portion of the Loan
which is not a Eurodollar Advance.
(hhhh) "PRO RATA": for each Lender shall mean in proportion to
its Commitment Percentage.
(iiii) "PURCHASING LENDER": the meaning set forth in Section
9.27(c).
(jjjj) "RECORDS": all books, records, computer records,
computer software, ledger cards, programs and other computer materials,
customer and supplier lists,
15
invoices, orders and other property and general intangibles at any
time evidencing or relating to the Assets.
(kkkk) "REGISTER": the meaning set forth in Section 9.27(d).
(llll) "REO AFFILIATE" those entities described on Schedule
1.1(llll).
(mmmm) "REQUIRED LENDERS": the meaning set forth in Section
10.3(d).
(nnnn) "SEC": the Securities and Exchange Commission.
(oooo) "SECONDARY OBLIGORS": Those entities identified on
Schedule 1.1(oooo).
(pppp) "SECURED OBLIGATIONS": all of Borrower's Liabilities,
Borrower's Obligations and all other obligations and liabilities of
Borrower or any other Loan Party to Lenders and/or Agent under the
terms of this Agreement, the Security Agreement, the Guaranties, the
Note Pledge Agreements, the Stock Pledge Agreements and the other Loan
Documents, and all extensions and renewals or refinancing thereof,
whether such obligation or liability is direct or indirect, otherwise
secured or unsecured, joint or several, absolute or contingent, due or
to become due, whether for payment or performance, whether heretofore
arising, now existing or hereafter arising, however evidenced, created,
incurred, acquired or owing and whether now contemplated or hereafter
arising. Without limitation of the foregoing, such liability and
obligations include the principal amount of Loans, interest, fees,
indemnities or expenses under this Agreement or any other Loan
Document, and all extensions, renewals and refinancing thereof, whether
or not such Loans were made in compliance with the terms and conditions
of this Agreement or in excess of the obligation of the Lenders to
lend. Secured Obligations shall remain Secured Obligations,
notwithstanding any assignment or transfer or any subsequent assignment
or transfer of any of the Secured Obligations or any interest therein.
(qqqq) "SECURITIES": shall have the meaning ascribed to that
term in the Securities Act of 1934.
(rrrr) "SECURITIES LAWS": all applicable Federal and state
securities laws and regulations promulgated pursuant thereto.
(ssss) "SECURITY AGREEMENTS": collectively those certain
amended and restated security agreements dated even date herewith and
all Modifications thereto granted by Borrower, FC Commercial, FC
Consumer Lending, FC Servicing, FC Capital, FC International and FC
Holdings to secure all Secured Obligations.
16
(tttt) "SENIOR SUBORDINATED DEBT": shall mean Indebtedness of
Borrower pursuant to the Senior Subordinated Debt Agreement and the
other Senior Subordinated Debt Documents.
(uuuu) "SENIOR SUBORDINATED DEBT AGREEMENT": shall have the
meaning set forth in Section 5.2.
(vvvv) "SENIOR SUBORDINATED DEBT DOCUMENTS": shall have the
meaning set forth in Section 5.2.
(wwww) "SENIOR SUBORDINATED DEBT LENDER": shall have the
meaning set forth in Section 5.2.
(xxxx) "STOCK": all shares, interests, participations or other
equivalents (however designated) of or in a corporation, whether voting
or non-voting, including, but not limited to, common stock, warrants,
preferred stock, convertible debentures and all agreements, instruments
and documents convertible, in whole or in part, into any one or more or
all of the foregoing.
(yyyy) "STOCK PLEDGE AGREEMENT": any one or more of those
certain stock pledge agreements, partnership pledge agreements,
membership interest pledge agreements, amended and restated stock
pledge agreements, amended and restated partnership pledge agreements
and/or amended and restated membership interest pledge agreements
granted by Borrower and other Loan Parties, dated for reference
purposes only as of the date hereof pursuant to which such Loan Party
has pledged to Agent Stock or other equity interests in the Pledged
Entities, to secure all Secured Obligations, together with all
Modifications thereto and hereto.
(zzzz) "SUBORDINATION AGREEMENT": that certain Inter-Creditor
and Subordination Agreement by and among Borrower, Senior Subordinated
Debt Lenders, Lenders and Agent.
(aaaaa) "SUBSIDIARY": any Person at least a majority of whose
issued and outstanding Stock or other ownership interests now or at any
time hereafter is owned by Borrower, any Primary Obligor or any
Secondary Obligor, as applicable.
(bbbbb) "TANGIBLE NET WORTH": as determined at any time, the
total of shareholders' equity (including capital (both common and
preferred) stock, additional paid-in capital and retained earnings
after deducting treasury stock of a Person, less the sum of the total
amount of any intangible assets, which, for purposes of this
definition, shall include, without limitation, general intangibles and,
if applicable, all accounts receivable not incurred in the ordinary
course of business from any Affiliate of such Person or any loans to
directors or officers of any Affiliate of such Person, unamortized
deferred charges and good will, all as determined in accordance with
GAAP.
17
(ccccc) "TOTAL COMMITMENT": The maximum total aggregate
commitment of all Lenders to make Loans pursuant to the terms hereof,
determined in accordance with Section 2.3(a).
(ddddd) "TRANCHE A COMMITMENT": the Commitment of Lenders to
make Tranche A Loans, as further described in Section 2.3(a), as may be
reduced pursuant to the terms of Section 2.3(b).
(eeeee) "TRANCHE A LOANS": Loans to be made by Lenders to
Borrower, made pursuant to Section 2.1(a).
(fffff) "TRANCHE A NOTES": those certain revolving promissory
notes of Borrower executed and delivered under this Agreement, payable
to the order of the respective Lenders on or before the Maturity Date,
evidencing Tranche A Loans made by Lenders to Borrower pursuant to
Section 2.1(a), and all Modifications thereto or thereof.
(ggggg) "TRANCHE B COMMITMENT": the Commitment of
BOS-Edinburgh to make Tranche B Loans, as further described in Section
2.3(a).
(hhhhh) "TRANCHE B LOANS": Loans to be made by BOS-Edinburgh
to Borrower, made pursuant to Section 2.1(b).
(iiiii) "TRANCHE B NOTE": that certain revolving promissory
note made by Borrower payable to the order of BOS-Edinburgh, on or
before the Maturity Date, evidencing Tranche B Loans made by
BOS-Edinburgh pursuant to Section 2.1(b), and all Modifications thereto
or thereof.
(jjjjj) "TRANSFER EFFECTIVE DATE": the effective date of a
transfer of a Lender's interest in its Commitment, the Loans hereunder
or a portion thereof, to another Lender in compliance with Section
9.27(c).
(kkkkk) "TRANSFER SUPPLEMENT": the meaning set forth in
Section 9.27(c)(iii).
(lllll) "TRANSFEROR LENDER": any Lender who sells, assigns or
transfers all or any portion of or interest in its Commitments or Loans
hereunder pursuant to Section 9.27.
(mmmmm) "TRANSFEROR LENDER NOTES": the meaning set forth in
Section 9.27(c).
(nnnnn) "UNMATURED DEFAULT": any event or condition which,
with the passage of time or the giving of notice or both, would
constitute an Event of Default hereunder.
18
1.2 GAAP. Except as otherwise defined in this Agreement or the other
Loan Documents, all accounting terms used herein shall have the meaning ascribed
to that term in accordance with GAAP.
1.3 Borrower. Whenever the context so requires, the use of "IT" in
reference to Borrower shall mean Borrower as defined above.
1.4 Rules of Construction. In this Agreement, unless a clear contrary
intention appears:
(a) the singular number includes the plural number and vice
versa; reference to any gender includes each other gender;
(b) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(c) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
provided that nothing in this clause is intended to authorize any
assignment not otherwise permitted by this Agreement;
(d) reference to any agreement, document or instrument means
such agreement, document or instrument together with all Modifications
thereto or thereof.
(e) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section
hereof or such Schedule or Exhibit hereto;
(f) the words "INCLUDING" (and with correlative meaning
"INCLUDE") means including, without limiting the generality of any
description preceding such term;
(g) with respect to the determination of any period of time,
the word "from" means "from and including" and the word "to" means "to
but excluding;"
(h) reference to any law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from time to
time; and
(i) The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
19
2 LOANS - GENERAL TERMS
2.1. Credit Facilities.
(a) Tranche A Loans. Subject to the terms and conditions
hereof and relying upon the representations and warranties herein set
forth, each Lender, severally and not jointly, agrees to make Tranche A
Loans to Borrower at any time or from time to time after the date
hereof to but not including the Maturity Date. The Commitment of all
Lenders to make Tranche A Loans shall be the amount set forth in
Section 2.3. A Lender shall have no obligation at any time to make any
Tranche A Loans in excess of such Lender's Commitment set forth in
Section 2.3. Subject to the terms hereof, Borrower may borrow, repay
and reborrow the Tranche A Loans; provided that, at no time shall the
outstanding principal balance of the Tranche A Loans exceed $66,000,000
nor shall the unpaid principal balance of the Tranche A Loans exceed
the other limitations set forth herein. The obligation of Borrower to
repay the unpaid principal balance of the Tranche A Loans made to it by
each Lender and to pay interest thereon is further evidenced, in part,
by the Tranche A Notes.
(b) Tranche B Loans. Subject to the terms and conditions
hereof and relying upon the representations and warranties herein set
forth, BOS-Edinburgh agrees to make Tranche B Loans to Borrower from
time to time after the date hereof to but not including the Maturity
Date. The Commitment of BOS-Edinburgh to make Tranche B Loans shall be
the amount set forth in Section 2.3. BOS-Edinburgh shall have no
obligation at any time to make any Tranche B Loans in excess of the
Commitment for Tranche B Loans set forth in Section 2.3 or in excess of
the amounts set forth in Section 2.2(a). Subject to the terms hereof,
Borrower may borrow, repay and reborrow the Tranche B Loans; provided
that, at no time shall the outstanding principal balance of the Tranche
B Loans exceed the amounts set forth in Section 2.2(a). The obligation
of Borrower to repay the unpaid principal balance of the Tranche B
Loans made to it by Lenders and to pay interest thereon is further
evidenced, in part, by the Tranche B Notes.
2.2. Maximum Principal Amount.
(a) Notwithstanding anything to the contrary contained herein
or in any other Loan Document, but subject to the limitations set forth
in other provisions of this Agreement, the principal portion of
Borrower's Liabilities outstanding shall not exceed the following
amounts (the "MAXIMUM PRINCIPAL AMOUNT"):
(i) the unpaid principal balance of the Tranche A
Loans shall not exceed, at any time, an amount
equal to $66,000,000; and
20
(ii) the unpaid principal balance of the Tranche B
Loans shall not exceed
$ 11,000,000 on the Closing Date,
$ 12,500,000 at any time before February 1, 2000,
$ 16,000,000 at any time before March 1, 2000,
$ 19,500,000 at any time before April 1, 2000,
$ 22,000,000 at any time before May 1, 2000
(iii) The Maximum Principal Amount and Lenders'
Commitments shall be reduced by mandatory
prepayments of principal in accordance with
Section 3.3. The unpaid principal balance plus
all accrued but unpaid interest, fees and all
other Secured Obligations shall be due and
payable in full on the Maturity Date.
(b) In the event that the outstanding principal balance of the
Tranche A Loans or Tranche B Loans exceed the Maximum Principal Amount
thereof (individually and not in the aggregate) determined in
accordance with Section 2.2(a), Borrower shall pay the amount of such
excess to Agent for, in the case of the Tranche A Loans the ratable
benefit of Lenders and, in the case of the Tranche B Loan, for the
benefit of BOS-Edinburgh, without notice or demand, and any amount not
so paid shall bear interest at the Default Rate until paid. This is an
absolute obligation to pay to Agent the amount of the unpaid principal
balance of the Loans in excess of said Maximum Principal Amount,
regardless of the cause of such excess.
(c) Tranche A Loans must be funded in the amount of Lenders'
Commitments prior to any disbursement of Tranche B Loans. It is
anticipated that the Tranche A Loans will be fully funded on the date
of the execution of this Agreement.
2.3. Lender's Commitments.
(a) On the date hereof the Total Commitment of Lenders is
$88,000,000 described as follows:
(i) The Tranche A Commitment, as of the date hereof
is $66,000,000, of which BOS-Edinburgh's
Commitment is $33,000,000 and Bank of America's
Commitment is $33,000,000.
(ii) Subject to Section 2.2(a)(ii), the Tranche B
Commitment is $22,000,000 of which
BOS-Edinburgh's Commitment is $22,000,000 and
Bank of America's Commitment is $0.
(iii) On the date hereof, BOS-Edinburgh's Commitment
Percentage with respect to Tranche A Loans is
50% and BOS-Edinburgh's Commitment Percentage
with respect to Tranche B Loans is 100%.
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(iv) On the date hereof, Bank of America's
Commitment Percentage relating to Tranche A
Loans is 50% and Bank of America's Commitment
Percentage with respect to Tranche B Loans is
0%.
(v) The Commitment Percentage of each Lender may be
adjusted if a transfer occurs in accordance
with Section 9.27. Lenders' Commitments are
subject to the mandatory reductions set forth
in Section 2.3(b).
(b) The payment of Extraordinary Transaction Proceeds to Agent
pursuant to the provisions hereof shall permanently reduce the Lenders'
Commitments. Following payment of Extraordinary Transaction Proceeds,
the Lender's Commitments shall be permanently reduced and the amounts
so applied may not be reborrowed.
2.4. Maturity Date; Termination of Loans.
(a) Lenders' respective obligations to make any Advance to
Borrower pursuant to the provisions hereof shall be in effect until the Maturity
Date, unless sooner terminated by Lenders upon the occurrence of an Event of
Default, an Unmatured Default, or pursuant to the terms hereof.
(b) Upon payment in full of the Tranche A Loans,
BOS-Edinburgh's Commitment to make the Tranche B Loans shall terminate.
2.5. Authorized Disbursement of Proceeds. Borrower hereby authorizes
and directs each Lender and Agent to disburse, for and on behalf of Borrower and
for Borrower's account, the proceeds of any Loans to such Person as Borrower or
any Designated Person shall direct. In addition to Advances of Loan proceeds
made pursuant to a Borrowing Request made by a Borrower from time to time,
Borrower hereby irrevocably authorizes each Lender and Agent to disburse
proceeds of the Loans to pay: (a) interest which is accrued but unpaid and which
is due and payable pursuant to the terms hereof and of the Notes until the Loans
are paid in full; and (b) for any and all Costs. The execution of this Agreement
by Borrower shall, and hereby does, constitute an irrevocable direction and
authorization to each Lender and Agent so to disburse such funds described in
this Section and to treat such Advances as money loaned pursuant to this
Agreement and as indebtedness evidenced by the Notes. No further direction or
authorization from Borrower shall be necessary for Lenders to make such
Advances, and all such Advances shall satisfy, to the extent so disbursed, the
obligations of Borrower hereunder and shall be evidenced by the Notes.
Notwithstanding anything to the contrary contained herein, Lenders are under no
duty or obligation to make such
22
Advances and failure to make such Advances shall not be deemed to be a default
by Lenders or impair any of Lenders' rights or remedies hereunder.
2.6. Use of Proceeds and Borrowing Procedure.
(a) Use of Proceeds. The Loans shall be used solely to fund
the working capital requirements of Borrower and its Subsidiaries;
provided that, no portion of the Loans proceeds shall be used to make
capital contributions, loans, gifts to or pay the obligations of FC
Commercial, FC Capital, any Harbor Debtor or any Subsidiary of any such
entity. Nothing contained in this Section 2.6(a) shall be deemed to
prohibit Borrower from making capital contributions, loans, gifts or
other payments to such entities from funds which are generated from the
operations of Borrower or its Subsidiaries or other sources.
(b) Borrowing Request. In order to request an Advance,
Borrower shall hand deliver or telecopy to Agent a duly completed
Borrowing Request not later than 10:00 a.m. New York time: (i) at least
three (3) Business Days before a proposed Eurodollar Advance and (ii)
at least one (1) Business Day before a proposed Prime Rate Advance.
Each Borrowing Request shall be irrevocable and shall specify: (1) the
amount of such Advance; (2) the number and location of the account to
which funds are to be disbursed; (3) the date such Advance is to be
made (which shall be a Business Day); and (4) the information required
pursuant to Sections 2.11 and 2.12.
(c) If Borrower in respect of an outstanding Eurodollar
Advance shall not have delivered a Borrowing Request in accordance with
Section 2.6(b) not later than 10 a.m. New York time at least three (3)
Business Days prior to the end of the Interest Period then in effect
for such Eurodollar Advance and requesting that such Eurodollar Advance
be refinanced, then, (unless Borrower has notified the Agent not fewer
than three (3) Business Days prior to the end of such Interest Period,
that such Eurodollar Advance is to be repaid at the end of such
Interest Period), Borrower shall be deemed to have delivered a
Borrowing Request requesting that such Advance be refinanced with a new
Advance of equivalent amount, and such new Advance shall bear interest
at the LIBOR Rate applicable for a seven (7) day Interest Period.
(d) Pro Rata Treatment of Loans. Each borrowing of a Tranche A
Loan shall be made from each Lender pro rata in accordance with its
Commitment Percentage, determined in accordance with Section 2.3. Each
borrowing of a Tranche B Loan shall be made from BOS-Edinburgh.
(e) Failure to Loan. The failure of any Lender to make a Loan
shall not relieve any other Lender of its obligation to fund any Loan
hereunder, but neither Agent nor any other Lender shall be responsible
for the failure of any other Lender to make a Loan.
23
2.7. Interest Rate. Except as provided in Section 2.9, the unpaid
principal balance of the Loans shall bear interest at the Eurodollar Rate and
Borrower shall not have the right to select the Prime Interest Rate without
Lenders' prior written approval, which approval may be withheld in Lenders' sole
and exclusive discretion; provided that Lenders hereby approve the use of the
Prime Rate for Advances made on the Closing Date for a maximum period of three
(3) days after the Closing Date. Interest on all Prime Rate Advances, if
applicable, shall be computed on a 365-day year for the actual number of days
elapsed. Interest on all Eurodollar Advances shall be computed on a 360 day year
for the actual number of days elapsed. After the occurrence of an Event of
Default and during the continuation thereof, all Loans shall bear interest at
the Default Rate. The unpaid principal balance of each Advance shall bear
interest at the Interest Rate applicable thereto, determined by Agent in
accordance with the provisions hereof, which determination shall be binding upon
Borrower, absent manifest error.
2.8. Change of Laws. If Agent or any Lender shall determine at any
time after the date hereof that the adoption of any law, rule or regulation
regarding capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by Agent or any Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any such authority, central bank
or comparable agency, has or would have the effect of reducing the rate of
return on Agent's or any Lender's capital as a consequence of its obligations
hereunder to a level below that which Agent or the applicable Lender could have
achieved but for such adoption, change or compliance (taking into consideration
Agent's or such Lender's policies with respect to capital adequacy) by an amount
deemed by Agent or such Lender to be material, Agent or such Lender, as
applicable, shall give notice thereof to Borrower of such determination (and any
Lender giving such notice shall notify Agent), in which event Borrower shall pay
to Agent for the benefit of the applicable Lender upon demand such amount or
amounts, in addition to the amounts payable under any other provision of this
Agreement or the Other Agreements, as will compensate Agent or such Lender, as
applicable, for such reduction. Determinations by Agent or such Lender for
purposes of this Section of the additional amount or amounts required to
compensate Agent or such Lender with respect to the foregoing shall be
conclusive in the absence of manifest error. In determining such amount or
amounts, Agent or such Lender may use any reasonable averaging or attribution
methods. Notwithstanding the foregoing, no amounts shall be payable by Borrower
to Agent or such Lender under the terms of this Section 2.8 if the Secured
Obligations are paid in full on or before ten (10) days after the date on which
Agent or such Lender, as applicable, shall have notified Borrower that amounts
will be due under this Section 2.8. In the event of a prepayment pursuant to
this Section 2.8, any LIBOR Breakage Fee otherwise payable pursuant to the terms
of this Article 2 shall be waived by Agent and Lenders and shall not be due or
payable.
2.9. Regulatory Changes. Notwithstanding any other provision herein
contained to the contrary, in the event that any regulatory change shall, in the
reasonable determination of Agent or any Lender, make it unlawful for Agent or
any Lender to make
24
or to maintain any Eurodollar Advance or impose additional restrictions on
Eurodollar Advances by Agent or any Lender, then, the obligation of Agent or
such Lender to make or maintain any such Eurodollar Advance shall be terminated
and all outstanding Eurodollar Advances shall automatically be converted to
Prime Rate Advances. Lenders shall, as promptly as practicable following any
such determination, give Borrower a notice thereof that sets forth the basis for
any such determination. After such determination and while such determination is
in effect, Lenders shall not be required to make further Eurodollar Advances.
2.10. Advances Prior to LIBOR Rate Determination. Anything herein to
the contrary notwithstanding, after notice but prior to making any requested
Eurodollar Advance if, for any reason whatsoever, LIBOR Rates are not then being
quoted for the requested Interest Period and in an amount approximating the
amount of such Eurodollar Advance, Agent shall give Borrower prompt notice
thereof and such Eurodollar Advance shall be deemed to be a Eurodollar Advance
bearing interest at the Eurodollar Rate then in effect based upon the next
shortest available Interest Period (but in no event longer than one month), as
determined by Agent.
2.11. Eurodollar Advances and Conversion. Provided no Event of
Default or Unmatured Default has occurred and is continuing, Borrower shall have
the option, subject to the other provisions of this Agreement, to: (i) request
that any Advance or any portion of an Advance in a minimum amount of $100,000
and in multiples of $100,000, shall be deemed to be a Eurodollar Advance by
giving telephonic notice to Agent at least three Business Days prior to the day
any Eurodollar Advance is to be made hereunder specifying the applicable
Interest Period; provided that Borrower gives Agent written confirmation by
facsimile of its telephonic notice on the same Business Day as such telephone
notice is given with respect to such Eurodollar Advance, and (ii) convert on any
Business Day, all or any portion of the outstanding principal amount of any
Advance or any portion of an Advance, in a minimum amount of $100,000 and in
multiples of $100,000, from one type of interest rate advance to another type of
interest rate advance by giving at least three (3) Business Days prior
telephonic notice to Agent thereof; provided that Borrower gives Agent written
confirmation of its telephonic notice by facsimile on the same Business Day that
such telephonic notice is given with respect to such conversion hereunder.
Notwithstanding the foregoing: (y) no Eurodollar Advance may be converted into a
Prime Rate Advance pursuant to this Section, except effective on the last day of
the Interest Period applicable thereto, and (z) Borrower shall have no more than
two (2) Eurodollar Advances with different Interest Periods at any one time.
2.12. Interest Period Election. Borrower may, by prior telephonic
notice to Agent, elect the Interest Period(s) to be applicable to all or any
portion of any Eurodollar Advance upon the expiration of the Interest Period
then applicable to such Eurodollar Advance; provided that such notice is given
to Agent at least three (3) Business Days prior to the expiration of the then
Interest Period and that Borrower gives written confirmation by facsimile of its
telephonic notice on the same Business Day that such telephonic notice is given.
In the event Borrower does not make such an election with respect to all or any
25
portion of a Eurodollar Advance for which the Interest Period is expiring, then,
upon the expiration of such Interest Period, the portion of such Eurodollar
Advance for which no such election has been made shall automatically convert to
a Prime Rate Advance.
2.13. Fees.
(a) Facility Fee. In the event the Secured Obligations are
paid in full and Lenders' Commitments are cancelled (the "CANCELLATION DATE"),
Borrower shall pay to Agent, for the ratable benefit of Lenders, a Facility Fee
to be allocated among Lenders' pro rata in accordance with their respective
Commitment Percentages relating to the Tranche A Loans. The amount of the
Facility Fee is dependent upon the date of the Cancellation Date and shall be
paid in accordance with the following schedule:
If the Cancellation Date is: Facility Fee shall be:
---------------------------- ----------------------
on or before February 29, 2000 $500,000
on or before September 29, 2000 $1,650,000
at any time thereafter $2,500,000
The Facility Fee shall be payable on the earlier of (i) the payment in full of
the Secured Obligations and the termination of the Tranche A Commitments, or
(ii) September 30, 2000. For greater certainty and not in limitation of the
foregoing, in the event the Secured Obligations have not been paid in full on or
before September 30, 2000 for any reason whatsoever, Borrower shall pay to
Agent, for the ratable benefit of the Lenders, a Facility Fee equal to
$2,500,000 on September 30, 2000.
(b) Unused Commitment. Borrower shall pay to Agent for the
ratable benefit of the Lenders, an unused commitment fee in an amount equal to
.125% (on an annual basis, based on the number of days elapsed on a 365-day
year) of the difference between Total Commitment determined in accordance with
Section 2.3 and the daily outstanding principal balance of the Loan. Such fee
shall be payable quarterly in arrears on the last Business Day of each calendar
quarter. Upon the permanent reduction of the Total Commitments in accordance
with Section 2.3, the unused commitment fee shall be based upon the reduced
Total Commitment.
(c) Agent's Fees. At Closing, Agent shall be paid a servicing
fee, for its sole benefit, equal to $50,000.00 for services provided hereunder.
(d) LIBOR Breakage Fee. In the event of any prepayment of an
Advance prior to the end of the then applicable Interest Period (by acceleration
or otherwise) or in the event any Advance is not made after delivery of a
Borrowing Request in accordance with the terms hereof, for any reason
whatsoever, Borrower shall pay to Agent, for the ratable benefit of the Lenders,
an amount equal to the LIBOR Breakage Fee.
26
(e) Interest on Fees. Any fee payable under this Section 2.13
which not paid when due shall bear interest at the Default Rate.
2.14. Usury. The provisions of this Section shall govern and control
over any irreconcilably inconsistent provision contained in this Agreement or in
any other document evidencing or securing the Loan. None of Lenders or Agent
shall be entitled to receive, collect, or apply as interest hereon (for purposes
of this Section, the word "interest" shall be deemed to include any sums treated
as interest under applicable law governing matters of usury and unlawful
interest), any amount in excess of the Highest Lawful Rate (hereinafter defined)
and, in the event Lenders or Agent ever receives, collects, or applies as
interest any such excess, such amount which would be excessive interest shall be
deemed a partial prepayment of principal and shall be treated hereunder as such;
and, if the principal of this Agreement is paid in full, any remaining excess
shall forthwith be paid to Borrower. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Highest Lawful
Rate, Borrower, Lenders and Agent shall, to the maximum extent permitted under
applicable law; (i) characterize any non-principal payment as an expense, fee or
premium rather than as interest; (ii) exclude voluntary prepayments and the
effects thereof, and (iii) spread the total amount of interest throughout the
entire contemplated term of this Agreement, provided, that if this Agreement is
paid and performed in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of existence hereof
exceeds the Highest Lawful Rate, Lenders and/or Agent shall refund to Borrower
the amount of such excess and, in such event, Lenders and/or Agent shall not be
subject to any penalties provided by any laws for contracting for, charging or
receiving interest in excess of the Highest Lawful Rate. "Highest Lawful Rate"
shall mean the maximum rate of interest which Lenders and/or Agent is allowed to
contract for, charge, take, reserve or receive under applicable law after taking
into account, to the extent required by applicable law, any and all relevant
payments or charges hereunder.
3 PAYMENT TERMS
3.1 Loan Account; Method of Making Payments. Agent shall maintain a
Loan Account on its books in which shall be recorded: (i) all Loans made by
Lenders to Borrower pursuant to this Agreement; (ii) all payments made by
Borrower on all Loans; and (iii) all other appropriate debits and credits as
provided in this Agreement, including, without limitation, all fees, charges,
expenses and interest. All entries in the Loan Account shall be made in
accordance with Agent's customary accounting practices, in effect from time to
time. The failure of Agent to record any of the foregoing shall not in any way
limit Borrower's Liabilities or Borrower's Obligations under this Agreement.
3.2 Interest Payments.
(a) Accrued interest on all Prime Rate Advances shall be
payable monthly, in arrears, on the last Business Day of each month
during the term hereof, without notice or demand.
27
(b) Accrued interest on any Eurodollar Advance shall not be
due and payable monthly, but, instead, shall be payable in arrears on
the last day, of the Interest Period applicable thereto.
3.3 Principal Payments. Borrower promises to pay to the order of
Agent, for the ratable benefit of Lenders, all mandatory principal payments at
the following times and in the following amounts:
(a) The unpaid principal balance, plus all accrued but unpaid
interest, shall be due and payable to Agent, for the ratable benefit of
Lenders, in full on the Maturity Date, without notice or demand. Said
amount shall be due and payable, notwithstanding any seemingly
contradictory provisions in this Agreement.
(b) In the event of a principal payment on any Pledged Note in
an amount in excess, in the aggregate, of $250,000, Borrower and the
applicable Loan Party shall give immediate notice thereof to Agent and
Borrower shall pay to Agent, for the ratable benefit of Lenders,
principal in an amount equal to the amount of such principal payment on
said Pledged Note; provided that the parties hereby acknowledge that
such principal payment shall not reduce the Total Commitment.
(c) If at any time the outstanding principal amount exceeds
the Maximum Principal Amount of the Tranche A Loan or the Tranche B
Loan, as applicable, determined in accordance with Section 2.2,
Borrower shall pay principal in an amount necessary to reduce the then
outstanding principal amount to an amount less than the Maximum
Principal Amount of the applicable Loan and said payment shall be
applied to the Tranche A Loan or the Tranche B Loan, as applicable, to
reduce such Loan to an amount below the Maximum Principal Amount
thereof determined in accordance with Section 2.2.
(d) Borrower shall pay to Agent, for the benefit of Lenders,
100% of all Extraordinary Transaction Proceeds, to be applied to the
Secured Obligations in the order of priority determined in accordance
with Section 3.6. Upon payment of said Extraordinary Transaction
proceeds, the Total Commitment shall be reduced.
(e) Upon payment in full of the Tranche A Loans, the Tranche B
Loans shall be payable in full.
3.4 Place of Payment. All payments to Agent hereunder and under the
Other Agreements shall be payable in immediately available funds on or before
noon New York time at the place designated on Exhibit A, or such place or places
as Agent may designate in writing to Borrower. All of such payments to Persons
other than Agent shall be payable at such place or places as Agent may designate
in writing to Borrower. Borrower's Liabilities and the other Secured Obligations
will be payable as set forth in the Notes, this Agreement, and the Other
Agreements.
28
3.5 Payment on Maturity and Prepayment.
(a) Payment on Maturity. On the Maturity Date, whether by
acceleration or otherwise, Borrower shall pay to Agent, for the ratable benefit
of Lenders, in full, in cash or other immediately available funds, the
outstanding amount of the Loans.
(b) Prepayment. Each Prime Rate Advance may be repaid at any
time, without premium or penalty by Borrower giving telephonic notice to Agent
of such prepayment no later than 10:00 a.m. New York time on the date of such
prepayment, confirmed in writing by facsimile of its telephonic notice on the
same day. Each Eurodollar Advance may be prepaid on the last day of the Interest
Period applicable thereto, but only by Borrower giving telephonic notice to
Agent of such prepayment at least three (3) Business Days prior to the day of
such prepayment, such notice confirmed in writing by facsimile on the day of the
telephonic notice. Prepayment of any Eurodollar Advance during an Interest
Period is expressly prohibited. In the event of an attempted prepayment of any
Eurodollar Advance during any Interest Period, Agent, at Borrower's option,
shall either: (i) hold such funds in a non-interest bearing cash collateral
account to secure the Secured Obligations and to apply such funds to the Secured
Obligations on the last day of the Interest Period, or (ii) apply such funds to
the Secured Obligations, in which event Borrower shall pay to Agent, for the
ratable benefit of the applicable Lenders, a LIBOR Breakage Fee immediately upon
demand therefor, and any amount not so paid shall bear interest at the Default
Rate.
3.6 Application of Payments. Agent shall apply payments made to
Agent, for the benefit of Lenders, in the following order of priority:
(a) Payments from Extraordinary Transaction Proceeds. Payments
from Extraordinary Transaction Proceeds shall be applied: (i) first to Costs,
including the payment of any costs and expenses incurred by Agent and/or Lenders
to enforce any rights hereunder or under the other Loan Documents; (ii) then to
accrued but unpaid interest and other fees and expenses then due and payable
hereunder; and (iii) then pro-rata to the unpaid principal amount of the Tranche
A and Tranche B Loans, based on the respective principal amounts then
outstanding.
(b) Payments in the Ordinary Course of Business. Payments
which are not made from Extraordinary Transaction Proceeds shall be applied: (i)
first to Costs, including the payment of any costs and expenses incurred by
Agent and/or Lenders to enforce any rights hereunder or under the other Loan
Documents; (ii) then to accrued but unpaid interest and other fees and expenses
then due and payable hereunder; (iii) then to the unpaid principal balance of
the Tranche B Loans, and (iv) then pro-rata to the unpaid principal amount of
the Tranche A Loans.
(c) Notwithstanding the foregoing, (i) Agent shall, to the
extent possible, not allocate payments in a manner which would create a LIBOR
Breakage Fee or other fee or penalty payable by Borrower which would not
otherwise be imposed and (ii) Lenders may elect to allocate payments in any
other order of priority as Lenders shall in their sole
29
and exclusive discretion elect to Secured Obligations which are then due and
owing, in any order of priority as Lenders shall elect. Borrower (y) irrevocably
waives the right to direct the application of payments and collections received
by Agent from or on behalf of Borrower, and (z) agrees that Agent shall have the
continuing exclusive right to apply and reapply any and all such payments and
collections against the Loans or any other Secured Obligations then due and
payable in such manner as Agent may deem appropriate, notwithstanding any entry
by Agent upon any of its books and records.
3.7 Advances to Constitute One Loan. All Advances, loans, including
Tranche A Loans and Tranche B Loans, and any other financial accommodations
provided pursuant to the terms hereof by Lenders to Borrower shall constitute
one loan and all indebtedness and obligations of Borrower to Lenders and/or
Agent under this Agreement, the Other Agreements or otherwise shall constitute
one general obligation secured by the Collateral.
3.8 Reapplication of Payments. To the extent that Agent receives any
payment on account of the Secured Obligations, and any such payment(s) and/or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other Person under any bankruptcy act, state or
federal law, common law or equitable cause, then, to the extent of such
payment(s) or proceeds received, the Secured Obligations or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment(s) and/or proceeds had not been received by Agent and applied
on account of the Secured Obligations.
3.9 Monthly Statements. All Advances to Borrower and all other debits
and credits provided for in this Agreement shall be evidenced by entries made by
each Lender and Agent in its internal data control systems showing the date,
amount and reason for each such debit or credit. Until such time as each Lender
and Agent shall have rendered to Borrower written statements of account as
provided herein, the balance in the Loan Account, as set forth on each Lender's
and Agent's respective most recent statements, shall be rebuttably presumptive
evidence of the amounts due and owing to each Lender and/or Agent by Borrower.
At each Lender's and Agent's option, each Lender and Agent shall render a
monthly statement to Borrower setting forth the balance of the Loan Account,
including principal, interest, costs, penalties, charges and other fees. Each
such statement shall be subject to subsequent adjustment by each Lender and
Agent and each Lender's and Agent's right to reapply payments in accordance with
Section 3.8, but shall, as to statements of principal and interest then due or
having been paid, absent manifest errors or omissions, be presumed correct and
binding upon Borrower and shall constitute an account statement unless, within
thirty (30) days after receipt of any statement from any Lender and/or Agent,
Borrower shall deliver to the appropriate Lender and/or Agent written objection
thereto, specifying the error or errors, if any, contained in such statement.
3.10 Time of Payment of Extraordinary Transaction Proceeds. Any
payment of Extraordinary Transaction Proceeds due pursuant to the terms of
Section 3.3(d) shall be made on the date of closing of such transaction and
Borrower shall direct the applicable
30
purchaser and/or lender to make payment by wire transfer of immediately
available funds directly to Agent. No portion of the consideration paid for such
transfer shall be made in kind, in securities, or by delivery of promissory note
or other form of indebtedness or obligation, without, in each instance the prior
written consent of Lenders, which consent may be withheld by Lenders in their
sole and exclusive discretion.
4 ANCILLARY AGREEMENTS
4.1 Guaranties. Borrower shall cause each Guarantor to execute and
deliver to Agent an unlimited guaranty of payment and performance of all the
Secured Obligations, or an amendment, restatement and ratification thereof, as
applicable (the "Guarantees"). Schedule 4.1 sets forth a true, accurate and
complete schedule of all Guarantees caused to be delivered by Borrower to Lender
concurrently herewith.
4.2 Note Pledge Agreements. Borrower shall execute and deliver to
Agent and shall cause certain Primary Obligors to execute and deliver to Agent a
note pledge agreement or an amendment and restatement of its Note Pledge
Agreement executed and delivered in accordance with the Existing Loan Agreement.
Notwithstanding the foregoing, Borrower shall not be required to pledge or to
require any other Person to pledge: (i) promissory notes made by Borrower or any
Primary Obligor payable to the order to an Affiliate which is a general partner
of a limited partnership which note had been made to satisfy the capital
adequacy requirements imposed upon the general partner of a limited partnership
under the Code, or (ii) those notes identified on Schedule 4.2(a) (those notes
referred to in subsection (i), and (ii) above are collectively referred to as
"EXCLUDED NOTES"). Schedule 4.2(b) is a true, accurate and complete schedule of
each Note Pledge Agreement, setting forth the name of the pledgor thereunder,
and identifying the Pledged Notes pledged pursuant thereto, including the maker
of the note, the payee of the note, the date of the note, the face amount of the
note and the unpaid principal balance thereof on the Closing Date. Schedule
4.2(b) shall be amended from time to time upon Agent's request; provided that
any such future amendment of Schedule 4.2(b) shall not be deemed to amend or
limit any representation or warranty by Borrower under this Agreement relating
to any Pledged Note.
4.3 Stock Pledge Agreements. Those Persons identified on Schedule
4.3(a) (as may be amended from time to time with the prior written consent of
Agent in accordance with Section 5.1(e)(iv)) shall be referred to herein as
"EXCLUDED ENTITIES" and neither Borrower nor any Affiliate of a Borrower shall
be obligated to pledge its Stock, partnership interests, membership interests or
other equity interest in such Excluded Entity. Borrower shall execute and
deliver to Agent a stock pledge agreement or an amendment and restatement of
Borrower's Stock Pledge Agreement, pursuant to which Borrower shall pledge or
ratify, amend and restate its pledge, as applicable, to Agent all of the Stock,
shares, membership interests, partnership interest, venture interest and all
other equity interests, in any form whatsoever, of each and every Person in
which Borrower owns an equity interest (other than the Excluded Entities),
whether now existing or hereafter arising. Borrower shall cause each Primary
Obligor, each Secondary Obligor and each other
31
Affiliate, as Agent shall reasonably request to execute and deliver to Agent an
amendment and restatement of its Stock Pledge Agreement, pursuant to which each
such Person shall ratify, amend and restate its pledge to Agent all of the
Stock, shares, membership interests, partnership interest, venture interest and
all other equity interests, in any form whatsoever, of each and every Person in
which such Person owns an equity interest (other than the Excluded Entities),
whether now existing or hereafter arising. Schedule 4.3(b) sets forth a true,
accurate and complete list of all Stock Pledge Agreements delivered in
connection with this Agreement, the name of the Pledgor, the identity of each
entity pledged pursuant thereto and a detailed description of the equity
interest pledged pursuant thereto.
4.4 Security Agreements. Borrower, FC Commercial, FC Consumer
Lending, FC Servicing, FC Capital, FC International and FC Holdings shall
deliver to Agent security agreements pursuant to which each shall grant a
security interest in all of its Assets (excluding those Assets specifically
identified in a schedule to the applicable Security Agreement) to secure the
Secured Obligations or an amendment, restatement and ratification thereof, as
applicable. Schedule 4.4 sets forth all Security Agreements, or amendments,
restatements and ratifications thereof, as applicable, delivered by Loan Parties
pursuant to the terms hereof.
5 GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS
5.1 General Representations and Warranties. Subject to the limitation
set forth in Section 5.5 and those matters disclosed on Schedule 5.1, except as
disclosed in writing to Lenders and Agent concurrently herewith, Borrower
warrants and represents to and covenants with Lenders and Agent that:
(a) Organization.
(i) Borrower is and at all times hereafter shall be
a corporation, duly organized and existing and
in good standing under the laws of the State of
Delaware and qualified or licensed to do
business and in good standing in all states in
which the laws thereof require Borrower to be
so qualified and/or licensed and in which the
failure to so qualify could have a Material
Adverse Effect, including, without limitation,
the State of Texas. Schedule 5.1(a)(i)
identifies each jurisdiction in which Borrower
has qualified or been licensed to do business
and describes the nature and current status of
any such qualification or license.
(ii) Each Primary Obligor and each Secondary Obligor
is and at all times hereafter shall be a
corporation or a limited partnership, duly
organized and existing and in good standing
under the laws of the state of its organization
and qualified or licensed to do business and in
good standing in all states in which the laws
thereof require each Primary Obligor and each
Secondary
32
Obligor to be so qualified and/or licensed and
in which the failure to so qualify could have a
Material Adverse Effect. Schedule 5.1(a)(ii)
identifies each jurisdiction in which each
Primary Obligor and each Secondary Obligor has
qualified or been licensed to do business and
describes the nature and current status of any
such qualification or license.
(b) Entity Power.
(i) Borrower has the right, power and capacity and
is duly authorized and empowered to enter into,
execute, deliver and perform this Agreement and
the Other Agreements, to which it is a party.
(ii) Each Primary Obligor and each Secondary Obligor
has the right, power and capacity and is duly
authorized and empowered to enter into,
execute, deliver and perform those Loan
Documents to which it is a party.
(c) Violation of Organic Documents.
(i) The execution, delivery and/or performance by
Borrower of this Agreement and the Other
Agreements to which it is a party, shall not,
by the lapse of time, the giving of notice or
otherwise, constitute a violation of any
applicable law or a breach of any provision
contained in the Organic Documents of Borrower,
or contained in any agreement, instrument or
document to which Borrower, is now or hereafter
a party or by which it or any of its Assets is
or may become bound.
(ii) The execution, delivery and/or performance by
each Primary Obligor and each Secondary Obligor
of the Other Agreements to which it is a party,
shall not, by the lapse of time, the giving of
notice or otherwise, constitute a violation of
any applicable law or a breach of any provision
contained in the Organic Documents of such
Primary Obligor or such Secondary Obligor, or
contained in any agreement, instrument or
document to which such Primary Obligor or such
Secondary Obligor is now or hereafter a party
or by which it or any of its Assets is or may
become bound.
(d) Enforceability.
(i) This Agreement and the Other Agreements to
which the Borrower is a party, are and will be
the legal, valid and binding agreements of
Borrower, enforceable in accordance
33
with their respective terms, except as
enforcement thereof may be subject to the
effect of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws
affecting creditors' rights generally, and to
general principles of equity (regardless of
whether such enforcement is sought in a
proceeding in equity or at law); and
(ii) Those Other Agreements to which each other Loan
Party is a party are and will be the legal,
valid and binding agreements of such Loan
Party, enforceable in accordance with their
respective terms, except as enforcement thereof
may be subject to the effect of applicable
bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors'
rights generally, and to general principles of
equity (regardless of whether such enforcement
is sought in a proceeding in equity or at law);
(e) Ownership
(i) Schedule 5.1(e) sets forth all classes of stock
of Borrower, the shareholders thereof (other
than members of the general public), addresses
of each shareholder, number of shares owned and
how the shares are held;
(ii) Schedule 5.1(e) (as may be amended from time to
time) sets forth all classes of stock and/or
partnership interests of each Primary Obligor
and each Secondary Obligor, the shareholders
and/or portions thereof, and the addresses,
number of shares and/or partnership interests
owned and how the shares are held.
(iii) Schedule 5.1(e) (as may be amended from time to
time) sets forth all options, warrants and
other rights to acquire Stock or other equity
interests of Borrower, any Primary Obligor, any
Secondary Obligor, and any other Pledged
Entity, the nature of such option, warrant or
right and the conditions for the exercise
thereof. Lenders hereby expressly consent to
the transfer, issuance or conveyance of Stock
and/or other equity interests of any Person in
accordance with such options, warrants and
rights.
(iv) Borrower shall deliver to Agent notice within
(10) Business Days after Borrower or any other
Loan Party acquires the Stock, partnership
interest or other equity interest in any Person
Borrower shall also amend Schedule 5.1(e), and
promptly deliver such amended schedule to the
Agent. Unless
34
Majority Lenders elect not to require Borrower
or such other Loan Party to pledge its equity
interest in such Person, Borrower and/or the
applicable Loan Party: (A) shall grant to Agent
a perfected first security interest in its
equity interest in such Person, (B) shall
deliver a Stock Pledge Agreement or such other
pledge agreement in form and substance
acceptable to Agent, (C) shall amend the
applicable Schedules of the applicable Stock
Pledge Agreement, (D) shall execute and deliver
to the Pledged Entity a notice of lien, (E)
shall execute any and all financing statements
required by Agent to perfect its security
interest, (F) shall deliver the original Stock
certificates or other evidence of ownership to
Agent, together with an assignment separate
from certificate therefor, and (G) shall take
such other action to effect and perfect such
security interest as Agent shall reasonably
require. In the event Agent elects not to
require a pledge of such equity interests,
Borrower shall amend Schedule 4.3(b).
(f) Fictitious Names.
(i) Each of the fictitious names, if any, used by
Borrower during the five (5) year period
preceding the date of this Agreement is set
forth on Schedule 5.1(f) attached hereto (as
amended from time to time) and none of such
fictitious names are registered trademarks or
tradenames with the U.S. Patent and Trademark
Office, except as set forth in Schedule 5.1(f);
(ii) Each of the fictitious names, if any, used by
each Primary Obligor and each Secondary Obligor
during the five (5) year period preceding the
date of this Agreement is set forth on Schedule
5.1(f) attached hereto (as amended from time to
time), and none of such fictitious names are
registered trademarks or tradenames with the
U.S. Patent and Trademark Office; provided
that, variations on the corporate name of
Primary Obligors and Secondary Obligors in
states where used solely for qualifying to do
business therein shall and have been excluded
from such schedule, with Lender's consent and
approval.
(g) Title. Schedule 5.1(g) is a true, accurate and complete
list of all Liens, relating to the Pledged Property on the date hereof.
At all times following acquisition thereof: (i) First X and First B
shall own fee title to its real estate subject to no liens other than
the Permitted Liens, and (ii) Borrower and each other Primary Obligor
and Secondary Obligor shall have good, indefeasible and merchantable
35
title to and ownership of all of its Assets, free and clear of all
Liens, except the Permitted Liens.
(h) Financial Warranty. Except as set forth on Schedule
5.1(h), Borrower: (i) is now, and at all times hereafter shall be
paying its debts as they mature, (ii) now owns, and shall at all times
hereafter own, property which, at a fair valuation, is greater than the
sum of its debt, and (iii) now has, and shall have at all times
hereafter, capital sufficient to carry on its business and transactions
and all businesses and transactions in which it is about to engage.
Except as set forth on Schedule 5.1(h), each Primary Obligor and
Secondary Obligor: (i) are each now, and at all times hereafter shall
be paying their respective debts as they mature, and (ii) each now has,
and shall have at all times hereafter, capital sufficient to carry on
its business and transactions and all businesses and transactions in
which it is about to engage.
(i) Proceedings. Except as set forth on Schedule 5.1(i), there
are no actions or proceedings which are pending or threatened against
Borrower, any Primary Obligor or any Secondary Obligor which could
reasonably be expected to have a Material Adverse Effect.
(j) Government Contracts. Except as set forth on Schedule
5.1(j), neither Borrower, nor any Primary Obligor or any Secondary
Obligor has any government contracts.
(k) Adequate Licenses. Borrower, Primary Obligor and Secondary
Obligor possesses adequate Assets, licenses, patents, copyrights,
trademarks and tradenames to continue to conduct its business as
previously conducted by it and as contemplated in the foreseeable
future except such licenses, patents, copyrights, trademarks and trade
names the failure of which to obtain could not be reasonably expected
to have a Material Adverse Effect.
(l) Government Permits; Consents.
(i) Borrower and each Primary Obligor and Secondary
Obligor has been and is in good standing with
respect to all governmental permits,
certificates, consents and franchises necessary
to continue to conduct its business as
previously conducted prior to the date hereof
and to own or lease and operate its properties
as now owned or leased by it. None of said
permits, certificates, consents or franchises
contain any term, provision, condition or
limitation more burdensome than such as are
generally applicable to Persons engaged in the
same or similar business as the applicable Loan
Party.
(ii) Except for those consents set forth on Schedule
5.1(l), neither Borrower, nor any other Loan
Party requires the approval,
36
consent, waiver, order or other authorization
by any other Person (including but not limited
to shareholders, partners, members, equity
owners, holders of Indebtedness Instruments, or
any owner of any lien upon the Assets of any
one or more of them or their Affiliates) for
the execution and delivery of, and the
consummation of the transactions contemplated
by, this Agreement and the other Loan
Documents, including but not limited to the
borrowing of the Loan, the pledge of the
Pledged Property, and the payment and
performance of all Secured Obligations.
Borrower and each other Loan Party has received
the consents described on Schedule 5.1(l) and
has delivered a copy thereof to Agent, which
consents are in full force and effect,
unmodified and unamended on the date hereof.
(m) Charge; Restrictions. Neither Borrower, nor any Primary
Obligor nor any Secondary Obligor is a party to (nor are any of its
Assets otherwise subject to) any contract or agreement or subject to
any Charge (other than Charges owed by First X or First B) restriction,
judgment, decree or order materially and adversely affecting its
business, property, assets, operations or condition, financial or
otherwise other than ad valorem taxes not yet due and payable.
(n) Compliance with Laws. Neither Borrower, nor any Primary
Obligor nor any Secondary Obligor is, or will be during the term
hereof, in violation of any applicable statute, regulation, order or
ordinance of the United States of America, of any state, city, town,
municipality, county or of any other jurisdiction, or of any agency
thereof, including the Federal Reserve Board, in any respect, which
has, had, or could reasonably be expected to have, a Material Adverse
Effect.
(o) Compliance with Indebtedness Instruments. Other than those
defaults set forth on Schedule 5.1(o) (as said Schedule 5.1(o) may be
amended from time to time), Borrower is and at no time during the term
hereof shall be in default under any Indebtedness Instrument. Other
than those defaults set forth on Schedule 5.1(o) (as said Schedule
5.1(o) may be amended from time to time), no Primary Obligor or any
Secondary Obligor is, on the date hereof, in default under any
Indebtedness Instrument.
(p) Financials. The Financials heretofore delivered by
Borrower, or any other Loan Party to Agent, fairly and accurately
present the Assets, liabilities and financial conditions and results of
operations of Borrower, and such other Persons described therein as of
and for the periods ending on such dates and have been prepared in
accordance with GAAP and such principles have been applied on a basis
consistently followed in all material respects throughout the periods
involved.
37
(q) Tax Returns. Borrower and each other member of the
Consolidated Group has filed or caused to be filed all tax returns
which are required to be filed, and has paid all Charges shown to be
due and payable on said returns or on any assessments made against it
or any of its property, and all other Charges imposed on it or any of
its properties by any Governmental Authority, except for ad valorem
taxes.
(r) No Material Adverse Change. Except as set forth in
Schedule 5.1, Since September 30, 1999, no event or circumstance has
occurred that had, has or could reasonably be expected to have a
Material Adverse Effect.
(s) No Indebtedness. Except as disclosed in the most recent
Financials heretofore delivered by Borrower and in Schedule 5.1(h),
Schedule 5.1(s), Schedule 5.1(t), Schedule 5.1(u), and Schedule 6.3(l),
neither Borrower nor any other Loan Party has any Indebtedness (except
for Indebtedness arising in the ordinary course of its business since
the dates reflected in the Financials that is not Indebtedness for
borrowed money), has guaranteed or entered into any Guaranty Equivalent
(other than as a result of the endorsement of any instrument of items
of payment for deposit or collection in the ordinary course of business
or as otherwise expressly permitted pursuant to the terms hereof) the
obligations of any Person.
(t) Affiliate Indebtedness. Attached hereto as Schedule 5.1(t)
(as amended from time to time) is a true, accurate, and complete
schedule of all Indebtedness, other than the Pledged Notes and Excluded
Notes, owing by Borrower, any Primary Obligor, any Secondary Obligor or
any other Affiliate thereof setting forth: (i) the date such
indebtedness was incurred; (ii) the original principal amount thereof
and the outstanding principal balance thereof as of the date hereof;
(iii) the interest rate payable thereon; (iv) whether such indebtedness
is evidenced by a note or other writing and whether any security has
been granted to secure payment thereof; (v) the payment terms thereof;
(vi) the maturity date thereof; and (vii) whether there has been any
notice of default , or to Borrower's knowledge, any default thereunder.
(u) Affiliate Notes. Attached hereto as Schedule 5.1(u) is a
true, accurate and complete schedule of all promissory notes made by
any Affiliate payable to the order of a Borrower, a Primary Obligor or
a Secondary Obligor, other than the Pledged Notes and the Excluded
Notes. If at any time after the date hereof, any Affiliate borrows
money or otherwise incurs Indebtedness from Borrower, a Primary Obligor
or a Secondary Obligor, Borrower shall immediately (i) give Agent
notice thereof, (ii) deliver a copy of such note to Agent, (iii)
prepare a Schedule 5.1(u)(iii) (other than the Pledged Notes and the
Excluded Notes) (as amended from time to time) setting forth the maker
and holder of such note, the principal amount thereof and the payment
terms thereof, and (iv) if requested by Agent, cause the holder of such
note to pledge such note to Agent pursuant to a Note Pledge Agreement,
in form and substance acceptable to Agent, in its sole and exclusive
discretion.
38
(v) No Liability on Lenders or Agent. The execution, delivery
and performance by Borrower and each other Loan Party of this Agreement
and/or the Other Agreements will not, except to the extent caused by
independent actions of Lenders and/or Agent, impose on or subject any
of the Lenders or the Agent to any liability, whether fixed or
contingent, in respect of any Environmental Law relating to the
operation of Borrower's business. None of the Lenders' or the Agent's
exercise of any of the rights or remedies described in this Agreement
or in any of the Other Agreements shall constitute a breach of any
provision contained in any agreement, instrument or document concerning
the assignment or license of, or the payment of royalties for, any
patents, patent rights, tradenames, trademarks, trade secrets,
know-how, copyrights or any other form of intellectual property now or
at any time or times hereafter protected as such by any applicable law.
(w) Affiliates. Schedule 5.1(w) attached hereto is a true,
accurate and complete schedule of Borrower's Affiliates, together with
a description of Borrower's relationship to each such Affiliate.
(x) Real Property; Environmental Issues. Neither Borrower nor
any Primary Obligor nor any Secondary Obligor, other than First X and
First B, now owns or at no time in the last five (5) years has owned,
any real property. Neither Borrower nor any Primary Obligor nor any
Secondary Obligor has received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other
Governmental Authority concerning any action or omission resulting in
the releasing, or otherwise disposing of hazardous waste or hazardous
substances into the environment with respect to any real property.
(y) Investment Company Act and Public Utility Holding Company
Act. Neither Borrower nor any Primary Obligor or any Secondary Obligor
nor the entering into of any Loan Documents, nor the issuance of the
Notes are subject to any of the provisions of the Investment Company
Act of 1940, as amended. Neither Borrower, nor any Primary Obligor or
any Secondary Obligor is a "holding company" as defined in the Public
Utility Holding Company Act of 1935, as amended, or subject to any
other federal or state statute or regulation limiting its ability to
incur Indebtedness for money borrowed.
(z) Disclosure. Neither this Agreement nor any other Loan
Document nor any statement, list, certificate or other document or
information, nor any schedules to this Agreement or any other Loan
Document, delivered or to be delivered to Lenders or Agent, contains or
will contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make statements contained
herein or therein, in light of the circumstances in which they are
made, not misleading. Copies of all documents delivered to Lenders
and/or Agent pursuant to Article 5 or any other provision of this
Agreement are true, correct and complete copies thereof and include all
Modifications thereto.
39
(aa) Qualification.
(i) Solely by reason of (and without regard to any
other activities of Lenders and/or Agent in any
state in which Assets are located) the entering
into, performance and enforcement of this
Agreement, the Notes and the other Loan
Documents by Lenders and/or Agent will not
constitute doing business by Lenders and/or
Agent in any of such states or result in any
liability of Lenders and/or Agent for taxes or
other governmental charges; and qualification
by Lenders and/or Agent to do business in such
jurisdiction is not necessary in connection
with, and the failure to so qualify will not
affect, the enforcement of, or exercise of any
rights or remedies under, any of such
documents.
(ii) No "business activity," "doing business" or
similar report or notice is required to be
filed by the Lenders and/or Agent in any such
jurisdiction in connection with the Loans or
the transactions contemplated by this Agreement
or any other Loan Document, and the failure to
file any such report or notice will not affect
the enforcement of, or the exercise of any
rights or remedies under, this Agreement or any
of the other Loan Documents.
(bb) SEC Filings. The Borrower has filed and made available to
the Agent and Lenders each form, registration statement, schedule,
report, proxy statement and document required to be filed by Borrower
with the SEC since January 1, 1995 (collectively, the "SEC REPORTS").
Except as set forth on Schedule 5.1(bb), the SEC Reports (i) at the
time filed, complied in all material respects with the applicable
requirements of the Securities Laws and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required
to be stated in the SEC Reports or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Borrower is the only Loan Party required to
file pursuant to the Exchange Act. Since January 1, 1995, Borrower has
made all filings with the SEC in a timely manner as required by law and
no event has occurred that requires an additional filing or any
amendment to a prior filing, which has not been made or filed.
(cc) Assets of Affiliate Entities. No entity listed on
Schedule 5.1 (cc) has Assets with a fair market value of greater than
$100,000. The fair market value of all Assets of all the entities
listed on Schedule 5.1 (cc), in the aggregate, have a total fair market
value of less than $500,000.
40
5.2 Representations Relating to Senior Subordinated Debt.
Concurrently herewith Borrower has entered into that certain Subordinated
Secured Senior Note Purchase Agreement by and among Borrower and each of the
Purchasers (as defined therein) referred to therein (the "SENIOR SUBORDINATED
DEBT AGREEMENT") with IFA Incorporated and other lenders, if any, named therein,
if any, (such lenders, together with their permitted successors and assigns
collectively, the "SENIOR SUBORDINATED DEBT LENDER") pursuant to which Borrower
shall obtain $25,000,000 of Indebtedness (the "SENIOR SUBORDINATED DEBT").
Attached hereto as Schedule 5.2 is a complete and accurate schedule of all
material documents, instruments and agreements executed, delivered or caused to
be delivered by Borrower or any other Person to Senior Subordinated Lender to
evidence, guaranty or secure the Senior Subordinated Debt (the "SENIOR
SUBORDINATED DEBT DOCUMENTS"). Borrower hereby represents and warrants to
Lenders and Agent that concurrently herewith Borrower has delivered or caused to
be delivered to Agent a true, accurate and complete copy of the Senior
Subordinated Debt Agreement and all Senior Subordinated Debt Documents. Neither
the Senior Subordinated Debt Agreement nor any other Senior Subordinated Debt
Document has been amended, modified or supplemented, nor have any of the
provisions thereof been waived. The Subordinated Debt Agreement has been duly
executed and delivered by Borrower and is in full force and effect. Each of the
representations and warranties of Borrower and each other party thereto,
contained in the Senior Subordinated Debt Agreement and the other Senior
Subordinated Debt Documents, is true and correct, and, to the extent made by
Borrower, Agent and each Lender shall be entitled to rely on such
representations and warranties with the same force and effect as if they were
set forth in this Agreement in full and made to Agent and each Lender directly.
The provisions of the Senior Subordinated Debt Documents, including but not
limited to all representations, warranties and covenants of the parties thereto,
are legal, valid and binding obligations of Borrower and all such other parties,
respectively, enforceable in accordance with the terms thereof.
5.3 Reaffirmation of Warranties and Representations. Each request for
an Advance made by Borrower pursuant to this Agreement or the Other Agreements
shall constitute (i) an automatic warranty and representation by Borrower to
Lenders and Agent that there does not then exist an Event of Default or an
Unmatured Default, and (ii) a reaffirmation as of the date of said Borrowing
Request that each and every warranty and representation of Borrower contained in
this Article 5 and other sections of this Agreement and in the Other Agreements,
including without limitation the representations set forth in the Stock Pledge
Agreements and Note Pledge Agreements, is true and correct in all material
respects, except where such representation or warranty specifically relates to
an earlier date.
5.4 Survival of Warranties and Representations. Borrower covenants,
warrants and represents to Lenders and Agent that all representations and
warranties of Borrower contained in this Agreement and the Other Agreements
shall be true on the date hereof, and shall survive the execution, delivery and
acceptance hereof and thereof by the parties thereto and the closing of the
transactions described herein and therein or related hereto or thereto.
41
Unless expressly limited by the terms of this Article 5, each representation and
warranty shall be deemed to be remade concurrently with each Advance hereunder.
5.5 Exclusion of Harbor Debtors. Notwithstanding anything to the
contrary contained in Section 5.1, none of the representations, warranties,
covenants or agreements set forth in Section 5.1 shall be deemed to be
representations, warranties, covenants or agreements with respect to or by any
Harbor Debtor.
6 COVENANTS AND CONTINUING AGREEMENTS.
6.1 Financial Covenants. Borrower and all other members of the
Consolidated Group, on a consolidated basis, shall, at all times during the term
hereof, measured quarterly:
(a) maintain a ratio of Indebtedness to Tangible Net Worth
equal to or less than 5 to 1 for the period ending September 30, 1999
and a ratio of Indebtedness to Tangible Net Worth equal to or less than
4 to 1 for each period thereafter;
(b) maintain Tangible Net Worth equal to or greater than
$50,000,000 for the period ending September 30, 1999 and, for each
period thereafter;
(c) maintain a Tangible Net Worth equal or greater than
$50,000,000 plus fifty percent (50%) of the cumulative positive net
income for that period measured at the end of such period, provided
that, in any event, a Tangible Net Worth equal or greater than
$50,000,000 must always be maintained; and
(d) maintain a ratio of EBITDA to interest coverage equal to
1.7 to 1 measured on a trailing three month basis commencing December
31, 1999.
All covenants set forth herein shall be measured quarterly, upon receipt of the
statements delivered to Agent pursuant to Section 6.2(c)(iii) or the annual
consolidated financial statements delivered in accordance with Section
6.2(c)(i), if available.
6.2 Affirmative Covenants. Borrower warrants and represents to and
covenants with Agent and Lenders that Borrower shall, and shall cause each
Primary Obligor and each Secondary Obligor to, unless Majority Lenders otherwise
consents thereto in writing, do all of the following during the term hereof:
(a) Representation and Warranties. Subject to Borrower's right
to cure set forth in Section 7.1(e), to the extent any representation
or warranty contained herein refers to an event or state of facts which
exists on the date hereof and shall exist during the term hereof or at
the time of each Advance hereunder, said representation or warranty
shall be deemed to be an affirmative covenant by Borrower to take all
actions, omit to take such actions or cause such actions to be taken
42
which shall be necessary or desirable to cause such representation or
warranty to be true and accurate at all times during the term hereof.
To the extent any representation, warranty or covenant herein
(including the negative covenants set forth in Section 6.3) relates to
any other Person (including but not limited to a Primary Obligor, a
Secondary Obligor, any Pledged Entity or any other Loan Party) it shall
be deemed to be a covenant of Borrower to cause such Person to comply
with or otherwise perform such representation, warranty or covenant,
whether or not Borrower has the legal, corporate or other ability to
cause such compliance or performance.
(b) Corporate Existence. Borrower, Primary Obligors and
Secondary Obligors shall preserve and maintain their respective
corporate existence, rights, privileges and franchises in the
jurisdiction of their respective incorporation or organization, and
qualify and remain qualified to do business in each other jurisdiction
in which such qualification is necessary in view of their respective
business or operations, except such jurisdictions where failure to
qualify would not have, or could not reasonably be expected to have a
Material Adverse Effect.
(c) Records; Reports. Borrower covenants with Lenders and
Agent that Borrower shall keep Records and prepare financial statements
and shall cause to be furnished to Agent (with sufficient copies for
all Lenders) the following (all of the foregoing and following which
comprise financial statements are to be kept and prepared in accordance
with GAAP applied on a basis consistent with the Financials unless
Borrower's independent certified public accountants concur in any
changes therein and such changes are consistent with then applicable
GAAP).
(i) Annual:
A. As soon as available but not later
than ninety (90) days after the
close of each fiscal year of
Borrower, an audited consolidated
balance sheet of Borrower and the
other members of the Consolidated
Group as at the end of such year,
the related statement of operations
(including income statement) for
such year and a reconciliation of
capital for such year, all certified
on an unqualified basis by a firm of
independent certified public
accountants selected by Borrower and
acceptable to Agent, in Agent's sole
and absolute discretion.
B. As soon as available but not later
than ninety (90) days after the
close of each fiscal year of
Borrower, an unaudited consolidating
balance sheet of Borrower and the
other members of the Consolidated
Group as at the end of such year
prepared on a consolidating basis,
the related
43
statements of operations (including
income statement) for such year and
a reconciliation of capital for such
year, prepared by the chief
financial officer of Borrower.
(ii) Concurrently with the delivery of the financial
statements described in Section (i) above for
fiscal years ending after December 31, 1998:
(A) a certificate of the aforesaid independent
certified public accountants certifying to
Agent that based upon their examination of the
affairs of Borrower and the other members of
the Consolidated Group (excluding the Harbor
Debtors), performed in connection with the
preparation of said financial statements, they
are not aware of the occurrence or existence of
any condition or event which constitutes an
Event of Default or Unmatured Default, or, if
they are aware thereof, the nature thereof, and
(B) a reliance letter executed by an authorized
partner of the aforesaid independent certified
public accountants, in form and substance
reasonably acceptable to Agent, and
acknowledging that Agent and Lenders may rely
on such financial statements in connection with
this Agreement notwithstanding that Agent and
Lenders are not in privity with such
independent certified public accountants in
connection with such financial statements.
(iii) As soon as available but not later than thirty
(30) days after the end of each calendar month
hereafter, a consolidated and consolidating
balance sheet of Borrower and the other members
of the Consolidated Group as at the end of, and
the related statement of operations for, the
portion of such Person's fiscal year then
elapsed, all certified by the chief financial
officer of such Person's to be prepared in
accordance with GAAP and to present fairly the
financial position and results of operations of
such Person for such period.
(iv) Concurrently with delivery to its stockholders
copies of all financial and other information
delivered by Borrower to such Persons,
including without limitation, its proxy
statements and annual reports to stockholders.
Within two (2) Business Days after delivery to
the SEC by Borrower, which in all cases shall
be on a timely basis in accordance with the
applicable document and the Securities Laws,
copies of all reports and other filings filed
by Borrower with the SEC, including without
limitation, all reports on Forms 10K, 10Q or 8K
promulgated under the Securities Exchange Act
of 1934, as amended, and all registration
44
statements filed under the Securities Act of
1933, as amended.
(v) Concurrently with delivery of the Financials
required pursuant to Sections 6.2(c)(i) and
(iii) hereof, a certificate executed by the
President, Treasurer or Chief Financial Officer
of Borrower that (A) no Event of Default or
Unmatured Default has occurred and is
continuing under this Agreement (including but
not limited to compliance with the covenants
set forth in Section 6.1) and that (B) no event
of default and no event or condition which,
with the passage of time or the giving of
notice or both, would constitute an event of
default has occurred and is continuing under
any other Indebtedness Instrument ("OTHER
INDEBTEDNESS INSTRUMENT UNMATURED DEFAULT") or
if an Event of Default or Unmatured Default has
occurred under this Agreement or an event of
default or Other Indebtedness Instrument
Unmatured Default has occurred under any other
Indebtedness Instrument, setting forth the
details of such event and the action which
Borrower proposes to take with respect thereto.
(vi) Bi-weekly, a statement of income and expense of
FC Capital, including proceeds from the
liquidation of assets, in form and detail
reasonably acceptable to Lenders.
(vii) Such other data and information (financial and
otherwise) as Agent and/or any Lender, from
time to time, reasonably may request bearing
upon or related to Borrower's or any Primary
Obligor's or any Secondary Obligor's financial
condition and/or results of operations.
(d) Insurance. Borrower, Primary Obligors and Secondary
Obligors at their sole cost and expense, shall keep and maintain: (i)
policies of insurance against all hazards and risks ordinarily insured
against by other owners or users of properties in similar business or
as reasonably requested in writing by Agent; and (ii) public liability
insurance relating to such Person's ownership and use of its Assets.
All such policies of insurance shall be in form, with insurers and in
such amounts as may be satisfactory to Agent. Borrower shall deliver to
Agent the original (or certified) copy of each policy of insurance, and
evidence of payment of all premiums for each such policy. Such policies
of insurance (except those of public liability) shall contain an
endorsement, in form and substance acceptable to Agent, showing losses
payable to Agent for the ratable benefit of Lenders. Such endorsement
or an independent instrument furnished to Agent, shall provide that all
insurance companies will give Agent at least thirty (30) days prior
written notice before any such policy or policies of insurance shall be
altered or canceled and that
45
no act or default of Borrower or any other Person shall affect the
right of Agent for the ratable benefit of Lenders, to recover under
such policy or policies of insurance in case of loss or damage. Upon
request by Agent and upon the occurrence of an Event of Default or
Unmatured Default, Borrower hereby directs all insurers under such
policies of insurance (except those of public liability) to pay all
proceeds payable thereunder directly to Agent. Upon request by Agent
and upon the occurrence of an Event of Default or Unmatured Default,
Borrower, irrevocably, appoints Agent (and all officers, employees or
agents designated by Agent) as Borrower's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting
claims under such policies of insurance, endorsing the name of
Borrower on any check, draft, instrument or other item of payment for
the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of
insurance. In the event Borrower at any time or times hereafter shall
fail to obtain or maintain any of the policies of insurance required
above or to pay any premium in whole or in part relating thereto,
then Agent, without waiving or releasing any of Borrower's
Obligations or any Event of Default or Unmatured Default hereunder,
may at any time or times thereafter (but shall be under no obligation
to do so) obtain and maintain such policies of insurance and pay such
premium and take any other action with respect thereto which Agent
deems advisable. All sums so disbursed by Agent, including reasonable
attorneys' fees, court costs, expenses and other charges relating
thereto, shall be part of Borrower's Liabilities, payable by Borrower
to Agent on demand. Agent shall also be named as an additional
insured with respect to Borrower's liability insurance.
(e) Payment of Charges. Other than Charges payable by First X
or First B, Borrower, each Primary Obligor and each Secondary Obligor
shall pay promptly, when due, all Charges and Borrower, each Primary
Obligor and each Secondary Obligor shall not permit the Charges to
arise or to remain unpaid, and will promptly discharge the same. In the
event Borrower, any Primary Obligor or any Secondary Obligor, at any
time or times hereafter, shall fail to pay the Charges or to obtain
such discharges as required herein, Borrower shall so advise Agent
thereof in writing. Agent may, without waiving or releasing any of
Borrower's Obligations or any Event of Default or Unmatured Default
hereunder, in its sole and absolute discretion, at any time or times
thereafter, make such payment, or any part thereof, or obtain such
discharge and take any other action with respect thereto which Agent
deems advisable. All sums so paid by Agent and any expenses, including
reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be part of Borrower's Liabilities, payable by
Borrower to Agent on demand. Notwithstanding the foregoing, Borrower,
any Primary Obligor or any Secondary Obligor may permit or suffer the
Charges to attach to its Assets and may dispute, without prior payment
thereof, the Charges, on the conditions that: (i) Borrower or the
applicable Primary Obligor or Secondary Obligor, in good faith, shall
be contesting the same in an appropriate proceeding diligently pursued;
(ii) enforcement thereof against any assets of Borrower or the
applicable Primary
46
Obligor or Secondary Obligor shall be stayed; and (iii) appropriate
reserves therefor shall have been established on the Records of
Borrower or the applicable Primary Obligor or Secondary Obligor in
accordance with GAAP.
(f) Pay Debts. Except as disclosed in Schedule 5.1(h) and
Charges payable by First X and First B, Borrower and each Primary
Obligor and Secondary Obligor shall pay or discharge or otherwise
satisfy all Indebtedness at or before maturity or before the same
becomes delinquent; provided that neither Borrower, nor any Primary
Obligor or any Secondary Obligor shall be required to pay any
Indebtedness while the same is being contested by it in good faith and
by appropriate proceedings so long as Borrower or the applicable
Primary Obligor or Secondary Obligor shall have set aside on its books
reserves in accordance with GAAP with respect thereto and title to any
property of Borrower or the applicable Primary Obligor or Secondary
Obligor is not jeopardized.
(g) Compliance with Laws. Borrower and each Primary Obligor
and Secondary Obligor shall comply with all laws, rules, regulations
and governmental orders (federal, state and local), including all
Environmental Laws, having applicability to it or to the business or
businesses at any time conducted by it, where the failure to so comply
would have, or could reasonably be expected to have, a Material Adverse
Effect.
(h) Perform Obligations. Borrower and each Primary Obligor and
Secondary Obligor shall duly and punctually pay and perform each of its
obligations under this Agreement and the Other Agreements in accordance
with the terms hereof and thereof.
(i) Payment of Dividends from Subsidiaries. To the extent
necessary to enable it to make payments of the Secured Obligations in
accordance with the terms hereof, Borrower shall cause dividends to be
paid to it by its Subsidiaries (whether in existence as of the date
hereof or hereafter formed or acquired) in amounts which are sufficient
to enable Borrower to satisfy its payment obligations under the terms
hereof; provided that Borrower shall not be required to take any action
which would result in a Subsidiary paying dividends to the extent not
permitted by applicable law and regulation and/or restrictions existing
under agreements in effect on the Closing Date if Borrower receives an
opinion of outside counsel (in form and substance satisfactory to
Lenders and Agent) as to the existence of the relevant restriction no
later than the applicable payment date or the Maturity Date, whether by
acceleration or otherwise.
(j) Stay, Extension and Usury Laws. Borrower covenants (to the
extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law or other law which would
prohibit or forgive it from paying all or any portion of the principal
of, premium, if any, or interest on the Notes, wherever enacted, now or
47
at any time hereafter in force, or which may affect the covenants or
the performance of its obligations under the Notes, and Borrower (to
the extent it may lawfully do so) hereby expressly waives all benefits
or advantages of any such law.
(k) Investigation and Confidentiality.
(i) Borrower shall permit Agent, Lenders and
each of their respective representatives reasonable access
during normal business hours to its properties and
personnel, and shall disclose and make available to Agent
and Lenders all books, papers and records relating to the
assets, stock ownership, properties, operations,
obligations, and liabilities of Borrower and its
Subsidiaries, including, but not limited to, all books of
account (including the general ledger), tax records,
minute books of meetings of boards of directors (and any
committees thereof) and shareholders, organizational
documents, bylaws, material contracts and agreements,
filings with any regulatory authority, accountants' work
papers (other than those that are the property of its
independent outside auditors), litigation files, loan
files, plans affecting employees, and any other business
or prospects in which the Lenders may have a reasonable
interest in connection with the Loans, provided that such
access shall be reasonably related to the transactions
contemplated hereby and not unduly interfere with normal
operations, and provided further that in the event that
any of the foregoing are in the control of any third
party, Borrower shall use its reasonable best efforts to
cause such third party to provide access to such materials
to the Agent and Lenders who shall request the same. In
the event that Borrower is prohibited by law from
providing any of the access referred to in the preceding
sentence to the Agent and Lenders, it shall use its
reasonable best efforts to obtain promptly waivers thereof
so as to permit such access. Borrower shall make its
directors, officers, employees and agents and authorized
representatives (including counsel and independent public
accountants) and its Subsidiaries available to confer with
Agent and Lenders and their respective representatives,
provided that such access shall be reasonably related to
the transactions contemplated hereby and not unduly
interfere with normal operations.
(ii) All information furnished to the Agent and
Lenders by the Borrower previously in connection with the
transactions contemplated by this Agreement or pursuant
48
hereto shall be treated as the sole property of the Agent
and Lenders and the Agent and Lenders covenant, severally
and not jointly and each as to itself only, that it shall
use its best efforts to keep confidential all such
information and shall not directly or indirectly use such
information for any purpose other than in connection with
the transactions contemplated hereby. The obligation to
keep such information confidential shall continue for five
years from the date hereof, but shall not apply to (i) any
information which any of the Agent or Lenders can
establish by convincing evidence (x) was already in its
possession prior to the disclosure thereof by Borrower;
(y) was then generally known to the public; or (z) became
known to the public through no fault of any of the Agent
and/or Lenders; or (ii) disclosures pursuant to a legal
requirement or in accordance with an order of a court of
competent jurisdiction.
(l) Approvals and Consents. In the event that any approval,
consent or non-objection need be obtained by Borrower, any Primary
Obligor and/or any Secondary Obligor from, or a notice or other filing
need be filed by Borrower, any Primary Obligor and/or any Secondary
Obligor, with, any Governmental Authority in connection with the
execution, delivery and performance of this Agreement or any Loan
Document by Borrower, any Primary Obligor and/or any Secondary Obligor,
the Borrower shall take and cause the Primary Obligors and Secondary
Obligors to take, as applicable, all actions reasonably necessary to
obtain any such approval, consent or non-objection or file such notice
or other filing as promptly as practicable, and the Lenders agree to
cooperate with Borrower in obtaining or filing the same.
(m) FC Capital Guaranty. Borrower shall cause FC Capital, no
later than three Business Days after the aggregate outstanding
principal amounts under the Nomura Facility and the ▇▇▇▇▇▇ Facility
have been paid in full, to execute and deliver to Agent a guarantee
agreement in respect of Borrower's obligations under this Agreement and
the Notes substantially in the form of the Guaranties and otherwise
satisfactory to the Lenders and Agent in form and substance except that
FC Capital's guarantee of the principal amount of the Notes shall not
exceed $12,000,000. As used herein: "▇▇▇▇▇▇ Facility" means that
certain Master Agreement Governing the Purchase and Sale of Mortgage
Loans dated as of 3/30/98 between ▇▇▇▇▇▇ Commercial Paper Inc. and FC
Capital; and "Nomura Facility" shall mean, individually and
collectively, the agreement between FC Capital and Nomura Securities
(Bermuda) with respect to the FC Securitization 1998-1 Retained I/O &
Servicing Asset and the agreement between FC Capital and Nomura
Securities (Bermuda) with respect to the FC Securitization 1998-2
Retained I/O & Servicing Asset.
49
6.3 Negative Covenants. Borrower warrants and represents to and
covenants with Lenders and Agent that neither Borrower, nor any Primary Obligor
nor any Secondary Obligor, as the case may be, shall, without Majority Lender's
prior written consent, which Majority Lender's may or may not give in its sole
and absolute discretion, concurrently or hereafter do any of the following:
(a) Sell or Encumber Assets. Neither Borrower, nor any Primary
Obligor nor any Secondary Obligor shall assign, sell or transfer any of
its Assets to any Person, other than in the ordinary course of
business. Neither Borrower, nor any Primary Obligor or any Secondary
Obligor shall assume, create, incur, or permit, grant, or suffer a Lien
upon any of its Assets, except (i) the Permitted Liens, and (ii)
Charges payable by First X and First B.
(b) Attachment. Neither Borrower, nor any Primary Obligor nor
any Secondary Obligor shall permit or suffer any levy, attachment or
restraint to be made affecting any of its Assets.
(c) Receiver. Neither Borrower, nor any Primary Obligor nor
any Secondary Obligor shall permit or suffer any receiver, trustee or
assignee for the benefit of creditors, or any other custodian to be
appointed to take possession of all or any of its Assets, other than a
custodian pursuant to a voluntary custodial agreement entered into to
perfect a security interest permitted hereby.
(d) Amend Organic Documents; Business Objectives. Neither
Borrower, nor any Primary Obligor or any Secondary Obligor shall make
any change: (i) in its Organic Documents or capital structure; or (ii)
in any of its business objectives, purposes and operations, including
by undertaking additional business activities. Neither Borrower, nor
any Primary Obligor nor any Secondary Obligor shall engage in any
business not of the same general type as those conducted by them on the
date hereof.
(e) Mergers and Acquisitions.
(i) Neither Borrower, nor any Primary Obligor nor
any Secondary Obligor shall merge or
consolidate with any Person.
(ii) National Auto Funding Corporation, a Texas
corporation and Affiliate of Borrower, will not
merge, consolidate or acquire the Assets of any
Person, shall not commence any new business
venture and shall use the proceeds of any sale
or other disposition of its Assets to pay the
Eligible Note made by it to Borrower.
(f) Stock Transfers.
50
(i) Except as disclosed in Schedule 5.1(e), as
amended from time to time with Majority
Lenders' consent, and except as permitted
pursuant to Section 6.3(f)(ii), neither any
Primary Obligor, any Secondary Obligor nor any
Pledged Entity shall grant any option, warrant
or other right to purchase any equity interest
in such Person, without in each case the prior
written consent of Majority Lenders, which
consent shall not be unreasonably withheld.
(ii) Notwithstanding anything to the contrary
contained herein, Borrower shall have the right
to register on Form S-3, and publicly offer and
sell equity Securities of Borrower under the
following terms and conditions: (w) Borrower
shall deliver notice to Agent, within
twenty-four (24) hours of the filing with the
SEC; (x) Borrower shall fully and timely comply
with all Securities Laws and with all terms and
provisions of the underwriting agreement
pursuant to which such Securities are offered
for sale; (y) the prospectus and all other
selling materials used by Borrower in such
offering shall not contain any misstatement of
material fact or omit to state any fact which
would render the statements contained therein
false or misleading, and (z) Borrower shall pay
the proceeds of such offering to Agent, in
accordance with the terms hereof.
(g) Adverse Transactions.
(i) Neither Borrower, nor any Primary Obligor nor
any Secondary Obligor shall enter into any
transaction which materially and adversely
affects its ability to perform its obligations
under the Loan Documents or to pay any other
Indebtedness.
(ii) Neither Borrower, nor any other Loan Party
shall make capital contributions, loans or
gifts to, investments in or enter into any
Guaranty Equivalent with respect to the
obligations of any entity identified on
Schedule 5.1(cc) at any time during the term
hereof.
(h) Investments.
(i) Subject to the further limitations set forth in
Sections 6.3(h) (ii), (iii) and (iv), after the
date hereof, neither Borrower, nor any Primary
Obligor nor any Secondary Obligor shall make
any investment in the Securities or obligations
or any Person, except in the ordinary course of
business.
51
(ii) After the date hereof, neither Borrower nor any
Primary Obligor nor any Secondary Obligor shall
invest (either directly or indirectly through
an Affiliate) in: (A) the Securities of any
Person organized under the laws of any country
or governmental body outside of the United
States, (B) in the Securities of any Person
which owns assets located outside of the United
States (other than commercial paper and other
debt securities of any Lender or the Agent), or
(C) in any assets located outside of the United
States (other than commercial paper and other
debt securities of any Lender or the Agent);
provided that, nothing contained in this
Section 6.3(h)(ii) shall be deemed to prohibit
any such investment by FC International.
(iii) After the date hereof, without Lenders' prior
written consent, which consent may be withheld
in Lenders sole and exclusive discretion,
neither Borrower nor any Primary Obligor nor
any Secondary Obligor will invest in any Person
or any asset not specifically contemplated in
Borrower's business plan delivered to Lenders
and dated October, 1999 (the "OCTOBER BUSINESS
PLAN").
(iv) After the date hereof, Borrower will only
invest in FC Commercial and/or FC Servicing in
a manner specifically contemplated in the
October Business Plan. As used in Sections
6.3(h)(ii), (iii) and (iv) "invest" shall
include, but not be limited to (y)
contributions to the capital of a Person, and
(z) making loans or other financial
accommodations to a Person.
(v) Neither Borrower, nor any Primary Obligor, nor
any Secondary Obligor, nor any Subsidiary
thereof shall make any investment in any one or
more of the Harbor Debtors or FC Capital.
(i) Dividends; Payment of Fees, etc. Neither Borrower, nor any
Primary Obligor nor any Secondary Obligor shall: (i) pay any dividends
or make any distributions of property or assets with respect to its
Stock, including, but not limited to, dividends with respect to its
equity interests, including any preferred Stock; (ii) pay any
director's fees or any salaries to any director or shareholder unless
such shareholder or director is directly and actively employed by a
Borrower or any Primary Obligor or Secondary Obligor; provided that,
Borrower may compensate outside directors in an amount not to exceed
$20,000.00 per year.
(j) Fee Agreements. Attached hereto as Schedule 6.3(j) (as
amended from time to time) is a true, accurate and complete schedule of
all Fee Agreements
52
to which Borrower or any Primary Obligor or Secondary Obligor is a
party. Lenders hereby expressly consent to the performance by
Borrower and said Primary Obligors and Secondary Obligors of said Fee
Agreements, that are in effect on the date hereof. Within ten (10)
Business Days after Borrower, any Primary Obligor or any Secondary
Obligor has entered into any new Fee Agreement or shall have modified
in any material respect any existing Fee Agreement, Borrower shall
give Agent notice thereof and amend Schedule 6.3(j), if applicable,
and shall, upon request by Agent, deliver a copy of any new or
amended Fee Agreement to Agent. Borrower shall not enter into any
other transactions with any Affiliate, including, without limitation,
agreements for the purchase, sale or exchange of property or the
rendering of any services to or by any Affiliate, or enter into,
assume or suffer to exist any employment, management, administration,
advisory or consulting contract with any Affiliate or, in each of the
foregoing cases, with any officer, director or partner of any
Affiliate (or a spouse or other relative of any of them) unless (a)
such transaction is otherwise not in violation of this Agreement or
any other Loan Document and (b) is in the ordinary course of its
business and is upon fair and reasonable terms no less favorable to
it than it would obtain in a comparable arm's-length transaction with
a Person not an Affiliate; and (c) the consideration payable pursuant
to such transaction or series of similar transactions with such
Affiliates or its Subsidiaries is not greater than $50,000 in the
aggregate in any one calendar year.
(k) Indebtedness.
(i) Neither Borrower nor any Primary Obligor shall
contract, create, incur, assume or suffer to
exist any Indebtedness; except for (A)
Indebtedness to Lenders and Agent pursuant to
this Agreement and the other Loan Documents;
(B) Indebtedness to the Senior Subordinated
Debt Lender incurred on the Closing Date
pursuant to the Senior Subordinated Debt
Agreement and the other Senior Subordinated
Debt Documents (as in effect on the Closing
Date); provided that the aggregate principal
amount of Senior Subordinated Debt shall not
exceed $25,000,000; (C) Indebtedness existing
on the Closing Date and reflected on the
Financials of Borrower delivered on the Closing
Date; (D) Indebtedness disclosed on Schedules
5.1(s), (t), and (u); (E) the FC Holdings Line
of Credit and the FC Consumer Lending Line of
Credit, if approved in writing by Lenders,
which approval shall not be unreasonably
withheld; and (F) unsecured trade payables
incurred in the ordinary course of business.
(ii) Borrower shall have the right, from time to
time, to refinance the Senior Subordinated Debt
in an aggregate principal amount not to exceed
$25,000,000, with an institutional lender (or a
53
non-institutional lender reasonably acceptable
to Agent) on financial terms no more onerous
than those provided for in the Senior
Subordinated Debt Documents, with a maturity
date no earlier than December 31, 2003;
provided that the substitute lenders enter into
a subordination and inter-creditor agreement in
substantially the form of the Subordination
Agreement, with only such modifications as
Lenders shall approve in their sole discretion.
(l) Loan; Guaranty Debt. Neither Borrower nor any Primary
Obligor nor Secondary Obligor shall make any loan to any Person, except
for loans made by Borrower pursuant to Pledged Notes and the Excluded
Notes. Except as set forth on Schedule 6.3(l), neither Borrower, nor
any Primary Obligor nor any Secondary Obligor shall enter into any
Guaranty Equivalents.
(m) Pay Indebtedness. Except in the ordinary course of
business, neither Borrower, nor any Primary Obligor nor any Secondary
Obligor shall defease, prepay, repay, purchase, redeem or otherwise
acquire any of its Indebtedness for borrowed money.
(n) Issue Power of Attorney. Except pursuant to this Agreement
and the Other Agreements, neither Borrower, nor any Primary Obligor nor
any Secondary Obligor shall issue any power of attorney or other
contract or agreement giving any Person power or control over the
day-to-day operations of Borrower's, any Primary Obligor's or any
Secondary Obligor's business, other than in connection with Permitted
Liens or Indebtedness expressly permitted pursuant to the terms of this
Agreement; provided that FC International and FC Holdings shall have
the right to ▇▇▇▇▇ ▇▇▇▇▇▇-of-attorney necessary to consummate
transactions out side of the United States, in the ordinary course of
its business to acquire assets in transactions subject to the
following: if the person to whom such power of attorney is granted is
not the chairman or president of FC Commercial or the senior vice
president of FC Commercial (whether or not acting in that capacity) or
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, then the amount of all equity investments by FC
Holdings or FC International in such transaction may not exceed
$3,000,000.
(o) Amendment of Credit Agreements. Neither Borrower, nor any
Primary Obligor or any Secondary Obligor, shall amend, modify or extend
any note, credit agreement, security agreement or other document,
instrument or agreement evidencing or securing Indebtedness of such
entity, including, but not limited to, in the case of Borrower, any of
the Senior Subordinated Debt Documents without in each case Majority
Lenders' prior written consent, which consent may be withheld in
Majority Lenders' sole and exclusive discretion; provided that Borrower
may extend existing credit facilities under financial terms no more
onerous than those provided for in the applicable existing credit
facility, including interest rate, costs, and fees payable to the
provider of such facility.
54
(p) Use of Proceeds. Loan proceeds shall be used only for
those purposes permitted in Section 2.6(a). No Loan proceeds shall be
loaned to, contributed as capital to, used to pay the debts or
obligations of or otherwise expended (either directly or indirectly) by
Borrower, nor shall Borrower permit any Subsidiary or other Affiliate
(other than members of the Harbor Debtors) to make loans to, contribute
capital to, pay the debts or obligations of or otherwise expend monies
(either directly or indirectly) for the benefit of or on behalf of any
one or more of the Harbor Debtors.
(q) Payments for Consent. The Borrower, Primary Obligors and
Secondary Obligors shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest fee or otherwise, to
any Lender as an inducement to any consent, waiver or amendment of any
of the terms or provisions of any Loan Document unless such
consideration is paid to all Lenders. Except as expressly permitted
pursuant to the Subordination Agreement, neither the Borrower, nor any
Primary Obligors, Secondary Obligors nor any Subsidiary thereof shall
defease, prepay, repay, purchase or redeem any Senior Subordinated
Debt.
(r) Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries. Borrower shall not, and shall not permit any of
its Subsidiaries (whether in existence as of the date of initial
issuance of the Notes or thereafter formed or acquired) to, create,
assume or otherwise cause or suffer to exist or to become effective any
consensual encumbrance or restriction on the ability of any such
Subsidiary to:
(i) pay any dividends or make any other
distribution on its Stock or other equity interests to
Borrower or any of its Subsidiaries;
(ii) make payments in respect to any
Indebtedness owed to Borrower or any other Subsidiary of a
Borrower; or
(iii) make loans or advances to a Borrower or
any of its Subsidiaries or to guarantee Indebtedness of a
Borrower or any other Subsidiary of a Borrower;
other than, in the case of (i), (ii) and (iii),
(1) restrictions existing under
agreements in effect on the date of initial
issuance of the Notes;
(2) consensual encumbrances or
restrictions binding upon any Person at the
time such Person becomes a Subsidiary of a
Borrower so long as such encumbrances or
restrictions (i) are not created, incurred or
assumed in contemplation of such Person
becoming a Subsidiary
55
and (ii) do not encumber or restrict Borrower
or any other Subsidiary of Borrower;
(3) restrictions with respect to a
Subsidiary imposed pursuant to an agreement
which has been entered into for the sale or
disposition of all or substantially all the
assets (which term may include the capital
stock) of such Subsidiary;
(4) restrictions on the transfer of
assets which are subject to Liens; and
(5) restrictions existing under any
agreement which refinances or replaces any of
the agreements containing the restrictions in
clauses (1) and (2), provided that the terms
and conditions of any such restrictions are not
materially less favorable to the Lenders than
those under the agreement evidencing or
relating to the Indebtedness refinanced.
(s) Senior Subordinated Debt Payments. Neither Borrower, nor
any Primary Obligor, nor any Secondary Obligor nor any Subsidiary
thereof shall make any payment of or with respect to the principal of
or premium (if any) with respect to the Senior Subordinated Debt and
neither Borrower, nor any Primary Obligor, nor any Secondary Obligor
nor any Subsidiary thereof shall acquire any of the Senior Subordinated
Debt for cash or property.
6.4 Required Notices.
(a) Borrower shall notify Agent and amend Schedule 5.1(t)
within two (2) Business Days after: (i) Borrower makes any additional
loans or advances to any Primary Obligor or Secondary Obligor, whether
or not evidenced by a writing signed by the obligor thereof; or (ii)
Borrower received any payment of principal on any Pledged Note;
provided that nothing in this Section 6.4(a) shall be deemed to permit
any use of proceeds of the Loans other than as expressly permitted
pursuant to Section 2.6(a).
(b) In addition to those notices required elsewhere in this
Agreement, in the Stock Pledge Agreement, in the Note Pledge Agreement
or any other Loan Document to which Borrower is a party, Borrower shall
notify Agent promptly after obtaining knowledge of:
(i) except as otherwise previously disclosed, any
event or occurrence which Borrower has
determined has caused a material loss or
decline in value of Borrower's, any Primary
Obligor's, or any Secondary Obligor's Assets
due to casualty or any other adverse occurrence
and the estimated (or actual, if available)
amount of such loss or decline;
56
(ii) the institution of any suit or administrative
proceeding which, if determined adversely to
Borrower, any Primary Obligor or any Secondary
Obligor or any Pledged Entity, is reasonably
likely to or could reasonably be expected to
materially adversely affect the operations,
financial condition or business of any obligor
of a Pledged Note or have a Material Adverse
Effect;
(iii) Borrower, any Primary Obligor or any Secondary
Obligor or any Pledged Entity becoming subject
to any Charge, restriction, judgment, decree or
order which could reasonably be expected to
have a Material Adverse Effect.
(iv) the commencement of any lockout, strike or
walkout relating to any labor contract to which
Borrower, any Primary Obligor or any Secondary
Obligor is a party;
(v) except as otherwise previously disclosed, any
event or occurrence which Borrower, any Primary
Obligor or any Secondary Obligor or any Pledged
Entity has determined will have or could
reasonably be expected to have a Material
Adverse Effect on the ability of any obligor of
a Pledged Note to repay such Pledged Note;
(vi) the occurrence of a default by Borrower, any
Primary Obligor or any Secondary Obligor or any
Pledged Entity under any agreement, document or
instrument to which it is a party which could
reasonably be expected to have a Material
Adverse Effect or materially and adversely
affect the Pledged Entity's business,
operations, Assets, condition (financial or
otherwise) or ability to perform its respective
obligations under the Loan Documents;
(vii) the filing of a petition under any section or
chapter of the United States Bankruptcy Code or
any similar law or regulation shall be filed by
or against Borrower, any Primary Obligor,
Secondary Obligor, or any Pledged Entity or any
such Person shall make an assignment for the
benefit of its creditors or if any case or
proceeding is filed by or against any such
Person for its dissolution or liquidation;
(viii) the making of an application for the
appointment of a receiver, trustee or custodian
for any of the assets of Borrower, any Primary
Obligor, or any Secondary Obligor, other than
voluntary custodial relationships entered into
to perfect security interests;
57
(ix) as soon as possible and in any event within
five (5) days after Borrower shall have
obtained knowledge of the occurrence of an
Event of Default or Unmatured Default, the
written statement of the chief financial
officer of Borrower setting forth the details
of such event and the action which Borrower
proposes to take with respect thereto;
(x) the exercise by any holder of any option,
warrant or right to purchase any equity
interest in Borrower, any Primary Obligor, any
Secondary Obligor or any other Pledged Entity,
other than the exercise of rights disclosed in
Section 5.1(e);
(xi) the breach of the covenants set forth in
Section 6.2(i);
(xii) the issuance or sale of any Securities by
Borrower, any Primary Obligor or any Secondary
Obligor, whether or not permitted pursuant to
the terms hereof; and
(xiii) the occurrence of an Event of Default or
Unmatured Default under the Senior Subordinated
Debt Documents. Borrower shall immediately
forward to Agent copies of any notices sent to
it by any Senior Subordinated Debt Lender, or
any representative thereof, in connection with
such Event of Default or Unmatured Default,
provided however, that notwithstanding the
foregoing, Borrower shall not pay interest at a
default rate under the Senior Subordinated Debt
Documents without the prior written consent of
Majority Lenders.
6.5 Payment of Claims. Upon the occurrence of an Event of Default or
an Unmatured Default, Agent, in its sole and absolute discretion, without
waiving or releasing any of Borrower's Liabilities or Borrower's Obligations or
any Event of Default, may at any time or times hereafter, but shall be under no
obligation to, pay, acquire and/or accept an assignment of any security
interest, lien, encumbrance or claim asserted by any Person against the Assets
of Borrower, or any Primary Obligor, or any Secondary Obligor. All sums paid by
Agent in respect thereof and all reasonable Costs relating thereto incurred by
Agent or for which Agent becomes obligated on account thereof shall be part of
Borrower's Liabilities payable by a Borrower to Agent on demand and any amount
not paid on demand shall bear interest at the Default Rate.
6.6 Year 2000 Compliance.
(a) The computer and management information systems of the
Borrower, the Primary Obligors and the Secondary Obligors are adequate
for the conduct of their business as presently conducted and as
proposed to be conducted and there are no material requirements for
systems integration, upgrade or replacement, and
58
there are no facilities or software inadequacies that could
reasonably be expected to have a material adverse effect on the
business of Borrower, any Primary Obligor, or any Secondary Obligor.
(b) The Borrower, the Primary Obligors and the Secondary
Obligors are Year 2000 Compliant and shall remain Year 2000 Compliant
at all times hereafter. As used in the preceding sentence, "YEAR 2000
COMPLIANT" means the ability of the software and other information
processing capabilities of such Person to correctly interpret and
process all data in whatever form so as to avoid errors that may
otherwise occur because of the inability of software or other
information processing capabilities to recognize accurately the year
2000 or subsequent dates.
(c) Any reprogramming required to permit the proper
functioning of the computer and management information systems of the
Borrower and its Subsidiaries during and following the year 2000 has
been completed as of the date hereof. The cost of such reprogramming
did not and is not expected to have a Material Adverse Effect.
7 DEFAULT
7.1 Events of Default. The occurrence of any one of the following
events shall constitute a default ("EVENT OF DEFAULT") under this Agreement:
(a) If Borrower fails or neglects to perform, keep or observe
any of Borrower's Obligations or if Borrower fails or neglects to cause
any Primary Obligor, Secondary Obligor or any other Loan Party (for any
reason whatsoever) to keep or observe any covenant with respect to such
Person set forth herein and the same is not cured within five (5) days
after the earlier of (i) Agent or any Lender gives Borrower notice of
such default or (ii) Borrower obtains knowledge of such default;
provided that a breach of any of the provisions, terms, conditions or
covenants contained in Sections 6.2(d), 6.2(i), 6.3 and 6.4 shall
automatically be an Event of Default without any notice or cure period;
(b) If any representation, warranty or material statement,
report or certificate made or delivered by any Loan Party, or any of
its directors, officers, authorized employees or agents, to Agent is
not true and correct; if Borrower fails or neglects to perform, keep or
observe any of Borrower's Obligations or if Borrower fails or neglects
to cause any Primary Obligor, Secondary Obligor or any other Loan Party
(for any reason whatsoever) to keep or observe any covenant with
respect to such Person set forth herein and the same is not cured
within five (5) days after Agent gives Borrower notice of such default;
provided that a breach of any of the provisions, terms, conditions or
covenants contained in Sections 6.2(d), 6.3 and 6.4 shall automatically
be an Event of Default without any notice or cure period;
(c) If Borrower fails to pay any of the Secured Obligations,
when due and payable or declared due and payable;
59
(d) If Borrower shall default under the terms of any
Indebtedness Instrument (including the Senior Subordinated Debt
Agreement) other than the Loan Documents;
(e) Except as provided in any other section of this Section
7.1, if any Subsidiary of Borrower (other than any one or more of the
Harbor Debtors) shall default under the terms of any Indebtedness
Instrument and such default is not cured within ten (10) days after the
occurrence thereof; provided that such cure period shall not apply if:
(i) a default occurs by such Subsidiary under the terms of any other
Indebtedness Instrument securing or evidencing a different borrowing,
or (ii) if any other Subsidiary defaults under the terms of any
Indebtedness Instrument during such ten (10) day cure period.
Notwithstanding the foregoing, if any two or more such Persons are
obligated for the same Indebtedness and a default occurs thereunder, it
shall be deemed to be a default by a single Person for the purposes of
this Section 7.1(e);
(f) If there is a Trigger Event, a Sequential Trigger Event, a
Termination Event, a Default, an Event of Default and/or any other
occurrence having a similar result as any of the foregoing, as
applicable, as defined in and/or under the terms of any one or more of
the agreements listed on Schedule 7.1(f) attached hereto;
(g) If Borrower fails or neglects to perform, keep or observe
any of Borrower's Obligations or to cause any Primary Obligor or
Secondary Obligor to keep or observe any representation, warranty or
covenant, contained in Section 6.2(e) and the same is not cured within
ten (10) days after Agent gives Borrower notice of such default;
(h) A breach of the representation, warranty and covenant set
forth in Section 6.2(i);
(i) If any of Borrower's Assets or the assets of any Primary
Obligor, or Secondary Obligor or any portion thereof are attached,
seized, subjected to a writ of distress warrant, or are levied upon
other than Charges payable by First X or First B, or come within the
possession of any receiver, trustee, custodian or assignee for the
benefit of creditors, other than a custodian pursuant to a voluntary
custodial agreement entered into to perfect a security interest;
(j) If a petition under any section or chapter of the United
States Bankruptcy Code or any similar law or regulation shall be filed
by Borrower, any Primary Obligor or any Secondary Obligor (other than
the Harbor Debtors), or if Borrower, any Primary Obligor or any
Secondary Obligor shall make an assignment for the benefit of its
creditors or if any case or proceeding is filed by Borrower, any
Primary Obligor (other than the Harbor Debtors) or any Secondary
Obligor for its dissolution or liquidation;
60
(k) If Borrower, any Primary Obligor, or any Secondary Obligor
(other than the Harbor Debtors) is enjoined, restrained or in any way
prevented by court order from conducting all or any material part of
its business affairs or if a petition under any section or chapter of
the United States Bankruptcy Code or any similar law or regulation is
filed against Borrower, any Primary Obligor, any Secondary Obligor
(other than the Harbor Debtors) or any Pledged Entity or if any case or
proceeding is filed against Borrower, any Primary Obligor or any
Secondary Obligor (other than the Harbor Debtors) for its dissolution
or liquidation;
(l) If an application is made by Borrower, any Primary
Obligor, any Secondary Obligor or any Pledged Entity (other than the
Harbor Debtors) for the appointment of a receiver, trustee or custodian
for any of its assets other than a custodian pursuant to a voluntary
custodial agreement entered into to perfect a security interest;
(m) If an application is made by any Person other than a Loan
Party for the appointment of a receiver, trustee, or custodian for any
of the Assets of Borrower, any Primary Obligor or any Secondary Obligor
or any Pledged Entity (other than the Harbor Debtors);
(n) Except as expressly permitted pursuant to Section 6.2(e),
(i) if a notice of any Charge is filed of record with respect to all or
any of Borrower's, any Primary Obligor's, or any Secondary Obligor's
Assets (other than the Harbor Debtors), or (ii) if any Charge becomes a
lien or encumbrance upon any of Borrower's, any Primary Obligor's or
any Secondary Obligor's Assets (other than the Assets of any Harbor
Debtor);
(o) The occurrence of a default under any agreement,
instrument and/or document executed and delivered by any Guarantor to
Agent, which is not cured within the time, if any, specified therefor
in such agreement, instrument or document or if any Loan Document shall
fail to grant to Agent, as secured party, the lien or other security
interest (if any) intended to be created thereby or if any Loan Party
thereto shall assert that it is not liable with respect thereto; or if
any Guarantor shall assert that it is not liable as a guarantor or
otherwise under its guarantee agreement executed in connection
herewith;
(p) The occurrence of a default under any of the Other
Agreements, which is not cured within the time, if any, specified
therefor in such Other Agreement;
(q) Except as expressly permitted pursuant to the terms
hereof, if Borrower, any Primary Obligor, any Secondary Obligor or any
Pledged Entity issues to or transfers to any Person any Stock of
Borrower, any Primary Obligor, any Secondary Obligor or any Pledged
Entity;
61
(r) If any final non-appealable judgment for the payment of
money in excess of $100,000 (after giving effect to any amount covered
by insurance as to which the insurer shall not have denied or
questioned its obligation to pay) shall be rendered against Borrower,
any Primary Obligor, or any Secondary Obligor; or final judgment for
the payment of money in excess of $100,000 shall be rendered against
Borrower, any Primary Obligor, or any Secondary Obligor and the same
shall remain undischarged for a period of thirty (30) days during which
execution shall not be effectively stayed or diligently contested in
good faith by appropriate proceedings;
(s) If Borrower or any ERISA Affiliate (1) shall effect a
complete or partial withdrawal (as defined in ERISA Sections 4203 or
4205) from a Multiemployer Plan, if such withdrawal could subject
either Borrower or any ERISA Affiliate to liability; (2) shall fail to
pay when due an amount that is payable by it to the PBGC or to an
Employee Benefit Plan; (3) has instituted against it by a fiduciary of
any Multiemployer Plan an action to enforce ERISA Section 515 and such
proceedings shall not have been dismissed within thirty (30) days
thereafter; (4) has imposed against it any tax under Code Section
4980B(a); (5) has assessed against it by the Secretary of Labor a civil
penalty with respect to any Employee Benefit Plan under ERISA Section
502(c) or 502(l); (6) shall apply for a waiver of the minimum funding
standards of the Code; or (7) shall permit any other event or condition
to occur or exist with respect to an Employee Benefit Plan that could
subject either Borrower or any ERISA Affiliate to liability;
(t) Except as set forth in Section 7.1(d) or (e), a default by
Borrower, any Primary Obligor, or any Secondary Obligor shall occur
under any agreement, document or instrument (other than this Agreement
or any of the other Loan Documents) now or hereafter existing, to which
Borrower, any Primary Obligor, or any Secondary Obligor is a party and
the effect of such default could have a material adverse effect on the
financial conditions or business operations of such Loan Party;
(u) If Borrower, any Primary Obligor, or any Secondary Obligor
dissolves, liquidates (other than with respect to a Secondary Obligor
upon the disposition of all of its Assets in the ordinary course of its
business), or fails to maintain its corporate existence, without the
prior written consent of Majority Lenders;
(v) Notwithstanding anything herein to the contrary,
including, but not limited to the terms of Section 7.1(e), if any
lender to Borrower, any Primary Obligor, any Secondary Obligor, or to
any Subsidiary thereof, (i) accelerates any loan to Borrower, any
Primary Obligor, any Secondary Obligor, or to any subsidiary thereof as
a result of the Harbor Proceedings or any default by any Harbor Debtor
to such lender or any other event of default arising under the terms of
any Indebtedness Instrument to which any Harbor Debtor is a party or
(ii) terminates any
62
agreement to forbear or waive any default by a Harbor Debtor or any
other event of default arising under the terms of any Indebtedness
Instrument;
(w) If any proceeding is commenced against Borrower in which
the amount claimed is greater than $1,000,000 and such proceeding is
not dismissed with prejudice with no judgment having been entered
against or other relief granted against Borrower within thirty (30)
days after the filing date thereof;
(x) The Occurrence of a Change in Control. For purposes
hereof, a Change in Control shall mean the occurrence of any of the
following events after the Closing: (i) any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), is or becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act)), directly, or indirectly, of more than fifty percent
(50%) of the aggregate voting power of all classes of Capital Stock of
Borrower entitled to vote generally in an election of directors; (ii)
Borrower is merged with or into another corporation or another
corporation is merged with or into Borrower with the effect that
immediately after such transaction the stockholders of Borrower
immediately prior to such transaction hold less than a majority in
interest of the total voting power entitled to vote in the election of
directors, managers or trustees of the entity surviving the
transaction; (iii) all or substantially all of the assets of Borrower
or its Subsidiaries are sold to any person or persons (as an entirety
in one transaction or a series of related transactions); or (iv) the
voluntary or involuntary dissolution, liquidation or winding up of
Borrower. For purposes of this Section 7.1(x) "Capital Stock" of any
Person means any and all shares, interests, participations or other
equivalents in the equity (however designated) of such Person and any
rights (other than debt securities convertible into an equity
interest), warrants or options to acquire an equity interest in such
Person; and
(y) Management. If ▇▇▇▇▇ ▇▇▇▇▇▇▇ ceases to be employed
full-time with Borrower and responsible for the day to day management
of Borrower. Such occurrence shall be an Event of Default without
notice or cure period, unless Borrower employs a replacement officer of
the Borrower having the duties of ▇▇. ▇▇▇▇▇▇▇ acceptable to Lenders in
their reasonable discretion within thirty (30) days after ▇▇. ▇▇▇▇▇▇▇
ceases to be employed.
(z) Warehouse Line/Substitute Line. If, on or before January
5, 2000 the Borrower has not provided evidence to Lenders, satisfactory
to Lenders in their sole discretion, that simultaneously (i) the
available commitment to lend under the FCAR Receivables LLC Retail
Automobile Installment Loan Agreement Financing Facility dated as of
▇▇▇▇▇ ▇▇, ▇▇▇▇ (▇▇▇ "▇▇▇▇ WAREHOUSE LINE"), exceeds Forty Million
Dollars ($40,000,000) or a substitute line of credit of like amount
acceptable to Lenders in their sole discretion is in effect (the
"SUBSTITUTE LINE"), and (ii) the Warehouse Line, or such Substitute
Line, as applicable, has a stated maturity of no earlier than December
15, 2000.
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7.2 Remedies Cumulative. All of Lenders' and Agent's rights and
remedies under this Agreement and the Other Agreements are cumulative and
non-exclusive.
7.3 Acceleration. Upon the occurrence of an Event of Default or any
Unmatured Default and during the continuation thereof, or the filing of a
petition under any section or chapter of the United States Bankruptcy Code or
similar law or regulation shall be filed by or against Borrower, any Primary
Obligor, Secondary Obligor, or any Pledged Entity or any such Person shall make
an assignment for the benefit of its creditors, or if any case or proceeding is
filed by or against any such Person for its dissolution or liquidation, without
notice to or demand of Borrower, Lenders shall have no further obligation to and
may then forthwith cease advancing monies, extending credit or issuing letters
of credit to or for the benefit of Borrower under this Agreement and/or the
Other Agreements. Upon the occurrence of an Event of Default, or the filing of
any case against or by Borrower, any Primary Obligor, any Secondary Obligor or
any Pledged Entity for its dissolution or liquidation, Agent (with the consent
of the Required Lenders) shall have the right to declare all Secured Obligations
to be immediately due and payable, without notice to or demand of Borrower, and
thereupon all Secured Obligations shall be immediately due and payable; provided
that if an Event of Default described in Section 7.1(k) with respect to Borrower
occurs or exists, all of the Borrower's Liabilities shall automatically, without
notice of any kind, be immediately due and payable and all obligations of
Lenders to Borrower hereunder to make Advances shall be automatically
terminated.
7.4 Remedies. Upon the occurrence of an Event of Default and the
continuation thereof, Agent and each Lender, in its sole and absolute
discretion, may exercise any and all rights and remedies that it may have under
the other Loan Documents, at law or in equity.
7.5 Injunctive Relief. Borrower recognizes that upon the occurrence of
an Event of Default, no remedy of law will provide adequate relief to any of the
Lenders or Agent, and agrees that Agent and each Lender shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages.
7.6 Advances During Unmatured Default. Upon the occurrence of any
Unmatured Default or Event of Default (other than Unmatured Defaults under
Section 7.1(e)), Lenders shall not be obligated to make any Advances; provided
that, nothing contained herein shall prohibit any Lender from making any
Advances.
8 CONDITIONS PRECEDENT TO DISBURSEMENT
8.1 Checklist Items. The obligation of Lenders to make the Loan to
Borrower is subject to the condition precedent that, in addition to satisfaction
of the conditions set forth in Sections 8.2 and 8.3, Agent shall have received,
prior to Closing Date all documents, instruments, agreements, notes, evidences
of Borrower's authority, and all other instruments as Agent may reasonably
request, including but not limited to all items on the documentation checklist,
delivered by Agent to Borrower prior to the date hereof.
64
8.2 Necessary Actions. The obligation of Lenders to make the Loan to
Borrower is subject to the further condition precedent that all proceedings
taken in connection with the transactions contemplated by this Agreement, and
all instruments, authorizations and other documents applicable thereto, shall be
reasonably satisfactory in form and substance to Lenders.
8.3 Conditions Precedent. In addition to the foregoing, prior to the
Closing Date and prior to any Lender making an Advance hereunder, all of the
following shall have been satisfied in a manner satisfactory to Lenders:
(a) since September 30, 1999, other than any events or
circumstances that have been publicly disclosed in writing prior to the
date hereof and the Harbor Proceedings, no change in the condition or
operations, financial or otherwise, of Borrower or any other Loan Party
shall have occurred which change, in the sole credit judgment of Agent,
may have a material adverse effect on Borrower or any other Loan Party;
(b) except as disclosed in Schedule 5.1(i), no litigation
shall be outstanding or have been instituted or threatened which
Majority Lenders determine to be reasonably likely to have a Material
Adverse Effect;
(c) all of the representations and warranties of Borrower set
forth in this Agreement and each of the Other Agreements to which
Borrower or any other Loan Party is a party shall be true and correct
on the date of the contemplated Loan to the same extent as originally
made on such date;
(d) except as disclosed in Schedule 5.1(o), no Event of
Default or Unmatured Default shall exist or be continuing;
(e) the corporate structure and capital structure of Borrower,
the Primary Obligors and the Secondary Obligors and the terms,
conditions, amounts and holders of all equity, debt and other
Indebtedness, obligations and liabilities of Borrower and each Primary
Obligor and each Secondary Obligor shall be satisfactory to Agent and
Lenders. Agent shall have received true and complete copies (in each
case certified as to authenticity on the Closing Date on behalf of the
Borrower) of the Senior Subordinated Debt Agreement and all other
Senior Subordinated Debt Agreements. Each Senior Subordinated Debt
Agreement shall be in a form and substance acceptable to Agent and
Lenders, in their sole and exclusive discretion; and
(f) Senior Subordinated Debt Lender shall have entered into
the Subordination Agreement in form and substance acceptable to
Majority Lenders in their sole and exclusive discretion.
65
9 GENERAL
9.1 Compliance with ERISA.
(a) Representations and Warranties. Borrower hereby represents
and warrants that:
(i) Schedule 9.1 hereto describes the Employee
Benefit Plans to which Borrower or any of its
ERISA Affiliates may have obligations;
(ii) each Employee Benefit Plan of Borrower or any
of its ERISA Affiliates is in compliance in all
material respects with its terms and with the
applicable provisions of ERISA, the Code and
all other statutes and regulations applicable
thereto and each such Employee Benefit Plan
that is intended to be qualified under Section
401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified,
and each trust related to any such Employee
Benefit Plan has been determined to be exempt
from federal income tax under Section 501(a) of
the Code;
(iii) neither Borrower nor any of its ERISA
Affiliates maintains or contributes to any
Employee Benefit Plan with an actuarial present
value of projected benefit obligations that
exceeds the fair market value of net assets
available for such benefits, calculated on the
basis of the actuarial assumptions specified in
the most recent actuarial valuation for such
Employee Benefit Plan, and no such Employee
Benefit Plan provides for subsidized early
retirement benefits that could materially
adversely affect the funded status of such
Employee Benefit Plan or Employee Benefit Plans
in the event of a reduction in force or plant
closing;
(iv) with respect to each Employee Benefit Plan that
is a "defined benefit plan," as defined in
Section 3(35) of ERISA, the assets of each such
Employee Benefit Plan are equal to or greater
than the accrued benefits of the participants
and beneficiaries thereunder, as determined
pursuant to the actuarial methods and
assumptions utilized by the PBGC in the event
of a plan termination;
(v) neither Borrower nor any of its ERISA
Affiliates sponsors, maintains, participates in
or contributes to any employee welfare benefit
plan within the meaning of Section 3(1) of
ERISA that provides benefits to employees after
termination of employment other than as
required by Section 601 of ERISA; as such,
neither Borrower nor any of its ERISA
Affiliates are
66
currently or will in the future be subject to
the accounting recognition and disclosure
standards of Statement of Financial Accounting
Standards No. 106 (FASB 106);
(vi) neither Borrower nor any of its ERISA
Affiliates has breached any of the
responsibilities, obligations, or duties
imposed on them by ERISA or the regulations
promulgated thereunder with respect to any
Employee Benefit Plan;
(vii) neither Borrower nor any ERISA Affiliate has
(i) failed to make a required contribution or
payment to a Multiemployer Plan or (ii) made or
expects to make a complete or partial
withdrawal under Sections 4203 or 4205 of ERISA
from a Multiemployer Plan;
(viii) at the date hereof, the aggregate potential
withdrawal liability payment, as determined in
accordance with Title IV of ERISA, of Borrower
and any ERISA Affiliates with respect to all
Employee Benefit Plans that are Multiemployer
Plans does not exceed $50,000 and, to the best
of Borrower's and its ERISA Affiliate's
knowledge, no Multiemployer Plan is in
reorganization or insolvent within the meaning
of Sections 4241 or 4245 of ERISA.
(ix) neither Borrower nor any ERISA Affiliate has
failed to make a required installment or any
other required payment under Section 412 of the
Code on or before the due date for such
installment or other payment;
(x) neither Borrower nor any ERISA Affiliate is
required to provide security to an Employee
Benefit Plan under Section 401(a)(29) of the
Code due to an Employee Benefit Plan amendment
that results in an increase in current
liability for the plan year;
(xi) no liability to the PBGC has been, or is
expected by Borrower or any ERISA Affiliate to
be, incurred by Borrower or any ERISA
Affiliate, other than the payment of premiums,
and there are no premium payments that have
became due and which are unpaid;
(xii) no events have occurred in connection with any
Employee Benefit Plan that might constitute
grounds for the termination of any such
Employee Benefit Plan by the PBGC or for the
appointment by any United States District Court
of a trustee to administer any such Employee
Benefit Plan;
67
(xiii) no Reportable Event has, in the case of any
Employee Benefit Plan maintained by Borrower or
an ERISA Affiliate other than a Multiemployer
Plan, occurred and is continuing, or to the
best of Borrower's knowledge, has occurred and
is continuing in the case of any such Employee
Benefit Plan that is a Multiemployer Plan;
(xiv) no Employee Benefit Plan maintained by Borrower
or an ERISA Affiliate had an Accumulated
Funding Deficiency, whether or not waived, as
of the last day of the most recent fiscal year
of such Employee Benefit Plan or, in the case
of any Multiemployer Plan, as of the most
recent fiscal year of such Multiemployer Plan
for which the annual reports of such
Multiemployer Plan's actuaries and auditors
have been received; and
(xv) neither Borrower nor any ERISA Affiliate has
engaged in a Prohibited Transaction prior to
the date hereof, and the execution, delivery,
and carrying out of this Agreement will not
involve any non-exempt Prohibited Transactions
(within the meaning of Part 4 of Subtitle B of
Title I of ERISA) or any transaction in
connection with which a tax could be imposed
pursuant to Section 4975 of the Code.
(b) ERISA Reports. Borrower shall:
(i) as soon as possible, and in any event within
fifteen (15) Business Days, after Borrower or
an ERISA Affiliate knows or has reason to know
that, regarding any Employee Benefit Plan with
respect to Borrower or an ERISA Affiliate, a
Prohibited Transaction or a Reportable Event
has occurred (whether or not the requirement
for notice, if applicable, of such Reportable
Event has been waived by the PBGC), deliver to
Agent a certificate of a responsible officer of
a Borrower setting forth the details of such
Prohibited Transaction or Reportable Event, the
action that Borrower proposes to take with
respect thereto, and, when known, any action
taken or threatened by the Internal Revenue
Service, Department of Labor, or PBGC;
(ii) upon request of the Agent made from time to
time, deliver to the Agent a copy of the most
recent actuarial report, funding waiver
request, and annual report filed with respect
to any Employee Benefit Plan maintained by
Borrower or an ERISA Affiliate;
68
(iii) upon request of the Agent made from time to
time, deliver to the Agent a copy of any
Employee Benefit Plan sponsored, contributed
to, participated in or maintained by Borrower
or any ERISA Affiliate; and
(iv) as soon as possible, and in any event within
ten (10) Business Days, after it knows or has
reason to know that any of the following have
occurred with respect to any Employee Benefit
Plan maintained, or contributed to, by Borrower
or an ERISA Affiliate, deliver to the Agent a
certificate of a responsible officer of a
Borrower setting forth the details of the
events described in (a) through (l) and the
action that Borrower or any ERISA Affiliate
proposes to take with respect thereto, together
with a copy of any notice or filing from the
PBGC or other agency of the United States
government with respect to such of the events
described in (a) through (l): (a) any Employee
Benefit Plan has been terminated; (b) the Plan
Sponsor intends to terminate any Employee
Benefit Plan; (c) the PBGC has instituted or
will institute proceedings under Section 4042
of ERISA to terminate any such Employee Benefit
Plan or to appoint a trustee to administer such
Employee Benefit Plan, or Borrower or any ERISA
Affiliate receives a notice from a
Multiemployer Plan that such action has been
taken by the PBGC with respect to such
Multiemployer Plan; (d) Borrower or any ERISA
Affiliate withdraws from any Employee Benefit
Plan, or notice of any withdrawal liability is
received by Borrower or any ERISA Affiliate;
(e) any Employee Benefit Plan has received an
unfavorable determination letter from the
Internal Revenue Service regarding the
qualification of the Employee Benefit Plan
under Section 401(a) of the Code; (f) Borrower
or any ERISA Affiliate fails to make a required
installment or any other required payment under
Section 412 of the Code on or before the due
date for such installment or payment or has
applied for a waiver of the minimum funding
standard under Section 412 of the Code; (g) the
imposition of any tax under Code Section
4980B(a) or the assessment by the Secretary of
Labor of a civil penalty under Sections 502(c)
or 502(l) of ERISA; (h) there is a partial or
complete withdrawal (as described in ERISA
Section 4203 or 4205) by Borrower or any ERISA
Affiliate from a Multiemployer Plan; (i)
Borrower or any ERISA Affiliate is in "DEFAULT"
as defined in ERISA Section 4219(c)(5)) with
respect to payments to a Multiemployer Plan
required by reason of its complete or partial
withdrawal from such Employee Benefit Plan; (j)
a Multiemployer Plan is in "REORGANIZATION" or
is "INSOLVENT" (as described in Title IV of
69
ERISA) or such Multiemployer Plan intends to
terminate or has terminated under Section 4041A
of ERISA; (k) the institution of a proceeding
by a fiduciary of a Multiemployer Plan against
Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA; or (1) Borrower or any
ERISA Affiliate has increased benefits under
any existing Employee Benefit Plan or commenced
contributions to an Employee Benefit Plan to
which Borrower or any ERISA Affiliate was not
previously contributing. For purposes of this
Section, Borrower shall be deemed to have
knowledge of all facts known by the Plan
Administrator of any Employee Benefit Plan of
which Borrower or any ERISA Affiliate is the
Plan Sponsor.
(c) Compliance with ERISA. Neither Borrower nor its ERISA
Affiliates will: (i) establish, maintain, or operate any Employee
Benefit Plan that is not in compliance in all material respects with
the provisions of ERISA, the Code, and all other applicable laws, and
the regulations and interpretations thereunder; (ii) allow to exist any
Accumulated Funding Deficiency with respect to any Employee Benefit
Plan, whether or not waived; (iii) terminate any Employee Benefit Plan
or withdraw or effect a partial or complete withdrawal (as described in
ERISA Section 4203 or 4205) from any Multiemployer Plan, if such
termination or withdrawal could subject Borrower or any ERISA Affiliate
to liability; (iv) fail to make any required installment or any other
payment required under Section 412 of the Code on or before the due
date for such installment or other payment; (v) amend any Employee
Benefit Plan so as to result in an increase in current liability for
the plan year such that Borrower or any ERISA Affiliate is required to
provide security to such Employee Benefit Plan under Section 401(a)(29)
of the Code; (vi) fail to make any contribution or payment to any
Multiemployer Plan which Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan; (vii) enter into any Prohibited Transaction for which a class
exemption is not available or a private exemption previously has not
been obtained from the Department of Labor; (viii) permit the
occurrence of any Reportable Event, or any other event or condition,
which could subject either Borrower or any ERISA Affiliate to
liability; or (ix) allow or permit to exist any other event or
condition known or that reasonably should be known to Borrower which
event or condition could subject either Borrower or any ERISA Affiliate
to liability.
(d) Definitions. For purposes of this Section 9.1, the
following definitions shall apply:
(i) "ACCUMULATED FUNDING DEFICIENCY" shall have the
meaning assigned to that term in Section 302 of
ERISA.
(ii) "CODE" shall mean the Internal Revenue Code of
1986, as amended.
70
(iii) "EMPLOYEE BENEFIT PLAN" shall mean an employee
benefit plan within the meaning of Section 3(3)
of ERISA that is maintained, sponsored,
participated in or contributed to by Borrower
or any ERISA Affiliate.
(iv) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended from
time to time, or any successor thereto.
(v) "ERISA AFFILIATE" shall mean any corporation,
trade or Business that is, along with Borrower,
a member of a controlled group of trades or
businesses, or a member of any group of
organizations, within the meaning of Sections
414(b), (c), (m) or (o) of the Code, and any
regulations thereunder.
(vi) "MULTIEMPLOYER PLAN" shall mean any plan
described in Section 3(37) or 4001(a)(3) of
ERISA to which contributions are or have been
made by Borrower or any ERISA Affiliate.
(vii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation or any governmental body succeeding
to its functions.
(viii) "PLAN ADMINISTRATOR" shall have the meaning
assigned to it in Section 3(16)(A) of ERISA.
(ix) "PLAN SPONSOR" shall have the meaning assigned
to it in Section 3(16)(B) of ERISA.
(x) "PROHIBITED TRANSACTION" shall mean a
transaction that is prohibited under Code
Section 4975 or ERISA Section 406 and not
exempt under Code Section 4975 or ERISA Section
408.
(xi) "REPORTABLE EVENT" shall mean (a) an event
described in Section 4043(c), 4068(a), or
4063(a) of ERISA or in the regulations
thereunder, (b) receipt of a notice of
withdrawal liability with respect to a
Multiemployer Plan pursuant to Section 4202 of
ERISA, (c) an event requiring Borrower or any
ERISA Affiliate to provide security for an
Employee Benefit Plan under Code Section
401(a)(29), (d) any failure to make payments
required by Code Section 412(m), (e) the
withdrawal of Borrower or any ERISA Affiliate
from an Employee Benefit Plan in which it is a
"SUBSTANTIAL EMPLOYER" as defined in Section
4001(a)(2) of ERISA, (f) the institution of
proceedings to terminate an Employee Benefit
Plan by the PBGC, or (g) the filing of a notice
to terminate an Employee Benefit Plan or the
71
treatment of an amendment of an Employee
Benefit Plan as a termination under Section
4041 of ERISA.
9.2 Costs. Borrower hereby agrees that it shall reimburse any of
Lenders and Agent, as applicable, on demand, as part of Borrower's Obligations,
for any and all Costs and any amount not paid on demand shall bear interest at
the Default Rate.
9.3 Statement. Each statement of account by Agent delivered to
Borrower relating to the Secured Obligations shall be presumed correct and
accurate and shall constitute an account stated between Borrower and Agent
unless Agent subsequently corrects such statement of its own volition or, within
thirty (30) days after Borrower's receipt of said statement, Borrower delivers
to Agent, by registered or certified mail addressed to Agent at the address
specified in Section 9.4, written objection thereto specifying the error or
errors, if any, which Borrower asserts are contained in any such statement.
9.4 Notices. Any and all notices given in connection with this
Agreement shall be deemed adequately given only if in writing (which term, for
all purposes of this Agreement and the other Loan Documents, shall include
telecopy) and addressed to the party for whom such notices are intended at the
address set forth below. All notices shall be sent by personal delivery, Federal
Express or other over-night messenger service, first class registered or
certified mail, postage prepaid, return receipt requested, telecopy or by other
means at least as fast and reliable as first class mail. A written notice shall
be deemed to have been given to the recipient party on the earlier of (a) the
date it shall be delivered to the address required by this Agreement; (b) the
date delivery shall have been refused at the address required by this Agreement;
or (c) with respect to notices sent by mail, the date as of which the postal
service shall have indicated such notice to be undeliverable at the address
required by this Agreement. Any and all notices referred to in this Agreement,
or which a party hereto desires to give to any other party hereto, shall be
addressed as follows:
IF TO BORROWER: FirstCity Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
IF TO AGENT: Bank of Scotland
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Loans Administration
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
▇▇▇▇▇ ▇▇▇▇
▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇ Jared, Esq.
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
and to
Bank of Scotland
Chicago Representative Office
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
IF TO LENDER The Governor and Company of the Bank of
Scotland, a bank organized under the laws of
Scotland by an Act of the Scots Parliament
in ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ Greeshields
and to
Bank of America, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ Jared, Esq.
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
The above addresses may be changed by notice of such change, mailed as provided
herein, to the last address designated.
73
9.5 Amendments and Waivers. This Agreement and the other Loan
Documents may not be modified, altered or amended except by an agreement in
writing signed by Borrower, each Lender and Agent, as applicable. Borrower
expressly agrees that for purposes of this Agreement and each and every other
Loan Document: (i) this Agreement and each and every other Loan Document shall
be a "credit agreement" under the Illinois Credit Agreements Act, 815 ILCS 160/1
et. seq. (the "ACT"); (ii) the Act applies to this transaction including, but
not limited to, the execution of this Agreement and each and every other Loan
Document; and (iii) any action on or in any way related to this Agreement and
each and every other Loan Document shall be governed by the Act. Borrower may
not sell, assign or transfer this Agreement or the Other Agreements or any
portion thereof, including, without limitation, any of Borrower's rights,
titles, interests, remedies, powers and/or duties hereunder or thereunder.
Borrower hereby consents to each Lender's and Agent's sale, assignment, transfer
or other disposition, at any time and from time to time hereafter, of this
Agreement or the Other Agreements, or of any portion thereof or participation
therein, including, without limitation, each Lender's and Agent's respective
rights, titles, interests, remedies, powers and/or duties.
9.6 No Implied Waiver; Remedies Cumulative. Any Lender's and/or
Agent's failure at any time or times hereafter to require strict performance by
Borrower of any provision of this Agreement or any other Loan Document shall not
waive, affect or diminish any right of Agent or either Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by
Agent or either Lender of an Event of Default or an Unmatured Default by
Borrower or any other Loan Party under this Agreement or the Other Agreements
shall not suspend, waive or affect any other Event of Default or Unmatured
Default by Borrower or any other Loan Party under this Agreement or the Other
Agreements, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or the
Other Agreements and no Event of Default or Unmatured Default by Borrower or any
other Loan Party under this Agreement or the Other Agreements shall be deemed to
have been suspended or waived by any Lender or Agent unless such suspension or
waiver is by an instrument in writing signed by a respective officer of any
Lender or Agent and directed to Borrower or such applicable other Loan Party
specifying such suspension or waiver.
9.7 Severability. If any provision (in whole or in part) of this
Agreement or the other Loan Documents or the application thereof to any person
or circumstance is held invalid or unenforceable, then such provision shall be
deemed modified, restricted, or reformulated to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Agreement or the other Loan Document, as the case may require, and
this Agreement and such other Loan Document shall be construed and enforced to
the maximum extent permitted by law, as if such provision had been originally
incorporated herein as so modified, restricted, or reformulated or as if such
provision had not been originally incorporated herein or therein, as the case
may be. The parties further agree to seek a lawful substitute for any provision
found to be unlawful. If such modification, restriction or reformulation is not
reasonably possible, the remainder of
74
this Agreement and the other Loan Documents and the application of such
provision to other persons or circumstances will not be affected thereby and the
provisions of this Agreement and the other Loan Documents shall be severable in
any such instance.
9.8 Incorporation of Other Loan Documents. The provisions of the
Other Agreements are incorporated in this Agreement by this reference thereto.
Except as otherwise provided in this Agreement and except as otherwise provided
in the Other Agreements by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement is in conflict
with, or inconsistent with, any provision in the Other Agreements or the other
Loan Documents, Majority Lenders shall have the right to elect, in its sole and
absolute discretion, which provision shall govern and control. Except to the
extent provided to the contrary in this Agreement and in the other Loan
Documents, no termination or cancellation (regardless of cause or procedure) of
this Agreement or the Other Agreements shall in any way affect or impair the
powers, obligations, duties, rights and liabilities of Borrower, any Lender or
Agent in any way or respect relating to (a) any transaction or event occurring
prior to such termination or cancellation, and/or (b) any of the undertakings,
agreements, covenants, warranties and representations of Borrower contained in
this Agreement or the Other Agreements. All such undertakings, agreements,
covenants, warranties and representations shall survive such termination or
cancellation.
9.9 Acceptance. This Agreement and the other Loan Documents are
submitted by Borrower to Lenders and Agent (for Lenders' and Agent's acceptance
or rejection thereof) at Lenders' and Agent's respective principal places of
business as an offer by Borrower to borrow monies from Lenders now and from time
to time hereafter and shall not be binding upon Lenders and Agent or become
effective until and unless accepted by Lenders and Agent, in writing, at said
places of business. If so accepted by Lenders and Agent, this Agreement and the
other Loan Documents and the other Loan Documents shall be deemed to have been
made at said place of business. This Agreement and the other Loan Documents
shall be governed and controlled by the laws of the State of Illinois as to
interpretation, enforcement, validity, construction, effect and in all other
respects including, but not limited to, the legality of the interest rate and
other charges, but excluding choice of law provisions and perfection of security
interests which shall be governed and controlled by the laws of the relevant
jurisdiction.
9.10 Knowledge. As used herein the phrase "TO THE BEST OF BORROWER'S
KNOWLEDGE" or words of such import shall mean all knowledge, including, actual
knowledge and knowledge of matters which any reasonable person in such position
knew or should have known, of the respective officers, directors and managers of
Borrower.
9.11 Waiver by Borrower. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT OR REQUIRED BY LAW, BORROWER WAIVES (A) PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS,
75
CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY ANY OF THE LENDERS AND/OR THE AGENT ON WHICH BORROWER MAY IN ANY
WAY BE LIABLE; (B) ALL RIGHTS TO NOTICE AND A HEARING PRIOR TO AGENT'S TAKING
POSSESSION OR CONTROL OF, OR TO REPLEVY, ATTACHMENT OR LEVY UPON THE COLLATERAL
OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
ANY OF THE LENDERS AND/OR THE AGENT TO EXERCISE ANY OF ITS RESPECTIVE REMEDIES;
AND (C) THE BENEFIT OF ALL VALUATION, APPRAISEMENT, EXTENSION AND EXEMPTION
LAWS.
9.12 Governing Law. THIS AGREEMENT HAS BEEN DELIVERED FOR ACCEPTANCE
BY LENDERS AND AGENT IN CHICAGO, ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF ILLINOIS. TO THE EXTENT PERMITTED BY APPLICABLE LAW
BORROWER HEREBY (a) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS OVER ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT; (b)
IRREVOCABLY WAIVES THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; (c) AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN ANY OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW; AND (d) AGREES NOT TO INSTITUTE ANY LEGAL ACTION
OR PROCEEDING AGAINST ANY OF THE LENDERS OR THE AGENT OR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT OTHER THAN ONE LOCATED
IN ▇▇▇▇ COUNTY, ILLINOIS. NOTHING IN THIS SECTION SHALL AFFECT OR IMPAIR ANY OF
THE LENDERS' OR AGENT'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY
LAW OR ANY OF THE LENDERS' OR THE AGENT'S RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST BORROWER OR BORROWER'S PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
9.13 Waiver of Marshaling. All rights of marshaling of assets of
Borrower, including any such right with respect to the Pledged Property, are
hereby waived by Borrower.
9.14 Limitation by Law. All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Agreement invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
76
9.15 Survival of Representations and Warranties. All representations
and warranties contained in this Agreement or made in writing by Borrower in
connection herewith shall survive the execution and delivery of this Agreement
and repayment of the Secured Obligations. Any investigation by Lenders and/or
Agent shall not diminish in any respect whatsoever its rights to rely on such
representations and warranties.
9.16 Service of Process. Borrower hereby irrevocably appoints and
designates CT Corporation System, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
as its true and lawful attorney-in-fact and duly authorized agent for service of
legal process and agrees that service of such process upon such agent and
attorney-in- fact shall constitute personal service of such process upon
Borrower.
9.17 Representation by Counsel. Borrower hereby represents that it
has been represented by competent counsel of its choice in the negotiation and
execution of this Agreement and the other Loan Documents; that it has read and
fully understood the terms hereof; Borrower and its counsel have been afforded
an opportunity to review, negotiate and modify the terms of this Agreement, and
that it intends to be bound hereby. In accordance with the foregoing, the
general rule of construction to the effect that any ambiguities in a contract
are to be resolved against the party drafting the contract shall not be employed
in the construction and interpretation of this Agreement.
9.18 Release of Lenders and Agent. Borrower releases Lenders and
Agent from any and all causes of action or claims which Borrower may now or
hereafter have for any asserted loss or damage to Borrower claimed to be caused
by or arising from any act or omission to act on the part of any of the Lenders
and/or the Agent, their respective officers, agents or employees, except for
willful misconduct or gross negligence.
9.19 Invalidated Payments. To the extent that Agent or any Lender
receives any payment on account of the Secured Obligations, and any such
payment(s) and/or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, subordinated and/or
required to be repaid to a trustee, receiver or any other Person under any
bankruptcy act, state or federal law, common law or equitable cause, then, to
the extent of such payment(s) or proceeds received, the Secured Obligations or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment(s) and/or proceeds had not been received by
Agent or such Lender and applied on account of the Secured Obligations.
9.20 Headings. The descriptive headings of the various provisions of
this Agreement and the other Loan Documents are inserted for convenience of
reference only and shall not be deemed to affect the meaning or construction of
any of the provisions hereof.
9.21 Counterparts. This Agreement and the other Loan Documents may be
executed in any number of counterparts, and by the different parties hereto and
thereto on the same or separate counterparts, each of which when so executed and
delivered shall be
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deemed to be an original; all the counterparts for each such Loan Document shall
together constitute one and the same agreement.
9.22 Fax Execution. For purposes of negotiating and finalizing this
Agreement (including any subsequent amendments thereto), any signed document
transmitted by facsimile machine ("FAX") shall be treated in all manner and
respects as an original document. The signature of any party by FAX shall be
considered for these purposes as an original signature. Any such FAX document
shall be considered to have the same binding legal effect as an original
document' provided that upon request an original of the faxed document is mailed
by first class US Mail or personally delivered to the recipient. At the request
of any party hereto, any FAX document subject to this Agreement shall be
re-executed by all parties here to parties in an original form. The undersigned
parties hereby agree that they shall raise the use of the FAX or the fact that
any signature or document was transmitted or communicated through the use of a
FAX as a defense to the formation of this Agreement.
9.23 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the Lenders, Agent, Borrower and its successors and assigns (except
as otherwise expressly provided herein) and nothing contained herein shall be
deemed to confer upon any Person other than Borrower and its successors and
assigns any right to insist on or to enforce the performance or observance of
any of the obligations contained herein. All conditions to the obligations of
the Lenders to make the Loans hereunder are imposed solely and exclusively for
the benefit of the Lenders and its respective successors and assigns and no
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms and no other Persons shall under any circumstances
be deemed to be a beneficiary of such conditions.
9.24 Domicile of Loans. Lenders may make, maintain or transfer any of
their Loans hereunder to, or for the account of, any of their respective branch
offices, subsidiaries or affiliates.
9.25 Entire Agreement. This Agreement and the other Loan Documents
constitute the entire agreement of Borrower, Lenders and Agent with respect to
the subject matter hereof and supersedes all prior and contemporaneous
negotiations, agreements, understandings and communications. No representation,
understanding, promise or condition concerning the subject matter hereof shall
be binding upon any of Lenders or Agent unless expressed herein or therein. No
course of dealing, course or performance, trade usage or parole evidence of any
nature, whether based on actions, omissions or circumstances occurring or
existing heretofore or hereafter, may be used in any way to alter or supplement
the terms hereof.
9.26 Construction. In this Agreement, unless the context otherwise
clearly requires, references to the plural include the singular, the singular
the plural, and the part the whole; the neuter case includes the masculine and
feminine cases; and "or" is not exclusive. In this Agreement, any references to
property (and similar terms) include an
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interest in such property (or other item referred to); "include," "includes,"
"including" and similar terms are not limiting; and "hereof," "herein,"
"hereunder" and similar terms refer to this Agreement as a whole and not to any
particular provision; and "expenses," "costs," "out-of-pocket expenses" and
similar terms include the charges of in-house counsel, auditors and other
professionals of the relevant Person to the extent that such amounts are
routinely identified and charged under such Person's cost accounting system.
Section and other references in this Agreement are to this Agreement unless
otherwise specified.
9.27 Successors and Assigns; Participation; Assignments.
(a) Transfer to BOS-Edinburgh; Successors and Assigns:
(i) BOS-NY hereby sells, assigns, transfers and
conveys all right, title and interest under the
Existing Loan Agreement to BOS-Edinburgh and
BOS-Edinburgh hereby accepts said assignment.
From and after the date hereof BOS-NY shall not
be deemed to be a Lender hereunder and
BOS-Edinburgh shall be deemed to be a Lender
hereunder. By execution of this Agreement
Agent, Borrower and each other Lender has
manifested its consent and acknowledgement to
said assignment and, notwithstanding anything
contained in Section 9.27 of the Existing
Agreement, agrees that no further
documentation, agreement or evidence of such
assignment shall be required.
(ii) This Agreement shall be binding upon and inure
to the benefit of Borrower, the Lenders, all
future holders of the Notes, Agent and their
respective successors and assigns; provided
that Borrower may not assign or transfer any of
its rights hereunder or interests herein
without the prior written consent of all the
Lenders. Any purported assignment without such
consents shall be void.
(b) Participations. Any Lender may, in accordance with
applicable law, at any time sell Participations to one or more
commercial banks or other Persons (each a "PARTICIPANT") in all or a
portion of its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion
of its Commitments and the Loans owing to it and any Note held by it);
provided that:
(i) any such Lender's obligations under this
Agreement and the other Loan Documents shall
remain unchanged;
(ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of
such obligations;
(iii) the parties hereto shall continue to deal
solely and directly with such Lender in
connection with such Lender's rights and
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obligations under this Agreement and each of
the other Loan Documents;
(iv) the Participant accepting such Participation
shall be bound by the provisions of Sections
10.14 and 10.15; and
(v) any sale or transfer to a Participant which is
not a party hereto or an Affiliate of any
Lender hereto shall require the prior written
consent of each of Agent, Borrower, and the
Majority Lenders, which consent shall not be
unreasonably withheld or delayed.
Borrower agrees that any such Participant shall be entitled to the
benefits of Sections 2.8, 10.7, and 10.14 with respect to its
participation in the Commitments and Lenders' Loans hereunder
outstanding from time to time; provided that no such Participant shall
be entitled to receive any greater amount pursuant to such Sections
than the TRANSFEROR LENDER would have been entitled to receive in
respect of the amount of the participation transferred to such
Participant had no such transfer occurred.
(c) Assignments. Any Lender may, in accordance with applicable
law, at any time assign all or a portion of its rights and obligations
under this Agreement and the other Loan Documents (including, without
limitation, all or any portion of its Commitments and Loans owing to it
and any Note held it) to any other Lender, any affiliate of any other
Lender or to one or more additional commercial banks or other
institutional Lenders (each a "PURCHASING LENDER"); provided that
(i) if a Lender makes such an assignment of less
than all of its then remaining rights and
obligations under this Agreement and the other
Loan Documents, such Transferor Lender shall
retain, after such assignment, a minimum
principal amount of $10,000,000 of the
Commitments and Loans then outstanding, and
such assignment shall be in a minimum aggregate
principal amount of $10,000,000 of the
Commitments and Loans then outstanding;
(ii) each such assignment shall be of a constant,
and not a varying, percentage of the Commitment
of the Transferor Lender and of all of the
Transferor Lender's rights and obligations
under this Agreement and the other Loan
Documents;
(iii) each such assignment shall be made pursuant to
a Transfer Supplement in substantially the form
attached hereto as Exhibit B, duly completed (a
"TRANSFER SUPPLEMENT"); and
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(iv) any transfer to a commercial bank or other
financial institution which is not a party
hereto or an Affiliate of a Lender hereto shall
require the prior written consent of each of
Agent and Borrower, which consent shall not be
unreasonably withheld or required of Borrower
if an Event of Default exists.
In order to effect any such assignment, the Transferor Lender and the
Purchasing Lender shall execute and deliver to Agent a duly completed
Transfer Supplement (including the consents required by clause (iv)
of the preceding sentence) with respect to such assignment, together
with any Note or Notes subject to such assignment (the "TRANSFEROR
LENDER NOTES") and a processing and recording fee of $5,000 payable
to Agent; and, upon receipt thereof, Agent shall accept such Transfer
Supplement. Upon receipt of the Purchase Price Receipt Notice
pursuant to such Transfer Supplement, Agent shall record such
acceptance in the Register. Upon such execution, delivery, acceptance
and recording, from and after the close of business at the Agent's
office in New York, New York, on the effective date specified in such
Transfer Supplement:
(w) the Purchasing Lender shall be a
party hereto and, to the extent
provided in such Transfer
Supplement, shall have the rights
and obligations of a Lender
hereunder;
(x) the Transferor Lender thereunder
shall be released from its
obligations under this Agreement to
the extent so transferred (and, in
the case of a Transfer Supplement
covering all or the remaining
portion of a Transferor Lender's
rights and obligations under this
Agreement, such Transferor Lender
shall cease to be a party to this
Agreement) from and after the
Transfer Effective Date; and
(y) On or prior to the Transfer
Effective Date specified in a
Transfer Supplement, Borrower shall
execute and deliver to the Agent
(for delivery to the Purchasing
Lender) new Notes evidencing such
Purchasing Lender's assigned
Commitments or Loans and (for
delivery to the Transferor Lender)
replacement Notes in the principal
amount of the Loans or Commitments
retained by the Transferor Lender
(such Notes to be in exchange for,
but not in payment of, those Notes
then held by such Transferor
Lender). Each such Note shall be
dated the date and be substantially
in the form of the predecessor Note.
The Agent shall ▇▇▇▇ the predecessor
Notes "exchanged" and deliver them
to the Borrower. Accrued interest
and accrued fees shall be
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paid to the Purchasing Lender at the
same time or times provided in the
predecessor Notes and this
Agreement.
(d) Register. The Agent shall maintain at its office a copy of
each Transfer Supplement delivered to it and a register (the
"REGISTER") for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing
to, each Lender from time to time. The entries in the Register shall be
conclusive absent manifest error and Borrower, Agent and the Lenders
may 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 Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(e) Financial and Other Information. Borrower authorizes Agent
and each Lender to disclose to any Participant or Purchasing Lender
(each, a "TRANSFEREE") any and all financial and other information in
such Person's possession concerning Borrower and Affiliates which has
been or may be delivered to such Person by or on behalf of Borrower in
connection with this Agreement or any other Loan Document or such
Person's credit evaluation of Borrower and Affiliates. Prior to
disclosing such financial information and other information to
transferees or prospective transferees, as applicable, Agent and
Lenders shall require that the transferee or prospective transferee
enter into a confidentiality agreement pursuant to which such
transferee or prospective transferee shall covenant to keep
confidential all such information. At the request of any Lender,
Borrower, at Borrower's expense, shall provide to each transferee or
prospective transferee the conformed copies of documents referred to in
Section 4 of the form of Transfer Supplement.
(f) Assignments to Federal Reserve Bank. Any Lender may at any
time assign all or any portion of its rights under this Agreement,
including without limitation any Loans owing to it, and any Note held
by it to a Federal Reserve Bank. No such assignment shall relieve the
Transferor Lender from its obligations hereunder.
9.28 Texas Language.
(a) THIS WRITTEN AGREEMENT (TOGETHER WITH THE OTHER LOAN
DOCUMENTS ) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO
WITH RESPECT TO THE MATTERS COVERED HEREBY AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES.
(b) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
HERETO.
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9.29 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY LAW,
BORROWER AND LENDERS AND AGENT EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE
OTHER AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO IN CONNECTION
HEREWITH. BORROWER HEREBY EXPRESSLY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT FOR LENDERS TO MAKE THE LOAN AND AGENT TO SERVE AS AGENT IN
CONNECTION THERETO.
9.30 Waiver of Claims. Borrower hereby acknowledges, agrees and
affirms that it possesses no claims, defenses, offsets, recoupment or
counterclaims of any kind or nature against or with respect to the enforcement
of the Existing Agreement or any other Loan Document or any amendments thereto
(collectively, the "CLAIMS"), nor does Borrower now have knowledge of any facts
that would or might give rise to any Claims. If facts now exist which would or
could give rise to any Claim against or with respect to the enforcement of the
Existing Agreement or any other Loan Document, as may have been amended by the
amendments thereto, Borrower hereby unconditionally, irrevocably and
unequivocally waives and fully releases any and all such Claims as if such
Claims were the subject of a lawsuit, adjudicated to final judgment from which
no appeal could be taken and therein dismissed with prejudice.
9.31 Miscellaneous. Notwithstanding anything to the contrary herein,
Lenders hereby consent to Borrower, as sponsor, entering into a Sale and
Servicing Agreement, Servicing Assumption Agreement, Insurance Agreement and
Indemnification Agreement relating to the FirstCity Auto Receivables Trust
1999-2 Asset Backed Notes and Asset Backed Certificates issued in connection
with the securitization described in the Summary of Terms attached hereto as
Schedule 9.31 which sets forth the general terms of the securitization.
As part of and in connection with that consent, Lenders recognize that pursuant
to the Sale and Servicing Agreement, Servicing Assumption Agreement, Insurance
Agreement and Indemnification Agreement, Borrower, as sponsor, will be
responsible to purchase any nonconforming contract in the event that the seller,
the servicer, or the related originator fails to repurchase any contract which
is required to be repurchased under Article III of the Sale and Servicing
Agreement and the definitions section of the Sale and Servicing Agreement and
that the Borrower has additional responsibilities related to transfer of
servicing.
10 AGENCY AND INTER-LENDER PROVISIONS.
10.1 Appointment.
(a) Each Lender hereby irrevocably appoints Bank of Scotland,
acting through its branch in New York, New York, to act as agent for
such Lender under
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this Agreement and the other Loan Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on behalf of such
Lender under the provisions of this Agreement and the other Loan
Documents, and to exercise such powers and to perform such duties as
are expressly delegated to or required of Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental
thereto. Agent shall hold all Pledged Property and all payments of
principal, interest, fees, charges and Costs received pursuant to this
Agreement and the other Loan Documents for the benefit of Lenders, to
be distributed as provided herein.
(b) Bank of Scotland, acting through its branch in New York,
New York, hereby agrees to act as Agent on behalf of the Lenders on the
terms and conditions set forth in this Agreement and the other Loan
Documents, subject to its right to resign as provided in Section 10.10.
Each Lender hereby agrees that the rights and remedies granted to Agent
under the Loan Documents shall be exercised exclusively by Agent, and
that no Lender shall have any right individually to exercise any such
right or remedy, except to the extent expressly provided herein or
therein.
(c) The provisions of this Article 10 are solely for the
benefit of Agent and Lenders; Borrower shall not have any rights as a
third party beneficiary of any of the provisions hereof (other than
Section 10.10) nor shall Borrower have any obligations under this
Article 10 (except as provided in Section 10.7(b), 10.13, 10.14 and
10.15). Subject to the provisions of Section 10.2 relating to the
nature of Agent's duties, nothing contained in this Article 10 shall be
deemed to amend, modify or amend Agent's or Lenders' respective duties
and obligations set forth in any other Article of this Agreement, nor
shall Borrower be deemed to have waived its right to performance of
such duties and obligations by Lenders.
10.2 General Nature of Agent's Duties. Notwithstanding anything to the
contrary elsewhere in this Agreement or in any other Loan Document:
(a) Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Loan
Documents, and no implied duties or responsibilities on the part of
Agent shall be read into this Agreement or any Loan Document or shall
otherwise exist.
(b) The duties and responsibilities of Agent under this
Agreement and the other Loan Documents shall be mechanical and
administrative in nature, and Agent shall not have a fiduciary
relationship in respect of any Lender.
(c) Agent is and shall be solely Agent of the Lenders. Agent
does not assume, and shall not at any time be deemed to have, any
relationship of agency or trust with or for, or any other duty or
responsibility to, Borrower or any other Person (except only for its
relationship as agent for, and its express duties and responsibilities
to, the Lenders as provided in this Agreement and the other Loan
Documents).
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(d) Agent shall be under no obligation to take any action
hereunder or under any other Loan Document if Agent believes in good
faith that taking such action may conflict with any law or any
provision of this Agreement or any other Loan Document, or may require
Agent to qualify to do business in any jurisdiction where it is not
then so qualified.
10.3 Exercise of Powers.
(a) Agent shall take any action of the type specified in this
Agreement or any other Loan Document as being within Agent's rights,
powers or discretion in accordance with directions from the Majority
Lenders or the Required Lenders, if applicable, (or, to the extent this
Agreement or such Loan Document expressly requires the direction or
consent of some other Person or set of Persons, then instead in
accordance with the directions of such other Person or set of Persons).
In the absence of such directions, Agent shall have the authority (but
under no circumstances shall be obligated), in its sole discretion, to
take any such action, except to the extent this Agreement or such Loan
Document expressly requires the direction or consent of the Majority
Lenders, the Required Lenders, or some other Person or set of Persons
in which case Agent shall not take such action absent such direction or
consent.
(b) Agent shall have the right to request instructions from
the Lenders at any time. If Agent shall request instructions from the
Lenders with respect to any act or action (including the failure to
act) in connection with this Agreement or any of the other Loan
Documents, Agent shall be entitled to refrain from such act or taking
such action unless and until Agent shall have received instructions
from the Required Lenders, and Agent shall not incur liability to any
Person by reason of so refraining.
(c) Any action or inaction pursuant to a direction, discretion
or consent from the Majority Lenders or the Required Lenders (if
applicable) shall be binding on all Lenders. Agent shall not have any
liability to any Person as a result of: (i) Agent acting or refraining
from acting in accordance with the directions of the Majority Lenders
or the Required Lenders, or other applicable Person or set of Persons;
(ii) subject to the provisions of Section 10.4(a), Agent refraining
from acting in the absence of instructions to act from the Majority
Lenders or the Required Lenders (if applicable), or other applicable
Person or set of Persons, whether or not Agent has discretionary power
to take such action; or (iii) subject to the provisions of Section
10.4(a), Agent taking discretionary action it is authorized to take
under this Section.
(d) Notwithstanding anything to the contrary contained herein,
Agent shall not do or take any of the following actions or grant any
consent described below, without, in each case, the prior consent of
Lenders which have made Loans constituting 100% in principal amount of
Loans outstanding on such date, or if no
85
Loans are outstanding, Lenders which have Commitments to make Loans
constituting, in the aggregate, at least 100% of the total Commitments
hereunder ("REQUIRED LENDERS"):
(i) amend, consent to or permit the amendment of
any provision of this Agreement or any other
Loan Document, relating to the rate of
interest, fees, charges, reimbursement of
Costs, indemnification of Agent or Lenders
or other Borrower's Liabilities due or
accruing hereunder or under any other Loan
Document;
(ii) extend or permit the extension of the
Maturity Date or otherwise extend or defer
the time for payment of Borrower's
Liabilities, including, but not limited to
Costs, fees, interest and principal;
(iii) subordinate or release the lien on any asset
securing any Secured Obligations; provided
that Agent with the consent of a Majority
Lenders shall have the right to (A) release
liens as expressly required under this
Agreement or the other Loan Documents and
(B) release of liens on Pledged Property
having, in the aggregate, a fair market
value (in Majority Lenders' reasonable
determination) of less than $1,000,000;
(iv) amend or consent to the amendment of
covenants set forth in Section 6.1 of this
Agreement;
(v) except as provided in Section 10.3(d)(iii),
grant any consent or waive any negative
covenant set forth in Sections 6.3(a),
6.3(b), 6.3(c), 6.3(e), 6.3(f), 6.3(k),
6.3(l);
(vi) waive any Unmatured Default or Event of
Default under Section 7.1(c), (d), (h), (i),
(j), (k) or (l);
(vii) increase the aggregate Commitment hereunder
or increase the Maximum Principal Amount set
forth in Section 2.2(a);
(viii) Declare a default and accelerate the Secured
Obligations pursuant to Section 7.3; or
(ix) Amend any provision of this Section 10.3(d).
(e) Except as expressly required pursuant to Section 10.3(d),
if Agent is required pursuant to the terms hereof to obtain the
approval or consent of Lenders for any act or action (including the
failure to act) or if Agent requests the approval, consent or
instruction of Lenders for any act or action (including the failure to
act),
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the approval, consent or instruction of the Majority Lenders shall be
required or sufficient. Agent shall be entitled to rely upon the
consent, approval and/or instruction of the Majority Lenders,
notwithstanding that other Lenders may have given Agent contrary
directions, objected to such action or course of action, or, directed
Agent to take or not to take a contrary action.
(f) Agent is hereby authorized on behalf of all of Lenders,
without the necessity of any notice to or further consent from any
Lender, from time to time prior to an Event of Default, to take any
action with respect to any Pledged Property or Loan Document which may
be necessary to perfect and maintain perfected the security interest in
and liens upon the Pledged Property granted pursuant to any of the Loan
Documents.
(g) Lenders hereby authorize Agent to release any lien granted
to or held by Agent upon any Pledged Property upon termination of this
Agreement and the Commitments and payment and satisfaction of all of
the Secured Obligations (other than the Contingent Secured Obligations,
as defined in the Security Agreement) at any time arising under or in
respect of this Agreement and the other Loan Documents or the
transactions contemplated hereby or thereby. Upon request by Agent at
any time, Lenders will confirm in writing Agent's authority to release
particular types or items of Pledged Property pursuant to this Section.
(h) Upon the release of any lien in accordance with Section
10.3(g), and upon at least five (5) Business Days' prior written
request by Borrower, Agent shall (and is hereby irrevocably authorized
by Lenders to) execute such documents as may be necessary to evidence
the release of such liens; provided that (i) Agent shall not be
required to execute any such document on terms which, in Agent's
reasonable opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such
liens without recourse or warranty and (ii) such release shall not in
any manner discharge, affect or impair the Secured Obligations
(including the Contingent Secured Obligations) or any liens upon (or
obligations of Borrower in respect of) all interests retained by
Borrower, including (without limitation) the proceeds of the sale, all
of which shall continue to constitute part of the Pledged Property. In
the event of any sale or transfer of Pledged Property, or any
foreclosure with respect to any of the Pledged Property, Agent shall be
authorized to deduct all of the Costs incurred by Agent from the
proceeds of any such sale, transfer or foreclosure.
(i) Subject to the provisions of Section 10.4(a), Agent shall
have no obligation whatsoever to Lenders, or to any other Person to
assure that: (i) the Pledged Property exists; (ii) the Pledged Property
is owned by Borrower, any other Loan Party or any other Person; (iii)
the Pledged Property is cared for, protected or insured; (iv) the liens
granted to Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or
are entitled to any particular priority; or (v) to exercise or to
continue exercising at all or in any
87
manner or under any duty of care, disclosure or fidelity any of the
rights, authorities and powers granted or available to Agent in this
Section 10.3, or in any of the other Loan Documents. It is understood
and agreed by Lenders that in respect of the Pledged Property, or any
act, omission or event related thereto, Agent may act in any manner it
may deem appropriate, in its sole discretion, given Agent's own
interest in the Pledged Property as one of Lenders and that Agent shall
have no duty or liability whatsoever to Lenders, except for Agent's
gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.
(j) In addition to Agent's right to take actions on its own
accord as permitted under this Agreement but subject to the provisions
of Section 10.3(d)(viii), Agent shall take such action with respect to
an Unmatured Default or Event of Default as shall be directed by the
Majority Lenders; provided that until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Unmatured
Default or Event of Default as it shall deem advisable.
(k) Agent shall not be required to deliver to any Lender,
originals or copies of any documents, instruments, notices,
communications or other information, other than the Financials,
received by Agent from the Required Lenders, any Lender, or any other
Person under or in connection with this Agreement or any other Loan
Document, except (i) as specifically provided in this Agreement or any
other Loan Document and (ii) as specifically requested from time to
time in writing by any Lender with respect to a specific document,
instrument, notice or other written communication received by and in
the possession of Agent at the time of receipt of such request and then
only in accordance with such specific request.
10.4 General Exculpatory Provisions. Notwithstanding anything to the
contrary elsewhere in this Agreement or any other Loan Document:
(a) Agent shall not be liable for any action taken or omitted
to be taken by it under or in connection with this Agreement or any
other Loan Document, unless caused by its own gross negligence or
willful misconduct as finally determined by a court of competent
jurisdiction.
(b) Agent shall not be responsible for: (i) the execution,
delivery, effectiveness, enforceability, genuineness, validity or
adequacy of this Agreement or any other Loan Document; (ii) any
recital, representation, warranty, document, certificate, report or
statement in, provided for in, or received under or in connection with,
this Agreement or any other Loan Document; (iii) any failure of
Borrower or any Lender to perform any of their respective obligations
under this Agreement or any other Loan Document; (iv) the existence,
validity, enforceability, perfection, recordation, priority, adequacy
or value, now or hereafter, of any lien or other direct or indirect
security afforded or purported to be afforded by any of the
88
Loan Documents or otherwise from time to time; or (v) caring for,
protecting, insuring, or paying any taxes, charges or assessments with
respect to any Collateral.
(c) Agent shall not be under any obligation to ascertain,
inquire or give any notice relating to: (i) the performance or
observance of any of the terms or conditions of this Agreement or any
other Loan Document on the part of Borrower; (ii) the business,
operations, condition (financial or otherwise) or prospects of Borrower
or any other Person; or (iii) the existence of any Event of Default or
Unmatured Default.
10.5 Administration by Agent.
(a) Subject to the provisions of Section 10.13, Agent shall
remit payments received by Agent from Borrower or any other Person of,
except as provided in Section 10.15, principal, interest and the unused
commitment fee payable pursuant to Section 2.13(b), after deducting all
Costs and other funds then due and owing by Borrower and/or Lenders to
Agent with respect to this Agreement and the other Loan Documents, to
each Lender, in accordance with its Commitment Percentage, as amended
or supplemented from time to time pursuant to Section 9.27. The
processing fee payable pursuant to Section 9.27(c) shall be retained by
Agent for its own benefit. Payments received on or before 11:00 a.m.
New York time, in immediately available funds, shall be wire
transferred to Lenders on the same Business Day. Payments received
after 11:00 a.m. New York time, in immediately available funds, shall
be wire transferred to the Lenders on the next business day. Payments
received in funds other than immediately available funds will be wire
transferred to Lenders upon such becoming available.
(b) Agent may rely upon any notice or other communication of
any nature (written or oral, including but not limited to telephone
conversations, whether or not such notice or other communication is
made in a manner permitted or required by this Agreement or any other
Loan Document) purportedly made by or on behalf of the proper party or
parties, and Agent shall not have any duty to verify the identity or
authority of any Person giving such notice or other communication.
(c) Agent may consult with legal counsel (including, without
limitation, in-house counsel for Agent in-house or other counsel for
Lender, or in-house or other counsel for Borrower), independent public
accountants and any other experts selected by it from time to time, and
Agent shall not be liable for any action taken or omitted to be taken
in good faith by it in accordance with the advice of such counsel,
accountants or experts.
(d) Agent may conclusively rely upon the truth of the
statements and the correctness of the opinions expressed in any
certificates or opinions furnished to Agent in accordance with the
requirements of this Agreement or any other Loan Document. Whenever
Agent shall deem it necessary or desirable that a matter be
89
proved or established with respect to Borrower or any Lender, such
matter may be established by a certificate of Borrower or such Lender,
as the case may be, and Agent may conclusively rely upon such
certificate (unless other evidence with respect to such matter is
specifically required in this Agreement or another Loan Document).
(e) Agent may fail or refuse to take any action unless it
shall be indemnified to its satisfaction from time to time against any
and all amounts, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
or nature which may be imposed on, incurred by or asserted against
Agent by reason of taking or continuing to take any such action.
(f) Agent may perform any of its duties under this Agreement
or any other Loan Document by or through agents, employees or
attorneys-in-fact. Agent shall not be responsible for the negligence or
misconduct of any agents, employees or attorneys-in fact selected by it
with reasonable care.
(g) Agent shall not be deemed to have any knowledge or notice
of the occurrence of any Event of Default or Unmatured Default unless
Agent has received notice from a Lender or from Borrower referring to
this Agreement, describing such Event of Default or Unmatured Default,
and stating that such notice is a "notice of default". If Agent
receives such a notice, Agent shall give prompt notice thereof to each
Lender.
10.6 Lender Not Relying on Agent or Other Lenders.
(a) Independently and without reliance upon Agent or any other
Lender, each Lender, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of the
financial or other condition and affairs of Borrower in connection with
the taking or not taking of any action in connection herewith, and (ii)
its own appraisal of the creditworthiness of Borrower. Except as
expressly provided in this Agreement, neither Agent nor any other
Lender shall have any duty or responsibility, either initially or on a
continuing basis, to provide any Lender, with any credit or other
information with respect thereto, whether coming into its possession
before the making of any Loan or Advance or at any time or times
thereafter.
(b) Agent shall not be responsible to any Lender, for any
recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of
this Agreement, the Notes or other Loan Documents or the financial or
other condition of Borrower. Agent shall not be required to make any
inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Notes or any of
the other Loan Documents, or the
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financial condition of Borrower, or the existence or possible existence
of any Unmatured Default or Event of Default, unless specifically
requested to do so in writing by any Lender.
10.7 Indemnification.
(a) Each Lender agrees to reimburse and indemnify Agent and
its directors, officers, employees and agents (to the extent not
reimbursed by Borrower and without limitation of the obligations of
Borrower to do so), Pro Rata, from and against any and all amounts,
losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements of any kind or nature
(including, without limitation, the fees and disbursements of counsel
for Agent or such other Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not Agent or any Lender or such other Person shall be designated a
party thereto) that may at any time be imposed on, incurred by or
asserted against Agent or such other Person as a result of, or arising
out of, or in any way related to or by reason of, this Agreement, any
other Loan Document, any transaction from time to time contemplated
hereby or thereby, or any transaction financed in whole or in part or
directly or indirectly with the proceeds of any Loan; PROVIDED THAT NO
LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH AMOUNTS, LOSSES,
LIABILITIES, CLAIMS, DAMAGES, EXPENSES, OBLIGATIONS, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS OR DISBURSEMENTS RESULTING FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AGENT OR SUCH OTHER PERSON,
AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION.
(b) Borrower hereby agrees to reimburse and indemnify each of
Agent, Lenders, Participants and their respective agents, employees and
assigns ("INDEMNIFIED PARTIES") from and against any and all losses,
liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnified Party in connection with any
investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnified Party shall be designated a
party thereto) that may at any time be imposed on, asserted against or
incurred by such Indemnified Party as a result of, or arising out of,
or in any way related to or by reason of, this Agreement or any other
Loan Document, any transaction from
91
time to time contemplated hereby or thereby, or any transaction
financed in whole or in part or directly or indirectly with the
proceeds of any Loan (and without in any way limiting the generality of
the foregoing, including any violation or breach of any Environmental
Law or any other law by Borrower or any other Loan Party; any
environmental claim arising out of the management, use, control,
ownership or operation of property by any of such Persons, including
all on-site and off-site activities involving Hazardous Materials; any
grant of Pledged Property; or any exercise by Agent or any Lender of
any of its rights or remedies under this Agreement or any other Loan
Document); BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES,
EXPENSES, OBLIGATIONS, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS OR
DISBURSEMENTS RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNIFIED PARTY, AS FINALLY DETERMINED BY A COURT
OF COMPETENT JURISDICTION. If and to the extent that the foregoing
obligations of Borrower under this subsection (b), or any other
indemnification obligation of Borrower hereunder or under any other
Loan Document, are unenforceable for any reason, Borrower hereby agrees
to make the maximum contribution to the payment and satisfaction of
such obligations which is permissible under applicable law.
Notwithstanding anything to the contrary contained herein, Borrower
shall not be liable to indemnify any Indemnified Party for any fees,
cost, loss, expense, or damage arising from any dispute, proceeding or
claim by and between Agent and any one or more of the Lenders relating
to the rights, duties, liabilities and/or obligations of Agent
hereunder or under any other Loan Document.
10.8 Agent in its Individual Capacity. With respect to its Commitment
and the portion of the Secured Obligations owing to it, Agent shall have the
same rights and powers under this Agreement and each other Loan Document as any
other Lender and may exercise the same as though it were not Agent, and the
terms "Lenders," "holders of Notes" and like terms shall include Agent in its
individual capacity as such. Agent and its affiliates may, without liability to
account, make loans to, issue letters of credit to, accept deposits from,
acquire debt or equity interests in, enter into interest rate hedging agreements
with, act as trustee under indentures of, and engage in any other business with,
Borrower and any stockholder, subsidiary or affiliate of Borrower, as though
Agent were not Agent hereunder.
10.9 Holders of Notes. Agent may deem and treat the Lender which is
payee of a Note as the owner and holder of such Note for all purposes hereof
unless and until a Transfer Supplement with respect to the assignment or
transfer thereof shall have been filed with Agent in accordance with Section
9.27. Any authority, direction or consent of any
92
Person who at the time of giving such authority, direction or consent is shown
in the Register as being a Lender shall be conclusive and binding on each
present and subsequent holder, transferee or assignee of any Note or Notes
payable to such Lender or of any Note or Notes issued in exchange therefor.
10.10 Successor Agent. Agent may resign at any time by giving thirty
(30) days' prior written notice thereof to Lenders and to Borrower. In the event
of a material breach of its duties hereunder, Agent may be removed by the
Required Lenders for cause by giving thirty (30) days' prior written notice
thereof to Agent, the other Lenders and to Borrower. Upon any such resignation
or removal, the Required Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed and consented to, and
shall have accepted such appointment, within 30 days after such notice of
resignation or removal, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent. Each successor Agent shall be a commercial bank or
trust company organized under the laws of the United States of America or any
State thereof and having a combined capital and surplus of at least
$1,000,000,000. Upon the acceptance by a successor Agent of its appointment as
Agent hereunder, such successor Agent shall thereupon succeed to and become
vested with all the properties, rights, powers, privileges and duties of the
former Agent, without further act, deed or conveyance. Upon the effective date
of resignation or removal of a retiring Agent, such Agent shall be discharged
from its duties under this Agreement and the other Loan Documents, but the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted by it while it was Agent under this Agreement. If and so long as no
successor Agent shall have been appointed, then any notice or other
communication required or permitted to be given by Agent shall be sufficiently
given if given by the Majority Lenders, all notices or other communications
required or permitted to be given to Agent shall be given to each Lender, and
all payments to be made to Agent shall be made directly to Borrower or Lender
for whose account such payment is made.
10.11 Additional Agents. If Agent shall from time to time deem it
necessary or advisable, for its own protection in the performance of its duties
hereunder or in the interest of the Lenders, Agent and Borrower shall execute
and deliver a supplemental agreement and all other instruments and agreements
necessary or advisable, in the opinion of Agent, to constitute another
commercial bank or trust company, or one or more other Persons approved by
Agent, to act as co-Agent or agent with respect to any part of the Pledged
Property, with such powers of Agent as may be provided in such supplemental
agreement, and to vest in such bank, trust company or Person as such co-Agent or
separate agent, as the case may be, any properties, rights, powers, privileges
and duties of Agent under this Agreement or any other Loan Document.
10.12 Calculations. Agent shall not be liable for any calculation,
apportionment or distribution of payments made by it in good faith. If such
calculation, apportionment or distribution is subsequently determined to have
been made in error, the sole recourse of any Lender to whom payment was due but
not made shall be: (i) to recover from the other Lenders any payment in excess
of the amount to which such Lender(s) are determined to
93
be entitled or, (ii) if the amount due was not paid by Borrower, to recover such
amount from Borrower.
10.13 Funding by Agent; Defaulting Lenders.
(a) Unless Agent shall have been notified in writing by any
Lender not later than the close of business on the day before the day
on which Loans are requested by Borrower to be made that such Lender
will not make its ratable share of such Loans, Agent may assume that
such Lender will make its ratable share of the Loans, and in reliance
upon such assumption Agent may (but in no circumstances shall be
required to) make available to Borrower a corresponding amount. If and
to the extent that any Lender fails to make such payment to Agent on
such date and is required to do so, such Lender shall pay such amount
plus any costs, expenses or losses resulting from such Lender's failure
to make such payment on demand (or, if such Lender fails to pay such
amount on demand, Borrower shall pay such amount on demand), together
with interest, for Agent's own account, for each day from and including
the date of Agent's payment to and including the date of repayment to
Agent (before and after judgment) at the rate or rates per annum
applicable to such Loans plus any cost, expense or loss resulting from
such Lender's failure to make such payment. All payments to Agent under
this Section shall be made to Agent at the address for payment set
forth above in funds immediately available, without set-off,
withholding, counterclaim or other deduction of any nature.
(b) The failure of any Lender to make the Loans to be made by
it as part of any Advance shall not relieve any other Lender of its
obligation hereunder to make its Loans on the date of such Advance, but
neither Agent nor any other Lender shall be responsible for the failure
of any other Lender to make Loans to be made by such other Lender on
the date of any Advance.
(c) Notwithstanding anything contained herein to the contrary,
so long as any Lender has defaulted in its obligation to make Loans or
has rejected its Commitment, without a right to do so, Agent shall not
be obligated to transfer to such Lender any payment made by Borrower to
Agent for the benefit of such Lender, and, such Lender shall not be
entitled to the sharing of any payments. Amounts payable to such Lender
pursuant to the terms hereof shall instead be paid to Agent. Agent may
hold and, in its discretion, provided Borrower is in full satisfaction
of all conditions precedent to disbursement herein, re-lend to Borrower
for the account of such Lender the amount of all such payments received
by it for the account of such Lender. For purposes of voting or
consenting to matters with respect to the Loan Documents, such
defaulting Lender shall be deemed not to be a "Lender" and such
Lender's percentages and proportionate share shall be deemed to be zero
(0) and each other Lender's percentage and proportionate share shall be
deemed to be increased pro rata based on its percentages and
proportionate share theretofore existing. This Section 10.13(c) shall
remain effective with respect to such defaulting Lender until (y) the
Secured Obligations shall have been declared or
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shall have become immediately due and payable or (z) each of the
Majority Lenders, Agent and Borrower shall have waived such Lender's
default in writing.
(d) No Commitment of any Lender shall be increased or
otherwise affected, and performance by Borrower shall not be excused by
the operation of this Section 10.13. Any payments of principal or
interest which would, but for this Section 10.13, be paid to any
Lender, shall in Agent's sole and exclusive discretion: (i) be
re-loaned to Borrower for the account of such defaulting Lender,
provided Borrower is in full satisfaction of all conditions precedent
to disbursement herein, (ii) be paid to Lenders who shall not be in
default under their respective Commitments and who shall not have
rejected any Commitment for application to the Loans without a right to
do so, or (iii) be used to provide cash collateral in such manner and
order as shall be determined by Agent.
10.14 Sharing of Collections. Lenders hereby agree among themselves
that if any Lender shall receive (by voluntary payment, realization upon
security, set-off or from any other source) any amount on account of the Secured
Obligations (including, without limitation, principal, interest thereon, or any
other Secured Obligation contemplated by this Agreement or the other Loan
Documents to be made by Borrower ratably to all Lenders) in greater proportion
than any such amount received by any other Lender, then the Lender receiving
such proportionately greater payment shall notify each other Lender and Agent of
such receipt, and equitable adjustment will be made in the manner stated in this
Section so that, in effect, all such excess amounts will be shared ratably among
all of the Lenders after payment to Agent of all amounts due to Agent hereunder.
The Lender receiving such excess amount shall purchase (which it shall be deemed
to have done simultaneously upon the receipt of such excess amount) for cash
from the other Lenders a participation in the applicable Secured Obligations
owed to such other Lenders in such amount as shall result in a ratable sharing
by all Lenders of such excess amount (and to such extent the receiving Lender
shall be a Participant). If all or any portion of such excess amount is
thereafter recovered from the Lender making such purchase, such purchase shall
be rescinded and the purchase price restored to the extent of such recovery,
together with interest or other amounts, if any, required by law to be paid by
the Lender making such purchase. Borrower hereby consents to and confirms the
foregoing arrangements. Each Participant shall be bound by this Section as fully
as if it were a Lender hereunder.
10.15 Set-Off. Borrower hereby agrees that if any Secured Obligation of
Borrower shall be due and payable (by acceleration or otherwise), after the
occurrence of an Event of Default and during the continuation thereof, Agent and
each Lender shall have the right, without notice to Borrower, to set-off against
and to appropriate and apply to such Secured Obligation any obligation of any
nature owing to Borrower by the Agent or such Lender, including but not limited
to all deposits (whether time or demand, general or special, provisionally
credited or finally credited, whether or not evidenced by a certificate of
deposit) now or hereafter maintained by Borrower with Agent or such Lender. Such
right shall be absolute and unconditional in all circumstances and, without
limitation, shall exist whether or not Agent or such Lender or any other Person
shall have given notice or made
95
any demand to Borrower or any other Person, whether such obligation owed to
Borrower is contingent, absolute, matured or unmatured (it being agreed that
Agent or such Lender may deem such obligation to be then due and payable at the
time of such setoff), and regardless of the existence or adequacy of any
collateral, guaranty or any other security, right or remedy available to Agent,
any Lender or any other Person. Borrower hereby agrees that, to the fullest
extent permitted by law, any Participant shall have the rights of set-off as a
Lender as provided in this Section 10.15 (regardless of whether such Participant
would otherwise be deemed in privity with or a direct creditor of Borrower). The
rights provided by this Section 10.15 are in addition to any other rights of
set-off and banker's lien and all other rights and remedies which Agent or any
Lender (or any such Participant, branch, subsidiary or affiliate) may otherwise
have under this Agreement, any other Loan Document, at law or in equity, or
otherwise, and nothing in this Agreement or any Loan Documents shall be deemed a
waiver or prohibition of or restriction on the rights of set-off or bankers'
lien of any such Person.
The remainder of this page is left intentionally blank
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IN WITNESS WHEREOF, this Amended and Restated Loan Agreement, dated for
reference purposes only as of December 20, 1999 has been duly executed by the
undersigned.
BORROWER:
---------
FIRSTCITY FINANCIAL CORPORATION
a Delaware corporation
By:
----------------------------------------
Title:
-------------------------------------
AGENT:
------
BANK OF SCOTLAND, acting through its
branch in New York, New York
By:
----------------------------------------
Title:
-------------------------------------
LENDERS:
--------
The Governor and Company of the Bank of
Scotland, a bank organized under the laws of
Scotland by an Act of the Scots Parliament
in 1695.
By:
----------------------------------------
Title:
-------------------------------------
BANK OF AMERICA, N.A.
By:
----------------------------------------
Title:
-------------------------------------
SIGNITURE PAGE CONTINUED
------------------------
97
BOS-NY
------
Bank of Scotland, acting through its branch
in New York, New York, solely for the
purpose of effecting the transfer set forth
in Section 9.27 (a)(i).
By:
----------------------------------------
Title:
-------------------------------------
98
SCHEDULE OF EXHIBITS AND SCHEDULES
----------------------------------
Schedule 1.1(ff) Specific Extraordinary Transactions
Schedule 1.1(llll) REO Affiliates
Schedule 1.1 (oooo) Schedule of Secondary Obligors
Schedule 4.1 Schedule of Guarantees
Schedule 4.2(a) Schedule of Excluded Notes
Schedule 4.2(b) Schedule of Note Pledge Agreements and Pledged Notes
Schedule 4.3(a) Schedule of Excluded Entities
Schedule 4.3(b) Schedule of Stock Pledge Agreements
Schedule 4.4 Schedule of Security Agreements
Schedule 5.1 Exceptions to Representations and Warranties
Schedule 5.1(a)(i) Organization of Borrower
Schedule 5.1(a)(ii) Organization of Primary and Secondary Obligors
Schedule 5.1(e) Schedule of Shareholders, Stock and Options
Schedule 5.1(f) Schedule of Fictitious Names
Schedule 5.1(g) Schedule of Permitted Liens
Schedule 5.1(h) Schedule of Debts for Purpose of Financial Warranty
Schedule 5.1(i) Schedule of Proceedings
Schedule 5.1(j) Schedule of Government Contracts
Schedule 5.1(l) Required Consents
Schedule 5.1(o) Defaults
Schedule 5.1(s) Schedule of Other Indebtedness
Schedule 5.1(t) Schedule of Affiliate Indebtedness
Schedule 5.1(u) Affiliate Notes
Schedule 5.1(u)(iii) Schedule of Future Affiliate Notes (to be delivered
post-closing as they arise)
Schedule 5.1(w) Schedule of Affiliates
Schedule 5.1(bb) SEC Report Exceptions
Schedule 5.1(cc) Limited Asset Affiliates
Schedule 5.2 Senior Subordinated Debt Documents
Schedule 6.3(j) Fee Agreements
Schedule 6.3(l) Guaranty Equivalents
Schedule 7.1(f) Cross Default Agreements
Schedule 9.1 ERISA Matters
Schedule 9.31 Miscellaneous
Exhibits
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Exhibit A Wire Transfer Instructions to Agent
Exhibit B Form of Transfer Supplement